What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-05 compared with 2024-03-12 · 202 added, 255 removed, 1658 unchanged (22% of the section changed)

15 unchanged sentences

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 5, 2025 , expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

Change in accounting principle

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for the recognition and measurement of credit losses in 2023 due to the adoption of Accounting Standard Codification Topic 326, Financial Instruments ‑ Credit Losses.

Basis for Opinion

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee of the board of directors and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses on Loans and Unfunded Commitments

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s allowance for credit losses for loans totaled $27.9 million as of December 31, 2023 , which consists of an allowance for collectively evaluated loans of $27.0 million and an allowance for individually evaluated loans of $0.9 million.

The Company’s allowance for credit losses for unfunded commitments totaled $0.9 million as of December 31, 2023 .

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses on Loans

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s allowance for credit losses for loans totaled $29 million as of December 31, 2024, which consists of an allowance for collectively evaluated loans of $29 million and no allowance for individually evaluated loans.

Management estimates the allowance based on credit losses believed to be in the Company’s loan portfolio over the life of its loans, segmented by portfolio and risk classification, at the balance sheet date.

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To further refine the expected losses, management selects a group of peer banks to scale the loss rate models to produce an allowance that is representative of the Company’s loan portfolio and geographic area (“peer scalar”).

The allowance for credit losses on unfunded commitments is based on the same assumptions as funded loans and also considers the expected utilization of unfunded commitments.

To account for economic uncertainty, the Company incorporates multiple economic scenarios in determining the allowance for credit losses.

The scenarios include various projections based on variables such as Gross Domestic Product, interest rates,

property price indices, and employment measures, among others.

The scenarios include various projections based on variables such as Gross Domestic Product, interest rates, property price indices, and employment measures, among others.

The scenarios are probability-weighted based on available information at the time the calculation is conducted.

Management considers qualitative adjustments to expected credit loss estimates for information not already captured in the quantitative loss estimation models.

The measurement of expected credit losses is influenced by the Company’s judgment of market conditions, changes in loan composition or concentrations, performance trends, regulatory changes, uncertainty in macroeconomic forecasts, or other asset specific risk characteristics.

Key assumptions used in the models include portfolio segmentation, the peer scalar, forecasted economic scenarios, qualitative adjustments, and the expected utilization of unfunded commitments, among others.

The measurement of expected credit losses is influenced by the Company’s judgment of

market conditions, changes in loan composition or concentrations, performance trends, regulatory changes, uncertainty in macroeconomic forecasts, or other asset specific risk characteristics.

Key assumptions used in the models include portfolio segmentation, risk rating, forecasted economic scenarios, the peer scalar, and qualitative adjustments, among others.

Loan portfolios are segmented by loan level attributes such as loan type, size, date of origination, and delinquency status to create homogenous loan pools.

Pool level metrics are calculated, and loss rates are subsequently applied to the pools as the loans have similar characteristics.

We identified the selection of the models being used in determining the loss rates, peer bank determinations for scaling, forecasted economic scenarios, qualitative adjustments, and expected utilization of unfunded commitments components of the allowance for credit losses for loans and the allowance for credit losses on unfunded loan commitments (herein referred to as “the allowance”) as a critical audit matter because auditing the underlying assumptions in those components involved a high degree of complexity and auditor judgment given the high degree of subjectivity exercised by management in developing the allowance, which resulted in an increase in audit effort and the use of an internal economic specialist due to the impact these assumptions have on the accounting estimate.

Our audit procedures related to management’s selection of the models being used in determining the loss rates, peer bank determinations for scaling, forecasted economic scenarios, qualitative adjustments, and expected utilization of unfunded commitments components of the allowance included the following, among others:

– We obtained an understanding of the relevant controls related to management’s selection of the models being used in determining the loss rates, peer bank determinations for scaling, forecasted economic scenarios, qualitative adjustments, and expected utilization of unfunded commitments components of the allowance and tested such controls for design and operating effectiveness.

We identified the peer bank determinations for scaling, forecasted economic scenarios, and qualitative adjustment components of the allowance for credit losses for loans (herein referred to as “the allowance”) as a critical audit matter because auditing the underlying assumptions in those components involved a high degree of complexity and auditor judgment given the high degree of subjectivity exercised by management in developing the allowance, which resulted in an increase in audit effort due to the impact these assumptions have on the accounting estimate .

Additionally, we used an internal economic specialist to assist in auditing the reasonable and supportable forecast based on the subjectivity and complexity involved with determining that assumption.

Our audit procedures related to management’s selection of the models being used in determining the peer bank determinations for scaling, forecasted economic scenarios, and qualitative adjustment components of the allowance included the following, among others:

– We obtained an understanding of the relevant controls related to management’s selection of the peer bank determinations for scaling, forecasted economic scenarios, and qualitative adjustment components of the allowance and tested such controls for design and operating effectiveness.

– We evaluated management’s judgments and assumptions used in the development of the qualitative factors for reasonableness and tested the reliability of the underlying data on which these factors are based, by comparing information to source documents and external information sources.

– We tested management’s process and significant judgments in the selection of the models being used in determining the loss rates, peer bank determinations for scaling, forecasted economic scenarios, and expected utilization of unfunded commitments of the allowance for credit losses, which included:

• Evaluating the reasonableness of management’s judgments related to the establishment of the models being used in determining the loss rates and expected utilization of unfunded commitments and testing the completeness and accuracy of data used by management in determining inputs to the models by agreeing those inputs to internal information sources .

– We tested management’s process and significant judgments in the selection of the peer bank determinations for scaling and forecasted economic scenarios of the allowance for credit losses, which included:

• Evaluating management’s considerations and data utilized as a basis for the peer bank determinations for scaling used in the loss rate models and testing the completeness and accuracy of the underlying data by tracing the data to independent sources.

• Evaluating management’s considerations and selection of forecasted economic scenarios and weightings, and testing the reasonableness of the underlying data, which included Gross Domestic Product, interest rates, property price indices, and employment measures , among others, by comparing these forecasts to external and internal information sources that were available to management, which included the use of an internal economic specialist.

• We obtained and assessed the reasonableness of model validations performed by a reputable third party evaluating the statistical documentation and process used by management in validating the models established by the vendor.

• Evaluating management’s considerations and selection of forecasted economic scenarios and testing the reasonableness of the underlying data, which included Gross Domestic Product, interest rates, property price indices, and employment measures , among others, by comparing these forecasts to external and internal information sources that were available to management, which included the use of an internal economic specialist.

• Evaluating the reasonableness of management’s weighting of selected forecasted economic scenarios by considering the consistency with available external market data.

