What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2026-03-04 compared with 2025-03-05 · 188 added, 209 removed, 427 unchanged (48% of the section changed)

9 unchanged sentences

• Our Allowance for Credit Losses-Loans (“ACL-Loans”) may not be adequate to absorb loan losses;

• Changes in real estate values could also increase our credit risk;

• Changes in real estate values could increase our credit risk;

• Changes in our executive management team;

3 unchanged sentences

• Economic, market, operational, liquidity, credit and interest rate risks associated with our business;

• The effects of and changes in trade, monetary and fiscal policies and laws, including the Federal Reserve Board’s interest rate policies;

• The effects of changes in trade, monetary and fiscal policies and laws, including the Federal Reserve Board’s interest rate policies;

• Changes in accounting policies and practices, as may be adopted by regulatory agencies, the Public Company Accounting Oversight Board or the Financial Accounting Standards Board;

9 unchanged sentences

Bankwell Financial Group, Inc.

(the "Parent Corporation") is a bank holding company, headquartered in New Canaan, Connecticut and offers a broad range of financial services through its banking subsidiary, Bankwell Bank (the "Bank" and, collectively with the Parent Corporation and the Parent Corporation's subsidiaries, "we", "our", "us", or the "Company"), a Connecticut state chartered non-member bank founded in 2002.

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 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.

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

In December 2025, the Bank received regulatory approvals from the Federal Deposit Insurance Corporation (“FDIC”), the Connecticut Department of Banking (“CT DOB”), and the New York Department of Financial Services (“NY DFS”) to establish a new, full-service branch located in Brooklyn, New York which opened during the first quarter of 2026.

Additionally, the Bank operates limited-service Domestic Representative Offices in New Canaan, Connecticut and Garden City, New York.

As of December 31, 2025, on a consolidated basis, we had total assets of approximately $3.4 billion, net loans of approximately $2.8 billion, total deposits of approximately $2.8 billion, and shareholders’ equity of approximately $301.5 million.

We are focused on being the banking provider of choice and to serve as an alternative to our larger competitors.

We have a history of building long-term client relationships and attracting new clients through what we believe is our superior service and our ability to deliver a diverse product offering.

In addition, we believe that our strong capital position and extensive inside ownership, coupled with a highly respected and experienced executive management team and board of directors, give us credibility with our clients and potential clients.

We believe our focus on building a franchise with meaningful market share and consistent revenue growth complemented by operational and technological efficiencies will produce attractive risk-adjusted returns for our shareholders.

We seek to be the banking provider of choice by offering a compelling alternative to larger competitors.

We have a history of building long-term client relationships and attracting new clients through what we believe is superior service and a diverse product offering.

We believe our strong capital position, meaningful inside ownership, and highly respected and experienced executive management team and board of directors enhance our credibility with both existing clients and prospective clients.

We believe our strategy of building a franchise with meaningful market share, consistent revenue growth and ongoing operational and technological efficiencies will produce attractive risk-adjusted returns for our shareholders.

Our History and Growth

The Bank is a Connecticut state chartered commercial bank, founded in 2002, whose deposits are insured under the Deposit Insurance Fund administered by the Federal Deposit Insurance Corporation (“FDIC”).

The Bank is a Connecticut state chartered commercial bank, founded in 2002, whose deposits are insured under the Deposit Insurance Fund administered by the FDIC.

On November 5, 2013, we acquired The Wilton Bank, which was merged into Bankwell Bank.

On October 1, 2014, we acquired Quinnipiac Bank and Trust Company, which was merged into Bankwell Bank.

While 2024 presented certain financial challenges, our executive management team remained steadfast in their efforts, allowing us to maintain a degree of growth and a solid foundation of financial stability.

Over the four year period from December 31, 2021 through December 31, 2025, we grew total assets from $2.5 billion to $3.4 billion, gross loans outstanding from $1.9 billion to $2.8 billion and deposits from $2.1 billion to $2.8 billion.

17 unchanged sentences

• Strategic Acquisitions.

To complement our organic growth, we focus on strategic acquisitions in or around our existing market that further our objectives.

We believe there are banking institutions that continue to face credit challenges, capital constraints and liquidity issues.

Some lack the scale and management expertise to manage the increasing regulatory burden and will likely need to partner with an institution like ours.

As we evaluate potential

acquisitions, we will seek those that provide meaningful financial benefits, long-term organic growth opportunities and expense reductions, without compromising our risk profile.

To complement our organic growth, we pursue strategic acquisitions in or adjacent to our existing market that further our objectives.

We believe there are banking institutions that continue to face credit challenges, capital constraints, and liquidity pressures.

Some also lack the scale and management expertise necessary

to address an increasingly complex regulatory environment and may ultimately seek to partner with an institution such as ours.

As we evaluate potential acquisitions, we seek opportunities that deliver meaningful financial benefits, support long-term organic growth, and generate expense efficiencies, without compromising our risk profile.

Our Competitive Strengths

21 unchanged sentences

• Strong Capital Position.

At December 31, 2024, we had a 8.20% tangible common equity ratio, and the Bank had a 10.09% tier 1 leverage ratio, a 11.64% tier 1 risk-based ratio, and an 12.70% total capital to risk-weighted assets ratio.

At December 31, 2025, we had an 8.90% tangible common equity ratio, and the Bank had a 10.56% Tier 1 capital to average assets ratio, a 11.87% Tier 1 capital ratio, and a 12.94% total capital to risk-weighted assets ratio.

We believe that our ability to attract and generate capital has facilitated our growth and is an integral component to the execution of our business plan.

4 unchanged sentences

Human Capital Resources

At December 31, 2024, we employ ed a total of 144 full-time equivalent employees.

At December 31, 2025, we employ ed a t otal of 167 fu ll-time equivalent employees.

It is through our team, and their ties to the communities, that we are able to dutifully suppo rt the communities we serve.

3 unchanged sentences

All of our emplo yees are able to participate in regular educational seminars run by outside parties, including but not limited to regulatory agencies and the American Bankers Association.

The Bank also participates in the American Bankers Association, Stonier School of Banking.

In order to develop a workforce that aligns with our corpo rate values, we regularly sponsor local community events so that our employees can better integrate themselves in our communities.

We believe that our employees’ well-being and professional development is fostered by our outreach to the communities we serve.

Our employees’ desire for active community involvement enables us to sponsor numerous local community events and initiatives.

To foster a workforce that reflects our corporate values, we regularly sponsor local community events that encourage meaningful employee engagement within the communities we serve.

We believe our employees’ well‑being and professional development are strengthened through this community involvement, and their commitment to giving back enables us to support a wide range of community events and initiatives.

The Company is committed to the overall well-being of our team members, offering competitive health and welfare benefits.

7 unchanged sentences

Competition for deposit products can depend heavily on pricing because of the ease with which clients can transfer deposits from one institution to another.

To further enhance our competitive position, we launched online account opening, via our Bankwell Direct channel, providing a more convenient and accessible way for clients to join our Bank.

While many competitors possess greater scale and resources, our strategy focuses on areas where we excel:

serving small to medium-sized businesses and professionals.

We leverage deep local market knowledge and established relationships cultivated by our management and board of directors to build strong client connections.

To enhance our competitive position, we offer online account opening, via our Bankwell Direct channel, providing a convenient and accessible way for clients to join our Bank.

Although many competitors have greater scale and resources, our strategy focuses on serving small to medium‑sized businesses and professionals, where we have distinct strengths.

Deep local market knowledge and established relationships cultivated by our management and board of directors support strong client connections.

Our personalized service, local decision-making, and specialized industry expertise differentiate us from larger institutions and resonate strongly within our target market.

We do not seek to compete directly for the primary banking relationships of large corporations, instead concentrating on providing superior service and tailored solutions to our core client base.

We do not compete for primary banking relationships with large corporations, instead prioritizing tailored solutions and high quality service for our core clients.

Lending Activities

7 unchanged sentences

We market our lending products and services to qualified borrowers through conveniently located banking offices, relationship networks and high touch personal service.

Our business development and marketing strategy is primarily focused on small to medium-sized businesses.

