What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-04 compared with 2025-03-05 · 205 added, 235 removed, 1625 unchanged (21% of the section changed)

12 unchanged sentences

We have audited the accompanying consolidated balance sheets of Bankwell Financial Group, Inc.

and its subsidiaries (the Company) as of December 31, 2024 and 2023 , the related consolidated statements of income, comprehensive income (loss), shareholders' equity, and cash flows for the years then ended and the related notes to the consolidated financial statements (collectively, the financial statements).

and its subsidiaries (the Company) as of December 31, 2025 and 2024 , the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows for the years then ended and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024 , and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

15 unchanged sentences

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.

The Company’s allowance for credit losses on loans consists of a component relating to collectively evaluated loans and a component relating to individually evaluated loans.

The allowance for collectively evaluated loans is derived from lifetime loss rate models that calculate expected losses over the life of each loan based on exposure at default, loan attributes, and reasonable, supportable economic forecasts, adjusted for qualitative adjustments considered by management.

Allowance for Credit Losses-Loans

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s allowance for credit losses – loans (“ACL-Loans”) totaled $30.7 million as of December 31, 2025, which consists of an allowance for collectively evaluated loans of $30.7 million and no allowance for individually evaluated loans.

The allowance for collectively evaluated loans is derived from lifetime loss rate models, utilizing Commercial Real Estate (CRE), Commercial Business (C&I), and Consumer specific models that calculate expected losses over the life of each loan based on exposure at default, loan attributes, and reasonable, supportable economic forecasts, adjusted for qualitative factors considered by management.

The lifetime loss rate models rely upon historical losses from a broad cross section of U.S.

banks and management reviews the banks included in the loss rate models that determine the loss rates.

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”).

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

banks (the peer banks) and management reviews the banks included in the loss rate models to determine that the Company’s loan portfolio composition by property type, balance distribution by loan age, and delinquency status are similar.

To further refine the expected losses, specifically related to loan concentrations as compared to the peer banks, 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.

To account for economic uncertainty, the Company incorporates multiple economic scenarios in determining the ACL-Loans.

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

1 unchanged sentence

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, risk rating, forecasted economic scenarios, the peer scalar, and qualitative adjustments, 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, and other asset specific risk characteristics.

Key assumptions used in the models include portfolio segmentation, risk rating, forecasted economic scenarios, the selection of the peer banks used to scale loss rate models, 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 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 identified management’s selection of the peer banks used to scale loss rate models, forecasted economic scenarios, and qualitative adjustment components of the ACL-Loans 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.

Our audit procedures related to management’s selection of the peer banks used to scale loss rate models, 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 banks used to scale loss rate models, 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 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 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 tested management’s process and significant judgments in the selection of the peer banks used to scale loss rate models and forecasted economic scenarios of the ACL-Loans, which included:

• Evaluating management’s considerations and data utilized as a basis for the selection of peer banks used to scale 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 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 and the auditors.

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

96 unchanged sentences

Unrealized holding gains on available for sale securities 2,693 2,525

Reclassification adjustment for gains realized in net income — —

Net change in unrealized gains 2,693 2,525

5 unchanged sentences

Unrealized (losses) on interest rate swaps, net of tax ( 1,030 ) ( 1,558 )

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

Total other comprehensive income, net of tax 1,028 420

Comprehensive income $ 36,226 $ 10,190

9 unchanged sentences

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

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 — — 9,770 — 9,770

Other comprehensive income, net of tax — — — ( 1,475 ) ( 1,475 )

Other comprehensive loss, net of tax — — — 420 420

Cash dividends declared ($ 0.80 per share)

3 unchanged sentences

Forfeitures of restricted stock ( 4,262 ) — — — —

Stock options exercised 8,680 155 — — 155

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

7 unchanged sentences

Forfeitures of restricted stock ( 16,829 ) — — — —

Stock options exercised — — — — —

Repurchase of common stock ( 44,550 ) ( 1,334 ) — — ( 1,334 )

17 unchanged sentences

Stock-based compensation 2,344 2,998

Loss on sale of premises and equipment — 13

Loss on sale of other real estate owned 31 —

Change in other real estate owned ( 140 ) —

Net change in:

Deferred tax assets ( 527 ) —

Deferred loan fees 1,004 ( 1,437 )

7 unchanged sentences

Net proceeds from sales and calls of available for sale securities 31,000 10,000

Net proceeds from sales and calls of held to maturity securities 7,500 —

Purchases of available for sale securities ( 85,714 ) ( 10,000 )

5 unchanged sentences

Proceeds (purchases) of Federal Home Loan Bank stock ( 552 ) 41

Proceeds from the sale of other real estate owned 9,691 —

Net cash used in investing activities ( 165,186 ) ( 33,961 )

3 unchanged sentences

(In thousands)

Year Ended December 31,

Cash flows from financing activities

1 unchanged sentence

Net change in other deposits 183,409 ( 5,974 )

Proceeds from exercise of options — 155

Payments on FHLB advances ( 170,000 ) —

Proceeds on FHLB advances 190,000 —

Dividends paid on common stock ( 6,267 ) ( 6,283 )