/s/ RSM US LLP

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2,672,959 2,685,301

Other real estate owned 8,299 —

Accrued interest receivable 14,535 14,863

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Net interest income 83,282 94,468

Provision for loan losses 866 5,437

Net interest income after provision for loan losses 93,602 89,306

Provision for credit losses 22,620 866

Net interest income after provision for credit losses 60,662 93,602

Noninterest income

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Net income $ 9,770 $ 36,663

Other comprehensive income (loss):

Unrealized gains (losses) on securities:

Unrealized holding gains (losses) on available for sale securities 1,149 ( 10,817 )

Other comprehensive income:

Unrealized gains on securities:

Unrealized holding gains on available for sale securities 2,525 1,149

Reclassification adjustment for gains realized in net income — —

Net change in unrealized gains (losses) 1,149 ( 10,817 )

Income tax (expense) benefit ( 209 ) 2,416

Unrealized gains (losses) on securities, net of tax 940 ( 8,401 )

Unrealized (losses) gains on interest rate swaps:

Unrealized (losses) gains on interest rate swaps ( 3,065 ) 21,598

Income tax benefit (expense) 650 ( 4,825 )

Unrealized (losses) gains on interest rate swaps, net of tax ( 2,415 ) 16,773

Total other comprehensive (loss) income, net of tax ( 1,475 ) 8,372

Net change in unrealized gains 2,525 1,149

Income tax expense ( 547 ) ( 209 )

Unrealized gains on securities, net of tax 1,978 940

Unrealized (losses) on interest rate swaps:

Unrealized (losses) on interest rate swaps ( 1,995 ) ( 3,065 )

Income tax benefit 437 650

Unrealized (losses) on interest rate swaps, net of tax ( 1,558 ) ( 2,415 )

Total other comprehensive income (loss), net of tax 420 ( 1,475 )

Comprehensive income $ 10,190 $ 35,188

8 unchanged sentences

Income (Loss) Total

Balance at January 1, 2022 7,803,166 $ 118,148 $ 92,400 $ ( 8,561 ) $ 201,987

Balance at December 31, 2022 7,730,699 $ 115,018 $ 123,640 $ ( 189 ) $ 238,469

Balance as of January 1, 2023 as adjusted for changes in accounting principle — — ( 4,893 ) — ( 4,893 )

Balance as of January 1, 2023 as adjusted for changes in accounting principle 7,730,699 115,018 118,747 ( 189 ) 233,576

Net income — — 36,663 — 36,663

8 unchanged sentences

Balance at December 31, 2023 7,882,616 118,247 149,169 ( 1,664 ) 265,752

Cumulative effect of change in accounting principle (ASU No.

2016-13,net of tax) — — ( 4,893 ) — ( 4,893 )

Balance as of January 1, 2023 as adjusted for changes in accounting principle 7,730,699 115,018 118,747 ( 189 ) 233,576

Net income — — 9,770 — 9,770

6 unchanged sentences

Stock options exercised — — — — —

Repurchase of common stock ( 85,990 ) ( 2,137 ) — — ( 2,137 )

Balance at December 31, 2024 7,859,873 $ 119,108 $ 152,656 $ ( 1,244 ) $ 270,520

8 unchanged sentences

Net amortization of premiums and discounts on investment securities 148 54

Provision for loan losses 866 5,437

Provision for credit losses 22,620 866

Credit for deferred income taxes ( 469 ) ( 191 )

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Stock-based compensation 2,998 3,074

Loss (gain) on sale of premises and equipment 13 ( 20 )

Loss on sale of premises and equipment — 13

Net change in:

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Proceeds from principal repayments on held to maturity securities 263 223

Net proceeds from sales and calls of available for sale securities 10,000 —

Purchases of available for sale securities ( 10,000 ) ( 9,847 )

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Purchases of premises and equipment, net ( 613 ) ( 2,045 )

(Purchase) of Federal Home Loan Bank stock ( 480 ) ( 2,402 )

Proceeds (purchases) of Federal Home Loan Bank stock 41 ( 480 )

Net cash used in investing activities ( 33,961 ) ( 48,302 )

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Net change in other deposits ( 5,974 ) ( 152,744 )

Net change in FHLB advances — 40,000

Proceeds from exercise of options — 155

Issuance of subordinated debt — 34,352

Dividends paid on common stock ( 6,283 ) ( 6,241 )

Repurchase of common stock ( 2,137 ) —

Net cash (used in) provided by financing activities ( 70,147 ) 739,490

Net (decrease) increase in cash and cash equivalents ( 86,522 ) 10,997

Net cash provided by (used in) financing activities 42,392 ( 70,147 )

Net increase (decrease) in cash and cash equivalents 38,367 ( 86,522 )

Cash and cash equivalents:

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Loans transferred to other real estate owned $ ( 8,299 ) $ —

Premises and equipment transferred to held for sale — —

Net change in unrealized losses or gains on available-for-sale securities 2,525 1,149

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The Bank provides a wide range of services to clients in our market, an area encompassing approximately a 100 mile radius around our branch network.

In addition, the Bank pursues certain types of commercial lending opportunities outside our market, particularly where we have strong relationships.

In addition, the Bank pursues certain types of commercial banking opportunities outside our market, particularly where we have strong relationships.

The Bank operates nine branches in New Canaan, Stamford, Fairfield, Westport, Darien, Norwalk, and Hamden, Connecticut.

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Accordingly, all significant operating decisions are based upon analysis of the Company as one segment or unit.

The Chief Executive Officer (CEO), acting as the Chief Operating Decision Maker (CODM), determines the Company's one reportable segment.

This determination is based on information about the Company's banking operations, its primary business, and the level of detail provided to the CODM for performance review.

Similar operating performance, products and services, and customer bases allow for aggregation of business components into this one segment.

The CODM evaluates financial performance by reviewing the consolidated financial results of the Company, analyzing factors such as revenue streams, significant expenses, and capital levels, as well as budget-to-actual results.

Consolidated net income and related performance metrics are also used to benchmark the Company’s performance against competitors.

The analysis of the Company’s results, including benchmarking, informs performance assessment and compensation decisions.

The banking operations generate revenue through loans, investments, and deposits, while significant expenses include interest expense, the provision for credit losses, and salaries and employee benefits.

All operations are domestic.

Basis of Consolidated Financial Statement Presentation

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Allowance for Credit Losses - Securities ("ACL-Securities")

Effective January 1, 2023, pursuant to ASU No.

Pursuant to ASU No.

2016-13, each quarter the Company individually evaluates the available for sale debt securities and held to maturity securities for impairment credit losses.

8 unchanged sentences

Since this is a highly rated state agency and municipal obligation, the Company's expectation of nonpayment of the amortized cost basis is zero.

No allowance for ALC-Securities was recorded for this security as of December 31, 2023.

No allowance for ACL-Securities was recorded for this security as of December 31, 2024.

Bank Owned Life Insurance

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Transfers of financial assets are accounted for as sales when control over the assets has been surrendered.

Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the transferor does not maintain effective control over the transferred assets through either (a) an agreement that both entitles and obligates the transferor to repurchase or redeem the assets before maturity or (b) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.

transferor does not maintain effective control over the transferred assets through either (a) an agreement that both entitles and obligates the transferor to repurchase or redeem the assets before maturity or (b) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.

Loans Receivable

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Consumer installment loans are considered to be pools of small balance homogeneous loans, which are collectively evaluated for credit losses.

Modifications made to a loan are considered under ASU 2022-02 when two conditions are met:

Modifications made to a loan are considered under ASC 2022-02 when two conditions are met:

1) the borrower is experiencing financial difficulties and 2) the modification constitutes a concession that is not in line with market rates and/or terms.

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2016-13, Financial Instruments – Credit Losses (“ASC 326”), which requires the measurement of all expected credit losses for financial assets held at amortized cost to be based on historical experience, current condition, and reasonable and supportable forecasts.

The Company adopted this guidance effective January 1, 2023 and recorded a cumulative effect adjustment that increased the allowance for credit losses for loans and loan commitments by $ 6.4 million , increased deferred tax assets by $ 1.5 million , and decreased retained earnings by $ 4.9 million , net of tax.

The Company adopted this guidance effective January 1, 2023 and

recorded a cumulative effect adjustment that increased the allowance for credit losses for loans and loan commitments by $ 6.4 million , increased deferred tax assets by $ 1.5 million , and decreased retained earnings by $ 4.9 million , net of tax.

