UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2026

or

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

For the transition period from ___________ to ___________

Commission File Number: 001-16767

Western New England Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Massachusetts 73-1627673
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number)
141 Elm Street, Westfield, Massachusetts 01086
(Address of principal executive offices) (Zip Code)

(413) 568-1911

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.01 par value per share WNEB NASDAQ

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

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

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

Large accelerated filer ☐ Accelerated filer ☒
Non-accelerated filer ☐ Smaller reporting company ☒
Emerging growth company ☐

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

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

At August 3, 2026 the registrant had 20,045,872 shares of common stock, $0.01 par value, issued and outstanding.

TABLE OF CONTENTS

Page
FORWARD-LOOKING STATEMENTS i
PART I – FINANCIAL INFORMATION 1
Item 1. Financial Statements of Western New England Bancorp, Inc. and Subsidiaries (Unaudited) 1
Consolidated Balance Sheets – June 30, 2026 and December 31, 2025 1
Consolidated Statements of Net Income – Three and Six Months Ended June 30, 2026 and 2025 2
Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2026 and 2025 3
Consolidated Statements of Changes in Shareholders’ Equity – Three and Six Months Ended June 30, 2026 and 2025 4
Consolidated Statements of Cash Flows – Six Months Ended June 30, 2026 and 2025 6
Notes to Consolidated Financial Statements 7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 41
Item 3. Quantitative and Qualitative Disclosures About Market Risk 63
Item 4. Controls and Procedures 63
PART II – OTHER INFORMATION 63
Item 1. Legal Proceedings 63
Item 1A. Risk Factors 64
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 64
Item 3. Defaults upon Senior Securities 64
Item 4. Mine Safety Disclosures 64
Item 5. Other Information 64
Item 6. Exhibits 65

FORWARD–LOOKING STATEMENTS

We may, from time to time, make written or oral “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to Western New England Bancorp, Inc.’s (the “Company”) financial condition, liquidity, results of operations, future performance, and business. Forward-looking statements may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” and “potential.” Examples of forward-looking statements include, but are not limited to, estimates with respect to our financial condition, results of operations and business that are subject to various factors which could cause actual results to differ materially from these estimates. These factors include, but are not limited to:

●unpredictable changes in general economic or political conditions, financial markets, fiscal, monetary and regulatory policies, including actual or potential stress in the banking industry;
●the possibility that future credit losses, loan defaults and charge-off rates are higher than expected due to changes in economic assumptions or adverse economic developments;
●general business and economic conditions on a national basis and in the local markets in which we operate, including those impacting credit quality;
●unstable political and economic conditions, including changes in tariff policies, which could materially impact credit quality trends and the ability to generate loans and gather deposits;
●inflation and governmental responses to inflation, including potential future increases in interest rates that reduce net interest margins;
●the effect on our operations of governmental legislation and regulation, including changes in accounting regulation or standards, the nature and timing of the adoption and effectiveness of new requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Basel guidelines, capital requirements and other applicable laws and regulations;
●changes in regulation, regulatory policy, legislation, accounting standards and practices, and fiscal monetary policy, particularly in light of the shift in presidential administrations and the potential for related shifts in agency policy and leadership;
●operational risks or risk management failures by us or critical third parties, including without limitation with respect to data processing, information systems, cybersecurity incidents, technological integration, including AI, vendor issues, business interruption, and fraud risks;
●significant changes in accounting, tax or regulatory practices or requirements;
●new legal obligations or liabilities or unfavorable resolutions or litigation;
●disruptive technologies in payment systems and other services traditionally provided by financial institutions;
●the risk that we may not be successful in the implementation of our business strategy;
●severe weather, natural disasters, pandemics, acts of war, or terrorism and other external events which could significantly impact our business;
●declines in real estate values in the Company’s market area, which may adversely affect our loan production;
●decreases in the value of securities and other assets, or changes in the securities markets which affect investment management revenue;
●decreases in deposit levels necessitating increased borrowing to fund loans, investments and other needs;
●competitive pressures from other financial institutions;
●the soundness of other financial services institutions which may adversely affect our credit risk;
●failure or circumvention of our internal controls or procedures;
●the risk that goodwill and intangibles recorded in our financial statements will become impaired;
●increases in Federal Deposit Insurance Corporation deposit insurance premiums and assessments;
●introduction of new lines of business or new products and services, which may subject us to additional risks;
●changes in key management personnel which may adversely impact our operations; and
●other risks and uncertainties detailed in Part 1A “Risk Factors” of the Company’s 2025 Annual Report on Form 10-K.

i

Investors should consider these risks, uncertainties, and other factors in addition to the factors under the heading “Risk Factors” included in this filing and our other filings with the SEC.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from the results discussed in these forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except to the extent required by law.

ii

PART I – FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS.

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(Dollars in thousands, except per share data)

June 30, December 31,
2026 2025
Assets
Cash and due from banks $22,819 $19,890
Federal funds sold 4,967 2,236
Interest-bearing deposits and other short-term investments 9,880 18,255
Total cash and cash equivalents 37,666 40,381
Securities available-for-sale, at fair value
(Amortized cost: $193,454 at June 30, 2026 and $198,194 at December 31, 2025)		 170,598 175,800
Securities held-to-maturity, at amortized cost
(Fair value: $151,189 at June 30, 2026 and $158,504 at December 31, 2025)		 181,723 188,800
Marketable equity securities, at fair value 662 632
Total investment securities 352,983 365,232
Federal Home Loan Bank stock and other restricted stock, at amortized cost 3,790 5,359
Total Loans 2,193,832 2,183,592
Allowance for credit losses (20,185) (20,297)
Net loans 2,173,647 2,163,295
Premises and equipment, net 23,776 23,345
Accrued interest receivable 9,008 8,783
Bank-owned life insurance 78,214 79,019
Deferred tax asset, net 12,836 12,716
Goodwill 12,487 12,487
Core deposit intangible 875 1,063
Other assets 27,019 24,800
Total Assets $2,732,301 $2,736,480
Liabilities and Shareholders’ Equity
Deposits:
Non-interest-bearing deposits $600,599 $594,516
Interest-bearing deposits 1,800,801 1,766,392
Total deposits 2,401,400 2,360,908
Borrowings:
Short-term borrowings 17,740 13,270
Long-term debt 25,000 73,000
Subordinated debt 19,810 19,790
Total borrowings 62,550 106,060
Securities pending settlement — 242
Other liabilities 20,072 21,633
Total Liabilities 2,484,022 2,488,843
Shareholders’ Equity:
Preferred stock - $0.01 par value, 5,000,000 shares authorized, none outstanding at June 30, 2026 and December 31, 2025 — —
Common stock - $0.01 par value, 75,000,000 shares authorized, 20,045,872 and 20,372,786 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively 200 204
Additional paid-in capital 110,442 114,515
Unearned compensation – Employee Stock Ownership Plan (“ESOP”) (1,225) (1,443)
Unearned compensation - Equity Incentive Plan (1,989) (1,224)
Retained earnings 157,908 152,302
Accumulated other comprehensive loss, net of tax (17,057) (16,717)
Total Shareholders’ Equity 248,279 247,637
Total Liabilities and Shareholders’ Equity $2,732,301 $2,736,480

See accompanying notes to unaudited consolidated financial statements.

1

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF NET INCOME – UNAUDITED

(Dollars in thousands, except per share data)

Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Interest and dividend income:
Commercial real estate loans $13,690 $13,294 $27,330 $26,101
Residential real estate loans 10,605 9,253 21,013 18,162
Commercial and industrial loans 3,609 3,596 6,942 6,788
Consumer loans 56 71 115 147
Total interest income from loans 27,960 26,214 55,400 51,198
Investment securities, taxable 2,456 2,587 4,954 5,008
Marketable equity securities 1 1 8 2
Total interest and dividend income from investment securities 2,457 2,588 4,962 5,010
Other investments 156 169 303 360
Short-term investments 208 641 397 1,481
Total interest income from cash and cash equivalents 364 810 700 1,841
Total interest and dividend income 30,781 29,612 61,062 58,049
Interest expense:
Deposits 10,358 10,437 20,336 21,813
Short-term borrowings 236 47 558 101
Long-term debt 515 1,232 1,417 2,451
Subordinated debt 351 254 605 508
Total interest expense 11,460 11,970 22,916 24,873
Net interest and dividend income 19,321 17,642 38,146 33,176
Provision for (reversal of) credit losses 1,557 (615) 1,632 (473)
Net interest and dividend income after provision for (reversal of) credit losses 17,764 18,257 36,514 33,649
Non-interest income:
Service charges and fees 2,422 2,235 4,553 4,258
Wealth management income 389 293 779 554
Income from bank-owned life insurance 535 516 1,011 989
Net unrealized gain on marketable equity securities 47 25 34 20
Gain on bank-owned life insurance death benefits 1 — 450 —
Gain on mortgage banking activities — 4 — 11
Gain on non-marketable equity investments — 243 — 243
Other income — 95 — 95
Total non-interest income 3,394 3,411 6,827 6,170
Non-interest expense:
Salaries and employee benefits 9,476 8,831 18,705 17,244
Occupancy 1,319 1,265 2,881 2,677
Furniture and equipment 404 491 837 978
Data processing 961 933 1,782 1,815
Software 712 645 1,401 1,304
Debit card and ATM processing expense 644 674 1,307 1,251
Professional fees 622 623 1,131 1,169
FDIC insurance assessment 377 399 769 830
Advertising 457 443 899 872
Other non-interest expenses 1,383 1,352 2,651 2,700
Total non-interest expense 16,355 15,656 32,363 30,840
Income before income taxes 4,803 6,012 10,978 8,979
Income tax provision 1,205 1,422 2,603 2,086
Net income $3,598 $4,590 $8,375 $6,893
Earnings per common share:
Basic earnings per share $0.18 $0.23 $0.42 $0.34
Weighted average basic shares outstanding 19,781,515 20,210,650 19,888,504 20,297,582
Diluted earnings per share $0.18 $0.23 $0.42 $0.34
Weighted average diluted shares outstanding 19,894,399 20,312,881 19,979,139 20,413,006
Dividends per share $0.07 $0.07 $0.14 $0.14

See accompanying notes to unaudited consolidated financial statements.

2

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – UNAUDITED

(Dollars in thousands)

Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Net income $3,598 $4,590 $8,375 $6,893
Other comprehensive income (loss):
Change in fair value of securities available-for-sale 158 1,191 (462) 4,677
Tax effect (40) (316) 122 (1,217)
Net-of-tax amount 118 875 (340) 3,460
Other comprehensive income (loss) 118 875 (340) 3,460
Total comprehensive income $3,716 $5,465 $8,035 $10,353

See accompanying notes to unaudited consolidated financial statements.

3

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - UNAUDITED

THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025

(Dollars in thousands, except per share data)

Common Stock
Shares Par Value Additional Paid-in Capital Unearned Compensation- ESOP Unearned Compensation- Equity Incentive Plan Retained Earnings Accumulated Other Comprehensive Income (Loss) Total
BALANCE AT DECEMBER 31, 2025 20,372,786 $204 $114,515 $(1,443) $(1,224) $152,302 $(16,717) $247,637
Net income — — — — — 4,777 — 4,777
Comprehensive loss — — — — — — (458) (458)
Common stock held by ESOP committed to be released (63,224 shares) — — 99 109 — — — 208
Share-based compensation - equity incentive plan — — — — (187) — — (187)
Forfeited equity incentive plan shares (54,754 shares) — — (542) — 542 — — —
Forfeited equity incentive plan shares reissued (64,710 shares) — — 808 — (808) — — —
Common stock repurchased (186,000) (3) (2,505) — — — — (2,508)
Issuance of common stock in connection with equity incentive plan 54,086 1 674 — (675) — — —
Cash dividends declared and paid on common stock ($0.07 per share) — — — — — (1,373) — (1,373)
BALANCE AT MARCH 31, 2026 20,240,872 $202 $113,049 $(1,334) $(2,352) $155,706 $(17,175) $248,096
Net income — — — — — 3,598 — 3,598
Comprehensive income — — — — — — 118 118
Common stock held by ESOP committed to be released (63,224 shares) — — 103 109 — — — 212
Share-based compensation - equity incentive plan — — — — 343 — — 343
Forfeited equity incentive plan shares (1,603 shares) — — (20) — 20 — — —
Common stock repurchased (195,000) (2) (2,690) — — — — (2,692)
Cash dividends declared and paid on common stock ($0.07 per share) — — — — — (1,396) — (1,396)
BALANCE AT JUNE 30, 2026 20,045,872 $200 $110,442 $(1,225) $(1,989) $157,908 $(17,057) $248,279

See accompanying notes to unaudited consolidated financial statements.

4

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - UNAUDITED

THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025

(Dollars in thousands, except per share data)

Common Stock
Shares Par Value Additional Paid-in Capital Unearned Compensation- ESOP Unearned Compensation- Equity Incentive Plan Retained Earnings Accumulated Other Comprehensive Income (Loss) Total
BALANCE AT DECEMBER 31, 2024 20,875,713 $209 $119,326 $(1,906) $(1,190) $142,745 $(23,274) $235,910
Net income — — — — — 2,303 — 2,303
Comprehensive income — — — — — — 2,585 2,585
Common stock held by ESOP committed to be released (67,377 shares) — — 39 116 — — — 155
Share-based compensation - equity incentive plan — — — — 145 — — 145
Forfeited equity incentive plan shares (22,176 shares) — — (202) — 202 — — —
Forfeited equity incentive plan shares reissued (24,560 shares) — — 228 — (228) — — —
Common stock repurchased (217,218) (2) (1,981) — — — — (1,983)
Issuance of common stock in connection with equity incentive plan 115,824 1 1,076 — (1,077) — — —
Cash dividends declared and paid on common stock ($0.07 per share) — — — — — (1,439) — (1,439)
BALANCE AT MARCH 31, 2025 20,774,319 $208 $118,486 $(1,790) $(2,148) $143,609 $(20,689) $237,676
Net income — — — — — 4,590 — 4,590
Comprehensive income — — — — — — 875 875
Common stock held by ESOP committed to be released (67,377 shares) — — 38 115 — — — 153
Share-based compensation - equity incentive plan — — — — 318 — — 318
Forfeited equity incentive plan shares (6,137 shares) — — (55) — 55 — — —
Forfeited equity incentive plan shares reissued (6,137 shares) — — 58 — (58) — — —
Common stock repurchased (290,609) (3) (2,744) — — — — (2,747)
Issuance of common stock in connection with equity incentive plan 10,791 — 102 — (102) — — —
Cash dividends declared and paid on common stock ($0.07 per share) — — — — — (1,437) — (1,437)
BALANCE AT JUNE 30, 2025 20,494,501 $205 $115,885 $(1,675) $(1,935) $146,762 $(19,814) $239,428

See accompanying notes to unaudited consolidated financial statements.

5

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(Dollars in thousands)

Six Months Ended June 30,
2026 2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $8,375 $6,893
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for (reversal of) credit losses 1,632 (473)
Depreciation and amortization of premises and equipment 999 1,090
Net amortization of purchase accounting adjustments — 2
Amortization of core deposit intangible 188 188
Net amortization of premiums and discounts on securities and mortgage loans 488 525
Net amortization of deferred costs on loans 208 129
Net amortization of premiums on subordinated debt 20 20
Share-based compensation expense 156 463
ESOP expense 420 308
Net change in unrealized gains on marketable equity securities (34) (20)
Gain on mortgage banking activities — (11)
Income from bank-owned life insurance (1,011) (989)
Gain on bank-owned life insurance death benefit (450) —
Net change in:
Accrued interest receivable (225) (251)
Other assets (1,665) 627
Other liabilities (2,115) (2,492)
Net cash provided by operating activities 6,986 6,009
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from calls, maturities, and principal collections of securities held-to-maturity 6,888 7,183
Purchases of securities available-for-sale (4,971) (29,601)
Proceeds from calls, maturities, and principal collections of securities available-for-sale 9,428 7,405
Proceeds from redemption and sales of marketable equity securities 44 —
Purchase of marketable equity securities (40) (27)
Net loan originations and principal payments (12,186) (21,876)
Redemption of Federal Home Loan Bank of Boston stock 1,569 —
Purchases of premises and equipment (1,502) (582)
Proceeds from sales of premises and equipment 52 —
Proceeds from payout on bank-owned life insurance 2,266 —
Net cash provided by (used in) investing activities 1,548 (37,498)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 40,492 67,466
Increase (decrease) in short-term borrowings 4,470 (1,350)
Repayment of long-term debt (48,000) —
Cash dividends paid on common stock (2,769) (2,876)
Repurchase of common stock (5,442) (4,893)
Net cash (used in) provided by financing activities (11,249) 58,347
NET CHANGE IN CASH AND CASH EQUIVALENTS: (2,715) 26,858
Beginning of period 40,381 66,450
End of period $37,666 $93,308
Supplemental cash flow information:
Net change in cash due to broker for common stock repurchased $(242) $(163)
Available-for-sale securities purchases pending settlement — (8,459)
Interest paid 23,078 24,953
Taxes paid 4,274 2,275

See the accompanying notes to unaudited consolidated financial statements.

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WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2026

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Basis of Presentation. Western New England Bancorp, Inc. (“WNEB,” “Company,” “we,” or “us”) is a Massachusetts-chartered stock holding company for Westfield Bank, a federally-chartered savings bank (“Bank”).

The Bank operates 25 banking offices in Hampden County and Hampshire County in western Massachusetts and the Capital Region in Connecticut, and its primary sources of revenue are interest income from loans as well as interest income from investment securities. The West Hartford Financial Services Center serves as the Company’s Connecticut hub, housing Commercial Lending, Cash Management and a Mortgage Loan Officer. The Bank’s deposits are insured up to the maximum Federal Deposit Insurance Corporation (“FDIC”) coverage limits.

Wholly-owned Subsidiaries. Elm Street Securities Corporation, WFD Securities, Inc. and CSB Colts, Inc., are Massachusetts-chartered securities corporations, formed for the primary purpose of holding qualified securities. WB Real Estate Holdings, LLC is a Massachusetts-chartered limited liability company that holds real property acquired as security for debts previously contracted by the Bank.

Principles of Consolidation. The consolidated financial statements include the accounts of Western New England Bancorp, Inc., the Bank, CSB Colts, Inc., Elm Street Securities Corporation, WB Real Estate Holdings, LLC and WFD Securities, Inc. All material intercompany balances and transactions have been eliminated in consolidation.

Estimates. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“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 consolidated financial statements and the reported amounts of income and expenses for each. Actual results could differ from those estimates. An estimate that is particularly susceptible to significant change in the near-term relates to the determination of the allowance for credit losses.

Basis of Presentation. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of our financial condition as of June 30, 2026, and the results of operations, changes in shareholders’ equity and cash flows for the interim periods presented. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results of operations for the year ending December 31, 2026. Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2025, included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”).

Reclassifications. Amounts in the prior period financial statements are reclassified when necessary to conform to the current year presentation.

2. EARNINGS PER SHARE

Basic earnings per share represents income available to common shareholders divided by the weighted average number of common shares outstanding during the period. If rights to dividends on unvested awards are non-forfeitable, these unvested awards are considered outstanding in the computation of basic earnings per share. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by us relate to stock options and certain performance-based restricted stock awards and are determined using the treasury stock method. Unallocated ESOP shares are not deemed outstanding for earnings per share calculations. There were no anti-dilutive shares outstanding during the three and six months ended June 30, 2026 and the three and six months ended June 30, 2025.

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Earnings per common share for the three and six months ended June 30, 2026 and the three and six months ended June 30, 2025 have been computed based on the following:

Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
(Dollars and shares in thousands, except per share data)
Net income applicable to common stock $3,598 $4,590 $8,375 $6,893
Average number of common shares issued 20,109 20,612 20,211 20,703
Less: Average unallocated ESOP Shares (137) (203) (145) (211)
Less: Average unvested performance-based equity incentive plan shares (190) (198) (177) (194)
Average number of common shares outstanding used to calculate basic earnings per common share 19,782 20,211 19,889 20,298
Effect of dilutive performance-based equity incentive plan shares 112 102 90 115
Average number of common shares outstanding used to calculate diluted earnings per share 19,894 20,313 19,979 20,413
Net income per common share:
Basic earnings per share $0.18 $0.23 $0.42 $0.34
Diluted earnings per share $0.18 $0.23 $0.42 $0.34

3. 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 equity section of the consolidated balance sheet, such items, along with net income, are components of comprehensive income (loss).

The components of accumulated other comprehensive loss included in shareholders’ equity are as follows:

June 30, 2026 December 31, 2025
(Dollars in thousands)
Net unrealized losses on securities available-for-sale $(22,856) $(22,394)
Tax effect 5,799 5,677
Net-of-tax amount (17,057) (16,717)
Accumulated other comprehensive loss, net of tax $(17,057) $(16,717)

4. INVESTMENT SECURITIES

The following tables summarize the amortized cost and fair value of securities available-for-sale and held-to-maturity at June 30, 2026 and December 31, 2025, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss on securities available-for-sale. The Company did not record an allowance for credit losses on its securities held-to-maturity portfolio as of June 30, 2026 and December 31, 2025.