Our relationship managers actively solicit business from companies entering our market areas as well as established businesses operating within the communities we serve.

We attract new lending clients through professional service, relationship networks, competitive pricing and innovative structure, including the utilization of federal and state tax incentives and lending programs such as the SBA loan programs.

Our efficient approval structure and local decision-making allow us to provide smart, proficient underwriting and timely decisions on new loan requests.

Our business development and marketing efforts are primarily directed toward small to medium-sized businesses.

Relationship managers actively pursue opportunities with companies entering our market areas as well as established businesses within the communities we serve.

We attract new lending clients through professional service, relationship networks, competitive pricing and innovative structure, including the use of federal and state tax incentives and lending programs such as the SBA loan programs.

Our efficient approval process and local decision-making allow us to provide smart, proficient underwriting and timely decisions on new loan requests.

This agility provides a competitive advantage over larger institutions.

24 unchanged sentences

Residential real estate loans.

In the fourth quarter of 2017, management made the strategic decision to cease originating residential mortgage loans.

In the third quarter of 2019, the Company stopped offering home equity loans or lines of credit.

In 2017, management made the strategic decision to cease originating residential mortgage loans.

In 2019, the Company stopped offering home equity loans or lines of credit.

Prior to these decisions, we offered first lien one-to-four family mortgage loans, as well as home equity lines of credit, in each case primarily on owner-occupied primary residences.

Although our residential real estate loan portfolio presents lower levels of risk than our commercial real estate and construction loan portfolios, we are exposed to risk based on fluctuations in the value of the real estate collateral securing the loan, as well as changes in the borrower’s financial condition, which could be affected by numerous factors, including divorce, job loss, illness or other personal hardship.

The rising rate environment may also pose a risk in our residential adjustable rate mortgages and home equity lines of credit portfolios as borrowers' rates reset at increased levels.

A rising rate environment may also pose a risk in our residential adjustable rate mortgages and home equity lines of credit portfolios as borrowers' rates reset at increased levels.

Commercial real estate loans.

11 unchanged sentences

Our construction portfolio include s loans to small and medium-sized businesses to construct owner-used properties, loans to developers of commercial real estate investment properties and residential developments.

Construction and development loans are generally made with a term of one to two years and interest is paid monthly.

and development loans are generally made with a term of one to two years and interest is paid monthly.

The ratio of the loan principal to the value of the collateral, as established by independent appraisal, will not exceed industry standards.

Loan proceeds are disbursed based on the percentage of completion and only after the project has been inspected by an experienced construction lender or third-party inspector.

Risks associated with construction loans include fluctuations in the value of real estate, project completion risk, leasing risk and change in market trends as well as interest rate risk in a volatile or rising risk environment.

We are also exposed to risk based on the ability of the construction loan borrower to refinance the debt or sell the property upon completion of the project, which may be affected by changes in market trends including rates, since the time that we funded the construction loan.

20 unchanged sentences

We adhere to what we believe are disciplined underwriting standards but also remain cognizant of the need to serve the credit needs of our clients by offering flexible loan solutions in a responsive and timely manner.

We also seek to maintain a diversified loan portfolio across client, product and industry types.

We seek to maintain a diversified loan portfolio across client, product and industry types;

however, our lending policies do not provide for any loans that are highly speculative, subprime, or that have high loan-to-value ratios.

1 unchanged sentence

W e have a service-driven, relationship-based, business-focused credit culture, rather than a price-driven, transaction-based culture.

Accordingly, substantially all of our loans are made to borrowers either located or operating in our market or with whom we have ongoing relationships across various product lines.

Accordingly, substantially all our loans are made to borrowers either located or operating in our market or with whom we have ongoing relationships across various product lines.

Lo ans secured by properties located in out-of-market areas that we have made are generally to borrowers who are well-known to us.

2 unchanged sentences

In connection with the management of our credit portfolio, we actively manage the composition of our loan portfolio, including credit concentrations.

We monitor borrower and loan product concentrations continuously which are reviewed with senio r management and the Board on at least a quarterly basis.

Loan product concentrations are reviewed annually in conjunction with the portfolio’s credit quality and the business plan for the coming year.

We continuously monitor borrower and loan product concentrations, which are reviewed with senio r management and the Board at least a quarterly.

Loan product concentrations are also reviewed annually in conjunction with the portfolio’s credit quality and the business plan for the coming year.

All concentrations are monitored by our Chief Credit Officer and our Directors' Loan Committee.

We have also established an internal lending guideline to one relationship of up to 30% of risk-based capital and allowance for credit losses, if secured by commercial real estate.

This limit is inside the regulatory limit of 50%.

A relationship in this

instance is defined as loans made to different entities but with a shared borrower principal(s).

For individual loans and loans dependent on the operation of a business, limits are set so as not to exceed the statutory maximum of 15% of equity capital and allowance for credit losses.

We have established an internal lending guideline limiting exposure to a single relationship to no more than 30% of risk-based capital plus the allowance for credit losses, if secured by commercial real estate.

This limit is within the regulatory limit of 50%.

In this instance, a relationship is defined as loans made to different entities but with a shared borrower principal(s).

For individual loans and loans dependent on the operation of a business, limits are set so as not to exceed the statutory maximum of

15% of equity capital plus the allowance for credit losses.

Our top 20 borrowing relationships range in exposure from $49.7 million to $111.5 million and are monitored on an on-going basis.

Loan approval process.

We seek an appropriate balance between prudent and disciplined underwriting on the one hand and flexibility in our decision-making and responsiveness to our clients on the other hand.

We seek an appropriate balance between prudent and disciplined underwriting and flexibility in our decision-making and responsiveness to our clients.

Our credit approval policies have a tiered approval process, with larger exposures referred to different levels of management and the Directors’ Loan Committee, as appropriate, based on the size and type of the loan.

9 unchanged sentences

Relationship managers, portfolio managers, credit administrators and senior management proactively support collection activities in order to maximize accountability and efficiency.

As part of these annual review procedures, we analyze recent financial statements of the collateral property, business and/or borrower to determine the current level of occupancy, revenues and expenses and to investigate any deterioration in the value of the real estate collateral or in the borrower’s or company’s financial condition.

As part of this annual review, we analyze recent financial statements of the collateral property, business and/or borrower to determine the current level of occupancy, revenues and expenses and to investigate any deterioration in the value of the real estate collateral or in the borrower’s or company’s financial condition.

Upon completion, we confirm or change the risk rating assigned to each loan.

3 unchanged sentences

This review includes an evaluation of the market conditions, the property’s or company’s trends, the borrower and guarantor status, the level of reserves required and loan accrual status.

Additionally, we have an independent, third-party loan review performed, which includes the accuracy of our loan risk ratings and our credit administration functions.

Finally, we perform an annual stress test of our commercial loan portfolio, in which we evaluate the impact on the portfolio of declining economic conditions, including lower values and decline in net operating income which may result from lower rental rates, lower occupancy rates and higher interest rates.

Management reviews these reports and presents them to our loan committees.

Additionally, we have an independent, third-party loan review performed, which includes an assessment of the accuracy of our loan risk ratings and our credit administration functions.

Finally, we perform an annual stress test of our commercial loan portfolio, in which we evaluate the impact on the portfolio of declining economic conditions, including lower property values and decline in net operating income which may result from lower rental rates, lower occupancy rates and higher interest rates.

Management reviews these reports and presents them to our Directors' Loan Committee.

These asset review procedures provide management with additional information for assessing our asset quality.

Bankwell’s response to the current economic environment’s impact on commercial real estate .

Given our concentration of loans secured by commercial real estate and current economic conditions, including factors such as elevated interest rates and changing demand for office space, management has adopted the following:

• increased and expanded our monitoring of our entire loan portfolio, with added focus on our commercial real estate loan portfolio,

• expanded reporting to Directors' Loan Committee and the Board of Directors which includes:

◦ upcoming commercial real estate maturity schedule, including loan to value, debt service coverage ratio, occupancy, and commentary on expected refinance or payoff status, maturity by property type and owner occupied or non-owner-occupied status;

◦ individual loan level detail of the performance on our residential care portfolio and our insurance agency portfolio and

• enhanced our covenant tracking and reporting to the Directors Loan Committee.