The ACL-Loans is measured on each loan’s amortized cost basis, excluding interest receivable, and is initially recognized upon origination or purchase of the loan, and subsequently remeasured on a recurring basis.

The ACL-Loans is recognized as a contra-asset, and credit loss expense is recorded as a provision for loan losses in the consolidated statements of income.

The ACL-Loans is recognized as a contra-asset, and credit loss expense is recorded as a provision for credit losses in the consolidated statements of income.

Loan losses are charged off against the ACL-Loans when management believes the loan is uncollectible.

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Based on the disparate regional concentration, management determined that a select group of peer banks is necessary to scale the loss rate models to produce an ACL that is more representative of the Company’s loan portfolio.

This peer-based calibration, called a "peer scalar", utilizes the loss rates of a subset of peer banks to appropriately scale the initial model results.

This peer-based calibration, called a "scalar", utilizes the loss rates of a subset of peer banks to appropriately scale the initial model results.

These peers have been selected by the Company given their similar characteristics, such as loan portfolio composition and location, to better align the models’ results to the Company’s expected losses.

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Individually evaluated loans consist of loans with credit quality indicators which are substandard or doubtful.

The Company also individually evaluates all insurance premium loans.

While insurance premium loans are considered consumer loans, the third-party Consumer ACL model is designed for unsecured lending, whereas these loans are secured.

The Company also individually evaluates all insurance premium loans as well as a cash-secured loan to an individual.

While these loans are considered consumer loans, the third-party Consumer ACL model is designed for unsecured lending, whereas these loans are secured.

To account for the fully secured structure of this type of loan, management determined each loan will be individually evaluated, regardless of the credit quality indicators.

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The discount rate is the implicit rate if it's readily determinable or otherwise the Company uses its incremental borrowing rate.

The implicit rates of our leases are not readily determinable and accordingly, we use our incremental borrowing rate based on the information available at the commencement date for all leases.

The implicit rates of our leases are not

readily determinable and accordingly, we use our incremental borrowing rate based on the information available at the commencement date for all leases.

The ROUA is subsequently measured throughout the lease term at the amount of the remeasured lease liability (i.e., present value of the remaining lease payments), plus any unamortized initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of any lease incentives received, and any impairment recognized.

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Any impairment is reported as a valuation allowance, to the extent that fair value is less than the carrying amount.

If the Company later determines that all or a portion of the impairment no longer exists, a reduction of the allowance may be recorded as an increase to income.

Changes in the valuation allowance are reported with service charges and fees income on the consolidated statements of income.

If the Company later determines that all or a portion of the impai rment no longer exists, a reduction of the allowance may be recorded as an increase to income.

Changes in the valuation allowance are reported in other income on the consolidated statements of income.

The fair values of servicing rights are subject to fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses.

Loans serviced for others are not included in the accompanying consolidated balance sheets.

Loans serviced for others are not included in the accompanying consolidated balanc e sheets.

Servicing fee income, which is included in service charges and fees on the income statement, is recorded for fees earned for servicing loans.

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The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

The Company has $ 1.0 million and $ 265 thousand of liabilities for uncertain tax positions at December 31, 2023 and 2022, respectively.

The Company has $ 1.6 million and $ 1.0 million of liabilities for uncertain tax positions at December 31, 2024 and 2023, respectively.

Where applicable, associated interest and penalties have also been recognized.

5 unchanged sentences

The fair value of time-based restricted stock is recorded based on the grant date fair value of the Company’s common stock.

For performance based grants, the Company records an expense over the vesting period based on (a) the probability that the performance metric will be met and (b) the fair market value of the Company’s stock at the date of the grant.

For performance based grants, the Company records an expense over the vesting period based on (a) the probability that the performance metric will be met and (b) the fair market value of the

Company’s stock at the date of the grant.

The fair value of stock options is determined using the Black-Scholes Option Pricing model.

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Adjustments will be made to record the swap at fair value on the Consolidated Balance Sheets, with changes in fair value recognized in interest income.

The carrying value of the fair value swap on the

Consolidated Balance Sheets will also be adjusted through interest income, based on changes in fair value attributable to changes in the hedged risk.

The carrying value of the fair value swap on the Consolidated Balance Sheets will also be adjusted through interest income, based on changes in fair value attributable to changes in the hedged risk.

The Company also has derivatives not designated as hedges.

1 unchanged sentence

The Company executes interest rate swaps with commercial banking clients to facilitate their respective risk management strategies.

Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions.

Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net interest risk exposure resulting from such transactions.

As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the client derivatives and the offsetting derivatives are recognized directly in earnings.

15 unchanged sentences

Recently issued accounting pronouncements not yet adopted

2024-03—Income Statement:

"Reporting Comprehensive Income - Expense Disaggregation Disclosures":

The amendments in this update is to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions.

The amendments in this update are effective for annual periods beginning after December 15, 2026.

2025-01—Income Statement:

"Reporting Comprehensive Income - Expense Disaggregation Disclosures":

Following the issuance of Update 2024-03, this amendment clarifies the initial effective date for entities that do not have an annual reporting period that ends on December 31 (referred to as non-calendar year-end entities).

The amendment is effective for public business entities for annual reporting periods beginning after December 15, 2026.

The Company believes this ASU will not have a material impact on existing disclosures and will continue to monitor for SEC action, and plan accordingly for adoption.

2023-09—Income Taxes (Topic 740):

3 unchanged sentences

The Company believes this ASU will not have a material impact on existing disclosures and will continue to monitor for SEC action, and plan accordingly for adoption.

Recently issued accounting pronouncements that have been adopted

2023-07—Segment Reporting:

"Improvements to Reportable Segment Disclosures":

The amendment requires a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss.

For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2023.

The Company has adopted this ASU in December 2024 and it did not have a material impact on existing disclosures.

2023-06, Disclosure Improvements:

23 unchanged sentences

For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

For all other

entities, the amendments will be effective two years later.

For all other entities, the amendments will be effective two years later.

The amendments in this Update should be applied prospectively.

For all entities, if by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity.

The Company believes this ASU will not have a material impact on existing disclosures and will continue to monitor for SEC action, and plan accordingly for adoption.

Recently adopted accounting pronouncements

2017-04, Intangibles – Goodwill and Other (Topic 350):

“Simplifying the Test for Goodwill Impairment.” This ASU simplifies the test for goodwill impairment by eliminating Step 2 from the goodwill impairment test.

In computing the implied fair value of goodwill under Step 2, an entity was required to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination.

Instead, under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value;

however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

In addition, this ASU also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test.

Therefore, the same impairment assessment applies to all reporting units.

An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets.

An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.

On October 16, 2019, the FASB voted in favor of a proposal to defer the effective date of this standard in the same manner it is deferring the effective date of ASC 326.

The FASB issued ASU No.

2019-10, which officially delayed the adoption of this standard for smaller reporting companies until fiscal years beginning after December 15, 2022.

The Company has adopted ASU No.

2017-04 as of March 31, 2023 and it had no impact to the Company's financial statements.

2016-13, Financial Instruments—Credit Losses (Topic 326 "CECL"):

“Measurement of Credit Losses on Financial Instruments.” This ASU changes the impairment model for most financial assets and certain other instruments.

For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward looking “expected loss” model that will replace today’s “incurred loss” model and can result in the earlier recognition of credit losses.

For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized as an allowance.

On November 15, 2019, the FASB issued ASU No.