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June 30, 2026
Amortized Cost Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Fair Value
(Dollars in thousands)
Securities available-for-sale:
Debt securities:
Government-sponsored enterprise obligations $18,359 $— $(2,191) $16,168
Corporate bonds 13,000 211 (107) 13,104
Total debt securities 31,359 211 (2,298) 29,272
Mortgage-backed securities:
Government-sponsored mortgage-backed securities 153,641 432 (19,966) 134,107
U.S. government guaranteed mortgage-backed securities 8,454 — (1,235) 7,219
Total mortgage-backed securities 162,095 432 (21,201) 141,326
Total securities available-for-sale 193,454 643 (23,499) 170,598
Securities held-to-maturity:
Debt securities:
U.S. Treasury securities 5,000 — (55) 4,945
U.S. government guaranteed obligations 953 — — 953
Total debt securities 5,953 — (55) 5,898
Mortgage-backed securities:
Government-sponsored mortgage-backed securities 175,770 152 (30,631) 145,291
Total mortgage-backed securities 175,770 152 (30,631) 145,291
Total securities held-to-maturity 181,723 152 (30,686) 151,189

Total

$375,177 $795 $(54,185) $321,787
December 31, 2025
Amortized Cost Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Fair Value
(Dollars in thousands)
Securities available-for-sale:
Debt securities:
Government-sponsored enterprise obligations $18,596 $— $(2,103) $16,493
Corporate bonds 11,000 155 (207) 10,948
Total debt securities 29,596 155 (2,310) 27,441
Mortgage-backed securities:
Government-sponsored mortgage-backed securities 162,831 806 (19,936) 143,701
U.S. government guaranteed mortgage-backed securities 5,767 — (1,109) 4,658
Total mortgage-backed securities 168,598 806 (21,045) 148,359
Total securities available-for-sale 198,194 961 (23,355) 175,800
Securities held-to-maturity:
Debt securities:
U.S. Treasury securities 5,001 — (103) 4,898
U.S. government guaranteed obligations 1,005 2 — 1,007
Total debt securities 6,006 2 (103) 5,905
Mortgage-backed securities:
Government-sponsored mortgage-backed securities 182,794 219 (30,414) 152,599
Total mortgage-backed securities 182,794 219 (30,414) 152,599
Total securities held-to-maturity 188,800 221 (30,517) 158,504

Total

 $386,994 $1,182 $(53,872) $334,304

9

The following table summarizes the unrealized gains recognized on marketable equity securities for the periods indicated:

Six Months Ended
June 30
2026 2025
(Dollars in thousands)
Net gains recognized during the period on marketable equity securities $34 $20
Net gains (losses) recognized during the period on equity securities sold during the period — —
Net unrealized gains recognized during the period on marketable equity securities held at end of period $34 $20

At June 30, 2026, U.S. Treasury securities with a fair value of $4.9 million, government-sponsored enterprise obligations with a fair value of $8.4 million and mortgage-backed securities with a fair value of $142.9 million were pledged to secure public deposits and for other purposes as required or permitted by law. The securities collateralizing public deposits are subject to fluctuations in fair value. We monitor the fair value of the collateral on a periodic basis, and pledge additional collateral if necessary, based on changes in fair value of collateral or the balances of such deposits.

The amortized cost and fair value of securities available-for-sale and held-to-maturity at June 30, 2026, by final maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers have the right to call or prepay obligations.

Available-for-Sale Held-to-Maturity
Amortized Cost Fair Value Amortized Cost Fair Value
(Dollars in thousands)
Debt securities:
Due in one year or less $— $— $5,000 $4,945
Due after one year through five years 9,952 8,785 — —
Due after five years through ten years 17,758 16,851 — —
Due after ten years 3,649 3,636 953 953
Total debt securities $31,359 $29,272 $5,953 $5,898
Mortgage-backed securities:
Due in one year or less $127 $126 $— $—
Due after one year through five years 2,481 2,462 — —
Due after five years through ten years 4,939 4,679 1,501 1,446
Due after ten years 154,548 134,059 174,269 143,845
Total mortgage-backed securities 162,095 141,326 175,770 145,291
Total securities $193,454 $170,598 $181,723 $151,189

10

There were no sales of available-for-sale securities for the six months ended June 30, 2026 and the six months ended June 30, 2025.

Allowance for Credit Losses – Securities Available-for-Sale

The Company measures expected credit losses on debt securities available-for-sale based upon the gain or loss position of the security. For debt securities available-for-sale in an unrealized loss position which the Company does not intend to sell, and it is not more likely than not that the Company will be required to sell the security before recovery of the Company’s amortized cost, the Company evaluates qualitative criteria to determine any expected loss. This includes among other items the financial health of, and specific prospects for the issuer, including whether the issuer is in compliance with the terms and covenants of the security. The Company also evaluates quantitative criteria including determining whether there has been an adverse change in expected future cash flows of the security. Securities available-for-sale which are guaranteed by government agencies do not currently have an allowance for credit loss as the Company determined these securities are either backed by the full faith and credit of the U.S. government and/or there is an unconditional commitment to make interest payments and to return the principal investment in full to investors when a debt security reaches maturity. In assessing the Company’s investments in government-sponsored and U.S. government guaranteed mortgage-backed securities and government-sponsored enterprise obligations, the contractual cash flows of these investments are guaranteed by the respective government-sponsored enterprise; Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”), Federal Farm Credit Bank (“FFCB”), or Federal Home Loan Bank (“FHLB”). Accordingly, it is expected that the securities would not be settled at a price less than the par value of the Company’s investments. The Company will evaluate this position no less than annually, however, certain items which may cause the Company to change this methodology include legislative changes that remove a government-sponsored enterprise’s ability to draw funds from the U.S. government, or legislative changes to housing policy that reduce or eliminate the U.S. government’s implicit guarantee on such securities. Accrued interest receivable on securities available-for-sale guaranteed by government agencies totaled $492,000 at June 30, 2026 and $513,000 at December 31, 2025, and is excluded from the estimate of credit losses. If the Company does not expect to recover the entire amortized cost basis of the security, an allowance for credit losses would be recorded, with a related charge to earnings. If the Company intends to sell the security or it is more likely than not that the Company will be required to sell the debt security before recovery of its amortized cost basis, the Company recognizes the entire difference between the amortized cost basis of the security and its fair value in earnings. Any impairment that has not been recorded through an allowance for credit loss is recognized in other comprehensive income. Accrued interest receivable on debt securities available-for-sale not guaranteed by government agencies totaled $250,000 at June 30, 2026 and $244,000 at December 31, 2025, and is excluded from the estimate of credit losses. There were no allowances for credit losses established on debt securities available-for-sale during the three and six months ended June 30, 2026 and the three and six months ended June 30, 2025.

Allowance for Credit Losses – Securities Held-to-Maturity

The Company measures expected credit losses on debt securities held-to-maturity on a collective basis by security type and risk rating where available. The reserve for each pool is calculated based on a Probability of Default/Loss Given Default basis taking into consideration the expected life of each security. Held-to-maturity securities which are issued by the United States Treasury or are guaranteed by government agencies do not currently have an allowance for credit loss as the Company determined these securities are either backed by the full faith and credit of the U.S. government and/or there is an unconditional commitment to make interest payments and to return the principal investment in full to investors when a debt security reaches maturity. In assessing the Company’s investments in government-sponsored and U.S. government guaranteed mortgage-backed securities and government-sponsored enterprise obligations, the contractual cash flows of these investments are guaranteed by the respective government-sponsored enterprise; FHLMC, FNMA, FFCB, or FHLB. Accordingly, it is expected that the securities would not be settled at a price less than the par value of the Company’s investments. The Company will evaluate this position no less than annually, however, certain items which may cause the Company to change this methodology include legislative changes that remove a government-sponsored enterprise’s ability to draw funds from the U.S. government, or legislative changes to housing policy that reduce or eliminate the U.S. government’s implicit guarantee on such securities. Any expected credit losses on securities held-to-maturity would be presented as an allowance for credit loss. Accrued interest receivable on securities held-to-maturity totaled $378,000 at June 30, 2026 and $393,000 at December 31, 2025, and is excluded from the estimate of credit losses. There were no allowances for credit losses established on securities held-to-maturity during the three and six months ended June 30, 2026 and the three and six months ended June 30, 2025.

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At June 30, 2026 and December 31, 2025, there was one available-for-sale corporate bond that was rated below investment grade by one or more ratings agencies. The Company reviewed the financial strength of the corporate bond rated below investment grade at June 30, 2026 and has concluded that the amortized cost remains supported by the expected future cash flows of the securities.

The following tables summarize the gross unrealized losses and fair value of the Company’s securities portfolio, aggregated by investment category and length of time that individual securities have been in a continuous loss position at June 30, 2026 and December 31, 2025:

June 30, 2026
Less Than Twelve Months Over Twelve Months
Number of Securities Fair Value Gross Unrealized Loss Depreciation from Amortized Cost Basis (%) Number of Securities Fair Value Gross Unrealized Loss Depreciation from Amortized Cost Basis (%)
(Dollars in thousands)
Securities available-for-sale:
Government-sponsored mortgage-backed securities 4 $9,482 $84 0.9% 72 $92,634 $19,882 17.7%
U.S. government guaranteed mortgage-backed securities 1 2,824 140 4.7 9 4,395 1,095 19.9
Government-sponsored enterprise obligations — — — — 6 16,168 2,191 11.9
Corporate bonds 1 1,996 4 0.2 2 4,897 103 2.1
Total securities available-for-sale 6 14,302 228 89 118,094 23,271
Securities held-to-maturity:
U.S. Treasury securities — — — —% 1 4,945 55 1.1%
Government-sponsored mortgage-backed securities 1 1,059 6 0.6 36 134,535 30,625 18.5
Total securities held-to-maturity 1 1,059 6 37 139,480 30,680
Total securities 7 $15,361 $234 126 $257,574 $53,951
December 31, 2025
Less Than Twelve Months Over Twelve Months
Number of Securities Fair Value Gross Unrealized Loss Depreciation from Amortized Cost Basis (%) Number of Securities Fair Value Gross Unrealized Loss Depreciation from Amortized Cost Basis (%)
(Dollars in thousands)
Securities available-for-sale:
Government-sponsored mortgage-backed securities 1 $1,819 $7 0.4% 73 $100,750 $19,929 16.5%
U.S. government guaranteed mortgage-backed securities — — — — 9 4,658 1,109 19.2
Government-sponsored enterprise obligations 1 1,662 6 0.4 5 14,831 2,097 12.4
Corporate bonds — — — — 2 4,793 207 4.1
Total securities available-for-sale 2 3,481 13 89 125,032 23,342
Securities held-to-maturity:
U.S. Treasury securities — — — —% 1 4,898 103 2.1%
Government-sponsored mortgage-backed securities — — — — 36 141,556 30,414 17.7
Total securities held-to-maturity — — — 37 146,454 30,517
Total securities 2 $3,481 $13 126 $271,486 $53,859

12

The Company expects to recover its amortized cost basis on all securities in its available-for-sale and held-to-maturity portfolios. Furthermore, the Company does not intend to sell, nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of June 30, 2026, prior to this anticipated recovery. The decline in fair value on its available-for-sale and held-to-maturity portfolios is largely due to changes in interest rates and other market conditions and not due to credit quality issues. The issuers continue to make timely principal and interest payments on the securities and the fair value is expected to recover as the securities approach maturity. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s stable capital and liquidity positions as well as its historically low portfolio turnover. The following description provides the number of investment positions in an unrealized loss position:

At June 30, 2026, the Company reported gross unrealized losses on the securities available-for-sale portfolio of $23.5 million, or 12.1% of the amortized cost basis of the securities available-for-sale, compared to gross unrealized losses on the securities available-for-sale portfolio of $23.4 million, or 11.8% of the amortized cost basis of the securities available-for-sale at December 31, 2025. At June 30, 2026, there were 95 securities available-for-sale in which the fair value was less than the amortized cost, compared to 91 securities available-for-sale at December 31, 2025.

At June 30, 2026, the Company reported gross unrealized losses on the securities held-to-maturity portfolio of $30.7 million, or 16.9%, of the amortized cost basis of the securities held-to-maturity portfolio, compared to $30.5 million, or 16.2%, of the amortized cost basis of the securities held-to-maturity portfolio at December 31, 2025. At June 30, 2026, there were 38 securities held-to-maturity in which the fair value was less than the amortized cost, compared to 37 securities held-to-maturity at December 31, 2025.

5. LOANS AND ALLOWANCE FOR CREDIT LOSSES

The following table presents the summary of the loan portfolio by the major classification of the loan at the periods indicated:

June 30, December 31,
2026 2025
(Dollars in thousands)
Commercial real estate:
Non-owner occupied $882,978 $910,239
Owner occupied 182,372 188,824
Total commercial real estate 1,065,350 1,099,063
Residential real estate:
Residential one-to-four family 745,548 719,070
Home equity 143,069 137,801
Total residential real estate 888,617 856,871
Commercial and industrial 234,269 221,790
Consumer 2,338 2,929
Total loans 2,190,574 2,180,653
Plus: Unearned premiums and deferred loan fees and costs, net 3,258 2,939
Less: Allowance for credit losses (20,185) (20,297)
Net loans $2,173,647 $2,163,295

Lending activities primarily consist of commercial real estate loans, commercial and industrial loans, residential real estate loans, and to a lesser degree, consumer loans.

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Loans Pledged as Collateral.

At June 30, 2026 and December 31, 2025, the carrying value of eligible loans pledged as collateral to support borrowing capacity at the FHLB was $958.7 million and $932.3 million, respectively. The outstanding balance of FHLB advances was $38.5 million and $83.0 million at June 30, 2026 and at December 31, 2025, respectively.

At June 30, 2026 and December 31, 2025, the carrying value of eligible loans pledged as collateral to support borrowing capacity with the Federal Reserve Bank (“FRB”) was $375.6 million and $307.3 million, respectively, with no outstanding borrowings at June 30, 2026 and at December 31, 2025.

Loans Serviced for Others.

The Company has transferred a portion of its originated commercial loans to participating lenders. The amounts transferred have been accounted for as sales and are therefore not included in our accompanying consolidated balance sheets. We continue to service the loans on behalf of the participating lenders. We share with participating lenders, on a pro-rata basis, any gains or losses that may result from a borrower’s lack of compliance with contractual terms of the loan. At June 30, 2026 and December 31, 2025, the Company was servicing commercial loans participated out to various other institutions totaling $65.7 million and $66.9 million, respectively.

Residential real estate mortgages are originated by the Company both for its portfolio and for sale into the secondary market. The Company may sell its loans to institutional investors such as the FHLMC. Under loan sale and servicing agreements with the investor, the Company generally continues to service the residential real estate mortgages. The Company pays the investor an agreed upon rate on the loan, which is less than the interest rate received from the borrower. The Company retains the difference as a fee for servicing the residential real estate mortgages. The Company capitalizes mortgage servicing rights at their fair value upon sale of the related loans, amortizes the asset over the estimated life of the serviced loan, and periodically assesses the asset for impairment. The significant assumptions used by a third party to estimate the fair value of capitalized servicing rights at June 30, 2026, include weighted average prepayment speed for the portfolio using the Public Securities Association Standard Prepayment Model (145 PSA), average internal rate of return (9.01%), weighted average servicing fee (0.25%), and average cost to service loans ($83.42 per loan). The estimated fair value of capitalized servicing rights may vary significantly in subsequent periods primarily due to changing market interest rates, and their effect on prepayment speeds and discount rates.

At June 30, 2026 and December 31, 2025, the Company was servicing residential mortgage loans owned by investors totaling $73.7 million and $77.1 million, respectively. Servicing fee income of $93,000 and $103,000 was recorded for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively, and is included in service charges and fees on the consolidated statements of net income.

A summary of the activity in the balances of mortgage servicing rights follows:

Three Months Ended Six Months Ended
June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
(Dollars in thousands)
Balance at the beginning of period: $288 $407 $318 $436
Amortization (29) (30) (59) (59)
Balance at the end of period $259 $377 $259 $377
Fair value at the end of period $801 $744 $801 $744

Loans are recorded at the principal amount outstanding, adjusted for charge-offs, unearned premiums and deferred loan fees and costs. Interest on loans is calculated using the effective yield method on daily balances of the principal amount outstanding and is credited to income on the accrual basis to the extent it is deemed collectable. Our general policy is to discontinue the accrual of interest when principal or interest payments are delinquent 90 days or more based on the contractual terms of the loan, or earlier if there are concerns regarding the collectability of the loan. Any unpaid amounts previously accrued on these loans are reversed from income. Subsequent cash receipts are applied to the outstanding principal balance or to interest income if, in the judgment of management, collection of the principal balance is not in question. Loans are returned to accrual status when they become current as to both principal and interest and perform in accordance with contractual terms for a period of at least six months, reducing the concern as to the collectability of principal and interest. Loan fees and certain direct loan origination costs are deferred, and the net fee or cost is recognized as an adjustment to interest income over the estimated average lives of the related loans.

14

Allowance for Credit Losses (“ACL”).

The allowance for credit losses is an estimate of expected losses inherent within the Company’s existing loans held for investment portfolio. The allowance for credit losses for loans held for investment, as reported in our consolidated balance sheet, is adjusted by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries. Accrued interest receivable on loans held for investment was $7.8 million at June 30, 2026 and $7.6 million at December 31, 2025 and is excluded from the estimate of credit losses.

The loan loss estimation process involves procedures to appropriately consider the unique characteristics of loan portfolio segments, which consist of commercial real estate loans, residential real estate loans, commercial and industrial loans, and consumer loans. These segments are further disaggregated into loan classes, the level at which credit risk is monitored. For each of these pools, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default, and loss given default. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data. The quantitative component of the ACL on loans is model-based and utilizes a forward-looking macroeconomic forecast. For commercial real estate loans, residential real estate loans, and commercial and industrial loans, the Company uses a discounted cash flow method, incorporating probability of default and loss given default forecasted based on statistically derived economic variable loss drivers, to estimate expected credit losses. This process includes estimates which involve modeling loss projections attributable to existing loan balances, and considering historical experience, current conditions, and future expectations for pools of loans over a reasonable and supportable forecast period. The historical information either experienced by the Company or by a selection of peer banks, when appropriate, is derived from a combination of recessionary and non-recessionary performance periods for which data is available. The expected loss estimates for the consumer loan segment are based on historical loss rates using the weighted average remaining maturity (“WARM”) method.

Commercial real estate loans. Loans in this segment include owner occupied and non-owner occupied commercial real estate, multi-family dwellings, and income producing investment properties, as well as commercial construction loans for commercial development projects throughout New England. Typically, commercial real estate loans are secured by office buildings, apartment buildings, industrial properties, warehouses, retail facilities, hotels, assisted living facilities, self-storage facilities and educational facilities. Collateral values are established by independent third-party appraisals and evaluations. Primary repayment sources for commercial real estate loans include operating income and cash flow generated by the real estate, sale of the real estate and, funds from any liquidation of the collateral. Under its lending guidelines, the Company generally requires a corporate or personal guarantee from individuals that hold material ownership in the borrowing entity. The underlying cash flows generated by the properties or operations can be adversely impacted by a downturn in the economy due to increased vacancy rates or diminished cash flows, which in turn, would have an effect on the credit quality in this segment. The Company’s management obtains financial information annually and continually monitors the cash flows of these loans.

Residential real estate loans. This portfolio segment consists of first mortgages secured by one-to-four family residential properties and home equity loans and home equity lines of credit secured by first or second mortgage on one-to-four family owner occupied properties. First mortgages may be underwritten to a maximum loan-to-value of 97% for owner occupied homes, 90% for second homes and 85% for investment properties. Mortgages with loan-to-values greater than 80% require private mortgage insurance. We do not grant subprime loans. Home equity loans and lines of credit are underwritten to a maximum combined loan-to-value of 85% of the appraised value of the property. Underwriting approval is dependent on review of the borrower’s ability to repay principal and interest on a monthly basis, credit history, financial resources and the value of the collateral. Residential real estate loans are originated either for sale to investors or retained in the Company’s loan portfolio. Decisions about whether to sell or retain residential real estate loans are made based on the interest rate, pricing for loans in the secondary market, and the Company’s liquidity and capital needs. The overall health of the economy, including unemployment rates and housing pricing, will have an effect on the credit quality in this segment.

15

Commercial and industrial loans. The primary risk associated with commercial and industrial loans is the ability of borrowers to achieve business results and cash flows consistent with those projected at loan origination. Collateral frequently consists of a first lien position on business assets including, but not limited to, accounts receivable, inventory, and equipment. The primary repayment source is operating cash flow, followed by liquidation of assets. Under its lending guidelines, the Company generally requires a corporate or personal guarantee from individuals that hold material ownership in the borrowing entity. A weakened economy and resultant decreased consumer spending will have an effect on the credit quality in this segment.

Consumer loans. Loans in this segment are both secured and unsecured and repayment is dependent on the credit quality of the individual borrower.

Allowance for Credit Losses Methodology

In estimating the component of the allowance for credit losses for loans that share similar risk characteristics with other loans, such loans are segregated into loan classes. Loans are designated into loan classes based on loans pooled by product types and similar risk characteristics or areas of risk concentration. In determining the allowance for credit losses, we derive an estimated credit loss assumption from a model that categorizes loan pools based on loan type and purpose.

The discounted cash flow (“DCF”) model calculates an expected loss percentage for each loan class by considering the probability of default, using life-of-loan analysis periods for the commercial and industrial, commercial real estate, residential real estate loan segments, and the historical severity of loss, based on the aggregate net lifetime losses incurred per loan class. The expected loss estimates for the consumer loan segment are based on historical loss rates using the remaining life method. The default and severity factors used to calculate the allowance for credit losses for loans that share similar risk characteristics with other loans are adjusted for differences between the historical period used to calculate historical default and loss severity rates and expected conditions over the remaining lives of the loans in the portfolio related to: (1) lending policies and procedures; (2) international, national, regional and local economic business conditions and developments that affect the collectability of the portfolio; (3) the nature and volume of the loan portfolio including the terms of the loans; (4) the experience, ability, and depth of the lending management and other relevant staff; (5) the volume and severity of past due and adversely classified loans and the volume of nonaccrual loans; (6) the quality of our loan review system and (7) the value of underlying collateral for collateralized loans. Additional factors include the existence and effect of any concentrations of credit, and changes in the level of such concentrations and the effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio. Such factors are used to adjust the historical probabilities of default and severity of loss so that they reflect management expectation of future conditions based on a reasonable and supportable forecast. The Company uses regression analysis of historical internal and peer data to determine which variables are best suited to be economic variables utilized when modeling lifetime probability of default and loss given default. This analysis also determines how the expected probability of default and loss given default will react to forecasted levels of the economic variables.