In addition to the enhancements made to monitoring and reporting, the Company has added resources to its Portfolio Management and Credit Departments.

Investment Activities

1 unchanged sentence

The majority of these securities are classified as available for sale.

The portfolio’s secondary purpose is to generate adequate earnings to provide and contribute to stable income and to generate a

profitable return while minimizing risk.

The portfolio’s secondary purpose is to generate adequate earnings to provide and contribute to stable income and to generate a profitable return while minimizing risk.

Additionally, our investment portfolio may be used to provide adequate collateral for various regulatory or statutory requirements and to manage our interest rate risk.

9 unchanged sentences

Deposits at the Bank are insured by the FDIC up to statutory limits.

We gather deposits through our network of deposit-taking branch offices, online account opening through our Bankwell Direct channel, and have attracted significant transaction account business through our relationship-based approach.

The Company sources deposits through its branch network and through online account

opening via Bankwell Direct and continues to generate meaningful transaction account balances by emphasizing a relationship‑driven service model.

Borrowed Funds

22 unchanged sentences

The Company’s existing governance and organizational structure incorporates a substantial risk management component through the following:

• A Risk Committee comprised of directors of the Company charged with oversight of the Company’s overall enterprise risk management framework, policies, procedures and controls, including operational and information security and cybersecurity risks and compliance programs;

• Oversight of various risk components by committees comprised of directors of the Company, including Directors' Loan Committee (credit), ALCO (asset and liability), and Audit Committee (financial);

• A Risk Management Committee comprised of senior management, which provides risk management oversight and is chaired by our Chief Risk Officer, who has direct accountability to the Board Risk Committee;

• Operational Risk and Compliance Working Groups, comprised of senior management, to identify, assess, manage, and mitigate operational risks across the Company.

The groups enhance the Company’s operational risk and compliance framework by ensuring compliance with regulatory requirements, evidence risk performance relative to the Company’s risk appetite, and promote a culture of risk awareness;

• Operational Risk and Compliance Working Groups, comprised of senior management, oversee the identification, assessment, management, and mitigation of operational and compliance risks across the Company.

The groups enhance the Company’s operational risk and compliance framework by ensuring compliance with regulatory requirements, verifying risk performance relative to the Company’s risk appetite, and promoting a culture of risk awareness;

• The retention of an independent firm (separate from the Company’s external auditors) that performs internal audit functions;

• Outsourcing of our asset/liability calculations to a reputable third party, including a quarterly assessment of interest rate risk, reviewed and validated by ALCO.

Risk management with respect to our lending philosophy focuses, among other things, on structuring credi ts to provide for multiple sources of repayment, coupled with strong underwriting by experienced relationship managers, lending and credit management.

We perform quarterly reviews of criticized loans and criticized asset action plans for those borrowers who display deteriorating financial conditions in order to monitor those relationships and implement corrective measures on a timely basis to minimize losses.

In addition, we perform an annual stress test of our commercial loan portfolio, in which we evaluate the impact on the portfolio of declining property values and lower net operating incomes as a result of economic conditions, including lower rental rates and lower occupancy rates.

The stress test focuses on the cash flow and valuation of the properties or businesses.

Additionally, the Company maintains a robust liquidity risk management framework, primarily through our Contingency Funding Plan (“CFP”).

The CFP is designed to ensure our ability to meet our financial obligations under both normal and stressed conditions.

A critical component of the CFP is liquidity stress testing, which involves simulating various adverse market and idiosyncratic scenarios.

These scenarios include, but are not limited to, significant deposit outflows, disruptions in wholesale funding markets, and severe economic downturns.

The results of these stress tests are used to assess the adequacy of our liquidity and to identify potential vulnerabilities.

Stress tests are conducted quarterly and reported to ALCO but may also be run on an ad-hoc basis when market conditions change.

• Use of a reputable independent third party to perform asset/liability calculations, including a quarterly assessment of interest rate risk, reviewed and validated by ALCO;

• Use of a reputable independent third party to perform loan review and portfolio stress testing, including an annual review of loan risk ratings and ACL coverage under various stress scenarios.

With respect to our lending philosophy, our risk management approach emphasizes structuring credits with multiple sources of repayment, supported by strong underwriting conducted by experienced relationship managers, credit analysts, and lending and credit management.

We conduct quarterly reviews of criticized loans, including the development and monitoring of criticized asset action plans for borrowers exhibiting deteriorating financial conditions, to enable timely corrective actions and minimize potential losses.

In addition, we perform an annual stress test of our commercial loan portfolio to assess the potential impact of adverse economic conditions.

This analysis evaluates the effects of declining property values and reductions in net operating income resulting from factors such as lower rental rates, decreased occupancy levels, and rising interest rates.

The stress test focuses on the cash flow and valuation of the underlying properties or businesses, as well as the impact of various interest rate increase scenarios.

Additionally, the Company maintains a robust liquidity risk management framework, anchored by its Contingency Funding Plan (“CFP”).

The CFP is designed to ensure the Company’s ability to meet financial obligations under both normal and stressed conditions.

A critical component of the CFP is liquidity stress testing, which involves modeling a range of adverse market‑wide and institution‑specific scenarios, including significant deposit outflows, disruptions in wholesale funding markets, and severe economic downturns.

The results of these stress tests are used to evaluate the adequacy of liquidity resources and to identify potential vulnerabilities.

Liquidity stress testing is conducted quarterly and reported to ALCO, and may also be performed on an ad-hoc basis in response to changing market conditions.

Supervision and Regulation

The Bank is subject to extensive regulation by the Connecticut Department of Banking, as its chartering agency, and by the FDIC, as its deposit insurer.

The Bank is subject to extensive regulation by the CT DOB, as its chartering agency and by the FDIC, as its deposit insurer.

Additionally, the Bank will also be subject to the supervision of the NY DFS, as it pertains to any New York-based branches.

The Bank’s deposits are insured up to applicable limits by the FDIC through the Deposit Insurance Fund.

The Bank is required to file reports with, and is periodically examined by, the FDIC and the Connecticut Department of Banking concerning its activities and financial condition and must obtain regulatory approvals prior to entering into certain transactions, such as mergers with, or acquisitions of, other financial institutions.

The Bank is required to file reports with, and is periodically examined by, the FDIC and the CT DOB concerning its activities and financial condition and must obtain regulatory approvals prior to entering into certain transactions, such as mergers with, or acquisitions of, other financial institutions.

The primary goals of the bank regulatory system are to maintain a safe and sound banking system and to facilitate the conduct of sound monetary policy.

This system is intended primarily for the protection of the Deposit Insurance Fund and bank depositors, rather than our shareholders and creditors.

This system is intended primarily for the protection of the Deposit Insurance Fund and bank depositors, rather than shareholders and creditors.

The banking agencies have broad enforcement power over bank holding companies and banks, including the authority, among other things, to enjoin “unsafe or unsound” practices, require affirmative action to correct any violation or practice, issue administrative orders that can be judicially enforced, direct increases in capital, direct the sale of subsidiaries or other assets, limit dividends and distributions, restrict growth, assess civil money penalties, remove officers and directors, and, with respect to banks, terminate deposit insurance or place the bank into conservatorship or receivership.

In general, these enforcement actions may be initiated for violations of laws and regulations or unsafe or unsound practices.

In general, these enforcement actions may be initiated as a consequence of violations of laws and regulations or unsafe or unsound practices.

The following discussion is a summary of the material laws, rules and regulations applicable to our operations, but does not purport to be a complete summary of all applicable laws, rules and regulations.

These laws, rules and regulations may change from time to time and the regulatory agencies often have broad discretion in interpreting them.

Any change in such laws, rules or regulations, whether by the Connecticut Department of Banking, the FDIC or the Federal Reserve Board ("FRB") could have a material adverse impact on the financial markets in general, and our operations and activities, financial condition, results of operations, growth plans and future prospects specifically.