2019-10, which officially delayed the adoption of this standard for smaller reporting companies (as defined by the SEC) until fiscal years beginning after December 15, 2022.

In accordance with ASU No.

2019-10, on January 1, 2023, the Company adopted Topic 326.

Upon adoption of CECL, the Company recorded a one-time cumulative effect, pre-tax adjustment of $ 5.1 million to the allowance for credit loss - loans and a corresponding net of tax adjustment to beginning retained earnings.

The Company also recorded a one-time cumulative effect, pre-tax adjustment of $ 1.3 million to the allowance for credit losses - unfunded commitments (which is reflected in Accrued expenses and other liabilities on the Consolidated Balanc e Sheets) and a corresponding net of tax adjustment to beginning retained earnings.

These impacts are reflected in the Company's first quarter 2023 financial statements.

The future impact of CECL on the Company’s allowance for credit losses and provision (credit) for credit losses subsequent to the initial adoption will depend on refinements to key assumptions including forecasting and qualitative factors, as well as changes in the loan portfolio and economic conditions.

In addition, the Company also evaluated its Held to maturity investment securities and Available for sale investment securities.

The Held to maturity investment securities were related to housing authority bonds in the towns of New Canaan and Stamford, CT.

The Company determined these housing authority bonds had remote risk of loss based on the historical performance of housing authority bonds and the strong credit ratings of both the towns of New Canaan and Stamford, CT.

The available for sale securities consisted of government backed U.S.

Treasuries, Mortgage-Backed Securities, and Corporate Securities.

Treasuries and Mortgage-Backed Securities were guaranteed by the U.S.

Government and had minimal risk of loss.

The Corporate Securities had minimal default risk.

As such, management concluded that no allowance for expected credit losses was required for the Held to maturity investment securities or the Available for sale investment securities upon adoption of the standard on January 1, 2023.

The impact of the CECL adoption on January 1, 2023 was as follows:

(in thousands) Change in Consolidated Statement of Conditions Tax Effected Change to Retained Earnings from Adoption of CECL

Total ACL- Loans $ 5,079 $ 1,167 $ 3,912

Total ACL-Unfunded Commitments 1,273 292 981

Total impact of CECL adoption $ 6,352 $ 1,459 $ 4,893

2022-02, Financial Instruments Credit Losses (Topic 326) :

"Troubled Debt Restructurings and Vintage Disclosures" .

ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings (“TDRs”) in ASC 310-40, “Receivables - Troubled Debt Restructurings by Creditors” for entities that have adopted the current expected credit loss (“CECL”) model introduced by ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” (ASU 2016-13”).

ASU 2022-02 also requires that public business entities disclose current-period gross charge-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, “Financial Instruments—Credit Losses—Measured at Amortized Cost”.

ASU 2022-02 is effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted.

The Company adopted ASU 2022-02 on January 1, 2023 and it did not have a material effect on the Company’s consolidated financial statements.

2022-06, Reference Rate Reform (Topic 848) ASU No.

2022-06, Reference Rate Reform (Topic 848):

“Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

The objective of the guidance in Topic 848 is to provide temporary relief during the transition period.

The Board included a sunset provision within Topic 848 based on expectations of when the London Interbank Offered Rate (LIBOR) would cease being published.

At the time that Update 2020-04 was issued, the UK Financial Conduct Authority (FCA) had established its intent that it would no longer be necessary to persuade, or compel, banks to submit to LIBOR after December 31, 2021.

As a result, the sunset provision was set for December 31, 2022 (12 months after the expected cessation date of all currencies and tenors of LIBOR).

In March 2021, the FCA announced that the intended cessation date of the overnight 1, 3, 6, and 12 month tenors of USD LIBOR would be June 30, 2023, which was beyond the original sunset date of Topic 848.

As the original relief in Topic 848 may not cover a period of time during which a significant number of modifications may take place, the amendments in this Update deferred the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

The Company has adopted ASU No.

2017-04 as of March 31, 2023 and it had no impact to the Company's financial statements.

The Company has adopted this ASU in December 2024 and it did not have a material impact on existing disclosures.

Shareholders’ Equity

6 unchanged sentences

Issuer Purchases of Equity Securities

On December 19, 2018, the Company's Board of Directors authorized a share repurchase program of up to 400,000 shares of the Company's Common Stock.

On October 27, 2021, the Company's Board of Directors authorized the repurchase of an additional 200,000 shares under its existing share repurchase program.

On December 19, 2018, the Company's Board of Directors authorized a share repurchase program ("Prior Plan") of up to 400,000 shares of the Company's Common Stock.

On October 27, 2021, the Company's Board of Directors authorized the repurchase of an additional 200,000 shares under the Prior Plan.

During the year ended December 31, 2024, the Company purchased 85,990 shares of its Common Stock at a weighted average of $ 24.82 per share.

During the year ended December 31, 2023, the Company did no t have any purchases of shares of its common stock.

To date, the Company has purchased 535,802 shares of the Company’s common stock pursuant to the Prior Plan.

On October 28, 2024, the Company announced that on October 23, 2024, its Board of Directors authorized a share repurchase plan ("New Plan").

Under the terms of the New Plan, the Company is authorized to buy back up to 250,000 shares of its outstanding common stock.

In connection with the authorization of the New Plan, the Company terminated the Prior Plan.

The Company intends to accomplish the share repurchases through open market transactions, though the Company could accomplish repurchases through other means, such as privately negotiated transactions.

1 unchanged sentence

The share repurchase plan does not obligate the Company to acquire any particular amount of Common Stock, and it may be modified or suspended at any time at the Company's discretion.

During the year ended December 31, 2023, the Company did not have any purchases of shares of its Common Stock.

During the year ended December 31, 2022, the Company purchased 166,375 shares of its Common Stock at a weighted average price of $ 33.30 per share.

Goodwill and Other Intangible Assets

27 unchanged sentences

State agency and municipal obligations

Less than one year $ 6,820 $ 37 $ — $ 6,857

Due from five through ten years 2,808 — ( 77 ) 2,731

Due after ten years 26,897 1,190 ( 1,013 ) 27,074

Total State agency and municipal obligations 36,525 1,227 ( 1,090 ) 36,662

Government-sponsored mortgage backed securities

7 unchanged sentences

Government and agency obligations

Less than one year $ 9,836 $ — $ ( 52 ) $ 9,784

Due from one through five years 55,288 123 ( 2,680 ) 52,731

13 unchanged sentences

Total held to maturity securities $ 15,817 $ 717 $ ( 631 ) $ 15,903

There we re no sales of i nvestment securities during the years ended December 31, 2023 or December 31, 2022.

There were no sales of i nvestment securities during the years ended December 31, 2024 or December 31, 2023.

At December 31, 2024 and December 31, 2023, none of the Company's securities were pledged as collateral with the Federal Home Loan Bank ("FHLB") or any other institution.

3 unchanged sentences

These securities represent an investment in mutual funds that have a primary objective to make investments for CRA purposes.

There were thirty-four investment securities as of December 31, 2023, in which the fair value of the security was less than the amortized cost of the s ecurity.

There were thirty-six such investment securities as of December 31, 2022.

There were thirty-seven inv estment securities as of December 31, 2024, in which the fair value of the security was less than the amortized cost of the s ecurity.

There were thirty-four such investment securities as of December 31, 2023.

The following table provides information regarding investment securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2024 and 2023:

71 unchanged sentences

This portfolio segment includes commercial business loans secured by assignments of corporate assets and personal guarantees of the business owners.