For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over four quarters on a straight-line basis. Other internal and external indicators of economic forecasts are also considered by management when developing forecast metrics.

The Company uses a WARM method to estimate the ACL for the consumer loan segment. Under this method, the historical average annual charge-off rate is applied to the weighted average remaining maturity of the loan portfolio, currently calculated at 2.5 years. This calculation is adjusted based on additional factors that include (1) lending policies and procedures; (2) international, national, regional and local economic business conditions and developments that affect the collectability of the portfolio; (3) the nature and volume of the loan portfolio including the terms of the loans; (4) the experience, ability, and depth of the lending management and other relevant staff; (5) the volume and severity of past due and adversely classified loans and the volume of nonaccrual loans; (6) the quality of our loan review system and (7) the value of underlying collateral for collateralized loans.

16

Individually evaluated financial assets

For a loan that does not share risk characteristics with other loans, expected credit loss is measured based on net realizable value, that is, the difference between the discounted value of the expected future cash flows, based on the original effective interest rate, and the amortized cost basis of the loan. For these loans, we recognize expected credit loss equal to the amount by which the net realizable value of the loan is less than the amortized cost basis of the loan (which is net of previous charge-offs and deferred loan fees and costs), except when the loan is collateral dependent, that is, when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In these cases, expected credit loss is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral. The fair value of the collateral is adjusted for the estimated cost to sell if repayment or satisfaction of a loan is dependent on the sale (rather than only on the operation) of the collateral.

Allowance for credit losses on off-balance sheet credit exposures, including unfunded loan commitments

The Company maintains a separate allowance for credit losses from off-balance-sheet credit exposures, including unfunded loan commitments, which is included in other liabilities on the consolidated balance sheet. Management estimates the amount of expected losses by calculating a commitment usage factor over the contractual period for exposures that are not unconditionally cancellable by the Company and applying the loss factors used in the ACL methodology to the results of the usage calculation to estimate the liability for credit losses related to unfunded commitments for each loan type. No credit loss estimate is reported for outstanding off-balance-sheet credit exposures that are unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures is adjusted as credit loss expense. Categories of off-balance sheet credit exposures correspond to the loan portfolio segments described above. Management evaluates the need for a reserve on unfunded loan commitments in a manner consistent with loans held for investment.

An analysis of changes in the allowance for credit losses by segment for the three and six months ended June 30, 2026 and the three and six months ended June 30, 2025 is as follows:

Commercial Real Estate Residential Real Estate Commercial and Industrial Consumer Unallocated Total
(Dollars in thousands)
Allowance for credit losses for loans
Balance at March 31, 2026 $13,511 $4,265 $2,547 $128 $— $20,451
Provision for (reversal of) credit losses 1,305 227 (25) 16 — 1,523
Charge-offs (1,800) — — (59) — (1,859)
Recoveries — 28 8 34 — 70
Balance at June 30, 2026 $13,016 $4,520 $2,530 $119 $— $20,185
Balance at March 31, 2025 $13,725 $3,217 $2,533 $194 $— $19,669
Provision for (reversal of) credit losses (242) 172 (459) 8 — (521)
Charge-offs (4) (25) — (54) — (83)
Recoveries 25 6 609 28 — 668
Balance at June 30, 2025 $13,504 $3,370 $2,683 $176 $— $19,733
Allowance for credit losses for off-balance sheet exposures
Balance at March 31, 2026 $368 $259 $35 $— $— $662
Provision for (reversal of) credit losses (1) 31 4 — — 34
Balance at June 30, 2026 $367 $290 $39 $— $— $696
Balance at March 31, 2025 $413 $273 $44 $— $— $730
Provision for (reversal of) credit losses (93) 1 (2) — — (94)
Balance at June 30, 2025 $320 $274 $42 $— $— $636

17

Commercial Real Estate Residential Real Estate Commercial and Industrial Consumer Unallocated Total
(Dollars in thousands)
Allowance for credit losses for loans
Balance at December 31, 2025 $13,718 $4,186 $2,245 $148 $— $20,297
Provision for (reversal of) credit losses 1,098 336 273 25 — 1,732
Charge-offs (1,800) (34) (2) (117) — (1,953)
Recoveries — 32 14 63 — 109
Balance at June 30, 2026 $13,016 $4,520 $2,530 $119 $— $20,185
Balance at December 31, 2024 $13,677 $3,156 $2,477 $219 $— $19,529
Provision for (reversal of) credit losses (194) 227 (403) 18 — (352)
Charge-offs (4) (25) — (115) — (144)
Recoveries 25 12 609 54 — 700
Balance at June 30, 2025 $13,504 $3,370 $2,683 $176 $— $19,733
Commercial Real Estate Residential Real Estate Commercial and Industrial Consumer Unallocated Total
(Dollars in thousands)
Allowance for credit losses for off-balance sheet exposures
Balance at December 31, 2025 $461 $295 $40 $— $— $796
Provision for (reversal of) credit losses (94) (5) (1) — — (100)
Balance at June 30, 2026 $367 $290 $39 $— $— $696
Balance at December 31, 2024 $456 $256 $45 $— $— $757
Provision for (reversal of) credit losses (136) 18 (3) — — (121)
Balance at June 30, 2025 $320 $274 $42 $— $— $636

During the six months ended June 30, 2026, the Company recorded a provision for credit losses of $1.6 million, compared to a reversal of credit losses of $473,000 during the six months ended June 30, 2025. The increase in the provision for credit losses was primarily due to the partial charge-off of $1.8 million on a non-owner occupied commercial real estate participation (“participation loan”) relationship secured by an office building. The Company does not have any additional expected losses to the borrower or guarantor associated with the participation loan. In June 2026, the Company was notified by the lead bank that on June 4, 2026, the borrower filed for Chapter 11 Bankruptcy (“Bankruptcy Filing”). Immediately prior to notification of the Bankruptcy Filing, the Company’s 40% portion of the participation loan had a carrying value of $3.4 million and the borrower was then current with its scheduled payments.

18

During the three months ended June 30, 2026, due to the Bankruptcy Filing, the Company downgraded the participation loan to substandard, placed the loan on nonaccrual status and recognized a partial charge-off of $1.8 million. At June 30, 2026, the Company’s 40% portion of the remaining carrying value of the participation loan was $1.6 million. The Company currently expects full recovery of its portion of the remaining carrying value through the anticipated sale of the underlying collateral. The provision for credit losses was also determined by a number of factors: the continued overall credit performance of the Company’s diversified loan portfolio, changes in the loan portfolio mix and Management’s consideration of existing economic conditions and the economic outlook from the Federal Reserve’s actions to control inflation. Management continues to monitor macroeconomic variables related to increasing interest rates, tariffs, inflation and concerns of an economic downturn, and believes it is appropriately reserved for the current economic environment. Management believes that the allowance for credit losses are at adequate levels, however, future adjustments may be necessary if economic, real estate market values and other conditions differ substantially from the current operating environment.

The Company recorded net charge-offs of $1.8 million, or 0.17% of average loans, on an annualized basis, for the six months ended June 30, 2026, as compared to net recoveries of $556,000, or 0.05%, of average loans, on an annualized basis, for the six months ended June 30, 2025. During the six months ended June 30, 2026, the increase in net charge-offs was due to the $1.8 million charge-off of the participation loan discussed above. During the six months ended June 30, 2025, the Company recorded a recovery of $624,000 on a previously charged-off commercial relationship acquired on October 21, 2016 from Chicopee Bancorp, Inc.

Past Due Loans.

The following tables present an age analysis of past due loans as of the dates indicated:

30 – 59 Days Past Due 60 – 89 Days Past Due 90 Days or More Past Due Total Past Due Loans Total Current Loans Total Loans Nonaccrual Loans
(Dollars in thousands)
June 30, 2026
Commercial real estate:
Non-owner occupied $— $125 $— $125 $882,853 $882,978 $1,751
Owner occupied 33 — — 33 182,339 182,372 270
Total 33 125 — 158 1,065,192 1,065,350 2,021
Residential real estate:
Residential one-to-four family 1,910 1,138 823 3,871 741,677 745,548 4,309
Home equity 358 60 142 560 142,509 143,069 1,078
Total 2,268 1,198 965 4,431 884,186 888,617 5,387
Commercial and industrial — 48 — 48 234,221 234,269 351
Consumer 21 — — 21 2,317 2,338 —
Total loans $2,322 $1,371 $965 $4,658 $2,185,916 $2,190,574 $7,759

19

30 – 59 Days Past Due 60 – 89 Days Past Due 90 Days or More Past Due Total Past Due Loans Total Current Loans Total Loans Nonaccrual Loans
(Dollars in thousands)
December 31, 2025
Commercial real estate:
Non-owner occupied $— $— $— $— $910,239 $910,239 $135
Owner occupied 304 — — 304 188,520 188,824 289
Total 304 — — 304 1,098,759 1,099,063 424
Residential real estate:
Residential one-to-four family 1,127 503 546 2,176 716,894 719,070 3,779
Home equity 113 — 500 613 137,188 137,801 511
Total 1,240 503 1,046 2,789 854,082 856,871 4,290
Commercial and industrial 48 — 1 49 221,741 221,790 448
Consumer 3 — — 3 2,926 2,929 —
Total loans $1,595 $503 $1,047 $3,145 $2,177,508 $2,180,653 $5,162

At June 30, 2026 and December 31, 2025, total past due loans totaled $4.7 million, or 0.21% of total loans, and $3.1 million, or 0.14% of total loans, respectively. Of the $4.7 million in past due loans, 95.1% are residential real estate loans.

Nonaccrual Loans.

Accrual of interest on loans is generally discontinued when contractual payment of principal or interest becomes past due 90 days or, if in management’s judgment, reasonable doubt exists as to the full timely collection of interest. Exceptions may be made if the loan has matured and is in the process of renewal or is well-secured and in the process of collection. When a loan is placed on nonaccrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current interest income. Interest payments on nonaccrual loans are generally applied to principal. If collection of the principal is reasonably assured, interest payments are recognized as income on the cash basis. Loans are generally returned to accrual status when principal and interest payments are current, full collectability of principal and interest is reasonably assured and a consistent record of at least six consecutive months of performance has been achieved.

The following table is a summary of the Company’s nonaccrual loans by major categories at June 30, 2026 and December 31, 2025:

As of June 30, 2026 For the Three Months Ended June 30, 2026 For the Six Months Ended June 30, 2026
Nonaccrual Loans with Allowance for Credit Loss Nonaccrual Loans Without Allowance for Credit Loss Total Nonaccrual Loans Accrued Interest Receivable Reversed from Income
(Dollars in thousands)
Commercial real estate:
Non-owner occupied $— $1,751 $1,751 $2 $3
Owner occupied — 270 270 4 9
Total — 2,021 2,021 6 12
Residential real estate:
Residential one-to-four family — 4,309 4,309 61 106
Home equity 835 243 1,078 18 24
Total 835 4,552 5,387 79 130
Commercial and industrial — 351 351 11 23
Consumer — — — — —
Total loans $835 $6,924 $7,759 $96 $165

20

As of December 31, 2025 For the Three Months Ended June 30, 2025 For the Six Months Ended June 30, 2025
Nonaccrual Loans with Allowance for Credit Loss Nonaccrual Loans Without Allowance for Credit Loss Total Nonaccrual Loans Accrued Interest Receivable Reversed from Income
(Dollars in thousands)
Commercial real estate:
Non-owner occupied $— $135 $135 $2 $5
Owner occupied — 289 289 5 8
Total — 424 424 7 13
Residential real estate:
Residential one-to-four family — 3,779 3,779 136 109
Home equity — 511 511 22 21
Total 4,290 4,290 158 130
Commercial and industrial — 448 448 15 28
Consumer — — — — —
Total loans $— $5,162 $5,162 $180 $171

At June 30, 2026 and December 31, 2025, nonaccrual loans totaled $7.8 million, or 0.35% of total loans and $5.2 million, or 0.24% of total loans, respectively. At June 30, 2026, the increase in nonaccrual loans was primarily attributable to the participation loan discussed above, which was placed on nonaccrual status following the borrower’s Bankruptcy Filing. Total nonperforming assets, defined as nonaccrual loans and other real estate owned, totaled $7.8 million, or 0.28% of total assets, at June 30, 2026, compared to $5.2 million, or 0.19% of total assets, at December 31, 2025. At June 30, 2026, and December 31, 2025, there were no loans 90 or more days past-due and still accruing interest. The Company did not recognize any interest income on nonaccrual loans for the six months ended June 30, 2026 and the six months ended June 30, 2025. At June 30, 2026 and December 31, 2025, there were no commitments to lend additional funds to any borrower on nonaccrual status. At June 30, 2026, and December 31, 2025, the Company did not have any other real estate owned.

Individually Evaluated Collateral Dependent Loans.

Loans that do not share similar risk characteristics with loans that are pooled into portfolio segments are individually evaluated. A loan is considered collateral dependent when, based on current information and events, the borrower is experiencing financial difficulty and repayment, both principal and interest, is expected to be provided substantially through the operation or sale of the collateral. Loans that are rated Substandard, have a loan-to-value above 85% or have demonstrated a specific weakness (e.g., slow payment history, industry weakness, or other clear credit deterioration) may be considered for individual evaluation if they are determined not to share similar risk characteristics within the segment. Individually evaluated assets will be measured primarily using the collateral dependent financial asset practical expedient, although the discounted cash flow method may be used when management deems it more appropriate or collateral values cannot be supported. For individually evaluated assets, an ACL is determined separately for each financial asset. At June 30, 2026, the Company had $848,000 in individually evaluated commercial loans, collateralized by business assets, and $7.6 million in individually evaluated real estate loans, collateralized by real estate property.

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The following table summarizes the Company’s individually evaluated collateral dependent loans by class as of the dates indicated:

As of June 30, 2026
Recorded Investment Related Allowance
(Dollars in thousands)
With no related allowance recorded:
Commercial real estate:
Non-owner occupied $1,916 $—
Owner occupied 302 —
Total 2,218 —
Residential real estate:
Residential one-to-four family 4,309 —
Home equity 243 —
Total 4,552
Commercial and industrial 400 —
Consumer — —
Loans with no related allowance recorded $7,170 $—
With an allowance recorded:
Commercial real estate:
Non-owner occupied $— $—
Owner occupied — —
Total — —
Residential real estate:
Residential one-to-four family — —
Home equity 835 150
Total 835 150
Commercial and industrial 448 109
Consumer — —
Loans with an allowance recorded $1,283 $259
Total individually evaluated loans $8,453 $259
As of December 31, 2025
Recorded Investment Related Allowance
(Dollars in thousands)
With no related allowance recorded:
Commercial real estate:
Non-owner occupied $307 $—
Owner occupied 331 —
Total 638 —
Residential real estate:
Residential one-to-four family 3,778 —
Home equity 511 —
Total 4,289
Commercial and industrial 497 —
Consumer — —
Loans with no related allowance recorded $5,424 $—
With an allowance recorded:
Commercial real estate:
Non-owner occupied $— $—
Owner occupied — —
Total — —
Residential real estate:
Residential one-to-four family — —
Home equity — —
Total — —
Commercial and industrial 464 122
Consumer — —
Loans with an allowance recorded $464 $122
Total individually evaluated loans $5,888 $122

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Modified Loans to Borrowers Experiencing Financial Difficulty.

The Company will modify the contractual terms of loans to a borrower experiencing financial difficulties as a way to mitigate loss and comply with regulations regarding bankruptcy and discharge situations. Loans are designated as modified when, as part of an agreement to modify the original contractual terms of the loan as a result of financial difficulties of the borrower, the Company grants the borrower a concession on the terms that would not otherwise be considered. Typically, such concessions may consist of a reduction in interest rate to a below market rate, taking into account the credit quality of the note, extension of additional credit based on receipt of adequate collateral, or a deferment or reduction of payments (principal or interest) which materially alters the Company’s position or significantly extends the note’s maturity date, such that the present value of cash flows to be received is materially less than those contractually established at the loan’s origination.

During the six months ended June 30, 2026 and for the year ended December 31, 2025, there were no loan modifications granted based on borrower financial difficulty. During the six months ended June 30, 2026 and the six months ended June 30, 2025, no modified loans defaulted (defined as 30 days or more past due) within 12 months of restructuring. During the six months ended June 30, 2026 and the six months ended June 30, 2025, there were no charge-offs on modified loans.

Credit Quality Information.

The Company monitors the credit quality of its loan portfolio by using internal risk ratings that are based on regulatory guidance. The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company utilizes an eight-grade internal loan rating system for commercial real estate and commercial and industrial loans.

The grades assigned and definitions are as follows: loans graded excellent, above average, good are classified as “Pass” for grading purposes (risk ratings 1-4). All loans risk rated Special Mention (5), Substandard (6), Doubtful (7) and Loss (8) are listed on the Company’s criticized report and are reviewed not less than on a quarterly basis to assess the level of risk and to ensure that appropriate actions are being taken to minimize potential loss exposure. In addition, the Company closely monitors classified loans, defined as Substandard, Doubtful, and Loss for signs of deterioration to mitigate the growth in nonaccrual loans, including performing additional due diligence, updating valuations and requiring additional financial reporting from the borrower. Loans identified as containing a loss are partially charged-off or fully charged-off. Performing residential real estate, home equity and consumer loans are grouped with “Pass” rated loans. Nonaccrual residential real estate, home equity and consumer loans are risk rated as “Substandard” and individually evaluated.

Loans rated 1 – 4: Loans rated 1-4 are classified as “Pass” and have quality metrics to support that the loan will be repaid according to the terms established and are not subject to adverse criticism as defined in regulatory guidance. Pass loans exhibit characteristics that represent acceptable risk and are not considered problem loans.

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Loans rated 5: Loans rated 5 are classified as “Special Mention” and have potential weaknesses that deserve management’s close attention. Special mention loans are currently performing but with potential weaknesses including adverse trends in borrower’s operations, credit quality, financial strength, or possible collateral deficiency. Loans in this category are currently protected based on collateral and repayment capacity and do not constitute undesirable credit risk but have potential weakness that may result in deterioration of the repayment process at some future date. Special Mention loans do not sufficiently expose the Company to warrant adverse classification.

Loans rated 6: Loans rated 6 are classified as “Substandard” and have an identified definitive weakness which may make full collection of contractual cash flows questionable and/or jeopardize the liquidation of the debt.

Loans rated 7: Loans rated 7 are classified as “Doubtful” and have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses make collection or liquidation of the loan highly questionable and improbable. The possibility of some loss is extremely high, but because of specific pending factors that may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined.

Loans rated 8: Loans rated 8 are classified a “Loss” and are considered uncollectible and are charged to the allowance for credit losses. The loss classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the asset because recovery and collection time may be affected in the future.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate loans over $3 million and commercial and industrial loans over $1 million. On an ongoing basis, management utilizes delinquency reports, interim customer financials, the criticized loan report and other loan reports to monitor credit quality and adjust risk ratings accordingly. In addition, at least on an annual basis, the Company contracts with an independent third-party to review the internal credit ratings assigned to loans in the commercial loan portfolio on a pre-determined schedule, based on the type, size, rating, and overall risk of the loan. During the course of its review, the third party examines a sample of loans, including new loans, existing relationships over certain dollar amounts and classified assets.

The following tables summarize the amortized cost balances of the Company’s loan portfolios presented by credit quality and origination year as of June 30, 2026 and December 31, 2025. The tables also summarize gross charge-offs by year of origination for the six months ended June 30, 2026 and for the year ended December 31, 2025.