These laws, rules and regulations may change, and the regulatory agencies often have broad discretion in interpreting them.

Any change in such laws, rules or regulations, whether by the CT DOB, the NY DFS, the FDIC or the Federal Reserve Board ("FRB"), could have a material adverse impact on the financial markets in general, and our operations and activities, financial condition, results of operations, growth plans and future prospects specifically.

Dodd-Frank Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), enacted in 2010, significantly changed the existing bank regulatory structure, affecting the lending and investment activities and general operations of depository institutions and their holding companies.

The Dodd-Frank Act made many changes to banking regulations, including authorizing depository institutions to pay interest on business checking accounts, requiring originators of securitized loans to retain a percentage of the risk for transferred loans, establishing regulatory rate-setting for certain debit card interchange fees, requiring bank holding companies and banks to be “well capitalized” and “well managed” in order to acquire banks located outside of their home state, requiring any bank holding company electing to be treated as a financial holding company to be “well capitalized” and “well managed,” and authorizing national and state banks to establish de novo branches in any state that would permit a bank chartered in that state to open a branch at that location.

The Dodd-Frank Act also created the Consumer Financial Protection Bureau with extensive powers to implement and enforce consumer protection laws, having examination and enforcement authority over all banks and savings associations with more than $10 billion in assets.

Banks and savings associations with $10 billion or less in assets will be examined for compliance with federal consumer protection and fair lending laws by their applicable primary federal bank regulators.

The Dodd-Frank Act also gives state attorneys general certain authority to enforce applicable federal consumer protection laws.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") implemented significant changes to the regulation and supervision of financial institutions.

While many of its provisions are primarily directed at larger, systemically important institutions, certain requirements apply to smaller banks, including enhanced consumer protection standards, capital and risk management expectations, and compliance with regulations promulgated by the Consumer Financial Protection Bureau, which are enforced through their primary federal regulators.

Institutions with less than $10 billion in assets, including the Bank, are exempt from certain provisions of the Dodd‑Frank Act, such as debit card interchange fee caps and heightened stress testing requirements, and generally have limited compliance obligations under the Volcker Rule, which restricts proprietary trading and certain investments in hedge funds and private equity funds.

Economic Growth Act

The Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Economic Growth Act”), enacted in May 2018, repealed or modified several provisions of the Dodd-Frank Act.

In addition, the Economic Growth Act includes regulatory relief for community banks regarding regulatory examination cycles, call reports, the so-called "Volcker Rule", mortgage disclosures and risk weights for certain high-risk commercial real estate loans.

The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (the “Economic Growth Act”) provided targeted regulatory relief to community banks by tailoring certain requirements imposed by the Dodd Frank Act, impacting regulatory examination cycles, call reports, the Volcker Rule, mortgage disclosures and risk weights for certain high-risk commercial real estate loans.

The Economic Growth Act provides insured depository institutions and their affiliates with less than $10 billion in total consolidated assets and limited trading activities with an exemption from the Dodd-Frank Act’s Volcker Rule, which generally restricts certain banking entities such as the Company and the Bank from engaging in proprietary trading activities and entering into certain relationships with hedge funds and private-equity funds.

In July 2019, the FDIC, along with several other banking agencies, adopted final rules to implement the exemption contemplated by the Economic Growth Act.

The Economic Growth Act has eased certain reporting and debt requirements for banks under $3 billion, as detailed in its Small Bank Holding Company Policy Statement.

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 became subject to the larger company capital requirements as set forth in the Economic Growth Act.

The Economic Growth Act required the federal banking agencies to promulgate regulations permitting insured depository institutions that have less than $5 billion in total consolidated assets (and satisfy other conditions) to use short-form reports of condition (i.e.

In 2019, the FDIC, along with several other banking agencies, adopted final rules to implement the exemption contemplated by the Economic Growth Act.

The Economic Growth Act provides certain reporting and capital relief for bank holding companies with total assets under $3 billion, as outlined in the Small Bank Holding Company Policy Statement.

As of June 30, 2023, the Company exceeded this threshold and no longer qualified for this treatment.

Beginning March 31, 2024, the Company became subject to the capital requirements applicable to larger bank holding companies, as set forth in the Economic Growth Act.

The Economic Growth Act also requires the federal banking agencies to allow insured depository institutions that have less than $5 billion in total consolidated assets (and satisfy other conditions) to use short-form reports of condition (i.e.

call reports) for the first and third quarters of each year.

1 unchanged sentence

Connecticut Department of Banking.

The Connecticut Department of Banking regulates the internal organization as well as the deposit, lending and investment activities of state-chartered banks, including the Bank.

The approval of the Connecticut Department of Banking is required for, among other things, the establishment of branch offices and business combination transactions.

The Connecticut Department of Banking conducts periodic examinations of Connecticut chartered banks.

The FDIC also regulates many of the areas regulated by the Connecticut Department of Banking, and federal law may limit some of the authority provided to Connecticut chartered banks by Connecticut law.

The CT DOB regulates the internal organization as well as the deposit, lending and investment activities of state-chartered banks, including the Bank.

The approval of the CT DOB is required for, among other things, the establishment of branch offices and business combination transactions.

The CT DOB conducts periodic examinations of Connecticut chartered banks.

The FDIC also regulates many of the areas regulated by the CT DOB, and federal law may limit some of the authority provided to Connecticut chartered banks by Connecticut law.

Lending Activities.

1 unchanged sentence

With certain limited exceptions, loans to any one obligor under this statutory authority may not exceed 15% and fully secured loans may not exceed an additional 10% of a bank’s equity capital and allowance for credit losses.

The Bank may pay cash dividends out of its net profits.

Substantially all the Company's income is derived from, and the principal source of our liquidity is, dividends from the Bank.

The ability of the Bank to pay dividends is also restricted by federal and state laws, regulations and policies.

Under Connecticut law, the Bank may pay cash dividends out of its net profits.

For purposes of this restriction, “net profits” represents the remainder of all earnings from current operations.

Further, the total amount of all dividends declared by a bank in any year may not exceed the sum of a bank’s net profits for the year in question combined with its retained net profits from the preceding two years.

Federal law also prevents an institution from paying dividends or making other capital distributions that, if by doing so, would cause it to become “under-capitalized”.

Beginning January 1, 2016, the Basel III Capital Rules limit the amount of dividends the Bank can pay if its capital ratios are below the threshold levels of the capital conservation buffer established by the rules.

The full capital conservation buffer of 2.5% (as a percentage of risk-weighted assets) became effective as of January 1, 2019.

The capital conservation buffer is in addition to the minimum risk-based capital requirement.

The FDIC may further limit a bank’s ability to pay dividends.

Moreover, the federal agencies have issued policy statements that provide that insured banks should generally only pay dividends out of current operating earnings.

Further, the total amount of all dividends declared by a bank in any year may not exceed the sum of a bank’s net profits for the past two fiscal years, plus the portion of the year in which the dividend is paid.

The ability of the Bank and the Company to pay dividends is also restricted by federal laws, regulations and policies (See “Federal Bank Holding Company Regulation – Dividends”).

Connecticut banking law authorizes Connecticut chartered banks to transact a "general banking business" and "all such incidental powers as are necessary thereto".

With the prior approval of the Connecticut Department of Banking, Connecticut banks are also authorized to engage in activities that are closely related to the business of banking, are convenient and useful to the business of banking, are reasonably related to the operation of a Connecticut bank, are financial in nature or that are permitted under the Bank Holding Company Act or the Home Owners’ Loan Act, both federal statutes, or the regulations promulgated as a result of those federal statutes.

Connecticut banks are also authorized to engage in any activity permitted for certain federally chartered institutions, as well as for certain out-of-state institutions, upon filing a notice with the Connecticut Department of Banking unless the Connecticut Department of Banking disapproves the activity.

With the prior approval of the CT DOB, Connecticut banks are also authorized to engage in activities that are closely related to the business of banking, are convenient and useful to the business of banking, are reasonably related to the operation of a Connecticut bank, are financial in nature or that are permitted under the Bank Holding Company Act or the Home Owners’ Loan Act, both federal statutes, or the regulations promulgated as a result of those federal statutes.