Commercial business loans generally have higher interest rates and shorter terms than other loans, but they also have increased difficulty of loan monitoring and a higher risk of default since their repayment generally depends on the successful operation of the borrower’s business.

This portfolio segment includes loans to finance insurance premiums secured by the cash surrender value of life insurance and marketable securities, overdraft lines of credit, and unsecured personal loans to high net worth individuals.

The following tables set forth the activity in the Company’s ACL-Loans for the years ended December 31, 2023 and December 31, 2022, by portfolio segment:

Commercial business loans generally have higher interest rates and shorter terms than other loans, but they also have increased difficulty of loan monitoring and a higher risk of default since their repayment general ly depends on the successful operation of the borrower’s business.

The following tables se t forth the activity in the Company’s ACL-Loans for the years ended December 31, 2024 and December 31, 2023, by portfolio segment:

Real Estate Commercial

3 unchanged sentences

For the Year Ended December 31, 2024

Balance As of December 31, 2022 $ 163 $ 15,597 $ 311 $ 6,214 $ 146 $ 22,431

Day 1 effect of CECL 80 4,987 611 ( 1,125 ) 526 5,079

Balance as of January 1, 2023 as adjusted for changes in accounting principle 243 20,584 922 5,089 672 27,510

Beginning balance $ 149 $ 20,950 $ 1,699 $ 4,562 $ 586 $ 27,946

Charge-offs ( 141 ) ( 13,111 ) ( 1,771 ) ( 7,909 ) ( 84 ) ( 23,016 )

7 unchanged sentences

For the Year Ended December 31, 2023

Beginning balance $ 504 $ 12,751 $ 4 $ 3,590 $ 53 $ 16,902

Balance as of December 31, 2022 $ 163 $ 15,597 $ 311 $ 6,214 $ 146 $ 22,431

Day 1 effect of CECL 80 4,987 611 ( 1,125 ) 526 5,079

Balance as of January 1, 2023 as adjusted for changes in accounting principle 243 20,584 922 5,089 672 27,510

Charge-offs — ( 824 ) — ( 440 ) ( 83 ) ( 1,347 )

14 unchanged sentences

Residential Real Estate charge-off

Current period net charge-offs $ — $ — $ — $ — $ — $ — $ —

Current period charge-offs $ — $ — $ — $ — $ — $ 141 $ 141

Commercial Real Estate Loans

5 unchanged sentences

Commercial Real Estate charge-off

Current period net charge-offs $ — $ — $ 213 $ — $ — $ 611 $ 824

Current period charge-offs $ — $ — $ — $ 522 $ 8,184 $ 4,405 $ 13,111

Construction Loans

5 unchanged sentences

Construction charge-off

Current period net charge-offs $ — $ — $ — $ — $ — $ — $ —

Current period charge-offs $ — $ — $ — $ — $ — $ 1,771 $ 1,771

Commercial Business Loans

5 unchanged sentences

Commercial Business charge-off

Current period net charge-offs $ — $ — $ — $ — $ 440 $ — $ 440

Current period charge-offs $ — $ — $ 7,664 $ 245 $ — $ — $ 7,909

Consumer Loans

5 unchanged sentences

Consumer charge-off

Current period net charge-offs $ 83 $ — $ — $ — $ — $ — $ 83

Current period charge-offs $ 28 $ — $ — $ 56 $ — $ — $ 84

Pass $ 347,951 $ 256,271 $ 957,203 $ 343,880 $ 100,985 $ 552,919 $ 2,559,209

4 unchanged sentences

Total charge-off

Current period net charge-offs $ 83 $ — $ 213 $ — $ 440 $ 611 $ 1,347

Current period charge-offs $ 28 $ — $ 7,664 $ 823 $ 8,184 $ 6,317 $ 23,016

Amortized Cost Balances by Origination Year

7 unchanged sentences

Residential Real Estate charge-off

Current period net charge-offs $ — $ — $ — $ — $ — $ — $ —

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

Commercial Real Estate Loans

5 unchanged sentences

Commercial Real Estate charge-off

Current period net charge-offs $ ( 76 ) $ — $ — $ — $ — $ — $ ( 76 )

Current period charge-offs $ — $ — $ 213 $ — $ — $ 611 $ 824

Construction Loans

5 unchanged sentences

Construction charge-off

Current period net charge-offs $ — $ — $ — $ — $ — $ — $ —

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

Commercial Business Loans

5 unchanged sentences

Commercial Business charge-off

Current period net charge-offs $ ( 24 ) $ — $ — $ — $ — $ ( 11 ) $ ( 35 )

Current period charge-offs $ — $ — $ — $ — $ 440 $ — $ 440

Consumer Loans

5 unchanged sentences

Consumer charge-off

Current period net charge-offs $ 18 $ — $ — $ — $ — $ 1 $ 19

Current period charge-offs $ 83 $ — $ — $ — $ — $ — $ 83

Pass $ 266,946 $ 1,083,543 $ 425,772 $ 149,001 $ 140,500 $ 509,339 $ 2,575,101

4 unchanged sentences

Total charge-off

Current period net charge-offs $ ( 82 ) $ — $ — $ — $ — $ ( 10 ) $ ( 92 )

Current period charge-offs $ 83 $ — $ 213 $ — $ 440 $ 611 $ 1,347

Loans evaluated for credit loss and the related ACL-Loans as of December 31, 2024 and December 31, 2023 were as follows:

25 unchanged sentences

Commercial business 19,848 —

Consumer 22,129 —

Subtotal 105,005 955

94 unchanged sentences

Individually evaluated loans are individually evaluated for credit losses.

Beginning in the third quarter of 2023, the Company individually evaluated all insurance premium loans within the Consumer portfolio segment, irrespective of credit risk ratings.

T he following tables summarize individually evaluated loans by portfolio segment and the related average carrying amount and interest income recognized as of December 31, 2023 and December 31, 2022:

Within the Consumer portfolio segment, the Company individually evaluated all insurance premium loans as well as a cash-secured loan to an individual, regardless of credit risk rating.

The following tables summarize individually evaluated loans by portfolio segment and the related average carrying amount and interest income recognized as of December 31, 2024 and December 31, 2023:

As of and for the Year Ended December 31, 2024

28 unchanged sentences

Commercial business 19,848 20,502 — 18,081 2,407

Consumer 22,129 22,129 — 20,132 1,144

Total individually evaluated loans without a valuation allowance 99,012 101,067 — 92,436 5,402

9 unchanged sentences

Modified terms are dependent upon the financial position and needs of the individual borrower.

There wer e no n ew loan modifications reportable under ASU 2022-02 at December 31, 2023.

Information on loan modifications prior to the adoption of ASU 2022-02 is presented in accordance with the applicable accounting standards in effect at that time.

As of December 31, 2022, loan modifications to taled $ 22.2 million.

The following table provides information on loans that were modified during the periods presented:

Outstanding Recorded Investment

Number of Loans Pre-Modification Post-Modification

2023 2022 2023 2022 2023 2022

(Dollars in thousands)

Years ended December 31,

Commercial real estate — 1 $ — $ 703 $ — $ 703

Residential real estate — — — — — —

Commercial business — — — — — —

Total — 1 $ — $ 703 $ — $ 703

At December 31, 2023 there were no nonaccrual modified loans.

At December 31, 2022, there were seven nonaccrual modified loans which totaled $ 2.5 million.

There were no new loan modifications reportable under ASU 2022-02 at December 31, 2024 and December 31, 2023.

There were no nonaccrual modified loans at December 31, 2024 and December 31, 2023.