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As of June 30, 2026 and for the Six Months Ended June 30, 2026
Term Loan Origination by Year Revolving Loans
June 30, 2026 2025 2024 2023 2022 Prior Revolving Loans Revolving Loans Converted to Term Loans Total
(Dollars in thousands)
Commercial Real Estate:
Pass (Rated 1- 4) $20,385 $76,327 $54,205 $52,177 $183,551 $588,881 $55,222 $1,607 $1,032,355
Special Mention (Rated 5) — 11,597 — — — 10,866 — — 22,463
Substandard (Rated 6) — — — — 1,627 8,905 — — 10,532
Total commercial real estate loans $20,385 $87,924 $54,205 $52,177 $185,178 $608,652 $55,222 $1,607 $1,065,350
Current period gross charge-offs $— $— $— $— $1,800 $— $— $— $1,800
Payment Performance:
Performing $20,385 $87,924 $54,205 $52,177 $183,551 $608,258 $55,222 $1,607 $1,063,329
Nonaccrual — — — — 1,627 394 — — 2,021
Residential One-to-Four Family:
Pass $46,834 $104,279 $84,914 $54,264 $80,633 $358,209 $11,592 $— $740,725
Substandard — — 186 343 171 4,123 — — 4,823
Total residential one-to-four family $46,834 $104,279 $85,100 $54,607 $80,804 $362,332 $11,592 $— $745,548
Current period gross charge-offs $— $— $— $— $— $— $— $— $—
Payment Performance:
Performing $46,834 $104,279 $84,914 $54,264 $80,633 $358,723 $11,592 $— $741,239
Nonaccrual — — 186 343 171 3,609 — — 4,309
Home Equity:
Pass $2,936 $7,288 $6,705 $5,590 $6,327 $16,407 $93,825 $2,913 $141,991
Substandard — — 35 71 1 — 48 923 1,078
Total home equity loans $2,936 $7,288 $6,740 $5,661 $6,328 $16,407 $93,873 $3,836 $143,069
Current period gross charge-offs $— $— $— $— $— $— $— $34 $34
Payment Performance:
Performing $2,936 $7,288 $6,705 $5,590 $6,327 $16,407 $93,825 $2,913 $141,991
Nonaccrual — — 35 71 1 — 48 923 1,078

25

As of June 30, 2026 and for the Six Months Ended June 30, 2026
Term Loan Origination by Year Revolving Loans
June 30, 2026 2025 2024 2023 2022 Prior Revolving Loans Revolving Loans Converted to Term Loans Total
(Dollars in thousands)
Commercial and Industrial:
Pass (Rated 1- 4) $9,226 $19,367 $21,874 $8,473 $21,297 $42,348 $86,648 $55 $209,288
Special Mention (Rated 5) — — 7,778 2,000 — 34 8,000 — 17,812
Substandard (Rated 6) — — — 4,937 492 274 1,466 — 7,169
Total commercial and industrial loans $9,226 $19,367 $29,652 $15,410 $21,789 $42,656 $96,114 $55 $234,269
Current period gross charge-offs $— $— $— $— $— $— $— $2 $2
Payment Performance:
Performing $9,226 $19,367 $29,652 $15,410 $21,789 $42,382 $96,037 $55 $239,918
Nonaccrual — — — — — 274 77 — 351
Consumer:
Pass $246 $188 $419 $448 $190 $74 $773 $— $2,338
Substandard — — — — — — — — —
Total consumer loans $246 $188 $419 $448 $190 $74 $773 $— $2,338
Current period gross charge-offs $68 $— $— $— $— $— $— $49 $117
Payment Performance:
Performing $246 $188 $419 $448 $190 $74 $773 $— $2,338
Nonaccrual — — — — — — — — —

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As of December 31, 2025 and for the Year Ended December 31, 2025
Term Loan Origination by Year Revolving Loans
2025 2024 2023 2022 2021 Prior Revolving Loans Revolving Loans Converted to Term Loans Total
(Dollars in thousands)
Commercial Real Estate:
Pass (Rated 1- 4) $83,434 $48,533 $50,248 $190,369 $224,149 $404,143 $75,646 $1,620 $1,078,142
Special Mention (Rated 5) — — — — — 11,397 — — 11,397
Substandard (Rated 6) — — — — — 9,524 — — 9,524
Total commercial real estate loans $83,434 $48,533 $50,248 $190,369 $224,149 $425,064 $75,646 $1,620 $1,099,063
Current period gross charge-offs $— $— $— $— $— $4 $— $— $4
Payment Performance:
Performing $83,434 $48,533 $50,248 $190,369 $224,149 $424,640 $75,646 $1,620 $1,098,639
Nonaccrual — — — — — 424 — — 424
Residential One-to-Four Family:
Pass $103,977 $87,661 $55,385 $83,428 $81,480 $294,238 $8,608 $— $714,777
Substandard — — 348 — 660 3,285 — — 4,293
Total residential one-to-four family $103,977 $87,661 $55,733 $83,428 $82,140 $297,523 $8,608 $— $719,070
Current period gross charge-offs $— $— $— $— $— $20 $— $— $20
Payment Performance:
Performing $103,977 $87,661 $55,385 $83,428 $81,480 $294,752 $8,608 $— $715,291
Nonaccrual — — 348 — 660 2,771 — — 3,779
Home Equity:
Pass $7,816 $7,316 $6,491 $6,910 $4,571 $13,210 $87,770 $3,206 $137,290
Substandard — 11 79 — — — 333 88 511
Total home equity loans $7,816 $7,327 $6,570 $6,910 $4,571 $13,210 $88,103 $3,294 $137,801
Current period gross charge-offs $— $— $— $— $— $— $24 $11 $35
Payment Performance:
Performing $7,816 $7,316 $6,491 $6,910 $4,571 $13,210 $87,770 $3,206 $137,290
Nonaccrual — 11 79 — — — 333 88 511

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As of December 31, 2025 and for the Year Ended December 31, 2025
Term Loans Originated by Year Revolving Loans
2025 2024 2023 2022 2021 Prior Revolving Loans Revolving Loans Converted to Term Loans Total
(Dollars in thousands)
Commercial and Industrial:
Pass (Rated 1- 4) $17,603 $33,394 $11,776 $23,117 $22,220 $25,673 $74,015 $58 $207,856
Special Mention (Rated 5) — — 19 — 72 — 5,648 — 5,739
Substandard (Rated 6) — — 5,259 526 — 975 1,435 — 8,195
Total commercial and industrial loans $17,603 $33,394 $17,054 $23,643 $22,292 $26,648 $81,098 $58 $221,790
Current period gross charge-offs $— $— $— $— $— $— $— $9 $9
Payment Performance:
Performing $17,603 $33,394 $17,054 $23,643 $22,292 $26,299 $80,999 $58 $221,342
Nonaccrual — — — — — 349 99 — 448
Consumer:
Pass $405 $514 $698 $313 $63 $85 $851 $— $2,929
Substandard — — — — — — — — —
Total consumer loans $405 $514 $698 $313 $63 $85 $851 $— $2,929
Current period gross charge-offs $152 $— $— $— $— $6 $— $70 $228
Payment Performance:
Performing $405 $514 $698 $313 $63 $85 $851 $— $2,929
Nonaccrual — — — — — — — — —

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The following table summarizes information about total loans rated Special Mention, Substandard, Doubtful or Loss for the periods noted.

June 30, 2026 December 31, 2025
(Dollars in thousands)
Criticized loans:
Special Mention:
Commercial real estate loans $22,463 $11,397
Commercial and industrial loans 17,812 5,739
Total 40,275 17,136
Substandard:
Commercial real estate loans 10,532 9,524
Commercial and industrial loans 7,169 8,195
Residential real estate loans 5,901 4,804
Total 23,602 22,523
Total criticized loans $63,877 $39,659
Total criticized loans as a percentage of total loans 2.9% 1.8%
Total criticized loans as a percentage of Risk-Based Capital 23.0% 14.3%

At June 30, 2026 and December 31, 2025, the Company did not have any loans rated Doubtful or Loss.

At June 30, 2026, total criticized loans, defined as special mention and substandard loans, totaled $63.9 million, or 2.9% of total loans, compared to $39.7 million, or 1.8% of total loans, at December 31, 2025. Loans designated special mention, which are not considered classified, increased $23.1 million, from $17.2 million, or 0.8% of total loans, at December 31, 2025, to $40.3 million, or 1.8% of total loans, at June 30, 2026. During the same period, substandard loans increased $1.1 million, or 4.9%, to $23.6 million, or 1.1% of total loans.

Of the $40.3 million in loans designated special mention at June 30, 2026, $17.8 million, or 44.2%, are commercial and industrial loans, and $22.5 million, or 55.8%, are commercial real estate loans. Of the $23.6 million in loans categorized substandard at June 30, 2026, $7.2 million, or 30.5%, are commercial and industrial loans, $10.5 million, or 44.5%, are commercial real estate loans, and $5.9 million, or 25.0%, are residential real estate loans. Of the total $63.9 million in criticized loans at June 30, 2026, 95.6% are current and paying as agreed.

The increase in special mention loans from December 31, 2025, to June 30, 2026, was primarily due to the downgrade of two commercial relationships totaling $21.5 million, from pass risk ratings to special mention. The increase in substandard loans from December 31, 2025, to June 30, 2026, resulted from the downgrade of the participation loan discussed above. During the three months ended June 30, 2026, the Company recognized a charge-off of $1.8 million on the participation loan, and at June 30, 2026, the remaining carrying value of the participation loan was $1.6 million.

Our commercial real estate portfolio is comprised of diversified property types and primarily within our geographic footprint. At June 30, 2026, the commercial real estate portfolio totaled $1.1 billion and represented 48.6% of total loans. Of the $1.1 billion, $883.0 million, or 82.9% of the commercial real estate portfolio, was categorized as non-owner occupied commercial real estate and represented 317.6% of the Bank’s total risk-based capital.

6. GOODWILL AND OTHER INTANGIBLES

Goodwill

At June 30, 2026 and December 31, 2025, the carrying value of the Company’s goodwill was $12.5 million. Goodwill is measured as the excess of the cost of a business combination over the sum of the amounts assigned to identifiable assets acquired less liabilities assumed. Goodwill is not amortized but rather assessed for impairment annually or more frequently if circumstances warrant. Management has the option of first assessing qualitative factors, such as events and circumstances, to determine whether it is more likely than not, meaning a likelihood of more than 50%, the value of a reporting unit is less than its carrying amount. If, after considering all relevant events and circumstances, management determines it is not more likely than not the fair value of a reporting unit is less than its carrying amount, then performing an impairment test is unnecessary. At June 30, 2026 and December 31, 2025, the Company’s goodwill was related to the acquisition of Chicopee Bancorp, Inc. in October 2016. For the six months ended June 30, 2026, management determined that it was not more likely than not the fair value of the reporting unit was less than its carrying amount. If management had determined otherwise, a fair value analysis would have been completed to determine the impairment and necessary write-down of goodwill.

29

Core Deposit Intangibles

In connection with the acquisition of Chicopee Bancorp, Inc., the Company recorded a core deposit intangible of $4.5 million, which is being amortized over twelve years using the straight-line method. Amortization expense was $188,000 for the six months ended June 30, 2026 and the six months ended June 30, 2025. At June 30, 2026, future amortization of the core deposit intangible totaled $375,000 for each of the next two years and $125,000 thereafter.

7. SHARE-BASED COMPENSATION

Restricted Stock Awards.

On January 28, 2025, the Company’s Board of Directors approved the Amended and Restated 2021 Omnibus Incentive Plan (the “Amended and Restated Plan”) to increase the total number of shares of common stock available for issuance by 1,000,000 shares, subject to shareholder approval. On May 14, 2025, the Company held its Annual Meeting of Shareholders at which time the Company’s shareholders approved the Amended and Restated Plan, as presented, to increase the total number of shares of common stock available for issuance by 1,000,000 shares. The Amended and Restated Plan became effective with such shareholder approval on May 14, 2025. Any shares that are not issued because vesting requirements are not met will be available for future issuance under the Amended and Restated Plan.

On an annual basis, the Compensation Committee (the “Committee”) approves long-term incentive awards out of the Amended and Restated Plan, whereby shares are granted to eligible participants of the Company that are nominated by the Chief Executive Officer and approved by the Committee, with vesting over a three-year term for employees and a one-year term for directors. Annual employee grants provide for a periodic award that is both performance and time-based and is designed to recognize the employee’s responsibilities, reward performance and leadership and as a retention tool. The objective of the award is to align compensation for the eligible participants of the Company and directors over a multi-year period directly with the interests of the Company’s shareholders by motivating and rewarding creation and preservation of long-term financial strength, shareholder value, and relative shareholder return.

2023 Long-Term Incentive Plan.

In March 2023, the Committee granted 120,998 shares under the 2023 Long-Term Incentive Plan (the “2023 LTI Plan”). Of the 120,998 shares granted, 60,499 shares, or 50% of the shares granted, were time-based restricted shares and vested ratably over a three-year period. The remaining 60,499 shares, or 50% of the shares granted, were performance-based restricted shares that were subject to the achievement of the 2023 LTI Plan performance metrics.

The Committee selected Return on Average Equity (“ROAE”) and Three-Year Cumulative Diluted Earnings Per Share (“EPS”) as the long-term performance goal. Each of these two measures were independently assigned a 50% weight for determining future performance against goals. The actual number of performance shares that vest will be determined at the end of the three-year period, depending upon the Company’s performance against the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based shares and 50% time-based shares.

For each performance-based goal, achieving threshold performance pays at 50% of target value, and achieving stretch performance pays at 150% of target value. The 2023 LTI Plan included a “catch-up” provision which allowed unearned performance-based restricted shares from the first and second performance periods to be earned at the end of the three-year period based on final year performance. To the extent earned at the end of the performance period, performance shares would be paid in the form of vested shares of common stock at a date determined by the Committee within seventy-five (75) days following the end of the performance period.

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The Threshold, Target and Stretch metrics under the 2023 LTI Plan are as follows:

ROAE Metrics – 50% Weighted
Performance Period Ending Threshold Target Stretch Actual
December 31, 2023 8.00% 8.45% 8.85% 6.47%
December 31, 2024 8.75% 9.25% 9.75% 4.93%
December 31, 2025 9.00% 9.50% 10.00% 6.35%
EPS Metrics – 50% Weighted
Performance Period Ending Threshold Target Stretch Actual
Three-Year Cumulative Diluted EPS $2.39 $2.65 $2.89 $2.01

As of December 31, 2025, the three-year performance period for the 2023 LTI Plan ended and 54,754 performance-based shares were forfeited by the Committee on January 21, 2026.

2023 Annual Equity Retainer.

In March 2023, under the Company’s 2021 Omnibus Plan, each non-employee director received an annual equity retainer of 2,022 time-based restricted shares of WNEB common stock. In total, 18,198 shares were granted and fully vested on December 31, 2023.

2024 Long-Term Incentive Plan.

In March 2024, the Committee granted 146,422 shares under the 2024 Long-Term Incentive Plan (the “2024 LTI Plan”). Of the 146,422 shares granted, 73,211 shares, or 50% of the shares granted, were time-based restricted shares that are scheduled to vest ratably over a three-year period. The remaining 73,211 shares, or 50% of the share granted, were performance-based restricted shares that are subject to the achievement of the 2024 LTI Plan performance metrics.

The Committee selected ROAE and EPS as the long-term performance goals. Each of these two measures were independently assigned a 50% weight for determining future performance against goals. The actual number of performance shares that vest will be determined at the end of the three-year period, depending upon the Company’s performance against the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based shares and 50% time-based shares.

For each performance-based goal, achieving threshold performance pays at 50% of target value, and achieving stretch performance pays at 150% of target value. The 2024 LTI Plan includes a “catch-up” provision which allows unearned performance-based restricted shares from the first and second performance periods to be earned at the end of the three-year period based on final year performance. To the extent earned at the end of the performance period, performance shares will be paid in the form of vested shares of common stock at a date determined by the Committee within seventy-five (75) days following the end of the performance period.

The Threshold, Target and Stretch metrics under the 2024 LTI Plan are as follows:

ROAE Metrics – 50% Weight
Performance Period Ending Threshold Target Stretch
December 31, 2024 5.05% 5.61% 6.17%
December 31, 2025 6.18% 6.86% 7.55%
December 31, 2026 7.30% 8.11% 8.92%

EPS Metrics – 50% Weight
Performance Period Ending Threshold Target Stretch
Three-Year Cumulative Diluted EPS $2.25 $2.50 $2.75

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2024 Annual Equity Retainer.

In March 2024, under the Company’s 2021 Omnibus Plan, each non-employee director received an annual equity retainer of 2,384 time-based restricted shares of WNEB common stock. In total, 21,456 shares were granted and there were 19,072 shares that fully vested on December 31, 2024.

2025 Long-Term Incentive Plan.

In March 2025, the Committee granted 140,384 shares under the 2025 Long-Term Incentive Plan (the “2025 LTI Plan”). Of the 140,384 shares granted, 70,192 shares, or 50% of the shares granted, were time-based restricted shares that are scheduled to vest ratably over a three-year period. The remaining 70,192 shares, or 50% of the shares granted, were performance-based restricted shares that are subject to the achievement of the 2025 LTI Plan performance metrics.

The Committee selected ROAE and EPS as the long-term performance goals. Each of these two measures were independently assigned a 50% weight for determining future performance against goals. The actual number of performance shares that vest will be determined at the end of the three-year period, depending upon the Company’s performance against the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based shares and 50% time-based shares.

For each performance-based goal, achieving threshold performance pays at 50% of target value, and achieving stretch performance pays at 150% of target value. The 2025 LTI Plan includes a “catch-up” provision which allows unearned performance-based restricted shares from the first and second performance periods to be earned at the end of the three-year period based on final year performance. To the extent earned at the end of the performance period, performance shares will be paid in the form of vested shares of common stock at a date determined by the Committee within seventy-five (75) days following the end of the performance period.

The Threshold, Target and Stretch metrics under the 2025 LTI Plan are as follows:

ROAE Metrics – 50% Weight
Performance Period Ending Threshold Target Stretch
December 31, 2025 5.12% 6.10% 7.32%
December 31, 2026 6.10% 7.24% 8.69%
December 31, 2027 6.52% 7.76% 9.31%

EPS Metrics – 50% Weight
Performance Period Ending Threshold Target Stretch
Three-Year Cumulative Diluted EPS $2.10 $2.50 $3.00

2025 Annual Equity Retainer.

In May 2025, under the Company’s Amended and Restated Plan, each non-employee director received an annual equity retainer of 2,116 time-based restricted shares of WNEB common stock. In total, 16,928 shares were granted and became fully vested on December 31, 2025.

2026 Long-Term Incentive Plan.

In March 2026, the Committee granted 105,972 shares under the 2026 Long-Term Incentive Plan (the “2026 LTI Plan”). Of the 105,972 shares granted, 52,986 shares, or 50% of the shares granted, were time-based restricted shares that are scheduled to vest ratably over a three-year period. The remaining 52,986 shares, or 50% of the shares granted, were performance-based restricted shares that are subject to the achievement of the 2026 LTI Plan performance metrics.

The Committee selected ROAE and EPS as the long-term performance goals. Each of these two measures were independently assigned a 50% weight for determining future performance against goals. The actual number of performance shares that vest will be determined at the end of the three-year period, depending upon the Company’s performance against the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based shares and 50% time-based shares.

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For each performance-based goal, achieving threshold performance pays at 50% of target value, and achieving stretch performance pays at 150% of target value. The 2026 LTI Plan includes a “catch-up” provision which allows unearned performance-based restricted shares from the first and second performance periods to be earned at the end of the three-year period based on final year performance. To the extent earned at the end of the performance period, performance shares will be paid in the form of vested shares of common stock at a date determined by the Committee within seventy-five (75) days following the end of the performance period.

The Threshold, Target and Stretch metrics under the 2026 LTI Plan are as follows:

ROAE Metrics – 50% Weight
Performance Period Ending Threshold Target Stretch
December 31, 2026 6.21% 7.31% 8.77%
December 31, 2027 7.01% 8.25% 9.90%
December 31, 2028 7.65% 9.00% 10.80%

EPS Metrics – 50% Weight
Performance Period Ending Threshold Target Stretch
Three-Year Cumulative Diluted EPS $2.82 $3.32 $3.98

2026 Annual Equity Retainer.

In March 2026, under the Company’s Amended and Restated Plan, each non-employee director received an annual equity retainer of 1,603 time-based restricted shares of WNEB common stock. In total, 12,824 shares were granted and there were 11,221 shares eligible to become fully vested on December 31, 2026.

At June 30, 2026, there were 942,105 remaining shares available to grant under the Amended and Restated Plan.

A summary of the status of unvested restricted stock awards at June 30, 2026 and June 30, 2025 is presented below:

Shares

Weighted Average Grant Date Fair Value Per Share

($)
Balance at December 31, 2025 261,000 9.11
Shares granted 54,086 12.48
Shares reissued 64,710 12.48
Shares forfeited (56,357) 9.96
Balance at June 30, 2026 323,439 10.20
Shares

Weighted Average Grant Date Fair Value Per Share

($)
Balance at December 31, 2024 254,732 9.01
Shares granted 126,615 9.31
Forfeited shares reissued 30,697 9.33
Shares forfeited (28,313) 9.09
Shares vested (31,460) 9.12
Balance at June 30, 2025 352,271 9.13

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The Company recorded a total expense for restricted stock awards of $156,000 and $463,000 for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively.

8. SHORT-TERM BORROWINGS AND LONG-TERM DEBT

On a long-term basis, the Company intends to continue to increase its core deposits to fund loan growth. The Company utilizes FHLB borrowings as part of the Company's overall strategy to manage interest rate risk and liquidity risk. FHLB advances are secured by a blanket security agreement which requires the Company to maintain certain qualifying assets as collateral, principally certain residential real estate loans, commercial real estate loans, and securities, not otherwise pledged. The maximum amount that the FHLB will advance to member institutions, including the Company, fluctuates from time to time in accordance with the policies of the FHLB. As an FHLB member, the Company is required to own capital stock of the FHLB, calculated periodically based primarily on its level of borrowings from the FHLB. Advances are made under several different credit programs with different lending standards, interest rates, and range of maturities. The Company’s relationship with the FHLB is an integral component of the Company’s asset-liability management program. At June 30, 2026, the Company pledged $958.7 million of eligible collateral to support its borrowing capacity at the FHLB.

Short-term FHLB advances totaled $13.5 million at June 30, 2026, with a weighted average rate of 3.82%, and $10.0 million at December 31, 2025, with a weighted average rate of 3.99%.

The Company also has a standing available Overnight Ideal Way Line of Credit (“Ideal Way Line of Credit”) with the FHLB of $9.5 million. Interest on the Ideal Way Line of Credit is payable at a rate determined and reset by the FHLB on a daily basis. The outstanding principal is due daily but the portion not repaid will be automatically renewed. At June 30, 2026, the Company had an immediate availability to borrow an additional $547.5 million from the FHLB, including the Ideal Way Line of Credit, based on qualified collateral pledged. At June 30, 2026 and December 31, 2025, the Company did not have an outstanding balance under the Ideal Way Line of Credit.

Other borrowings, held as collateral for customer swap arrangements, totaled $4.2 million at June 30, 2026, with a weighted average rate of 3.63%, and $3.3 million at December 31, 2025, with a weighted average rate of 3.64%.

As a member of the FRB, the Company may also borrow from the Federal Reserve Bank Discount Window (the “FRB Discount Window”). At June 30, 2026 and December 31, 2025, the Company had an available line of credit of $392.7 million and $349.0 million, respectively, with the FRB Discount Window at an interest rate determined and reset on a daily basis. Borrowings from the FRB Discount Window are secured by eligible loan collateral and certain securities from the Company’s investment portfolio, not otherwise pledged. At June 30, 2026 and December 31, 2025, the Company did not have an outstanding balance under the FRB Discount Window.

The Company also has pre-established, non-collateralized overnight borrowing arrangements with large national and regional correspondent banks to provide additional overnight and short-term borrowing capacity for the Company. The Company has a $15.0 million line of credit with a correspondent bank and a $10.0 million line of credit with another correspondent bank, both at an interest rate determined and reset on a daily basis. As of June 30, 2026 and December 31, 2025, there were no advances outstanding under these lines.