Connecticut banks are also authorized to engage in any activity permitted for certain federally chartered institutions, as well as for certain out-of-state institutions, upon filing a notice with the CT DOB unless the CT DOB does not approve the activity.

Connecticut banks are required to pay annual assessments to the Connecticut Department of Banking to fund the Connecticut Department of Banking’s operations.

The general assessments are paid pro-rata based upon a bank’s asset size.

Under Connecticut law, the Connecticut Department of Banking has extensive enforcement authority over Connecticut banks and, under certain circumstances, affiliated parties, insiders, and agents.

The Connecticut Department of Banking’s enforcement authority includes cease and desist orders, fines, receivership, conservatorship, removal of officers and directors, emergency closures, dissolution and liquidation.

Under Connecticut banking law, no person may acquire beneficial ownership of more than 10% of any class of voting securities of a Connecticut chartered bank, or any bank holding company of such a bank, without prior notification of, and lack of disapproval by, the CT DOB.

Under Connecticut law, the CT DOB has extensive enforcement authority over Connecticut banks and, under certain circumstances, affiliated parties, insiders, and agents.

The CT DOB's enforcement authority includes cease and desist orders, fines, receivership, conservatorship, removal of officers and directors, emergency closures, dissolution and liquidation.

Federal Bank Holding Company Regulation

3 unchanged sentences

Under FRB policy, which has been codified by the Dodd-Frank Act, a bank holding company must serve as a source of strength for its subsidiary bank.

Under this policy, the FRB may require, and has required in the past, a bank holding company to contribute additional capital to an under-capitalized subsidiary bank.

The FRB may require a bank holding company to contribute additional capital to an under-capitalized subsidiary bank.

A bank holding company must obtain FRB approval before:

2 unchanged sentences

or (3) merging or consolidating with another bank holding company.

The Bank Holding Company Act also prohibits a bank holding company, with certain exceptions, from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company which is not a bank or bank holding company, or from engaging directly or indirectly in activities other than those of banking, managing or controlling banks, or providing services for its subsidiaries.

The principal exceptions to these prohibitions involve certain non-bank activities which, by statute or by FRB regulation or order, have been identified as activities closely related to the business of banking or managing or controlling banks.

The FRB has issued a policy statement on the payment of cash dividends by bank holding companies, which expresses the FRB’s view that a bank holding company should pay cash dividends only to the extent that the Bank Holding Company’s net income for the past year is sufficient to cover both the cash dividends and a rate of earnings retention that is consistent with the Bank Holding Company’s capital needs, asset quality and overall financial condition.

The FRB has issued a policy statement regarding the payment of cash dividends by bank holding companies, which states a bank holding company should distribute cash dividends only when the bank holding company’s net income for the past year is sufficient to cover both the cash dividends and a rate of earnings retention that is consistent with the bank holding company’s capital needs, asset quality and overall financial condition.

The FRB also indicated that it would be inappropriate for a bank holding company experiencing serious financial problems to borrow funds to pay dividends.

Substantially all of our income is derived from, and the principal source of our liquidity is, dividends from the Bank.

The ability of the Bank to pay dividends to us is also restricted by federal and state laws, regulations and policies.

The Bank may pay cash dividends out of its net profits.

For purposes of this restriction, “net profits” represents the remainder of all earnings from current operations.

Under federal law, the Bank may not pay any dividend to the holding company if the Bank is under-capitalized or the payment of the dividend would cause it to become under-capitalized.

The Basel III Capital Rules limit the amount of dividends the Bank can pay to us if its capital ratios are below the full capital conservation buffer of 2.5% (as a percentage of risk-weighted assets).

Under federal law, the Bank may not pay any dividend to the Company or make other capital distributions if the Bank is under-capitalized or if by doing so, would cause it to become under-capitalized.

Basel III Capital Rules limit the amount of dividends the Bank can pay if its capital ratios are below the full capital conservation buffer of 2.5% (as a percentage of risk-weighted assets).

The capital conservation buffer is in addition to the minimum risk-based capital requirement.

The FDIC may further restrict the payment of dividends by requiring the Bank to maintain a higher level of capital than would otherwise be required for it to be adequately capitalized for regulatory purposes.

Moreover, if, in the opinion of the FDIC, the Bank is engaged in an unsafe or unsound practice (which could include the payment of dividends), the FDIC may require, generally

after notice and hearing, it to cease such practice.

Moreover, if, in the opinion of the FDIC, the Bank is engaged in an unsafe or unsound practice (which could include the payment of dividends), the FDIC may require it to cease such practice, generally after notice and hearing.

The FDIC has indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe banking practice.

3 unchanged sentences

This notification requirement does not apply to any bank holding company that (i) meets the well capitalized standard for commercial banks, (ii) is “well managed” within the meaning of the FRB regulations and (iii) is not subject to any unresolved supervisory issues.

Federal Bank Regulation

Other Federal and State Bank Regulation

Safety and Soundness.

13 unchanged sentences

Capital Requirements.

The FRB monitors the Company's capital adequacy, on a consolidated basis, and the FDIC and Connecticut Department of Banking monitor the capital adequacy of the Bank.

The Federal Reserve, the FDIC and the other federal and state bank regulatory agencies establish regulatory capital guidelines for U.S.

The FRB monitors the Company's capital adequacy, on a consolidated basis, and the FDIC and CT DOB monitor the capital adequacy of the Bank.

The FRB, the FDIC and the other federal and state bank regulatory agencies establish regulatory capital guidelines for U.S.

banking organizations.

As of January 1, 2015, the Company and the Bank became subject to new capital rules set forth by the Federal Reserve, the FDIC and the other federal and state bank regulatory agencies.

The revised capital rules aligned the banking agencies’ leverage and risk-based capital requirements and the method for calculating risk weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act (the Basel III Capital Rules).

Since January 1, 2015, the Company and the Bank have been subject to revised capital rules set forth by the FRB, the FDIC and the other federal and state bank regulatory agencies.

The revised capital rules aligned the banking agencies’ leverage and risk-based capital requirements, including the calculation of risk weighted assets, to align with agreements that were reached by the Basel Committee on Banking Supervision and with certain provisions of the Dodd-Frank Act (the Basel III Capital Rules).

The Basel III Capital Rules established a minimum common equity Tier 1 capital requirement of 4.5% of risk-weighted assets;

set the minimum leverage ratio at 4% of total assets;

set the minimum Tier 1 capital to average assets ratio at 4% of total assets;

increased the minimum Tier 1 capital to risk-weighted assets requirement from 4% to 6%;

9 unchanged sentences

Transactions with Affiliates.

Under federal law, transactions between depository institutions and their affiliates are governed by Sections 23A and 23B of the Federal Reserve Act, or FRA, and the FRB’s Regulation W.

Transactions between a bank and its affiliates are subject to Sections 23A and 23B of the Federal Reserve Act (“FRA”) and the Federal Reserve’s Regulation W.

In a holding company context, at a minimum, the parent holding company of a bank and any companies which are controlled by such parent holding company are considered an affiliate of the bank.

Generally, Section 23A limits the extent to which the bank or its subsidiaries may engage in “covered transactions” with any one affiliate to 10% of such bank’s capital stock and surplus, and places an aggregate limit on all such transactions with all affiliates at 20% of capital stock and surplus.

Generally, Section 23A restricts the amount and types of “covered transactions” a bank may engage in with affiliates, including extensions of credit, investments in affiliate securities, asset purchases, and certain guarantees, by imposing quantitative limits generally capped at 10% of capital stock and surplus for any single affiliate and 20% in the aggregate, and by requiring such transactions to be secured by eligible collateral.

The term “covered transaction” includes, among other things, the making of loans or other extensions of credit to an affiliate and the purchase of assets from an affiliate.

Section 23A also establishes specific collateral requirements for loans or extensions of credit to an affiliate, or the issuance of guarantees, acceptance, or letter of credit on behalf of an affiliate.

Section 23B requires that covered transactions and a broad list of other specified transactions be on terms substantially the same, or no less favorable, to the bank or its subsidiary as similar transactions with non-affiliates.