There were no loans modified that re-defaulted during the years ended December 31, 2024 or December 31, 2023.

The following table provides information on how loans were modified for the years ended December 31, 2023 and December 31, 2022.

(In thousands)

Rate concession $ — $ —

Maturity, rate and payment concession — —

Payment concession — 703

Total $ — $ 703

Allowance for Credit Losses (ACL)-Unfunded Commitments

As part of the adoption of CECL, the Company has recorded ACL-Unfunded Commitments in A ccrued expenses and other liabilities .

As part of CECL, the Company has recorded ACL-Unfunded Commitments in A ccrued expenses and other liabilities .

The provision is recorded within the Provision for credit losses on the Company’s Consolidated Statements of Income.

4 unchanged sentences

(Credit) for credit losses (unfunded commitments) ( 170 ) ( 347 )

( 347 ) ( 90 )

Balance at end of period $ 756 $ 926

(1) In 2022, unfunded commitments was recorded as "Other" in noninterest expense.

Components of Provision for Credit Losses

3 unchanged sentences

Provision for credit losses $ 22,620 $ 866

(1) In 2022, unfunded commitments was recorded as "Other" in noninterest expense.

Premises and Equipment

13 unchanged sentences

As of December 31, 2024, the Company leases real estate for eight branch locations and headquarter office under various operating lease agreements.

The branch leases have maturities ranging from 2028 to 2033, some of which include options to extend the lease term.

The Company is not r easonably certain to exercise these renewal options, and as a result, these optional periods are not included in determining the lease term.

The branch leases have maturities ranging f rom 2028 to 2033, so me of which include options to extend th e lease term.

The Company is not reasonably certain to exercise these renewal options, and as a result, these optional periods are not included in determining the lease term.

The weighted average remaining life of the lease term for these leases was 5.5 years as of December 31, 2024.

The Company utilized a weighted average discount rate of 5.2 % in determining the lease liability for its branch locations and a discount rate of 4.5 % for its headquarter office.

The total fixed operating lease costs wer e $ 2.3 million and $ 2.5 million for the years ended December 31, 2023 and December 31, 2022, respectively.

The total fixed operating lease co sts were $ 2.2 million and $ 2.3 million for the years ended December 31, 2024 and December 31, 2023, respectively.

The total variable operating lease costs were $ 0.2 million and $ 0.2 million for the years ended December 31, 2024 and December 31, 2023, respectively.

40 unchanged sentences

Balance at end of year $ 558 $ 869

Included in accrued expenses and other liabilities as of December 31, 2023 and December 31, 2022, respectively, are $ 4 thousand a nd $ 23 thousand for loan servicing liabilities related to loans serviced for others for which the Company does not receive a servicing fee.

Assets held for sale

16 unchanged sentences

2026 4,887 24

2027 1,030 68

2028 6,222 6,215

2029 and thereafter 10,025 9,998

3 unchanged sentences

Brokered money market accounts totaled $ 53.5 million and $ 91.4 million at December 31, 2024 and 2023, respectively.

There were no ce rtifi cates of deposits from national listing services, one-way buy CDARS or on-way buy ICS at

December 31, 2023 or December 31, 2022.

There were no ce rtifi cates of deposits from national listing services, one-way buy CDARS or on-way buy ICS at December 31, 2024 or December 31, 2023.

Brokered deposits are comprised of Brokered CDs, brokered money market accounts, one-way buy CDARS, and one-way buy ICS.

15 unchanged sentences

Total advances $ 90,000 3.91 % $ 90,000 3.24 %

(1) $ 50 million of t he Company's FHLB borrowings are subject to longer term interest rate swap agreements and the weighted average rate reflects the " all-in" swap rate under these agreements, see Note 18.

(1) In 2023, $ 50 million of the Company's FHLB borrowings were subject to longer term interest rate swap agreements and the average rate reflects the "all-in" swap costs under these agreements.

Interest expense on FHLB advances totaled $ 3.6 million and $ 3.0 million for the years ended December 31, 2024 and December 31, 2023, respectively.

17 unchanged sentences

The Bank owned 56,545 shares and 56,957 shares at December 31, 2024 and December 31, 2023, respectively.

There is no ready market or quoted market values for the stock and as such is classified as restricted stock.

The shares have a par value of $ 100 and are carried on the consolidated balance sheets at cost, and evaluated for impairment, as the stock is only redeemable at par subject to the redemption practices of the FHLB.

There is no active market or quoted market values for the stock and as such is classified as restricted stock.

The shares have a par value of $ 100 and are carried on

the consolidated balance sheets at cost, and evaluated for impairment, as the stock is only redeemable at par subject to the redemption practices of the FHLB.

The determination of whether the par value will ultimately be recovered is influenced by criteria such as the following:

28 unchanged sentences

Commitments and Contingencies

As of December 31, 2023, the Company lease s real estate for eight br anch locations and headquarter office under various operating lease agreements.

The branch leases have maturiti es ranging from 2028 to 2033 , some of which include options to extend the lease term.

As of December 31, 2024, the Company lease s real e state for eight branch locations and headquarter office under various operating lease agreements.

The branch leases have maturities ranging from 2028 to 2033, some of which include options to extend the lease term.

Reference Note 7 for further detail.

9 unchanged sentences

Management believes that they control the credit risk of these financial instruments through credit approvals, credit limits, monitoring procedures and the receipt of collateral as deemed necessary.

Financial instruments whose contract amounts represented credit risk at December 31, 2023 and December 31, 2022 were as follows:

Financial instruments whose contract amounts represented credit risk at December 31, 2024 was as follows:

(In thousands)

Commitments to extend credit:

Loan pipeline $ 218,612

Loan commitments 173,203

1 unchanged sentence

Unused home equity lines of credit 2,331

$ 333,483 $ 560,964

Commitments to extend credit are agreements to lend to a client as long as there is no violation of any condition established in the contract or certain milestones in the case of construction loans or otherwise required collateral under borrowing base limits are met.

Commitments to extend credit generally have fixed expiration dates or other termination clauses and may require payment of a fee by the borrower.

Loan pipeline, while not legally binding, represents the Company's future potential funding obligations which are currently in an advanced stage of underwriting and are subject to various conditions before disbursement.

Loans in the pipeline are typically short-term, usually within 90 days.

Loan commitments, undisbursed construction loans, and unused home equity lines of credit are agreements to lend to a client as long as there is no violation of any condition established in the contract or certain milestones in the case of construction loans or otherwise required collateral under borrowing base limits are met.

They generally have fixed expiration dates or other termination clauses and may require payment of a fee by the borrower.

Since these commitments could expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

3 unchanged sentences

This reserve is reported as a component of accrued expenses and other liabilities in the accompanying Consolidated Balance Sheets.

The reserve for unfunded commitments tot aled $ 926 thousand a t December 31, 2023 and $ 80 thousand at December 31, 2022.

As of December 31, 2023, the Bank had a remaining capital commitment of $ 3.7 million to three Small Business Investment Companies ("SBIC") and a remaining capital commitment of $ 1.6 million in a private equity investment company.

Contributions to these funds represent an equity investment for the Company.

The reserve for unfunded commitments tot aled $ 755 thousand a t December 31, 2024.

As of December 31, 2024, the Bank had a rema ining capital commitment of $ 4.6 million to three Small Business Investment Companies ("SBIC") and a remaining capital commitment of $ 1.8 million in a private equity investment company.

Contributions to these funds represent equity investments for the Company.