Long-term debt consists of FHLB and FRB advances with an original maturity of one year or more. Long-term FHLB advances totaled $25.0 million at June 30, 2026, with a weighted average fixed rate of 4.83%, and $73.0 million at December 31, 2025, with a weighted average fixed rate of 4.94%. There were no long-term FRB advances outstanding at June 30, 2026 or December 31, 2025.

9. SUBORDINATED DEBT

On April 20, 2021, the Company issued and sold $20.0 million in aggregate principal amount of its 4.875% Fixed-to-Floating Rate Subordinated Notes (the “Notes”) to certain qualified institutional buyers in a private placement transaction. The Notes mature on May 1, 2031 (“Maturity Date”) and were designed to qualify as Tier 2 capital under the Federal Reserve’s capital adequacy regulations. During the last five years of the Notes, the amount eligible for Tier 2 capital must be reduced by 20% of the original amount annually (net of redemptions), and no amount of the Notes is eligible for inclusion in Tier 2 capital when the remaining maturity of the Notes is less than one year. At June 30, 2026, $19.8 million aggregate principal amount of the Notes was outstanding.

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From the issuance date through April 30, 2026, the Notes bore interest at a fixed interest rate of 4.875% per annum. Beginning on May 1, 2026, the Notes bear interest at a floating rate equal to the 90-day average Secured Overnight Financing Rate (“SOFR”), plus 412 basis points, payable quarterly in arrears.

These Notes are presented in the consolidated balance sheets under the caption ‘‘Subordinated debt’’ and the balance of $19.8 million at both June 30, 2026 and December 31, 2025, respectively, are net of remaining unamortized deferred issuance costs of approximately $190,000 and $210,000, respectively that are being amortized through the Maturity Date into interest expense on subordinated debt in the Company’s consolidated statements of net income. Amortization of issuance costs into interest expense was $20,000 for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively.

The Company has the ability to call the Notes, in whole, or in part, at a redemption price equal to 100% of the principal amount at certain times on or after May 1, 2026, and at any time upon the occurrence of certain events, subject in each case to the approval of the Board of Governors of the Federal Reserve System (the “Federal Reserve”). As of June 30, 2026, the Company has not redeemed any portion of the Notes.

10. DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives.

The Company is exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of our assets and liabilities and the use of derivative financial instruments. Specifically, we entered into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally related to certain variable rate loan assets and variable rate borrowings.

Fair Value Hedges of Interest Rate Risk.

The Company is exposed to changes in the fair value of certain pools of fixed-rate assets due to changes in benchmark interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. The Company's interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.

At June 30, 2026 and December 31, 2025, there were no outstanding fair value hedges on the consolidated balance sheet.

Non-Hedging Derivatives.

Derivatives not designated as hedges are not speculative but rather result from a service the Company provides to certain customers. The Company executes loan-level derivative products such as interest-rate swap agreements with commercial banking customers to aid them in managing their interest-rate risk by converting floating-rate loan payments to fixed-rate loan payments. The Company concurrently enters into offsetting swaps with a third-party financial institution, effectively minimizing the Company’s net risk exposure resulting from such transactions. The third-party financial institution exchanges the customer's fixed-rate loan payments for floating-rate loan payments. As the interest-rate swap agreements associated with this program do not meet hedge accounting requirements, changes in the fair value are recognized directly in earnings.

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Fair Values of Derivative Instruments on the Consolidated Balance Sheets.

The tables below present the fair value of our derivative financial instruments designated as hedging and non-hedging instruments as well as our classification on the consolidated balance sheet as of June 30, 2026 and December 31, 2025.

June 30, 2026 Asset Derivatives Liability Derivatives
Balance Sheet Location Fair Value Balance Sheet Location Fair Value
(Dollars in thousands)
Derivatives not designated as hedging instruments:
Interest rate swap – with customer counterparties $241 $4,508
Interest rate swap – with dealer counterparties 4,508 241
Total derivatives Other Assets $4,749 Other Liabilities $4,749
December 31, 2025 Asset Derivatives Liability Derivatives
Balance Sheet Location Fair Value Balance Sheet Location Fair Value
(Dollars in thousands)
Derivatives not designated as hedging instruments:
Interest rate swap – with customer counterparties $821 $4,142
Interest rate swap – with dealer counterparties 4,142 821
Total derivatives Other Assets $4,963 Other Liabilities $4,963

Effect of Derivative Instruments in the Consolidated Statements of Net Income.

There were no gains or losses on fair value hedging relationships recorded through interest income for the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively.

There were no gains or losses recognized in accumulated other comprehensive income related to derivative financial instruments during the six months ended June 30, 2026 and the six months ended June 30, 2025, respectively.

Credit-risk-related Contingent Features

By using derivative financial instruments, we expose ourselves to credit risk. Credit risk is the risk of failure by the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative is negative, we owe the counterparty and, therefore, it does not possess credit risk. The credit risk in derivative instruments is mitigated by entering into transactions with highly-rated counterparties that we believe to be creditworthy and by limiting the amount of exposure to each counterparty.

We have agreements with our derivative counterparties that contain a provision where if we default on any of our indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations. We also have agreements with certain of our derivative counterparties that contain a provision where if we fail to maintain our status as well capitalized, then the counterparty could terminate the derivative positions and we would be required to settle our obligations under the agreements. Certain of our agreements with our derivative counterparties contain provisions where if a formal administrative action by a federal or state regulatory agency occurs that materially changes our creditworthiness in an adverse manner, we may be required to fully collateralize our obligations under the derivative instrument.

At June 30, 2026, the Company had minimum collateral posting thresholds with certain derivative counterparties. At June 30, 2026, the Company did not have any derivatives in a net liability position with its counterparties and was not required to post collateral under these agreements.

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11. FAIR VALUE OF ASSETS AND LIABILITIES

Determination of Fair Value.

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for our various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

Methods and assumptions for valuing our financial instruments are set forth below. Estimated fair values are calculated based on the value without regard to any premium or discount that may result from concentrations of ownership of a financial instrument, possible tax ramifications or estimated transaction cost.

Securities. The securities measured at fair value in Level 1 are based on quoted market prices in an active exchange market. All other securities are measured at fair value in Level 2 and are based on pricing models that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data. These securities include government-sponsored enterprise obligations, state and municipal obligations, corporate bonds, residential mortgage-backed securities guaranteed and sponsored by the U.S. government or an agency thereof. Fair value measurements are obtained from a third-party pricing service and are not adjusted by management.

Interest rate swaps. The valuation of our interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. We have determined that the majority of the inputs used to value our interest rate derivatives fall within Level 2 of the fair value hierarchy.

Assets and Liabilities Measured at Fair Value on a Recurring Basis.

Assets and liabilities measured at fair value on a recurring basis are summarized below:

June 30, 2026
Level 1 Level 2 Level 3 Total
(Dollars in thousands)
Assets:
Securities available-for-sale $— $170,598 $— $170,598
Marketable equity securities 662 — — 662
Interest rate swaps — 4,749 — 4,749
Total assets $662 $175,347 $— $176,009
Liabilities:
Interest rate swaps $— $4,749 $— $4,749
December 31, 2025
Level 1 Level 2 Level 3 Total
(Dollars in thousands)
Assets:
Securities available-for-sale $— $175,800 $— $175,800
Marketable equity securities 632 — — 632
Interest rate swaps — 4,963 — 4,963
Total assets $632 $180,763 $— $181,395
Liabilities:
Interest rate swaps $— $4,963 $— $4,963

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There were no transfers to or from Level 3 for assets measured at fair value on a recurring basis during the six months ended June 30, 2026 or for the year ended December 31, 2025.

Assets Measured at Fair Value on a Non-recurring Basis.

The Company may also be required, from time to time, to measure certain other financial assets at fair value on a nonrecurring basis in accordance with generally accepted accounting principles. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. The following tables summarize the fair value hierarchy used to determine the carrying values of the related assets as of June 30, 2026 and December 31, 2025.

Six Months Ended
At June 30, 2026 June 30, 2026
Total
Level 1 Level 2 Level 3 Losses
(Dollars in thousands) (Dollars in thousands)
Collateral dependent loans $— $— $1,627 $1,800
Six Months Ended
At December 31, 2025 June 30, 2025
Total
Level 1 Level 2 Level 3 Losses
(Dollars in thousands) (Dollars in thousands)
Collateral dependent loans $— $— $1 $25

The amount of individually evaluated collateral dependent loans represents the carrying value, net of the related write-down or valuation allowance of collateral dependent loans for which adjustments are based on the estimated fair value of the underlying collateral. The fair value of collateral dependent loans with specific allocations of the allowance for credit losses on loans is generally based on real estate appraisals performed by independent licensed or certified appraisers. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Management will discount appraisals as deemed necessary based on the date of the appraisal and new information deemed relevant to the valuation. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

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Summary of Fair Values of Financial Instruments.

The estimated fair values of our financial instruments are as follows:

June 30, 2026
Carrying Value Fair Value
Level 1 Level 2 Level 3 Total
(Dollars in thousands)
Assets:
Cash and cash equivalents $37,666 $37,666 $— $— $37,666
Securities held-to-maturity 181,723 4,945 146,244 — 151,189
Securities available-for-sale 170,598 — 170,598 — 170,598
Marketable equity securities 662 662 — — 662
FHLB and other restricted stock 3,790 — — 3,790 3,790
Loans - net 2,173,647 — — 2,067,682 2,067,682
Accrued interest receivable 9,008 — — 9,008 9,008
Mortgage servicing rights 259 — 801 — 801
Derivative asset 4,749 — 4,749 — 4,749
Liabilities:
Deposits 2,401,400 — — 2,398,932 2,398,932
Short-term borrowings 17,740 — 17,741 — 17,741
Long-term debt 25,000 — 25,138 — 25,138
Subordinated debt 19,810 — 23,023 — 23,023
Accrued interest payable 589 — — 589 589
Derivative liabilities 4,749 — 4,749 — 4,749
December 31, 2025
Carrying Value Fair Value
Level 1 Level 2 Level 3 Total
(Dollars in thousands)
Assets:
Cash and cash equivalents $40,381 $40,381 $— $— $40,381
Securities held-to-maturity 188,800 4,898 153,606 — 158,504
Securities available-for-sale 175,800 — 175,800 — 175,800
Marketable equity securities 632 632 — — 632
FHLB and other restricted stock 5,359 — — 5,359 5,359
Loans - net 2,163,295 — — 2,061,147 2,061,147
Accrued interest receivable 8,783 — — 8,783 8,783
Mortgage servicing rights 318 — 673 — 673
Derivative asset 4,963 — 4,963 — 4,963
Liabilities:
Deposits 2,360,908 — — 2,359,790 2,359,790
Short-term borrowings 13,270 — 13,286 — 13,286
Long-term debt 73,000 — 73,601 — 73,601
Subordinated debt 19,790 — 15,796 — 15,796
Accrued interest payable 752 — — 752 752
Derivative liabilities 4,963 — 4,963 — 4,963

12. RECENT ACCOUNTING PRONOUNCEMENTS

In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures – Disaggregation of Income Statement Expenses (Subtopic 220-40). ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03 requires new financial statement disclosures in tabular form, disaggregating information about prescribed categories underlying any relevant income statement expense caption. The prescribed categories include, among other things, employee compensation, depreciation, and intangible asset amortization. Additionally, entities must disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. This ASU is effective for the Company, on a prospective basis, for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027 and is not expected to have a material impact on the Company’s consolidated financial statements.

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13. SEGMENT

The Company operates as a single reportable segment under ASC 280, as the Chief Operating Decision Maker (“CODM”) reviews financial performance and allocates resources based on the consolidated results of the Company as a whole. The Company, through its bank subsidiary, provides banking services to individuals and companies primarily in Hampden County and Hampshire County in western Massachusetts and the Capital Region in Connecticut. These services include commercial lending, residential lending and consumer lending, checking, savings, time deposits, cash management, and wealth management. The CODM primarily evaluates performance using net interest income and net income as reported in the consolidated statement of income. The Company’s primary measure of profitability is net interest and dividend income. Net interest and dividend income is the difference between the interest income earned on interest-earning assets and the interest paid on interest-bearing liabilities. Interest-earning assets consist primarily of commercial real estate loans, commercial and industrial loans, residential real estate loans, and securities. Interest-bearing liabilities consist primarily of time deposits and money market accounts, demand deposits, savings accounts and borrowings from the FHLB. The consolidated results of operations also depend on the provision for credit losses, non-interest income, and non-interest expense. In addition, the CODM considers net income as a key measure of overall financial performance. The Company’s CODM consists of members of the Senior Management team, including the Chief Executive Officer, the Chief Financial Officer, the Chief Banking Officer, and the Chief Lending Officer.

14.SUBSEQUENT EVENTS

Subsequent to the end of the reporting period, on July 10, 2026, the Company successfully completed the sale of its two buildings located at 219 and 229 Exchange Street, Chicopee, Massachusetts to the City of Chicopee. The transaction resulted in a total gross cash consideration of $2.4 million and a preliminary estimated gain on sale of approximately $717,000, which will be recognized in the consolidated financial statements for the third quarter of 2026. The staff was reassigned from this Chicopee facility to other locations within the organization which will yield operational efficiencies.

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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview.

We strive to remain a leader in meeting the financial service needs of the local community and to provide quality service to the individuals and businesses in the market areas that we have served since 1853. Historically, we have been a community-oriented provider of traditional banking products and services to business organizations and individuals, including products such as residential and commercial real estate loans, commercial and industrial loans, consumer loans, and a variety of deposit products. We meet the needs of our local community through a community-based and service-oriented approach to banking.

The Company has adopted a growth-oriented strategy that continues to focus on increasing commercial lending and residential lending. Our strategy also calls for increasing deposit relationships, specifically core deposits, which the Company defines as all deposits except for time deposits, and broadening our product lines and services. We believe that this business strategy is best for our long-term success and viability and complements our existing commitment to high-quality customer service.

In connection with our overall growth strategy, we seek to:

●Increase market share and achieve scale to improve the Company’s profitability, efficiency and return value to shareholders;
●Grow the Company’s commercial loan portfolio and related commercial deposits by targeting businesses in our primary market area of Hampden and Hampshire Counties in western Massachusetts and the Capital Region in Connecticut;
●Grow the Company’s residential real estate portfolio to diversify the Company’s loan portfolio and deepen customer relationships;
●Focus on expanding our retail banking deposit franchise and increase the number of households served within our designated market area;
●Invest in people, systems, and technology to grow revenue, improve efficiency and enhance the overall customer experience;
●Grow revenues, increase book value per share and tangible book value per share (a non-GAAP financial measure), pay competitive dividends to shareholders, and utilize the Company’s stock repurchase plan to leverage our capital and enhance franchise value; and
●Consider growth through mergers and acquisitions. We may pursue expansion opportunities in existing or adjacent strategic locations with companies that add complementary products to our existing business and at terms that add value to our existing shareholders.

You should read the following financial results for the three months and six months ended June 30, 2026 in the context of this strategy.

●Net income was $3.6 million, or $0.18 per diluted share, for the three months ended June 30, 2026, compared to net income of $4.6 million, or $0.23 per diluted share, for the three months ended June 30, 2025. For the six months ended June 30, 2026, net income was $8.4 million, or $0.42 per diluted share, compared to $6.9 million, or $0.34 per diluted share, for the six months ended June 30, 2025.
●Net interest income increased $1.7 million, or 9.5%, to $19.3 million, for the three months ended June 30, 2026, from $17.6 million for the three months ended June 30, 2025. The increase in net interest income was due to an increase in interest and dividend income of $1.2 million, or 3.9%, and a decrease in interest expense of $510,000, or 4.3%. During the three months ended June 30, 2026, and the three months ended June 30, 2025, the Company recorded prepayment penalties related to payoffs in the commercial real estate portfolio of $82,000 and $425,000, respectively. Excluding the prepayment penalties, net interest income increased $2.0 million, or 11.7%. The increase in interest and dividend income was primarily due to the increase in average loans of $108.6 million, or 5.2%, and an increase of seven basis points in the average loan yield, without the impact of tax-equivalent adjustments, from the three months ended June 30, 2025 to the three months ended June 30, 2026.

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●During the three months ended June 30, 2026, the Company recorded a provision for credit losses of $1.6 million, due to a charge-off of $1.8 million on the participation loan discussed above. During the three months ended June 30, 2025, the Company recorded a reversal of credit losses of $615,000 The reversal of credit losses was a result of a recovery in the amount of $624,000 on charged-off commercial relationship acquired on October 21, 2016 from Chicopee Bancorp, Inc.

CRITICAL ACCOUNTING POLICIES.

Our consolidated financial statements are prepared in accordance with GAAP and practices within the banking industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments. Actual results could differ from those estimates.

Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions.

There have been no material changes to our critical accounting policies during the six months ended June 30, 2026. For additional information on our critical accounting policies, please refer to the information contained in Note 1 of the accompanying unaudited consolidated financial statements and Note 1 of the consolidated financial statements included in our 2025 Annual Report.

COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2026 AND DECEMBER 31, 2025

At June 30, 2026, total assets were $2.7 billion, a decrease of $4.2 million, or 0.1%, from December 31, 2025. The decrease in total assets was primarily due to a decrease in investment securities of $12.2 million, or 3.4%, and a decrease in cash and cash equivalents of $2.7 million, or 6.7%, partially offset by an increase in total loans of $9.9 million, or 0.5%.

Investment Securities.

At June 30, 2026, the investment securities portfolio totaled $353.0 million, or 12.9% of total assets, compared to $365.2 million, or 13.3% of total assets, at December 31, 2025. At June 30, 2026, the Company’s available-for-sale securities portfolio, recorded at fair market value, decreased $5.2 million, or 3.0%, from $175.8 million at December 31, 2025 to $170.6 million. The held-to-maturity securities portfolio, recorded at amortized cost, decreased $7.1 million, or 3.8%, from $188.8 million at December 31, 2025, to $181.7 million at June 30, 2026.

At June 30, 2026, the Company reported net unrealized losses on the available-for-sale securities portfolio of $22.9 million, or 11.8% of the amortized cost basis of the available-for-sale securities portfolio, compared to unrealized losses of $22.4 million, or 11.3% of the amortized cost basis of the available-for-sale securities at December 31, 2025. At June 30, 2026, the Company reported net unrealized losses on the held-to-maturity securities portfolio of $30.5 million, or 16.8% of the amortized cost basis of the held-to-maturity securities portfolio, compared to $30.3 million, or 16.1% of the amortized cost basis of the held-to-maturity securities portfolio at December 31, 2025.

The securities in which the Company may invest are limited by regulation. Federally chartered savings banks have authority to invest in various types of assets, including U.S. Treasury obligations, securities of various government-sponsored enterprises, mortgage-backed securities, certain certificates of deposit of insured financial institutions, repurchase agreements, overnight and short-term loans to other banks, corporate debt instruments and marketable equity securities. The securities, with the exception of $13.1 million in corporate bonds, are issued by the United States government or government-sponsored enterprises and are therefore either explicitly or implicitly guaranteed as to the timely payment of contractual principal and interest. These positions are deemed to have no credit impairment, therefore, the disclosed unrealized losses within the securities portfolio relate primarily to changes in prevailing interest rates. In all cases, price improvement in future periods will be realized as the issuances approach maturity.

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Management regularly reviews the portfolio for securities in an unrealized loss position. At June 30, 2026, and December 31, 2025, the Company did not record any credit impairment charges on its securities portfolio and attributed the unrealized losses primarily due to fluctuations in general interest rates or changes in expected prepayments and not due to credit quality. The primary objective of the Company’s investment portfolio is to provide liquidity and to secure municipal deposit accounts while preserving the safety of principal. The available-for-sale and held-to-maturity portfolios are both eligible for pledging to the Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) as collateral for borrowings. The portfolios are comprised of high-credit quality investments and both portfolios generated cash flows monthly from interest, principal amortization and payoffs, which supports the Bank's objective to provide liquidity.

Loans.

Total loans increased $9.9 million, or 0.5%, from $2.2 billion, or 79.7% of total assets, at December 31, 2025, to $2.2 billion, or 80.2% of total assets, at June 30, 2026. The increase in total loans was primarily driven by an increase in residential real estate loans, including home equity loans, of $31.7 million, or 3.7%, an increase in commercial and industrial loans of $12.5 million, or 5.6%, partially offset by a decrease in commercial real estate loans of $33.7 million, or 3.1%. The decrease in commercial real estate loans was primarily driven by an increased level of prepayments in the commercial real estate loan portfolio and the partial charge-off of $1.8 million on the participation loan discussed above. Non-owner occupied commercial real estate loans decreased $27.3 million, or 3.0%, to $883.0 million, or 40.3% of total loans and owner-occupied commercial real estate loans decreased $6.5 million, or 3.4%, to $182.4 million, or 8.3% of total loans.

Total delinquency was $4.7 million, or 0.21% of total loans, at June 30, 2026, compared to $3.1 million, or 0.14% of total loans at December 31, 2025. Of the $4.7 million in past due loans, 95.1% are residential real estate loans. At June 30, 2026, nonaccrual loans totaled $7.8 million, or 0.35% of total loans, compared to $5.2 million, or 0.24% of total loans, at December 31, 2025. The increase in nonaccrual loans was primarily due to the participation loan discussed above, which was placed on nonaccrual status following the borrower’s June 2026 Bankruptcy Filing. At June 30, 2026, and December 31, 2025, there were no loans 90 or more days past-due and still accruing interest. Total nonperforming assets, defined as nonaccrual loans and other real estate owned, totaled $7.8 million, or 0.28% of total assets, at June 30, 2026, compared to $5.2 million, or 0.19% of total assets, at December 31, 2025. At June 30, 2026, and December 31, 2025, the Company did not have any other real estate owned.