Section 23A also establishes specific collateral requirements for loans or extensions of credit to an affiliate, or the issuance of guarantees,

acceptance, or letter of credit on behalf of an affiliate.

Section 23B requires that most transactions between a bank and its affiliates be conducted on terms and conditions that are substantially the same as, or at least as favorable to the bank as, those prevailing for comparable transactions with non‑affiliated parties, thereby enforcing an arm’s‑length standard.

The Dodd-Frank Act has expanded the definition of covered transactions and increased the timing and other aspects of the collateral requirements associated with covered transactions, including an expansion of the covered transactions to include credit exposures related to derivatives, repurchase agreements and securities lending arrangements and an increase in the amount of time for which collateral requirements regarding covered transactions must be satisfied.

Loans to Insiders.

Further, the FRA places restrictions on extensions of credit that can be made by a depository institution to its directors, executive officers, and principal shareholders (or insiders) and to the insiders of its affiliates.

The FRA places restrictions on extensions of credit that can be made by a depository institution to its directors, executive officers, and principal shareholders (or insiders) and to the insiders of its affiliates.

Many of those restrictions also apply to the "related interests" of those insiders.

20 unchanged sentences

Subject to certain adjustments, the range of assessment rates is now between 2.5 to 42 ba sis points of the assessment base.

The Dodd-Frank Act set the required minimum reserve ratio to 1.35 percent.

If the reserve ratio falls below 1.35 percent or is expected to so fall within 6 months, the FDIC generally must adopt a restoration plan to restore the Deposit Insurance Fund reserve ratio to at least 1.35 percent within 8 years.

For both 2024 and 2023, the FDIC has exercised that discretion by establishing a 2% designated fund reserve ratio as a long-range minimum target for setting assessment rates.

The Dodd-Frank Act set the required minimum reserve ratio to 1.35 percent of estimated insured deposits.

If the reserve ratio falls below 1.35 percent or is expected to do so within 6 months, the FDIC generally must adopt a restoration plan to restore the Deposit Insurance Fund reserve ratio to at least 1.35 percent within 8 years.

For 2025, the FDIC has exercised that discretion by establishing a 2% designated fund reserve ratio as a long-range minimum target for setting assessment rates.

A material increase in FDIC insurance premiums would likely have an adverse effect on the operating expenses and results of operations of the Bank.

2 unchanged sentences

We are not aware of any current practice, condition or violation that might lead to termination of the Bank’s deposit insurance.

Deposit Operations.

In addition to the regulations discussed above, the Bank’s deposit operations are subject to other federal laws applicable to depository accounts, such as the:

• Truth-In-Savings Act, requiring certain disclosures for consumer deposit accounts;

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

• Electronic Fund Transfer Act and Regulation E issued by the Consumer Financial Protection Bureau to implement that act, which govern electronic deposits to and withdrawals from deposit accounts and clients’ rights and liabilities arising from the use of automated teller machines and other electronic banking services;

• Rules and regulations of the various federal banking agencies charged with the responsibility of implementing these federal laws.

Federal Reserve System.

The FRB regulations require depository institutions to maintain noninterest earning reserves against their transaction accounts (primarily NOW and regular checking accounts).

The FRB regulations are adjusted annually and generally provide that reserves be maintained against aggregate transaction accounts.

However, effective March 26, 2020, the FRB eliminated its reserve requirement ratio, in light of the shift to an ample reserves regime.

FRB regulations historically required depository institutions to maintain noninterest‑earning reserve balances against transaction accounts, primarily NOW and regular checking accounts.

While reserve requirements were subject to annual adjustment and generally applied to aggregate transaction accounts, effective March 26, 2020, the FRB eliminated reserve requirement ratios as part of its transition to an ample reserves regime.

Federal Home Loan Bank of Boston (FHLB).

4 unchanged sentences

Under the CRA, as implemented by FDIC regulations, a bank has a continuing and affirmative obligation, consistent with its safe and sound operation, to help meet the credit needs of its entire community, including low and moderate income neighborhoods.

The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community.

The CRA does not establish specific lending requirements or programs for banks nor does it limit a bank's discretion to develop the types of products and services that it believes are best suited to its particular community.

The CRA does require the FDIC, in connection with its examination of a bank, to assess the bank’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such bank, including applications to acquire branches and other financial institutions.

6 unchanged sentences

The Connecticut version of CRA is generally similar to the federal version, but utilizes a five-tiered descriptive rating system.

Connecticut law requires the Connecticut Department of Banking to consider, but not be limited to, a bank’s record of performance under the Connecticut CRA in considering any application by the Bank to establish a branch or other deposit-taking facility, to relocate an office or to merge or consolidate with or acquire the assets and assume the liabilities of any other banking institution.

In our most recent evaluation, the Bank received a CRA rating of “satisfactory”.

On October 24, 2023, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation released the final rule to strengthen and modernize their regulations implementing the CRA.

The final rule revises the CRA regulations to better achieve the CRA’s core purpose of encouraging banks to help meet the credit needs of their local communities.

It also adapts to changes in the banking industry, including the expanded role of mobile and online banking;

provides greater clarity and consistency in the application of CRA regulations;

tailors performance standards, data collection, and reporting requirements to account for differences in bank size, business model, and local conditions;

promotes transparency and public engagement;

confirms that CRA and fair lending respo nsibilities are mutually reinforcing;

and promotes a consistent regulatory approach that applies to banks regulated by all

three agencies.

The final rule took effect on April 1, 2024, with staggered compliance dates of January 1, 2026, and January 1, 2027.

Consumer Protection and Fair Lending Regulations.

We are subject to a variety of federal and Connecticut statutes and regulations that are intended to protect consumers and prohibit discrimination in the granting of credit.

Connecticut law requires the CT DOB to consider, but not be limited to, a bank’s record of performance under the Connecticut CRA in considering any application by the Bank to establish a branch or other deposit-taking facility, to relocate an office or to merge or consolidate with or acquire the assets and assume the liabilities of any other banking institution.

Bankwell was rated “Satisfactory” by both the FDIC and the Connecticut Department in their most recent concurrent Community Reinvestment Act (CRA) Performance Evaluations.

On October 24, 2023, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively “the agencies”) released a final rule containing sweeping changes to the CRA regulations (the “2023 rule”).

The 2023 rule was intended to modernize and strengthen regulations implementing the CRA but was strongly opposed and subject to legal challenges.

In March 2024, the U.S.

District Court for the Northern District of Texas enjoined the agencies from enforcing the 2023 rule while the litigation was pending.

On July 18, 2025, the agencies issued a proposal to rescind the 2023 rule and reinstate the prior CRA framework.

The 2023 rule is currently subject to legal action and the agencies continue to apply the 1995 CRA regulations.

Fair Lending, Equal Credit Opportunity Act (ECOA) and Section 1071.

Fair Lending laws, including the Fair Housing Act, ECOA, and its implementing regulation, Regulation B, prohibit discrimination in any aspect of a credit transaction.

Section 1071 of the Dodd-Frank Act amended ECOA to require banks to collect and report small business loan application data to the Consumer Financial Protection Bureau (CFPB).

Regulation B was amended on March 30, 2023, creating a complex reporting framework requiring banks to report more than 22 data points on each small business loan application.

Legal challenges ensued.

After two extensions of the compliance date, on November 13, 2025, the CFPB issued a Notice of Proposed Rulemaking to make major changes to the 2023 rule including increasing coverage thresholds and removing certain required data points.

The proposal also extended the compliance date to January 1, 2028, with a new first filing deadline of June 1, 2029.

Comments were due on December 15, 2025.

Consumer Protection.

We are subject to a variety of federal, Connecticut and New York statutes and regulations that are intended to protect consumers in providing bank deposit and loan products and services.

These statutes and regulations provide for a range of sanctions for non-compliance with their terms, including imposition of administrative fines and remedial orders, and referral to the Attorney General for prosecution of a civil action for actual and punitive damages and injunctive relief.

Certain of these statutes authorize private individual and class action lawsuits and the award of actual, statutory and punitive damages and attorneys’ fees for certain types of violations.