The components of income tax expense for the years ended December 31, 2024 and December 31, 2023 consisted of:

31 unchanged sentences

Deferred director fees 495 434

Start-up costs — 14

Unrealized loss on available for sale securities 1,185 1,732

12 unchanged sentences

Management evaluated its remaining deferred tax assets and believes no valuation allowances were needed at December 31, 2024 or December 31, 2023.

At December 31, 2023, the Company had federal net operating loss carryove rs of $ 1.6 million.

At December 31, 2024, the Company had federal net operating loss carryovers of $ 1.4 million.

The carryovers were transferred to the Company upon the merger with The Wilton Bank.

62 unchanged sentences

Unvested at end of period 223,875

(1) Incl udes 34,369 shares of performance based restricted stock.

(1) Includes 33,115 shares of performance based restricted stock.

(3) Includ es 28,774 shar es of performance based restricted stock.

(4) Includ es 5,586 shar es of performance based restricted stock.

(2) Includes 18,598 shares of performance based restricted stock.

(3) Includes 16,527 shares of performance based restricted stock.

The total fair value of restricted stock awards vested during the year ended December 31, 2024 was $ 2.5 million.

The Co mpany’s restricted stock expense for the years ended December 31, 2024 and December 31, 2023 was $ 3.0 million and $ 3.1 million, respectively.

At December 31, 2023, there was $ 4.9 million of unrecognized stock compensation expense for restricted stock, expected to be recognized over a weighted average period of 1.6 years.

At December 31, 2024, there wa s $ 3.1 million of unrecognized stock compensation expense for restricted stock, expected to be recognized over a weighted average period of 2.4 years.

Performance based restricted stock :

28 unchanged sentences

Balance at December 31, 2022 $ ( 6,750 ) $ 6,561 $ ( 189 )

Other comprehensive (loss) income before reclassifications, net of tax ( 8,401 ) 16,607 8,206

Other comprehensive income (loss) before reclassifications, net of tax 940 1,205 2,145

Amounts reclassified from accumulated other comprehensive

income, net of tax — ( 3,620 ) ( 3,620 )

Net other comprehensive (loss) income ( 8,401 ) 16,773 8,372

Net other comprehensive income (loss) 940 ( 2,415 ) ( 1,475 )

Balance at December 31, 2023 $ ( 5,810 ) $ 4,146 $ ( 1,664 )

10 unchanged sentences

The Company does not use derivatives for speculative purposes.

As of December 31, 2023, the Company was a party to five cash flow swaps, designated as hedging instruments, to add stability to interest expense and to manage its exposure to the variability of the future cash fl ows attributable to the contractually specified interest rates.

The notional amount for each swap is $ 25 million and in each case, the Company has entered into pay-fixed cash flow swaps to convert rolling 90 - day FHLB advances or brokered deposits.

As of December 31, 2024, the Company was a party to three cash flow swaps, designated as hedging instruments, to add stability to interest expense and to manage its exposure to the variability of the future cash fl ows attributable to the contractually specified interest rates.

The notional amount for each swap is $ 25 million and in each case, the Company has entered into pay-fixed cash flow swaps to convert rolling 90 - day brokered deposits.

Cash flow swaps with a positive fair value are recorded as other assets and cash flow swaps with a negative fair value are recorded as other liabilities on the Consolidated Balance Sheets.

3 unchanged sentences

The fair value of the terminated swaps will be reclassified from other comprehensive income to interest expense on a straight-line basis over the original term of the hedging relationship.

The Company entered into one pay-fixed portfolio layer method fair value swap, designated as a hedging instrument, with a total notional amount of $ 150 million in the first quarter of 2023.

The Company has one pay-fixed portfolio layer method fair value swap, designated as a hedging instrument, with a total notional amount of $ 150 million.

The Company designated the fair value swap under the portfolio layer method.

39 unchanged sentences

Interest rate swaps $ 125,000 Other assets $ 5,240 $ — Accrued expenses and other liabilities $ —

Fair value swap

Derivatives not designated as hedging instruments:

$ — Other assets $ — $ 150,000 Accrued expenses and other liabilities $ 917

Interest rate swaps (1)

2 unchanged sentences

Accrued interest receivable related to interest rate swaps as of December 31, 2023 totaled $ 0.8 million and is excluded from the fair value presented in the table above.

The fair value of interest rate swaps in a net liability position, including accrued interest, totaled $ 8.8 million as of December 31, 2022.

The fair value of interest ra te swaps in a net asset position, including accrued interest, totaled $ 6.0 million as of December 31, 2023.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

25 unchanged sentences

Derivative Assets $ 8,040 $ — $ 8,040 $ 234 $ 7,806 $ —

(1) Includes accrued interest receivabl e totaling $ 764 thousand.

(1) Includes accrued interest receivable totaling $ 568 thousand.

December 31, 2024

3 unchanged sentences

Derivative Liabilities $ 4,502 $ — $ 4,502 $ 233 $ — $ 4,269

(1) Includes net interest receivable totaling $ 23 thousand.

(1) Includes net interest payable totaling $ 30 thousand.

December 31, 2023

3 unchanged sentences

Derivative Assets $ 9,583 $ — $ 9,583 $ — $ 8,599 $ 984

(1) Includes accrued interest payable totaling $ 559 thousand.

(1) Includes accrued interest receivable totaling $ 764 thousand .

December 31, 2023

3 unchanged sentences

Derivative Liabilities $ 4,473 $ — $ 4,473 $ — $ — $ 4,473

(1) Includes no accrued interest.

(1) Includes net interest receivable totaling $ 23 thousand.

Fair Value of Financial Instruments

29 unchanged sentences

Derivative asset 7,472 7,472 — 7,472 —

Other real estate owned 8,299 8,299 — — 8,299

Financial liabilities:

40 unchanged sentences

Level 1 investment securities include investments in a U.S.

t reasury note and in marketable equity securities for which a quoted price is readily available in the market.

t reas ury note and in marketable equity securities for which a quoted price is readily available in the market.

Level 3 held to maturity securities represent private placement municipal housing authority bonds for which no quoted market price is available.

11 unchanged sentences

The Company also considers the creditworthiness of each counterparty for assets and the creditworthiness of the Company for liabilities.

Assets held for sale:

Assets held for sale (excluding loans) consist of real estate properties that are expected to sell within a year.

The assets are reported at the lower of the carrying amount or fair value less costs to sell.

The fair value represents the price that would be received to sell the asset (the exit price).

The fair value of demand deposits, regular savings and certain money market deposits is the amount payable on demand at the reporting date.

9 unchanged sentences

Loan commitments on which the committed interest rate is less than the current market rate are insignificant at December 31, 2024 and December 31, 2023.

Other Real Estate Owned ("OREO"):

OREO is held at the lower of cost or fair value and is measured at fair value when recorded below cost.

The fair value of OREO is calculated using independent appraisals or internal valuation methods, less estimated selling costs, and may consider available pricing guides, auction results, price opinions, and other factors that are not observable in an active market when determining fair value.

Accordingly, OREO are classified within Level 3 of the fair value hierarchy.

At December 31, 2024, the fair value of OREO was $ 8.3 million.

At December 31, 2023, the Company did no t have OREO.