At June 30, 2026, the allowance for credit losses was $20.2 million, or 0.92% of total loans and 260.2% of nonaccrual loans, compared to $20.3 million, or 0.93% of total loans and 393.2% of nonaccrual loans, at December 31, 2025. The decrease in the allowance for credit losses as a percentage of nonaccrual loans was due to the increase in nonaccrual loans from $5.2 million at December 31, 2025, to $7.8 million at June 30, 2026. Management continues to closely monitor the loan portfolio for any signs of weakness due to the speculation that commercial real estate values may deteriorate as the market continues to adjust to higher vacancies and higher interest rates as well as any signs of deterioration in the borrower’s financial condition. Management continues to proactively take steps to mitigate risk in the loan portfolio.

At June 30, 2026, total criticized loans, defined as special mention and substandard loans, totaled $63.9 million, or 2.9% of total loans, compared to $39.7 million, or 1.8% of total loans, at December 31, 2025. Loans designated special mention, which are not considered classified, increased $23.1 million, from $17.2 million, or 0.8% of total loans, at December 31, 2025, to $40.3 million, or 1.8% of total loans, at June 30, 2026. During the same period, substandard loans increased $1.1 million, or 4.9%, to $23.6 million, or 1.1% of total loans.

Of the $40.3 million in loans designated special mention at June 30, 2026, $17.8 million, or 44.2%, are commercial and industrial loans, and $22.5 million, or 55.8%, are commercial real estate loans. Of the $23.6 million in loans categorized substandard at June 30, 2026, $7.2 million, or 30.5%, are commercial and industrial loans, $10.5 million, or 44.5%, are commercial real estate loans, and $5.9 million, or 25.0%, are residential real estate loans. Of the total $63.9 million in criticized loans at June 30, 2026, 95.6% are current and paying as agreed.

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The increase in special mention loans from December 31, 2025, to June 30, 2026, resulted from the downgrade of two commercial relationships totaling $21.5 million, from pass risk ratings to special mention. The increase in substandard loans from December 31, 2025, to June 30, 2026, was primarily due to the downgrade of the participation loan discussed above. At June 30, 2026, the Company’s portion of the remaining carrying value of the participation loan was $1.6 million.

Our commercial real estate portfolio is comprised of diversified property types that are primarily within our geographic footprint. At June 30, 2026, the commercial real estate portfolio totaled $1.1 billion and represented 48.6% of total loans. Of the $1.1 billion, $883.0 million, or 82.9% of the commercial real estate portfolio, was categorized as non-owner occupied commercial real estate and represented 317.6% of the Bank’s total risk-based capital.

CRE Concentrations.

The OCC, the FRB, and the FDIC (“Agencies”) issued guidance in 2006 which addresses institutions with increased concentrations of commercial real estate (“CRE”) loans. The guidance does not establish specific CRE lending limits; rather, it promotes sound risk management practices and appropriate levels of capital that will enable institutions to continue to pursue CRE lending in a safe and sound manner. In developing this guidance, the Agencies recognized that different types of CRE lending present different levels of risk, and that consideration should be given to the lower risk profiles and historically superior performance of certain types of CRE, such as well-structured multifamily housing finance, when compared to others, such as speculative office space construction.

Institutions are encouraged to segment their CRE portfolios to acknowledge these distinctions for risk management purposes. The guidance focuses on those CRE loans for which the cash flow from the real estate is the primary source of repayment rather than loans to a borrower for which real estate collateral is taken as a secondary source of repayment or through an abundance of caution. Thus, for the purposes of the guidance, CRE loans include those loans with risk profiles sensitive to the condition of the general CRE market (for example, market demand, changes in capitalization rates, vacancy rates, or rents). CRE loans are land development and construction loans (including 1- to 4-family residential and commercial construction loans) and other land loans. CRE loans also include loans secured by multifamily property, and nonfarm nonresidential property where the primary source of repayment is derived from rental income associated with the property (that is, loans for which 50 percent or more of the source of repayment comes from third party, nonaffiliated, rental income) or the proceeds of the sale, refinancing, or permanent financing of the property. Excluded from the scope of this guidance are loans secured by nonfarm nonresidential properties where the primary source of repayment is the cashflow from the ongoing operations and activities conducted by the party, or affiliate of the party, who owns the property.

As part of their ongoing supervisory monitoring processes, the Agencies use certain criteria to identify institutions that are potentially exposed to significant CRE concentration risk. An institution that has experienced rapid growth in CRE lending, has notable exposure to a specific type of CRE, or is approaching or exceeds the following supervisory criteria may be identified for further supervisory analysis of the level and nature of its CRE concentration risk:

1. Total reported loans for construction, land development, and other land represent 100 percent or more of the institution’s total risk-based capital; or

2. Total commercial real estate loans, as defined in this guidance, represent 300 percent or more of the institution’s total risk-based capital, and the outstanding balance of the institution’s commercial real estate loan portfolio has increased by 50 percent or more during the prior 36 months.

The Agencies use the criteria as a preliminary step to identify institutions that may have CRE concentration risk. Because regulatory reports capture a broad range of CRE loans with varying risk characteristics, the supervisory monitoring criteria do not constitute limits on an institution’s lending activity but rather serve as high-level indicators to identify institutions potentially exposed to CRE concentration risk.

The Company holds a concentration in commercial real estate loans. As of June 30, 2026, commercial real estate loans represented 383.2% of consolidated bank risk-based capital. Non-owner occupied commercial real estate loans totaled $883.0 million, or 317.6% of consolidated bank risk-based capital, and owner-occupied commercial real estate loans totaled $182.4 million, or 65.6% of consolidated bank risk-based capital. As of June 30, 2026, construction, land development, and other land loans represented 33.7% of consolidated bank risk-based capital. During the prior 36 months, the Company has experienced an increase in its commercial real estate portfolio of 5.0%.

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The management team has extensive experience in underwriting commercial real estate loans and has implemented and continues to maintain heightened risk management procedures and strong underwriting criteria with respect to its commercial real estate portfolio. The Company’s Board of Directors (the “Board”) has established internal maximum limits on CRE as an asset class overall as well as sub limits within CRE by property class, to better manage and control the exposure to property classes during periods of changing economic conditions. The Board also has minimum targets for regulatory capital ratios that are in excess of well capitalized ratios.

Our risk management process begins with a robust underwriting program. The underwriting and risk rating of all loans is completed by the Company’s Credit Department that is independent of the originating lender(s).

The table below breaks down the commercial real estate portfolio outstanding balance by non-owner and owner occupied and by concentration as of June 30, 2026:

Property Type Non-Owner Occupied Owner Occupied Total % of CRE Portfolio % of Total Loans % of Total Bank Risk-Based Capital (1)
(Dollars in thousands)
Office $169,471 $20,946 $190,417 18.0% 8.7% 68.5%
Apartment 170,511 — 170,511 16.0% 7.8% 61.3%
Industrial 109,511 40,149 149,660 14.0% 6.8% 53.8%
Retail 111,316 4,972 116,288 10.9% 5.3% 41.8%
Mixed Use 76,398 5,559 81,957 7.7% 3.7% 29.5%
Other 43,323 23,744 67,067 6.3% 3.1% 24.1%
Auto Sales and Service 7,727 54,368 62,095 5.8% 2.8% 22.3%
Self-Storage 45,913 65 45,978 4.3% 2.1% 16.5%
Hotel/Hospitality 40,761 — 40,761 3.8% 1.9% 14.7%
Shopping Center 29,411 6,476 35,887 3.4% 1.6% 12.9%
Warehouse 22,483 10,588 33,071 3.1% 1.5% 11.9%
Adult Care/Assisted Living 29,056 — 29,056 2.7% 1.3% 10.5%
School/Higher Education 9,928 15,505 25,433 2.4% 1.2% 9.2%
Student Housing 17,169 — 17,169 1.6% 0.8% 6.2%
Total commercial real estate $882,978 $182,372 $1,065,350 100.0% 48.6% 383.2%
% of Total Bank Risk-Based Capital (1) 317.6% 65.6% 383.2%
% of Total CRE loans 82.9% 17.1%
(1)Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.

At June 30, 2026, of the $1.1 billion in commercial real estate loans, $883.0 million, or 82.9% of total commercial real estate loans, were categorized as non-owner occupied and represented 317.6% of total bank risk-based capital.

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The table below breaks down the commercial real estate portfolio outstanding balance by non-owner and owner occupied and by concentration as of December 31, 2025:

Property Type Non-Owner Occupied Owner Occupied Total % of CRE Portfolio % of Total Loans % of Total Bank Risk-Based Capital (1)
(Dollars in thousands)
Office $174,196 $20,961 $195,157 17.8% 8.9% 70.5%
Apartment 174,330 — 174,330 15.9% 8.0% 62.9%
Industrial 124,601 44,382 168,983 15.4% 7.7% 61.0%
Retail 110,356 5,102 115,458 10.5% 5.3% 41.7%
Mixed Use 75,593 5,741 81,334 7.4% 3.7% 29.4%
Other 45,445 25,376 70,821 6.4% 3.3% 25.5%
Automotive Sales and Service 6,850 55,605 62,455 5.6% 2.9% 22.5%
Self-Storage 46,106 67 46,173 4.2% 2.1% 16.7%
Hotel/Hospitality 41,582 — 41,582 3.8% 1.9% 15.0%
Shopping Center 28,854 6,292 35,146 3.2% 1.6% 12.7%
Warehouse 23,560 10,339 33,899 3.1% 1.6% 12.2%
Adult Care/Assisted Living 26,783 — 26,783 2.4% 1.2% 9.7%
School/Higher Education 10,420 14,959 25,379 2.3% 1.2% 9.2%
Student Housing 21,563 — 21,563 2.0% 1.0% 7.8%
Total commercial real estate $910,239 $188,824 $1,099,063 100.0% 50.4% 396.8%
% of Total Bank Risk-Based Capital (1) 328.6% 68.2% 396.8%
% of Total CRE loans 82.8% 17.2%
(1)Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.

At December 31, 2025, of the $1.1 billion in commercial real estate loans, $910.2 million, or 82.8% of total commercial real estate loans, were categorized as non-owner occupied and represented 328.6% of total bank risk-based capital.

The following table further breaks down the non-owner occupied commercial real estate portfolio balances by concentration, collateral location and weighted average loan-to-value (“LTV”) as of June 30, 2026:

Property Type MA CT NH RI ME Other Total % of Total Bank Risk-Based Capital(1) Weighted Average LTV(2)
(Dollars in thousands)
Office $63,054 $57,296 $38,023 $— $11,098 $— $169,471 61.0% 61.8%
Apartment 106,140 43,169 — 21,202 — — 170,511 61.3% 51.1%
Industrial 59,580 34,310 — 11,205 — 4,416 109,511 39.4% 53.0%
Retail 52,892 25,432 13,647 5,994 13,351 — 111,316 40.0% 49.2%
Mixed Use 36,878 22,242 — 12,676 — 4,602 76,398 27.5% 55.2%
Other 38,652 3,896 661 — 114 — 43,323 15.5% 50.8%
Automotive Sales and Service 5,613 2,114 — — — — 7,727 2.8% 64.7%
Self-Storage 35,969 9,180 764 — — — 45,913 16.5% 55.1%
Hotel/Hospitality 19,694 21,067 — — — — 40,761 14.7% 50.1%
Shopping Center 10,169 19,242 — — — — 29,411 10.6% 48.7%
Warehouse 16,809 4,830 — — — 844 22,483 8.1% 41.3%
Adult Care/Assisted Living 8,385 8,435 12,236 — — — 29,056 10.4% 57.6%
School/Higher Education 9,928 — — — — — 9,928 3.6% 42.5%
Student Housing 6,634 7,537 2,660 — — 338 17,169 6.2% 54.7%
Total Non-Owner Occupied CRE $470,397 $258,750 $67,991 $51,077 $24,563 $10,200 $882,978 317.6% 53.6%
(1)Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.
(2)Weighted average LTV is based on the original appraisal and the current loan exposure.

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The following table further breaks down the non-owner occupied commercial real estate portfolio balances by concentration, collateral location, and weighted average LTV as of December 31, 2025:

Property Type MA CT NH RI ME Other Total % of Total Bank Risk-Based Capital(1) Weighted Average LTV(2)
(Dollars in thousands)
Office $63,973 $60,433 $38,586 $— $11,204 $— $174,196 62.9% 62.6%
Apartment 107,299 43,612 — 23,419 — — 174,330 62.9% 52.2%
Industrial 74,031 34,887 — 11,229 — 4,454 124,601 45.0% 56.4%
Retail 53,291 25,964 13,865 6,070 11,166 — 110,356 39.8% 50.8%
Mixed Use 35,641 22,503 — 12,809 — 4,640 75,593 27.3% 55.7%
Other 40,666 3,984 677 — 118 — 45,445 16.4% 51.5%
Automotive Sales and Service 5,679 1,171 — — — — 6,850 2.5% 64.9%
Self-Storage 36,155 9,180 771 — — — 46,106 16.6% 55.4%
Hotel/Hospitality 20,074 21,508 — — — — 41,582 15.0% 51.1%
Shopping Center 9,227 19,627 — — — — 28,854 10.4% 48.4%
Warehouse 17,034 4,889 — — — 1,637 23,560 8.5% 41.4%
Adult Care/Assisted Living 8,543 8,514 9,726 — — — 26,783 9.7% 58.1%
School/Higher Education 10,420 — — — — — 10,420 3.8% 43.3%
Student Housing 3,628 14,934 2,660 — — 341 21,563 7.8% 60.7%
Total Non-Owner Occupied CRE $485,661 $271,206 $66,285 $53,527 $22,488 $11,072 $910,239 328.6% 54.9%
(1)Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.
(2)Weighted average LTV is based on the original appraisal and the current loan exposure.

The Company also underwrites and originates owner occupied commercial real estate loans. These loans are typically term loans made to support properties that rely upon the operations of the business occupying the property for repayment. The Agencies specifically excluded owner occupied commercial real estate from their concentration guidance, as the primary source of repayment is the cash flow from the ongoing operations and activities conducted by the party, or affiliate of the party, who owns the property.

The table below depicts a well-diversified portfolio of owner occupied commercial real estate portfolio as of June 30, 2026:

Property Type MA CT NH Other Total % of Total Bank Risk-Based Capital(1) Weighted Average LTV(2)
(Dollars in thousands)
Owner Occupied CRE
Office $18,205 $2,741 $— $— $20,946 7.5% 55.3%
Industrial 33,987 5,973 — 189 40,149 14.4% 50.8%
Retail 4,972 — — — 4,972 1.8% 49.6%
Mixed Use 4,797 762 — — 5,559 2.0% 55.4%
Other 14,676 8,456 612 — 23,744 8.6% 40.7%
Automotive Sales and Service 31,202 23,166 — — 54,368 19.6% 58.2%
Self-Storage 65 — — — 65 -% 49.7%
Shopping Center 4,356 2,120 — — 6,476 2.3% 55.9%
Warehouse 10,256 332 — — 10,588 3.8% 63.6%
School/Higher Education 14,545 960 — — 15,505 5.6% 59.8%
Total Owner Occupied CRE $137,061 $44,510 $612 $189 $182,372 65.6% 54.0%
(1)Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.
(2)Weighted average LTV is based on the original appraisal and the current loan exposure.

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The table below depicts a well-diversified portfolio of owner occupied commercial real estate portfolio as of December 31, 2025:

Property Type MA CT NH Other Total % of Total Bank Risk-Based Capital(1) Weighted Average LTV(2)
(Dollars in thousands)
Owner Occupied CRE
Office $18,550 $2,411 $— $— $20,961 7.6% 56.1%
Industrial 37,852 6,331 — 199 44,382 16.0% 50.9%
Retail 5,102 — — — 5,102 2.1% 50.4%
Mixed Use 4,964 777 — — 5,741 2.1% 56.3%
Other 15,903 8,600 873 — 25,376 9.0% 40.6%
Automotive Sales and Service 32,030 23,575 — — 55,605 20.1% 59.2%
Self-Storage 67 — — — 67 —% 51.3%
Shopping Center 4,201 2,091 — — 6,292 2.2% 55.6%
Warehouse 9,992 347 — — 10,339 3.7% 63.9%
School/Higher Education 14,959 — — — 14,959 5.4% 63.9%
Total Owner Occupied CRE $143,620 $44,132 $873 $199 $188,824 68.2% 54.6%
(1)Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.
(2)Weighted average LTV is based on the original appraisal and the current loan exposure.

Commercial Real Estate Office Exposure.

Our total office related commercial real estate loans (which is comprised of loans within our commercial real estate portfolio that are secured by office space, medical office space, and mixed-use where rental income is primarily from office space) totaled $190.4 million, or 68.5% of total bank risk-based capital, and $195.2 million, or 70.5% of total bank risk-based capital, as of June 30, 2026 and December 31, 2025, respectively.

The table below breaks the office-related commercial real estate loans by collateral type for the periods noted:

June 30, 2026 Non-Owner Occupied Owner Occupied Total % of Office Portfolio % of Total Bank Risk-Based Capital(1)
(Dollars in thousands)
Collateral Type:
Office/Medical $106,666 $10,373 $117,039 61.4% 42.1%
Office/Professional Metro 3,517 7,586 11,103 5.8% 4.0%
Office/Professional Suburban 34,260 2,779 37,039 19.5% 13.3%
Office/Professional Urban 25,028 208 25,236 13.3% 9.1%
Total Office Portfolio $169,471 $20,946 $190,417 100.0% 68.5%
December 31, 2025 Non-Owner Occupied Owner Occupied Total % of Office Portfolio % of Total Bank Risk-Based Capital(1)
(Dollars in thousands)
Collateral Type:
Office/Medical $108,113 $9,941 $118,054 60.5% 42.6%
Office/Professional Metro 3,577 7,796 11,373 5.8% 4.1%
Office/Professional Suburban 35,686 3,011 38,697 19.8% 14.0%
Office/Professional Urban 26,820 213 27,033 13.9% 9.8%
Total Office Portfolio $174,196 $20,961 $195,157 100.0% 70.5%
(1)Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.

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CRE office loans are primarily concentrated in Massachusetts, where approximately 42.7% of the total balance of CRE office loans were located at June 30, 2026, compared to 42.3% at December 31, 2025. The Company does not have CRE loans secured by office real estate in greater Boston or New York.

June 30, 2026 Non-Owner Occupied Owner Occupied Total % of Office Portfolio % of Total Bank Risk-Based Capital(1)
(Dollars in thousands)
By State:
Massachusetts $63,054 $18,205 $81,259 42.7% 29.2%
Connecticut 57,296 2,741 60,037 31.5% 21.6%
New Hampshire 38,023 — 38,023 20.0% 13.7%
Other 11,098 — 11,098 5.8% 4.0%
Total Office Portfolio $169,471 $20,946 $190,417 100.0% 68.5%
December 31, 2025 Non-Owner Occupied Owner Occupied Total % of Office Portfolio % of Total Bank Risk-Based Capital(1)
(Dollars in thousands)
By State:
Massachusetts $63,973 $18,550 $82,523 42.3% 29.8%
Connecticut 60,433 2,411 62,844 32.2% 22.7%
New Hampshire 38,586 — 38,586 19.8% 14.0%
Other 11,204 — 11,204 5.7% 4.0%
Total Office Portfolio $174,196 $20,961 $195,157 100.0% 70.5%
(1)Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.

The following table sets forth the CRE office loans for non-owner occupied and owner occupied CRE and their credit quality indicators as of the dates indicated:

June 30, 2026 Non-Owner Occupied Owner Occupied Total % of Office Portfolio % of Total Bank Risk-Based Capital(1)
(Dollars in thousands)
By Risk Rating:
Pass $159,927 $20,677 $180,604 94.8% 65.0%
Special Mention 69 — 69 —% —%
Substandard 9,475 269 9,744 5.2% 3.5%
Total Office Portfolio $169,471 $20,946 $190,417 100.0% 68.5%
December 31, 2025 Non-Owner Occupied Owner Occupied Total % of Office Portfolio % of Total Bank Risk-Based Capital(1)
(Dollars in thousands)
By Risk Rating:
Pass $166,275 $20,683 $186,958 95.8% 67.5%
Special Mention 72 — 72 —% —%
Substandard 7,849 278 8,127 4.2% 3.0%
Total Office Portfolio $174,196 $20,961 $195,157 100.0% 70.5%
(1)Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.

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Given prevailing market conditions such as recent sustained increases in interest rates, reduced occupancy as a result of the increase in hybrid work arrangements post-COVID, and lower commercial real estate valuations, we carefully monitor these loans for signs of deterioration in credit quality and other risks. Such heightened monitoring includes incremental risk management strategies undertaken by management, including more frequent portfolio reviews, ongoing monitoring of market conditions, and additional portfolio analysis, which may include monitoring concentration limitations, including concentrations by loan type, property type, geographic area, and with participants, where applicable, and risk diversification, tracking aggregated policy and underwriting exceptions and stress testing the loan portfolios.

Deposits.

At June 30, 2026, total deposits were $2.4 billion and increased $40.5 million, or 1.7%, from December 31, 2025. Core deposits, which the Company defines as all deposits except time deposits, decreased $5.3 million, or 0.3%, from $1.7 billion, or 70.8% of total deposits, at December 31, 2025, to $1.7 billion, or 69.4% of total deposits, at June 30, 2026. Non-interest-bearing deposits increased $6.1 million, or 1.0%, to $600.6 million, and represented 25.0% of total deposits, money market accounts increased $2.7 million, or 0.4%, to $718.4 million, and savings accounts increased $6.6 million, or 3.5%, to $193.2 million. These increases were partially offset by a decrease in interest-bearing checking accounts of $20.7 million, or 11.9%, to $153.5 million.

Time deposits increased $45.8 million, or 6.6%, from $689.9 million at December 31, 2025, to $735.7 million at June 30, 2026. The Company did not have brokered time deposits at June 30, 2026, and December 31, 2025. We continue our disciplined and focused approach to core relationship management and customer outreach to meet funding requirements and liquidity needs, with an emphasis on retaining a long-term core customer relationship base by competing for and retaining deposits in our local market.