At the federal level, these laws include, among others, the following:

• Federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers (Connecticut chartered banks are generally exempt from the Federal Truth-in-Lending Act, but are otherwise subject to a substantially similar state Truth-in-Lending Act administered and enforced by the Connecticut Department of Banking);

• Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

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

• Fair Credit Reporting Act of 1978, governing the use of consumer credit reports and the provision of information to credit reporting agencies;

• Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected by collection agencies;

• Real Estate Settlement Procedures Act, governing closing costs and settlement procedures and disclosures to consumers related thereto;

• Service members Civil Relief Act of 2004, governing the repayment terms of, and property rights underlying, secured obligations of persons in military service;

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

At the federal level, these laws include, but are not limited to the following:

• Truth in Savings Act which establishes disclosure requirements so that consumers may make informed decisions about depository accounts;

• Expedited Funds Availability Act which specifies availability schedules within which banks must make funds available for withdrawal, sets forth rules concerning responsibilities of paying and returning banks;

provisions related to requirements substitute checks must meet to be the legal equivalent of a paper check during check processing;

• Electronic Funds Transfer Act which protects consumers engaging in electronic funds transfers and provides an error resolution framework;

regulates overdraft fees;

and governs consumer remittances from the United States to foreign countries;

• Equal Credit Opportunity Act and Fair Housing Act, which prohibits discrimination based on race, color, religion or other prohibited factors in extending credit;

• Fair Debt Collection Practices Act, which governs the way consumer debts may be collected by collection agencies;

• Flood Disaster Protection Act which prohibits banks from making, increasing, renewing, or extending a loan secured by improved real estate located in a Special Flood Hazard Area unless the property securing the loan is covered by flood insurance;

• Service members Civil Relief Act of 2004 and the Military Lending Act, which governs the repayment terms of, and property rights underlying, secured obligations of persons in military service;

Although the Bank does not engage in consumer lending, the following regulations are also monitored:

Federal Truth in Lending Act;

the Home Mortgage Disclosure Act;

the Fair Credit Reporting Act;

the SAFE Act;

and the Real Estate Settlement Procedures Act and rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.

Additional Considerations

5 unchanged sentences

Incentive Compensation Guidance.

The federal banking agencies have released comprehensive guidance on incentive compensation policies focused on ensuring that financial institutions’ incentive compensation policies do not undermine the safety and soundness of those institutions by encouraging excessive risk taking.

The incentive compensation guidance sets expectations for financial institutions concerning their incentive compensation arrangements and related risk management, control and governance processes.

The federal banking agencies have issued comprehensive guidance addressing incentive compensation policies designed to prevent compensation arrangements from encouraging excessive risk‑taking that could undermine the safety and soundness of financial institutions.

The guidance sets expectations for financial institutions concerning their incentive compensation arrangements and related risk management, control and governance processes.

All employees that have the ability to materially affect the risk profile of a financial institution, either individually or as part of a group, are covered by the guidance.

6 unchanged sentences

Federal Securities Laws.

As a public company, we also file reports with the SEC and are subject to its regulatory authority, as well as the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, with respect to our securities, financial reporting and certain governance matters.

As a public company, we also file reports with the Securities and Exchange Commission “SEC” and are subject to its regulatory authority, as well as the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, with respect to our securities, financial reporting and certain governance matters.

Because our securities are listed on the Nasdaq Global Market (“Nasdaq”), we are subject to Nasdaq's rules for listed companies, including rules relating to corporate governance.

8 unchanged sentences

A bank holding company may become a financial holding company if each of its subsidiary banks is well capitalized, well managed, and has at least a “satisfactory” CRA rating.

A financial holding company must provide notice to the FRB within 30 days after commencing activities previously determined by statute or by the FRB and Department of the Treasury to be permissible.

Privacy Requirements.

Under the GLBA, all financial institutions are required to establish policies and procedures to restrict the sharing of non-public client data with non-affiliated parties and to protect client data from unauthorized access.

In addition, the Fair Credit Reporting Act of 1970, or FCRA, includes many provisions concerning national credit reporting standards and permits consumers, including clients of the Bank, to opt out of information-sharing for marketing purposes among affiliated companies.

The Fair and Accurate Credit Transactions Act of 2004 amended certain provisions of the FCRA and requires banks and other financial institutions to notify their clients if they report negative information about them to a credit bureau or if they are granted credit on terms less favorable than those generally available.

The Bank currently has a privacy protection policy in place and believes such policy is in compliance with the regulations.

A financial holding company

must provide notice to the FRB within 30 days after commencing activities previously determined by statute or by the FRB and Department of the Treasury to be permissible.

Privacy of Consumer Information.

The Bank is subject to a myriad of state and federal regulations governing the privacy of consumer and customer personal information.

Federal requirements include but are not limited to:

GLBA and its implementing regulation, Regulation P, which requires financial institutions to establish policies and procedures to restrict the sharing of non-public client data with non-affiliated parties and to protect client data from unauthorized access;

the Fair Credit Reporting Act (FCRA), which addresses national credit reporting standards and permits consumers to opt out of information-sharing for marketing purposes among affiliated companies;

the Fair and Accurate Credit Transactions Act (FACT Act) which amended certain provisions of the FCRA and requires banks and other financial institutions to notify their clients if they report negative information about them to a credit bureau;

and the Right to Financial Privacy Act which establishes specific procedures that federal government authorities must follow in order to obtain information from a financial institution about a customer’s financial records.

Other applicable privacy laws include the Children’s Online Privacy Protection Act (COPPA), the Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM), and the Telephone Consumer Protection Act.

The Bank maintains a Board-approved Privacy Policy which facilitates compliance.

The Bank Secrecy Act and Related Anti-Money Laundering and Anti-Terrorist Financing Legislation.

8 unchanged sentences

Title III of the USA PATRIOT Act of 2001 amended the BSA and incorporates anti-terrorist financing provisions into the requirements of the BSA and its implementing regulations.

Among other things, the USA PATRIOT Act requires all financial institutions, including us, to institute and maintain a risk-based anti-money laundering compliance program that includes a client identification program, provides for information sharing with law enforcement and between certain financial institutions by means of an exemption from the privacy provisions of the GLBA, prohibits U.S.

Among other things, the USA PATRIOT Act requires all financial institutions, to institute and maintain a risk-based anti-money laundering compliance program that includes a client identification program, provides for information sharing with law enforcement and between certain financial institutions by means of an exemption from the privacy provisions of the GLBA, prohibits U.S.

banks and broker-dealers from maintaining accounts with foreign “shell” banks, establishes due diligence and enhanced due diligence requirements for certain foreign correspondent banking and foreign private banking accounts and imposes additional record keeping requirements for certain correspondent banking arrangements.

2 unchanged sentences

The CTA aims to eliminate the use of shell companies that facilitate the laundering of criminal proceeds and, for that purpose, directs FinCEN to establish and maintain a national registry of beneficial ownership information for certain corporate and other business entities.

The CTA required reporting companies subject the CTA to provide specific information with respect to 25% beneficial owner(s) at the time of formation (or by December 31, 2024 for entities existing on January 1, 2024) and upon a change in ownership.

Non-compliance with FinCEN regulations promulgated under the CTA may result in civil fines as well as criminal penalties.

Compliance involves identifying company details, beneficial owners (those with significant control or ownership), and, for new entities, company applicants, with updates required for changes.

Numerous lawsuits were filed in federal courts during 2024 seeking to block enforcement of the CTA, with some courts granting nationwide injunctions, all of which were eventually stayed or lifted.

On February 20, 2025, after the last outstanding injunction was lifted, FINCen extended the original CTA filing deadline for existing reporting companies to March 21, 2025.

However, on February 27, 2025, FINCen announced that it will not be enforcing the March 21st deadline and will instead issue a new “interim final rule” by March 21, 2025 that could change timelines and reporting requirements.

On March 2, 2025, the Treasury Department announced that it will not be enforcing the CTA against U.S.