Fair Value Measurements

50 unchanged sentences

Servicing asset, net — — 558

Assets held for sale — — —

December 31, 2023

1 unchanged sentence

Servicing asset, net — — 865

Assets held for sale — — —

The following table presents information about quantitative inputs and assumptions for Level 3 financial instruments carried at fair value on a nonrecurring basis at December 31, 2024 and December 31, 2023:

10 unchanged sentences

Individually evaluated loans $ 31,527 Appraisals Discount to appraised value 6.00 - 8.00 %

22,129 Appraisals, cash surrender value life insurance, securities, cash held as collateral Discounts to appraised value and securities value 0.00 - 8.00 %

50,394 Discounted cash flows Discount rate 3.38 – 10.75 %

1 unchanged sentence

Prepayment rate 3.00 - 17.00 %

Assets held for sale $ — Sale & Income Approach Adjustment to valuation and cost to sell N/A

(1) Servicing liabilities totaling $ 4 thousand were valued using a discount rate of 4.4 %.

(2) Servicing liabilities totaling $ 23 thousand were valued using a discount rate of 4.0 %.

Individually evaluated loans :

1 unchanged sentence

Periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans.

Nonrecurring adjustments also include certain credit loss amounts for collateral-dependent loans calculated in accordance with ASC 310-10 when establishing the allowance for credit losses.

Nonrecurring adjustments also include certain credit loss amounts for

collateral-dependent loans calculated in accordance with ASC 310-10 when establishing the allowance for credit losses.

Such amounts are generally based on the fair value of the underlying collateral supporting the loan.

16 unchanged sentences

As of June 30, 2023, the Company no longer met the definition of a Small Bank Holding Company as the Company's assets exceeded $3 billion.

Effective March 31, 2024, the Company will be subject to the larger company capital requirements as set forth in the Economic Growth Act.

Effective March 31, 2024, the Company became subject to the larger company capital requirements as set forth in the Economic Growth Act.

Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.

15 unchanged sentences

December 31, 2024

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 264,209 9.28 % $ 128,121 4.50 % N/A N/A

Tier I Capital to Risk-Weighted Assets 264,209 9.28 % 170,828 6.00 % N/A N/A

Total Capital to Risk-Weighted Assets 362,285 12.72 % 227,770 8.00 % N/A N/A

Tier I Capital to Average Assets 264,209 8.05 % 131,232 4.00 % N/A N/A

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 268,733 9.60 % $ 126,030 4.50 % $ 182,043 6.50 %

Tier I Capital to Risk-Weighted Assets 268,733 9.60 % 168,040 6.00 % 224,053 8.00 %

Total Capital to Risk-Weighted Assets 367,946 13.14 % 224,053 8.00 % 280,066 10.00 %

Tier I Capital to Average Assets 268,733 8.34 % 128,943 4.00 % 161,179 5.00 %

The capital amounts and ratios for the Bank and Company at December 31, 2023 were as follows:

21 unchanged sentences

Reserve Requirements on Cash

The Bank was not required to maintain a minimum reserve balance in the FRBNY at December 31, 2023 or December 31, 2022 as the Federal Reserve Bank has waived this requirement.

The Bank was not required to maintain a minimum reserve balance in the FRBNY at December 31, 2024 or December 31, 2023 as the FRBNY has waived this requirement.

Related Party Transactions

1 unchanged sentence

Such loans are transacted at terms including interest rates, similar to those available to unrelated clients.

Changes in loans outstanding to such related parties during the years ending December 31, 2023 and December 31, 2022 were as follows:

(In thousands)

Balance, beginning of year $ — $ 25,416

Additional loans — —

Repayments — ( 25,416 )

Balance, end of year $ — $ —

There were no related party loans outstanding during the years ending December 31, 2024 and December 31, 2023.

Related party deposits aggregated approximately $ 53.3 million and $ 34.7 million at December 31, 2024 and December 31, 2023, respectively.

During the years ended December 31, 2023 and December 31, 2022, the Company paid appro ximately $ 5 thousand and $ 5 thousand, respectively, to related parties for services provided to the Company.

During the year ended December 31, 2024, the Com pany had no pa yments to related parties for services provided to the Company.

During the year ended December 31, 2023, the Company paid appro ximately $ 5 thousand to related parties for services provided to the Company.

The payments were primarily for consulting and legal services.

Parent Company Only Financial Statements

Bankwell Financial Group, Inc., the Parent Company, operates its wholly-owned subsidiary, Bankwell Bank.

The earnings of this subsidiary are recognized by the Parent Company using the equity method of accounting.

Accordingly, earnings are recorded as increases in the Parent Company’s investment in the subsidiary and dividends paid reduce the investment in the subsidiary.

Condensed financial statements of the Parent Company only are as follows:

Parent Corporation Only Financial Statements

Bankwell Financial Group, Inc., the Parent Corporation, operates its wholly-owned subsidiary, Bankwell Bank.

The earnings of this subsidiary are recognized by the Parent Corporation using the equity method of accounting.

Accordingly, earnings are recorded as increases in the Parent Corporation’s investment in the subsidiary and dividends paid reduce the investment in the subsidiary.

Condensed financial statements of the Parent Corporation only are as follows:

Condensed Statements of Financial Condition

43 unchanged sentences

Repurchase of common stock ( 2,137 ) —

Capital contribution to Bank 12,000 ( 20,000 )

Capital contribution from Bank 13,500 12,000

Net cash provided by financing activities 5,080 5,914

Net increase (decrease) in cash and cash equivalents 2,695 ( 85 )

Net (decrease) increase in cash and cash equivalents ( 312 ) 2,695

Cash and cash equivalents:

6 unchanged sentences

Subsequent Events

The Company's Board of Directors declared a $ 0.20 per share cash dividend, payable February 23, 2024 to shareholders of record on February 13, 2024.

On January 24, 2024, Bankwell’s Board of Directors approved the promotion and appointment of Steve H.

Brunner as Executive Vice President, Chief Risk and Operations Officer.

On February 15, 2024, James M.

Garnett, Jr., director on the Company's Board of Directors passed away.

Garnett had been a member of the Company's Board since 2018 and Chair of the Audit Committee since 2022.

The Company is extremely grateful for Mr.

Garnett's dedication to the Company and his service as a director on the Company's Board of Directors.

Demos has been appointed the interim Audit Committee Chairman.

Demos has been a member of the Company's Audit Committee since 2022.

Subsequent to December 31, 2023 through March 11, 2024, the Company purchased 17,239 shares of its Common Stock at a weighted average price of $ 25.12 per share.

The Parent Corporation's Board of Directors declared a $ 0.20 per share cash dividend, payable February 21, 2025 to shareholders of record on February 11, 2025.

On January 22, 2025, Matthew McNeill was elected to President of the Bank and the Parent Corporation.

McNeill joined the Company in 2020 as Executive Vice President and Chief Banking Officer.

On January 24, 2025, the Company sold a property that it had acquired in the fourth quarter of 2024 that it held as an Other Real Estate Owned (“OREO”) asset as of December 31, 2024.

The OREO asset had previously secured a non-performing construction loan and was acquired by the Company out of the borrower’s bankruptcy for $ 8.3 million.

The Company received net proceeds from the sale of such OREO in the amount of $ 8.3 million.

On January 31, 2025, the Company closed the sale of a $ 27.1 million multifamily commercial real estate loan that it had put on nonperforming status during the third quarter of 2024.

The Company received the full principal amount as well as all past due interest and late fees.

As of December 31, 2024, the Company's nonperforming assets as a percentage of total assets was 1.88 %.

Included in the 1.88 % are the two disposed assets, totaling $ 35.4 million, or 108 basis points.

Subsequent to December 31, 2024 through March 4, 2025, the Company purchased 16,920 shares of its Common Stock at a weighted average price of $ 31.15 .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data