At June 30, 2026, the Bank’s uninsured deposits totaled $722.7 million, or 30.1% of total deposits, compared to $697.6 million, or 29.5% of total deposits, at December 31, 2025. Uninsured amounts were based on the portion of customer account balances that exceeded the FDIC limit of $250,000. At June 30, 2026, there was one consumer deposit relationship, which is our largest deposit relationship, with a household concentration comprising 5.8% of total deposits, compared to 5.0% of total deposits at December 31, 2025. The next largest deposit relationship is to a local municipality with a concentration of 1.3% of total deposits at June 30, 2026, and 1.9% at December 31, 2025.

The table below is a summary of our deposit balances for the periods noted:

At June 30, 2026 At December 31, 2025
Balance % of Total Deposits Balance % of Total Deposits
(Dollars in thousands)
Demand and interest-bearing checking:
Demand deposit accounts $600,599 25.0% $594,516 25.2%
Interest-bearing checking accounts 153,531 6.4% 174,227 7.4%
Savings:
Regular savings accounts 193,160 8.0% 186,597 7.9%
Money market accounts 718,361 29.9% 715,620 30.3%
Total core deposits 1,665,651 69.4% 1,670,960 70.8%
Time deposits 735,749 30.6% 689,948 29.2%
Total deposits $2,401,400 100.0% $2,360,908 100.0%

Borrowings.

At June 30, 2026, total borrowings decreased $43.5 million, or 41.0%, from $106.1 million at December 31, 2025, to $62.6 million. At June 30, 2026, short-term borrowings increased $4.5 million, or 33.7%, to $17.7 million, compared to $13.3 million at December 31, 2025. At June 30, 2026, long-term borrowings decreased $48.0 million, or 65.8%, to $25.0 million from $73.0 million at December 31, 2025.

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At June 30, 2026, and December 31, 2025, borrowings also consisted of $19.8 million in fixed-to-floating rate subordinated notes (the “Notes”). Beginning on May 1, 2026, the Notes bear interest at a floating rate equal to the 90-day average secured overnight financing rate (“SOFR”) plus 412 basis points.

As of June 30, 2026, the Company had $547.5 million of additional borrowing capacity at the FHLB, $392.7 million of additional borrowing capacity under the FRB Discount Window and $25.0 million of other unsecured lines of credit with correspondent banks.

Capital.

At June 30, 2026, shareholders’ equity was $248.3 million, or 9.1% of total assets, compared to $247.6 million, or 9.1% of total assets, at December 31, 2025. The change was primarily attributable to net income of $8.4 million, partially offset by cash dividends paid of $2.8 million and the repurchase of 381,000 shares at a cost of $5.2 million. At June 30, 2026, total shares outstanding were 20,045,872. The Company’s regulatory capital ratios continue to be strong and in excess of regulatory minimum requirements to be considered well-capitalized as defined by regulators and internal Company targets.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2026 AND JUNE 30, 2025

General.

The Company reported a decrease in net income of $992,000, or 21.6%, from $4.6 million, or $0.23 per diluted share, for the three months ended June 30, 2025, to $3.6 million, or $0.18 per diluted share, for the three months ended June 30, 2026. Net interest income increased $1.7 million, or 9.5%, provision for credit losses increased $2.2 million, non-interest income decreased $17,000, or 0.5%, and non-interest expense increased $699,000, or 4.5%. Return on average assets and return on average equity were 0.53% and 5.84%, respectively, for the three months ended June 30, 2026, compared to 0.69% and 7.76%, respectively, for the three months ended June 30, 2025.

Net Interest and Dividend Income.

The following tables set forth the information relating to our average balance and net interest income for the three months ended June 30, 2026 and 2025, and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated. Yields and costs are derived by dividing annualized interest income by the average balance of interest-earning assets and annualized interest expense by the average balance of interest-bearing liabilities for the periods shown. The interest rate spread is the difference between the total average yield on interest-earning assets and the cost of interest-bearing liabilities. Net interest margin represents tax-equivalent net interest and dividend income as a percentage of average interest-earning assets. Average balances are derived from actual daily balances over the periods indicated. Interest income includes fees earned when the real estate loans are prepaid or refinanced. For analytical purposes, the interest earned on tax-exempt assets is adjusted to a tax-equivalent basis to recognize the income tax savings which facilitates comparison between taxable and tax-exempt assets.

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Three Months Ended June 30,
2026 2025
Average Average Yield/ Average Average Yield/
Balance Interest Cost(8) Balance Interest Cost(8)
(Dollars in thousands)
ASSETS:
Interest-earning assets
Loans(1)(2) $2,189,867 $28,084 5.14% $2,081,319 $26,335 5.08%
Securities(2) 355,904 2,457 2.77 375,074 2,588 2.77
Other investments - at cost 14,171 156 4.42 15,062 169 4.50
Short-term investments(3) 26,034 208 3.20 58,622 641 4.39
Total interest-earning assets 2,585,976 30,905 4.79 2,530,077 29,733 4.71
Total non-interest-earning assets 152,735 156,247
Total assets $2,738,711 $2,686,324
LIABILITIES AND EQUITY:
Interest-bearing liabilities
Interest-bearing checking accounts $147,413 $360 0.98% $165,329 $424 1.03%
Savings accounts 193,850 58 0.12 188,498 55 0.12
Money market accounts 728,462 3,847 2.12 687,621 3,600 2.10
Time deposit accounts 722,603 6,093 3.38 690,555 6,358 3.69
Total interest-bearing deposits 1,792,328 10,358 2.32 1,732,003 10,437 2.42
Short-term borrowings and long-term debt 85,845 1,102 5.15 122,070 1,533 5.04
Interest-bearing liabilities 1,878,173 11,460 2.45 1,854,073 11,970 2.59
Non-interest-bearing deposits 593,110 572,833
Other non-interest-bearing liabilities 20,392 22,207
Total non-interest-bearing liabilities 613,502 595,040
Total liabilities 2,491,675 2,449,113
Total equity 247,036 237,211
Total liabilities and equity $2,738,711 $2,686,324
Less: Tax-equivalent adjustment(2) (124) (121)
Net interest and dividend income $19,321 $17,642
Net interest rate spread(4) 2.33% 2.10%
Net interest rate spread, on a tax equivalent basis(5) 2.34% 2.12%
Net interest margin(6) 3.00% 2.80%
Net interest margin, on a tax equivalent basis(7) 3.02% 2.82%
Ratio of average interest-earning assets to average interest-bearing liabilities 137.69% 136.46
(1)Loans, including nonaccrual loans, are net of deferred loan origination costs and unadvanced funds.
(2)Loan and securities income are presented on a tax-equivalent basis using a tax rate of 21%. The tax-equivalent adjustment is deducted from tax-equivalent net interest and dividend income to agree to the amount reported on the consolidated statements of net income.
(3)Short-term investments include federal funds sold.
(4)Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(5)Net interest rate spread, on a tax-equivalent basis, represents the difference between the tax-equivalent weighted average yield on interest-earning assets and the tax-equivalent weighted average cost of interest-bearing liabilities. See “Explanation of Use of Non-GAAP Financial Measurements.”
(6)Net interest margin represents net interest and dividend income as a percentage of average interest-earning assets.
(7)Net interest margin, on a tax-equivalent basis, represents tax-equivalent net interest and dividend income as a percentage of average interest-earning assets. See “Explanation of Use of Non-GAAP Financial Measurements.”
(8)Annualized.

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Rate/Volume Analysis.

The following table shows how changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected our interest and dividend income and interest expense during the periods indicated. Information is provided in each category with respect to: (1) interest income changes attributable to changes in volume (changes in volume multiplied by prior rate); (2) interest income changes attributable to changes in rate (changes in rate multiplied by prior volume); and (3) the net change.

The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

Three Months Ended June 30, 2026 compared to Three Months Ended June 30, 2025
Increase (Decrease) Due to
Volume Rate Net
Interest-earning assets (Dollars in thousands)
Loans (1) $1,373 $376 $1,749
Securities (1) (132) 1 (131)
Other investments - at cost (10) (3) (13)
Short-term investments (356) (77) (433)
Total interest-earning assets 875 297 1,172
Interest-bearing liabilities
Interest-bearing checking accounts (46) (18) (64)
Savings accounts 2 1 3
Money market accounts 214 33 247
Time deposits 295 (560) (265)
Short-term borrowings and long-term debt (455) 24 (431)
Total interest-bearing liabilities 10 (520) (510)
Change in net interest and dividend income (1) $865 $817 $1,682
(1)Securities, loan income and change in net interest and dividend income are presented on a tax-equivalent basis using a tax rate of 21%. The tax-equivalent adjustment is deducted from tax-equivalent net interest income to agree to the amount reported in the consolidated statements of net income. See “Explanation of Use of Non-GAAP Financial Measurements.”

Net interest income increased $1.7 million, or 9.5%, to $19.3 million, for the three months ended June 30, 2026, from $17.6 million for the three months ended June 30, 2025. The increase in net interest income was due to an increase in interest and dividend income of $1.2 million, or 3.9%, and a decrease in interest expense of $510,000, or 4.3%. During the three months ended June 30, 2026, and the three months ended June 30, 2025, the Company recorded prepayment penalties related to payoffs in the commercial real estate portfolio of $82,000 and $425,000, respectively. Excluding the prepayment penalties, net interest income increased $2.0 million, or 11.7%. The increase in interest and dividend income was primarily due to the increase in average loans of $108.5 million, or 5.2%, and an increase of seven basis points in the average loan yield, without the impact of tax-equivalent adjustments, from the three months ended June 30, 2025 to the three months ended June 30, 2026.

The net interest margin increased 20 basis points from 2.80% for the three months ended June 30, 2025 to 3.00% for the three months ended June 30, 2026. The net interest margin, on a tax-equivalent basis, increased 20 basis points from 2.82% for the three months ended June 30, 2025 to 3.02% for the three months ended June 30, 2026. Excluding the prepayment penalties discussed above, the net interest margin increased 25 basis points from 2.73% for the three months ended June 30, 2025 to 2.98%, for the three months ended June 30, 2026.

The average yield on interest-earning assets, without the impact of tax-equivalent adjustments, increased eight basis points from 4.69% for the three months ended June 30, 2025 to 4.77%, for the three months ended June 30, 2026. The average loan yield, without the impact of tax-equivalent adjustments, increased seven basis points from 5.05% for the three months ended June 30, 2025, to 5.12% for the three months ended June 30, 2026. During the three months ended June 30, 2026, average interest-earning assets increased $55.9 million, or 2.2%, to $2.6 billion, primarily due to an increase in average loans of $108.6 million, or 5.2%, partially offset by a decrease in average short-term investments, consisting of cash and cash equivalents, of $32.6 million, or 55.6%, and a decrease in average securities of $19.2 million, or 5.1%.

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The average cost of total funds, including non-interest bearing accounts and borrowings, decreased 12 basis points from 1.98% for the three months ended June 30, 2025, to 1.86% for the three months ended June 30, 2026. The average cost of core deposits, which the Company defines as all deposits except time deposits, increased two basis points from 1.01% for the three months ended June 30, 2025, to 1.03% for the three months ended June 30, 2026. The average cost of time deposits decreased 31 basis points from 3.69% for the three months ended June 30, 2025, to 3.38% for the three months ended June 30, 2026. The average cost of borrowings, including subordinated debt, increased 11 basis points from 5.04% for the three months ended June 30, 2025, to 5.15%, for the three months ended June 30, 2026. Average demand deposits, an interest-free source of funds, increased $20.3 million, or 3.5%, from $572.8 million, or 24.9% of total average deposits, for the three months ended June 30, 2025, to $593.1 million, or 24.9% of total average deposits, for the three months ended June 30, 2026.

Provision for (Reversal of) Credit Losses.

The provision for credit losses is reviewed by management based upon our evaluation of economic and business conditions affecting our key lending areas and other conditions, such as new loan products, credit quality trends (including trends in nonperforming loans expected to result from existing conditions), collateral values, loan volumes and concentrations, specific industry conditions using reasonable and supportable forecasts and the impact that such conditions were believed to have had on the collectability of the loan portfolio.

During the three months ended June 30, 2026, the Company recorded a provision for credit losses of $1.6 million, due to the partial charge-off of $1.8 million on the participation loan discussed above. The Company does not have any additional expected losses to the borrower or guarantor associated with the participation loan. At June 30, 2026, the Company’s portion of the remaining carrying value of the participation loan was $1.6 million. The Company currently expects full recovery of its portion of the remaining carrying value through the anticipated sale of the underlying collateral. During the three months ended June 30, 2025, the Company recorded a reversal of credit losses of $615,000 as a result of a recovery in the amount of $624,000 on a charged-off commercial relationship acquired on October 21, 2016 from Chicopee Bancorp, Inc.

The provision for credit losses was also determined by a number of factors: the continued overall credit performance of the Company’s diversified loan portfolio, changes in the loan portfolio mix and Management’s consideration of existing economic conditions and the economic outlook from the Federal Reserve’s actions to control inflation. Management continues to monitor macroeconomic variables related to increasing interest rates, tariffs, inflation and concerns of an economic downturn, and believes it is appropriately reserved for the current economic environment. Management believes that the allowance for credit losses are at adequate levels, however, future adjustments may be necessary if economic, real estate market values and other conditions differ substantially from the current operating environment.

During the three months ended June 30, 2026, the Company recorded net charge-offs of $1.8 million, or 0.33% of average loans, on an annualized basis, compared to net recoveries of $585,000, or 0.11% of average loans, on an annualized basis, for the three months ended June 30, 2025. During the three months ended June 30, 2026, the increase in net charge-offs was due to the $1.8 million charge-off of the participation loan discussed above.

Non-Interest Income.

During the three months ended June 30, 2026, non-interest income decreased $17,000, or 0.5%, to $3.4 million from $3.4 million for the three months ended June 30, 2025. During the three months ended June 30, 2026, service charges and fees on deposits increased $187,000, or 8.4%, wealth management income increased $96,000, or 32.8%, income from BOLI increased $19,000, or 3.7%, from $516,000 for the three months ended June 30, 2025, to $535,000 for the three months ended June 30, 2026. During the three months ended June 30, 2026 and the three months ended June 30, 2025, the Company reported unrealized gains on marketable equity securities of $47,000 and $25,000, respectively. During the three months ended June 30, 2025, the Company reported a gain of $243,000 on non-marketable equity investments and did not have comparable income during the three months ended June 30, 2026. During the three months ended June 30, 2025, the Company reported $95,000 in other income from loan-level swap fees on commercial loans and did not have comparable income during the three months ended June 30, 2026.

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Non-Interest Expense.

For the three months ended June 30, 2026, non-interest expense increased $699,000, or 4.5%, to $16.4 million from $15.7 million for the three months ended June 30, 2025. The increase in non-interest expense was due to an increase in salaries and benefits of $645,000, or 7.3%, due to annual merit increases and increases in health insurance benefits, an increase in software related expense of $67,000, or 10.4%, an increase in occupancy expense of $54,000, or 4.3%, an increase in other non-interest expense of $31,000, or 2.3%, an increase in data processing expense of $28,000, or 3.0%, and an increase in advertising and marketing expense of $14,000, or 3.2%. These increases were partially offset by a decrease in furniture and equipment expense of $87,000, or 17.7%, a decrease in debit card and ATM processing fees of $30,000, or 4.5%, and a decrease in FDIC insurance expense of $22,000, or 5.5%.

For the three months ended June 30, 2026, the efficiency ratio was 72.0%, compared to 74.4% for the three months ended June 30, 2025. For the three months ended June 30, 2026, the adjusted efficiency ratio, a non-GAAP financial measure, was 72.2% compared to 75.3% for the three months ended June 30, 2025. The decreases in the efficiency ratio and the adjusted efficiency ratio were driven by an increase in total revenues, defined as the sum of net interest income and non-interest income, during the three months ended June 30, 2026, compared to the three months ended June 30, 2025. See “Explanation of Use of Non-GAAP Financial Measurements” for the related efficiency ratio calculation and a reconciliation of GAAP to non-GAAP financial measures.

Income Taxes.

Income tax expense for the three months ended June 30, 2026, was $1.2 million, or an effective tax rate of 25.1%, compared to $1.4 million, or an effective tax rate of 23.7%, for the three months ended June 30, 2025. The increase is due to higher projected pre-tax income for the twelve months ended December 31, 2026.

COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND JUNE 30, 2025

General.

For the six months ended June 30, 2026, the Company reported net income of $8.4 million, or $0.42 per diluted share, compared to $6.9 million, or $0.34 per diluted share, for the six months ended June 30, 2025. Net interest income increased $5.0 million, or 15.0%, provision for credit losses increased $2.1 million, non-interest income increased $657,000, or 10.6%, and non-interest expense increased $1.5 million, or 4.9%, during the same period. Return on average assets and return on average equity were 0.62% and 6.80% for the six months ended June 30, 2026, respectively, compared to 0.52% and 5.87% for the six months ended June 30, 2025, respectively.

Net Interest and Dividend Income.

The following tables set forth the information relating to our average balance and net interest income for the six months ended June 30, 2026 and 2025, and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated. Yields and costs are derived by dividing interest income by the average balance of interest-earning assets and interest expense by the average balance of interest-bearing liabilities for the periods shown. The interest rate spread is the difference between the total average yield on interest-earning assets and the cost of interest-bearing liabilities. Net interest margin represents tax-equivalent net interest and dividend income as a percentage of average interest-earning assets. Average balances are derived from actual daily balances over the periods indicated. Interest income includes fees earned when the real estate loans are prepaid or refinanced. For analytical purposes, the interest earned on tax-exempt assets is adjusted to a tax-equivalent basis to recognize the income tax savings which facilitates comparison between taxable and tax-exempt assets.

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Six Months Ended June 30,
2026 2025
Average Average Yield/ Average Average Yield/
Balance Interest Cost(8) Balance Interest Cost(8)
(Dollars in thousands)
ASSETS:
Interest-earning assets
Loans(1)(2) $2,188,207 $55,643 5.13% $2,077,424 $51,440 4.99%
Securities(2) 359,921 4,962 2.78 370,249 5,010 2.73
Other investments - at cost 14,874 303 4.11 14,941 360 4.86
Short-term investments(3) 25,436 397 3.15 67,282 1,481 4.44
Total interest-earning assets 2,588,438 61,305 4.78 2,529,896 58,291 4.65
Total non-interest-earning assets 153,256 156,489
Total assets $2,741,694 $2,686,385
LIABILITIES AND EQUITY:
Interest-bearing liabilities
Interest-bearing checking accounts $148,137 660 0.90 $153,212 674 0.89
Savings accounts 191,975 101 0.11 186,196 95 0.10
Money market accounts 728,525 7,669 2.12 695,872 7,569 2.19
Time deposit accounts 707,193 11,906 3.40 696,618 13,475 3.90
Total interest-bearing deposits 1,775,830 20,336 2.31 1,731,898 21,813 2.54
Short-term borrowings and long-term debt 105,907 2,580 4.91 122,426 3,060 5.04
Interest-bearing liabilities 1,881,737 22,916 2.46 1,854,324 24,873 2.70
Non-interest-bearing deposits 590,820 571,245
Other non-interest-bearing liabilities 20,900 23,826
Total non-interest-bearing liabilities 611,720 595,071
Total liabilities 2,493,457 2,449,395
Total equity 248,237 236,990
Total liabilities and equity $2,741,694 $2,686,385
Less: Tax-equivalent adjustment(2) (243) (242)
Net interest and dividend income $38,146 $33,176
Net interest rate spread(4) 2.30% 1.92%
Net interest rate spread, on a tax equivalent basis(5) 2.32% 1.95%
Net interest margin(6) 2.97% 2.64%
Net interest margin, on a tax equivalent basis(7) 2.99% 2.66%
Ratio of average interest-earning
assets to average interest-bearing liabilities 137.56% 136.43%
(1)Loans, including nonaccrual loans, are net of deferred loan origination costs and unadvanced funds.
(2)Loan and securities income are presented on a tax-equivalent basis using a tax rate of 21%. The tax-equivalent adjustment is deducted from tax-equivalent net interest and dividend income to agree to the amount reported on the consolidated statements of net income.
(3)Short-term investments include federal funds sold.
(4)Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(5)Net interest rate spread, on a tax-equivalent basis, represents the difference between the tax-equivalent weighted average yield on interest-earning assets and the tax-equivalent weighted average cost of interest-bearing liabilities. See “Explanation of Use of Non-GAAP Financial Measurements.”
(6)Net interest margin represents net interest and dividend income as a percentage of average interest-earning assets.
(7)Net interest margin, on a tax-equivalent basis, represents tax-equivalent net interest and dividend income as a percentage of average interest-earning assets. See “Explanation of Use of Non-GAAP Financial Measurements.”
(8)Annualized.

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Rate/Volume Analysis.

The following table shows how changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected our interest and dividend income and interest expense during the periods indicated. Information is provided in each category with respect to: (1) interest income changes attributable to changes in volume (changes in volume multiplied by prior rate); (2) interest income changes attributable to changes in rate (changes in rate multiplied by prior volume); and (3) the net change.

The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

Six Months Ended June 30, 2026 compared to

Six Months Ended June 30, 2025

Increase (Decrease) Due to
Volume Rate Net
Interest-earning assets (Dollars in thousands)
Loans (1) $2,743 $1,460 $4,203
Securities (1) (140) 92 (48)
Other investments - at cost (2) (55) (57)
Short-term investments (921) (163) (1,084)
Total interest-earning assets 1,680 1,334 3,014
Interest-bearing liabilities
Interest-bearing checking accounts (22) 8 (14)
Savings accounts 3 3 6
Money market accounts 355 (255) 100
Time deposits 205 (1,774) (1,569)
Short-term borrowings and long-term debt (413) (67) (480)
Total interest-bearing liabilities 128 (2,085) (1,957)
Change in net interest and dividend income $1,552 $3,419 $4,971
(1)Securities, loan income and change in net interest and dividend income are presented on a tax-equivalent basis using a tax rate of 21%. The tax-equivalent adjustment is deducted from tax-equivalent net interest income to agree to the amount reported in the consolidated statements of net income. See “Explanation of Use of Non-GAAP Financial Measurements.”