However, on March 2, 2025, the Treasury Department announced that it will not be enforcing the CTA against U.S.

citizens or domestic reporting companies and that it would be issuing a proposed rule that will narrow the scope of the CTA filing requirements to foreign reporting companies only.

On September 29, 2022, FinCEN finalized the first of three proposed rules to implement changes to the beneficial ownership requirements and related amendments set forth in the CTA (the “BOI Reporting Rule”).

The BOI Reporting Rule, which became effective on January 1, 2024, prescribes which corporate entities created in or registered to do business in the U.S.

will be required to report beneficial ownership information (“BOI”) directly to FinCEN.

On December 21, 2023, FinCEN issued a final rule, effective on February 20, 2024, (the “Access Rule”), which prescribes the circumstances under which BOI reported to the FinCEN registry may be disclosed to various government agencies and to financial institutions using BOI to facilitate compliance with regulatory customer due diligence requirements and how BOI must be protected.

Under the Access Rule, FinCEN may disclose BOI to a financial institution to facilitate compliance with customer due diligence requirements under applicable law, provided the relevant reporting company has consented to such disclosure.

The Access Rule requires financial institutions that obtain BOI from FinCEN to develop and implement administrative, technical, and physical safeguards reasonably designed to protect the information, but provides that such institutions will be able to satisfy this requirement by apply to BOI the same security and information handling procedures the use to protect customer’s nonpublic personal information in compliance with the GBLA.

On December 21, 2023, federal and state bank regulators issued an Interagency Statement that states that the Access Rule does not create a new regulatory requirement for banks to access BOI from the CTA registry, create a supervisory expectation that they do so or necessitate changes to BSA/AML compliance programs designed to comply with the existing Customer Due Diligence rule (the “current CDD Rule”) and other existing BSA requirements, such as customer identification program requirements and suspicious activity reporting.

FinCEN stated that it plans to issue a third rule, which has not yet been proposed, that is expected to revise the current CDD Rule to bring it into conformity with the CTA as well as reduce any burdens on financial institutions and legal entity customers that are, in light of the CTA, unnecessary or duplicative.

On March 21, 2025, FinCEN issued new an interim final rule that removes the requirement for U.S.

entities to report beneficial ownership information under the CTA.

On June 28, 2024, FinCEN announced a proposed rule to strengthen and modernize financial institutions’ anti-money laundering and countering the financing of terrorism (AML/CFT) programs.

While financial institutions have long maintained AML/CFT programs under existing regulations, this proposed rule would amend those regulations to explicitly require that such programs be effective, risk-based, and reasonably designed with certain minimum components, including a mandatory risk assessment process and also require financial institutions to review government-wide AML/CFT priorities and incorporate them, as appropriate, into their risk-based programs.

The proposed rule is intended to encourage financial institutions to modernize their AML/CFT programs where appropriate to responsibly innovate, while still managing illicit finance risks.

The June 2024 proposed rule was not finalized in its original form;

instead, FinCEN issued a separate Final Rule in August 2024 for Investment Advisers, delaying its effective date to January 1, 2028, and reopened it for revisions, with a related Customer Identification Program (CIP) rule also pending.

Recent developments signal continued recalibration of BSA reporting requirements.

On October 9, 2025, FinCEN issued guidance in the form of Suspicious Activity Report (SAR) FAQs clarifying several long‑debated expectations largely harmonizing practice with

existing regulations.

On October 21, 2025, the Streamlining Transaction Reporting and Ensuring Anti-Money Laundering Improvements for a New Era (STREAMLINE) Act was introduced, a legislative effort aimed at simplifying BSA reporting.

On February 13, 2026, FinCEN issued an order (FIN-2026-R001) granting exceptive relief to covered financial institutions from the long-standing requirement to identify and verify the beneficial owners of legal entity customers at each new account opening.

Inconsistencies between state and federal laws persist regarding the provision of banking services to Marijuana Related Businesses (MRBs).

The Office of Foreign Assets Control, or OFAC, which is a division of the Treasury Department, is responsible for helping to ensure that U.S.

18 unchanged sentences

For Federal income tax purposes, we report income and expenses on the accrual method of accounting and use tax year ending December 31 for filing federal income tax returns.

Alternative Minimum Tax:

The Internal Revenue Code of 1986, as amended (the “Code”), imposes an alternative minimum tax (“AMT”) at a rate of 20.0% on a base of regular taxable income plus certain tax preferences which we refer to as “alternative minimum taxable income.” The AMT is payable to the extent such alternative minimum taxable income is in

excess of an exemption amount and the AMT exceeds the regular income tax.

Net operating losses can offset no more than 90.0% of alternative minimum taxable income.

Certain AMT payments may be used as credits against regular tax liabilities in future years.

We have not been subject to the AMT and have no such amounts available as credits for carryover.

Net Operating Loss Carryovers:

For the years ended 2017 and prior, a corporation may carryback net operating losses generated in such years to the preceding two taxable years and forward to the succeeding 20 taxable years.

Under the Tax Cuts and Jobs Act enacted in December 2017, a corporation may not carryback net operating losses arising in tax years after 2017, but may carryforward such losses indefinitely;

however, the net operating loss deduction in a given year is limited to 80% of taxable income.

The Coronavirus Aid, Relief, and Economic Security Act ("CARES") temporarily - and retroactively - modified the net operating loss rules to permit carryback of net operating losses generated in 2018, 2019 and 2020 for five years.

A corporation may elect to waive the carryback period and only carry these net operating losses forward to future years.

The five-year carryback provision of the CARES Act is not available for losses generated in 2021 and subsequent years.

At December 31, 2025, w e had $1.2 million of net operating loss carryforwards for federal income tax purposes.

The carryovers were transferred to the Company upon the merger with The Wilton Bank in 2014.

The federal net operating losses will expire in 2032.

The use of these carryforwards is subject to annual limitations.

Corporate Dividends-Received Deduction:

The Company may exclude from its income 100.0% of dividends received from the Bank as a member of the same affiliated group of corporations.

The corporate dividends received deduction is 80.0% in the case of dividends received from corporations with which a corporate recipient does not file a consolidated tax return, and corporations which own less than 20.0% of the stock of a corporation distributing a dividend may deduct only 70.0% of dividends received or accrued on their behalf.

Excise Tax on Stock Repurchases, The Inflation Reduction Act of 2022 (“IRA”) imposes a 1% excise tax on the aggregate fair market value of stock repurchased by certain corporations during the taxable year, subject to adjustments.

Excise Tax on Stock Repurchases:

The Inflation Reduction Act of 2022 (“IRA”) imposes a 1% excise tax on the aggregate fair market value of stock repurchased by certain corporations during the taxable year, subject to adjustments.

The excise tax generally applies to any US corporation whose stock is traded on an established securities market and that repurchases more than $1 million of stock over the course of a tax year.

3 unchanged sentences

The Connecticut corporation business tax is based on the federal taxable income before net operating loss and special deductions and makes certain modifications to federal taxable income to arrive at Connecticut taxable income.

Connecticut taxable income is multiplied by the state tax rate (7.5% f or the fiscal years ending December 31, 2024 and 2023) to arrive at Connecticut income tax.

Connecticut taxable income is multiplied by the state tax rate (7.5% for the fiscal years ending December 31, 2025 and 2024) to arrive at Connecticut income tax.

In addition to Connecticut state income tax, we are subject to income tax in other states due to business activities conducted therein, including the employment of personnel and the origination of loans.

2 unchanged sentences

The PIC’s activities are limited in scope to holding and managing loans that are collateralized by real estate.

Income earned by a PIC is determined in accordance with the statutory requirements for a passive investment company and the dividends paid by the PIC to the Bank are not taxable income for Connecticut income tax purposes.

As a result of the formation of the PIC, the Bank no longer expects to be subject to Connecticut income taxes.

Income earned by the PIC is determined in accordance with the statutory requirements for a passive investment company

and the dividends paid by the PIC to the Bank are not taxable income for Connecticut income tax purposes.

As a result of the formation of the PIC, the Bank does not expect to be subject to Connecticut income taxes.

State taxes are being recognized for income taxes on income earned in other states.

1 unchanged sentence

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 1. Business