During the six months ended June 30, 2026, net interest income increased $5.0 million, or 15.0%, to $38.1 million, compared to $33.2 million for the six months ended June 30, 2025. The increase in net interest income was due to an increase in interest and dividend income of $3.0 million, or 5.2%, driven by higher interest income from loans, and a decrease in interest expense of $2.0 million, or 7.9%. The decrease in interest expense was due to a decrease in interest expense on deposits of $1.5 million, or 6.8%, and a decrease in interest expense on borrowings of $480,000, or 15.7%.

The net interest margin increased 33 basis points from 2.64%, for the six months ended June 30, 2025, to 2.97% for the six months ended June 30, 2026. The net interest margin, on a tax-equivalent basis, increased 33 basis points from 2.66%, for the six months ended June 30, 2025, to 2.99% for the six months ended June 30, 2026. During the six months ended June 30, 2026 and the six months ended June 30, 2025, the Company recorded prepayment penalties related to payoffs in the commercial real estate portfolio of $98,000 and $425,000, respectively. Excluding the prepayment penalties, the net interest margin increased 35 basis points from 2.61%, for the six months ended June 30, 2025 to 2.96%, for the six months ended June 30, 2026.

The average yield on interest-earning assets, without the impact of tax-equivalent adjustments, was 4.76% for the six months ended June 30, 2026, compared to 4.63% for the six months ended June 30, 2025. The average loan yield, without the impact of tax-equivalent adjustments, was 5.11% for the six months ended June 30, 2026, compared to 4.97% for the six months ended June 30, 2025. During the six months ended June 30, 2026, average interest-earning assets increased $58.5 million, or 2.3%, to $2.6 billion, from the same period in 2025. The increase was primarily due to an increase in average loans of $110.8 million, or 5.3%, partially offset by a decrease in average short-term investments, consisting of cash and cash equivalents, of $41.8 million, or 62.2%, and a decrease in average securities of $10.3 million, or 2.8%.

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The average cost of total funds, including non-interest bearing accounts and borrowings, decreased 20 basis points from 2.07% for the six months ended June 30, 2025, to 1.87% for the six months ended June 30, 2026. The average cost of core deposits, which the Company defines as all deposits except time deposits, decreased three basis points to 1.02% for the six months ended June 30, 2026, from 1.05% for the six months ended June 30, 2025. The average cost of time deposits decreased 50 basis points from 3.90% for the six months ended June 30, 2025, to 3.40% for the six months ended June 30, 2026. The average cost of borrowings, including subordinated debt, decreased 13 basis points from 5.04% for the six months ended June 30, 2025, to 4.91% for the six months ended June 30, 2026. Average demand deposits, an interest-free source of funds, increased $19.6 million, or 3.4%, from $571.2 million, or 24.8% of total average deposits, for the six months ended June 30, 2025, to $590.8 million, or 25.0% of total average deposits, for the six months ended June 30, 2026.

Provision for (Reversal of) Credit Losses.

During the six months ended June 30, 2026, the Company recorded a provision for credit losses of $1.6 million, compared to a reversal of credit losses of $473,000 during the six months ended June 30, 2025. The increase in the provision for credit losses was primarily due to the partial charge-off of $1.8 million on the participation loan discussed above. The provision for credit losses was also determined by a number of factors: the continued overall credit performance of the Company’s diversified loan portfolio, changes in the loan portfolio mix and Management’s consideration of existing economic conditions and the economic outlook from the Federal Reserve’s actions to control inflation. Management continues to monitor macroeconomic variables related to increasing interest rates, tariffs, inflation and concerns of an economic downturn, and believes it is appropriately reserved for the current economic environment. Management believes that the allowance for credit losses are at adequate levels, however, future adjustments may be necessary if economic, real estate market values and other conditions differ substantially from the current operating environment.

The Company recorded net charge-offs of $1.8 million, or 0.17% of average loans, on an annualized basis, for the six months ended June 30, 2026, as compared to net recoveries of $556,000, or 0.05%, of average loans, on an annualized basis, for the six months ended June 30, 2025. The increase in net charge-offs was due to the $1.8 million charge-off of the participation loan discussed above. During the six months ended June 30, 2025, the Company recorded a recovery of $624,000 on a previously charged-off commercial relationship acquired on October 21, 2016 from Chicopee Bancorp, Inc.

Non-Interest Income.

For the six months ended June 30, 2026, non-interest income increased $657,000, or 10.6%, from $6.2 million during the six months ended June 30, 2025, to $6.8 million. During the six months ended June 30, 2026, non-interest income included the recognition of $450,000 in BOLI death benefits. Excluding the BOLI death benefits, non-interest income increased $207,000, or 3.4%. During the same period, service charges and fees on deposits increased $295,000, or 6.9%, wealth management income increased $225,000, or 40.6%, and income from BOLI increased $22,000, or 2.2%.

During the six months ended June 30, 2025, the Company reported a gain of $243,000 on non-marketable equity investments and did not have comparable income during the six months ended June 30, 2026. During the six months ended June 30, 2025, the Company reported $95,000 in other income from loan-level swap fees on commercial loans and did not have comparable income during the six months ended June 30, 2026. During the six months ended June 30, 2026, the Company reported unrealized gains on marketable equity securities of $34,000, compared to unrealized gains on marketable equity securities of $20,000 during the six months ended June 30, 2025. Gains and losses from the investment portfolio vary from quarter to quarter based on market conditions, as well as the related yield curve and valuation changes. During the six months ended June 30, 2025, the Company reported $11,000 in gains from mortgage banking activities and did not have comparable gains or losses during the six months ended June 30, 2026.

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Non-Interest Expense.

For the six months ended June 30, 2026, non-interest expense increased $1.5 million, or 4.9%, to $32.4 million, compared to $30.8 million for the six months ended June 30, 2025. The increase in non-interest expense was primarily due to an increase in salaries and employee benefits of $1.5 million, or 8.5%, due to annual merit increases and increases in health insurance benefits. During the same period, occupancy expense increased $204,000, or 7.6%, due to an increase in snow removal costs of $111,000, or 76.6%. Software related expenses increased $97,000, or 7.4%, debit card and ATM processing fees increased $56,000, or 4.5%, and advertising expense increased $27,000, or 3.1%. These increases were partially offset by a decrease in furniture and equipment expense of $141,000, or 14.1%, a decrease in FDIC insurance expense of $61,000, or 7.3%, a decrease in other non-interest expense of $49,000, or 1.8%, a decrease in professional fees of $38,000, or 3.3%, and a decrease in data processing expense of $33,000, or 1.8%.

For the six months ended June 30, 2026, the efficiency ratio was 72.0% compared to 78.4% for the six months ended June 30, 2025. For the six months ended June 30, 2026, the adjusted efficiency ratio, a non-GAAP financial measure, was 72.7%, compared to 78.9% for the six months ended June 30, 2025. The decreases in the efficiency ratio and the adjusted efficiency ratio were driven by higher revenues, defined as the sum of net interest income and non-interest income, during the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The adjusted efficiency ratio is a non-GAAP measure. See “Explanation of Use of Non-GAAP Financial Measurements” for the related efficiency ratio calculation and a reconciliation of GAAP to non-GAAP financial measures.

Income Taxes.

Income tax expense for the six months ended June 30, 2026, was $2.6 million, representing an effective tax rate of 23.7%, compared to $2.1 million, representing an effective tax rate of 23.2%, for the six months ended June 30, 2025. The increase is due to higher projected pre-tax income for the twelve months ended December 31, 2026.

Explanation of Use of Non-GAAP Financial Measurements.

We believe that it is common practice in the banking industry to present interest income and related yield information on tax-exempt loans and securities on a tax-equivalent basis, as well as presenting tangible book value per share and adjusted efficiency ratio, and that such information is useful to investors because it facilitates comparisons among financial institutions. However, the adjustment of interest income and yields on tax-exempt loans and securities to a tax-equivalent amount, as well as the presentation of tangible book value per share and adjusted efficiency ratio, may be considered to include financial information that is not in compliance with GAAP. A reconciliation from GAAP to non-GAAP is provided below.

At June 30, 2026 At June 30, 2025
(Dollars in thousands, except per share data)
Book Value per Share (GAAP) $12.39 $11.68
Non-GAAP adjustments:
Goodwill (0.62) (0.61)
Core deposit intangible (0.05) (0.06)
Tangible Book Value per Share (non-GAAP) $11.72 $11.01
Three Months Ended Six Months Ended
June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
(Dollars in thousands)
Loan income (no tax adjustment) $27,960 $26,214 $55,400 $51,198
Tax-equivalent adjustment (1) 124 121 243 242
Loan income (tax-equivalent basis) $28,084 $26,335 $55,643 $51,440

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Three Months Ended Six Months Ended
June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025
(Dollars in thousands)
Net interest income (no tax adjustment) $19,321 $17,642 $38,146 $33,176
Tax-equivalent adjustment (1) 124 121 243 242
Net interest income (tax-equivalent basis) $19,445 $17,763 $38,389 $33,418
Net interest income (no tax adjustment) $19,321 $17,642 $38,146 $33,176
Less:
Prepayment penalties 82 425 98 425
Adjusted net interest income (non-GAAP) $19,239 $17,217 $38,048 $32,751
Average interest-earning assets $2,585,976 $2,530,077 $2,588,438 $2,529,896
Net interest margin (no tax adjustment) 3.00% 2.80% 2.97% 2.64%
Net interest margin (tax-equivalent) 3.02% 2.82% 2.99% 2.66%
Net interest margin, excluding prepayment penalties (no tax adjustment) (non-GAAP) 2.98% 2.73% 2.96% 2.61%
Efficiency Ratio:
Non-interest Expense (GAAP) $16,355 $15,656 $32,363 $30,840
Net Interest Income (GAAP) $19,321 $17,642 $38,146 $33,176
Non-interest Income (GAAP) $3,394 $3,411 $6,827 $6,170
Non-GAAP adjustments:
Unrealized gain on marketable equity securities (47) (25) (34) (20)
Gain on non-marketable equity investments — (243) — (243)
Gain on bank-owned life insurance death benefits (1) — (450) —
Non-interest Income for Adjusted Efficiency Ratio (non-GAAP) $3,346 $3,143 $6,343 $5,907
Total Revenue for Adjusted Efficiency Ratio (non-GAAP) $22,667 $20,785 $44,489 $39,083
Efficiency Ratio (GAAP) 72.00% 74.36% 71.96% 78.38%
Adjusted Efficiency Ratio (Non-interest Expense (GAAP)/Total Revenue for Adjusted Efficiency Ratio (non-GAAP)) 72.15% 75.32% 72.74% 78.91%
(1) The tax equivalent adjustment is based upon a 21% tax rate.

Liquidity and Capital Resources.

The term “liquidity” refers to our ability to generate adequate amounts of cash to fund loan originations, loan purchases, deposit withdrawals and operating expenses. Our primary sources of liquidity are deposits, scheduled amortization and prepayments of loan principal and mortgage-backed securities, maturities, and calls of investment securities and funds provided by our operations. We also can borrow funds from the FHLB and the FRB based on eligible collateral of loans and securities. Our material cash commitments include funding loan originations, fulfilling contractual obligations with third-party service providers, maintaining operating leases for certain of our Bank properties and satisfying repayment of our long-term debt obligations.

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Primary Sources of Liquidity

The Company, on an ongoing basis, closely monitors the Company’s liquidity position for compliance with internal policies, and believes that available sources of liquidity are adequate to meet funding needs in the normal course of business. As part of that monitoring process, the Company stresses the potential liabilities calculation to ensure a strong liquidity position. Included in the calculation are assumptions of some significant deposit run-off as well as funds needed for loan closing and investment purchases. The Company does not anticipate engaging in any activities, either currently or over the long-term, for which adequate funding would not be available and which would therefore result in significant pressure on liquidity. However, an economic recession could negatively impact the Company’s liquidity. The Bank relies heavily on FHLB as a source of funds, particularly with its overnight line of credit. In past economic recessions, some FHLB branches have suspended dividends, cut dividend payments, and not bought back excess FHLB stock that members hold in an effort to conserve capital. FHLB has stated that it expects to be able to continue to pay dividends, redeem excess capital stock, and provide competitively priced advances in the future.

At June 30, 2026 and December 31, 2025, outstanding borrowings from the FHLB were $38.5 million and $83.0 million, respectively. At June 30, 2026, the Company had $547.5 million in available borrowing capacity with the FHLB, including the $9.5 million Ideal Way Line of Credit. The Company has the ability to increase its borrowing capacity with the FHLB by pledging additional investment securities or loans.

The Company has an available line of credit of $392.7 million with the FRB Discount Window at an interest rate determined and reset on a daily basis. Borrowings from the FRB Discount Window are secured by certain eligible loan collateral and securities from the Company’s investment portfolio not otherwise pledged. As of June 30, 2026 and December 31, 2025, there were no advances outstanding under either of these lines.

In addition, the Company has available lines of credit of $15.0 million and $10.0 million with two correspondent banks. Interest rates on these lines are determined and reset on a daily basis by each respective bank. At June 30, 2026 and December 31, 2025, the Company did not have an outstanding balance under either of these lines of credit. In addition, the Company may enter into reverse repurchase agreements with approved broker-dealers which would allow the Company to borrow money by pledging securities as collateral.

The Company also has outstanding, at any time, a significant number of commitments to extend credit and provide financial guarantees to third parties. These arrangements are subject to strict credit control assessments. Guarantees specify limits to our obligations. Since many commitments and almost all guarantees expire without being funded in whole or in part, the contract amounts are not estimates of future cash flows. The Company is also obligated under agreements with the FHLB to repay borrowed funds and is obligated under leases for certain branches, ATMs and equipment.

Maturing investment securities are a relatively predictable source of funds. However, deposit flows, calls of securities and prepayments of loans and mortgage-backed securities are strongly influenced by interest rates, general and local economic conditions, and competition in the marketplace. These factors reduce the predictability of the timing of these sources of funds.

The Company’s primary activities are the origination of commercial real estate loans, commercial and industrial loans, and residential real estate loans, as well as and the purchase of mortgage-backed and other investment securities. At June 30, 2026, the Company had approximately $163.5 million in loan commitments and letters of credit to borrowers and approximately $343.7 million in available home equity and other unadvanced lines of credit.

Deposit inflows and outflows are affected by the level of interest rates, the products and interest rates offered by competitors and by other factors. At June 30, 2026, time deposit accounts scheduled to mature within one year totaled $715.1 million, or 97.2% of total time deposits. Based on the Company’s deposit retention experience and current pricing strategy, we anticipate that a significant portion of these time deposits will remain on deposit. We monitor our liquidity position frequently and anticipate that it will have sufficient funds to meet our current funding commitments for the next 12 months and beyond.

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Material Cash Commitments

The Company entered into a long-term contractual obligation with a vendor for use of its core provider and ancillary services beginning in 2016. Total remaining contractual obligations outstanding with this vendor as of June 30, 2026 were estimated to be $21.7 million, with $5.0 expected to be paid within one year, and the remaining $16.7 million to be paid within the next four years. Further, the Company has operating leases for certain of its banking offices and ATMs. Our leases have remaining lease terms of less than one year to twelve years, some of which include options to extend the leases for additional five-year terms up to ten years. At June 30, 2026, undiscounted lease liabilities totaled $8.2 million. Principal payments expected to be made on our lease liabilities during the twelve months ended June 30, 2027 totaled $1.5 million. The remaining lease liability payments totaled $6.7 million and are expected to be made after June 30, 2027.

On April 20, 2021, the Company issued and sold $20.0 million in aggregate principal amount of its 4.875% Fixed-to-Floating Rate Notes to certain qualified institutional buyers in a private placement transaction. The Notes mature on May 1, 2031 (“Maturity Date”) and were designed to qualify as Tier 2 capital under the Federal Reserve’s capital adequacy regulations. At June 30, 2026, $19.8 million aggregate principal amount of the Notes was outstanding.

From the issuance date through April 30, 2026, the Notes bore interest at a fixed interest rate of 4.875% per annum. Beginning on May 1, 2026, the Notes bear interest at a floating rate equal to the 90-day average SOFR, plus 412 basis points, payable quarterly in arrears. The Company has the ability to call the Notes, in whole, or in part, at a redemption price equal to 100% of the principal amount at certain times on or after May 1, 2026, and at any time upon the occurrence of certain events, subject in each case to the approval of the Federal Reserve. As of June 30, 2026, the Company has not redeemed any portion of the Notes.

At June 30, 2026, the Company exceeded each of the applicable regulatory capital requirements to be considered “well-capitalized”. As of June 30, 2026, the Bank is considered “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 following table. There are no conditions or events since that notification that management believes would change our category.

Our actual capital ratios of June 30, 2026 and December 31, 2025 are also presented in the following table.

Actual Minimum For Capital Adequacy Purpose Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions
Amount Ratio Amount Ratio Amount Ratio
(Dollars in thousands)
June 30, 2026
Total Capital (to Risk Weighted Assets):
Consolidated $288,690 13.96% $165,421 8.00% N/A N/A
Bank 278,058 13.47 165,133 8.00 $206,416 10.00%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated 252,221 12.20 124,066 6.00 N/A N/A
Bank 257,436 12.47 123,850 6.00 165,133 8.00
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Consolidated 252,221 12.20 93,049 4.50 N/A N/A
Bank 257,436 12.47 92,887 4.50 134,170 6.50
Tier 1 Leverage Ratio (to Adjusted Average Assets):
Consolidated 252,221 9.18 109,945 4.00 N/A N/A
Bank 257,436 9.37 109,842 4.00 137,302 5.00

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Actual Minimum For Capital Adequacy Purpose Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions
Amount Ratio Amount Ratio Amount Ratio
(Dollars in thousands)
December 31, 2025
Total Capital (to Risk Weighted Assets):
Consolidated $291,864 14.19% $164,584 8.00% N/A N/A
Bank 276,990 13.48 164,435 8.00 $205,544 10.00%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated 251,103 12.21 123,438 6.00 N/A N/A
Bank 256,019 12.46 123,326 6.00 164,435 8.00
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Consolidated 251,103 12.21 92,578 4.50 N/A N/A
Bank 256,019 12.46 92,495 4.50 133,603 6.50
Tier 1 Leverage Ratio (to Adjusted Average Assets):
Consolidated 251,103 9.13 110,013 4.00 N/A N/A
Bank 256,019 9.32 109,878 4.00 137,347 5.00

OFF-BALANCE SHEET ARRANGEMENTS.

The Company does not have any off-balance sheet arrangements, other than noted above under Material Cash Commitments, that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our assessment of our sensitivity to market risk since our presentation in our 2025 Annual Report. Please refer to Item 7A of the 2025 Annual Report for additional information.

ITEM 4: CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.

Management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), as of the end of the period covered by this report. Based upon the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective, to ensure that information required to be disclosed in the reports we file and submit under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported as and when required and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely discussion regarding required disclosure.

Changes in Internal Control Over Financial Reporting.

There have been no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during our last fiscal quarter that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Except as set forth in Item 3 of our Annual Report on Form 10-K for the year ended December 31, 2025, the Company was not involved in any material pending legal proceedings as a plaintiff or as a defendant, other than routine legal proceedings occurring in the ordinary course of business. We believe that all such claims and actions currently pending against us, if any, are either adequately covered by insurance or would not have a material adverse effect on us if decided in a manner unfavorable to us.

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ITEM 1A. RISK FACTORS.

For a summary of risk factors relevant to our operations, see Part 1, Item 1A, “Risk Factors” in our 2025 Annual Report. There are no additional material changes in the risk factors relevant to our operations since December 31, 2025.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The following table sets forth information with respect to purchases made by us of our common stock during the three months ended June 30, 2026.

Period Total Number of Shares Purchased Average Price Paid per Share ($) Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Number of Shares that May Yet Be Purchased Under the Program (1)
April 1 - 30, 2026 126,966 13.94 126,966 559,499
May 1 – 31, 2026 48,034 13.69 48,034 511,465
June 1 - 30, 2026 20,000 13.17 20,000 491,465
Total 195,000 13.80 195,000 491,465
(1)On April 22, 2025, the Board of Directors authorized a new stock repurchase plan (the “2025 Plan”), under which the Company is authorized to repurchase up to 1,000,000 shares of its common stock, or approximately 4.8% of the Company’s outstanding shares of common stock as of the date the 2025 Plan was adopted.

There were no sales by us of unregistered securities during the three months ended June 30, 2026.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURE.

Not applicable.

ITEM 5. OTHER INFORMATION.

During the quarter ended June 30, 2026, no director or officer of the Company adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.

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ITEM 6.EXHIBITS.

Exhibit

Number

 Exhibit Description
3.2 Restated Articles of Organization of Western New England Bancorp, Inc. (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the Securities and Exchange Commission on October 26, 2016).
3.3 Amended and Restated Bylaws of Western New England Bancorp, Inc. (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the Securities and Exchange Commission on February 2, 2017).
4.1 Form of Stock Certificate of Western New England Bancorp, Inc. (f/k/a Westfield Financial, Inc.) (incorporated by reference to Exhibit 4.1 of the Registration Statement No. 333-137024 on Form S-1 filed with the Securities and Exchange Commission on August 31, 2006).
31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1* Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101** Financial statements from the quarterly report on Form 10-Q of Western New England Bancorp, Inc. for the quarter ended June 30, 2026, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Net Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*Filed herewith.
**Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on August 7, 2026.

Western New England Bancorp, Inc.
By: /s/ James C. Hagan
James C. Hagan
President and Chief Executive Officer
By: /s/ Guida R. Sajdak
Guida R. Sajdak
Executive Vice President and Chief Financial Officer