Repurchase of common stock ( 1,334 ) ( 2,137 )

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

Net cash provided by financing activities 54,310 42,392

Net increase (decrease) in cash and cash equivalents ( 82,603 ) 38,367

6 unchanged sentences

Income taxes:

Federal 6,900 4,300

New York City 328 184

New York State 927 559

Florida 3,174 —

New Jersey 330 290

Noncash investing and financing activities

2 unchanged sentences

Net change in unrealized losses or gains on interest rate swaps ( 1,348 ) ( 1,995 )

Establishment of right-of-use-asset and lease liability — 1,410

Transfer of loans from held-for-investment to held-for-sale 43,839 4,387

9 unchanged sentences

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

The Bank also operates in a limited service Domestic Representative Office in New Canaan, Connecticut and in Garden City, New York.

During 2025, the Bank received regulatory approval from the FDIC, the CT DOB, and the NY DFS to establish a new full-service branch in Brooklyn, New York.

Principles of Consolidation

5 unchanged sentences

Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change in the near-term relate to the ACL-Loans, derivative instrument valuation, investment securities valuation, ACL-Securities, and deferred income taxes valuation.

Material estimates that are particularly susceptible to significant change in the near-term relate to the ACL-Loans and ACL-Securities.

The Company has one reportable segment.

34 unchanged sentences

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

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.

Pursuant to ASC 326, the Company individually evaluates the available for sale debt securities and held to maturity securities for impairment credit losses quarterly.

Available for sale securities include U.S.

5 unchanged sentences

The analysis of the issuers’ performance and the intent of the Company to retain these securities support the determination that there was no expected credit loss, and therefore, no ACL-Securities were recognized on the corporate bond portfolio as of December 31, 2025.

Of our held to maturity securities portfolio, one security’s fair value was less than its amortized cost as of December 31, 2024.

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 ACL-Securities was recorded for this security as of December 31, 2024.

Of our held to maturity securities portfolio, four securities' fair values were less than their respective amortized costs as of December 31, 2025.

Since these are highly rated state agency and municipal obligations, the Company's expectation of nonpayment of the amortized cost basis is zero.

No allowance for ACL-Securities was recorded for these securities as of December 31, 2025.

Bank Owned Life Insurance

21 unchanged sentences

Credit losses, if any, and any subsequent changes are recorded as adjustments to the ACL-Loans.

Individually evaluated loans also include loans modified where concessions have been granted to borrowers experiencing financial difficulties.

Individually evaluated loans also include modified loans where concessions have been granted to borrowers experiencing financial difficulties.

These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.

4 unchanged sentences

A nonaccrual loan is restored to accrual status when it is no longer delinquent and collectability of interest and principal is no longer in doubt.

Management reviews all nonaccrual loans, other loans past due 90 days or more, and restructured loans for credit losses.

Management reviews all nonaccrual loans, other loans past due 90 days or more, and modified loans for credit losses.

In most cases, loan payments that are past due less than 90 days are considered minor collection delays and the related loans may not be individually evaluated.

3 unchanged sentences

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

Debt may be bifurcated with separate terms for each tranche of the restructured debt.

The decision to restructure a loan, versus aggressively enforcing the collection of the loan, may benefit the Company by increasing the ultimate probability of collection.

If a performing loan is restructured into a modification it remains in performing status.

If a nonperforming loan is restructured into a modification, it continues to be carried in nonaccrual status.

Debt may be bifurcated with separate terms for each tranche of the modified debt.

The decision to modify a loan, versus aggressively enforcing the collection of the loan, may benefit the Company by increasing the ultimate probability of collection.

If a performing loan is modified into a modification it remains in performing status.

If a nonperforming loan is modified, it continues to be carried in nonaccrual status.

Nonaccrual classification may be removed if the borrower demonstrates compliance with the modified terms for a minimum of six months.

Modifications are reported as such for at least one year from the date of restructuring.

In years after the restructuring, loans may be removed from this classification if the restructuring agreement specifies a market rate of interest equal to that which would be provided to a borrower with similar credit at the time of restructuring and the loan is not deemed to be a credit loss based on the modified terms.

Modifications are reported as such for at least one year from the date of modifying.

In years after the modification, loans may be removed from this classification if the modification agreement specifies a market rate of interest equal to that which would be provided to a borrower with similar credit at the time of modification and the loan is not deemed to be a credit loss based on the modified terms.

Acquired Loans

3 unchanged sentences

Allowance for Credit Losses-Loans ("ACL-Loans") and Allowance for Credit Losses-Unfunded commitments ("ACL-Unfunded commitments")

In June 2016, the FASB issued ASU No.

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 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.

2 unchanged sentences

Subsequent recoveries, if any, are credited to the ACL-Loans.

Loans are normally placed on nonaccrual status if it is probable that the Company will be unable to collect the full payment of principal and interest when due according to the contractual terms of the loan agreement, or the loan is past due for a period of 90 days or more unless the obligation is well-secured and is in the process of collection.

Loans are normally placed on nonaccrual status if it is probable that the Company will be

unable to collect the full payment of principal and interest when due according to the contractual terms of the loan agreement, or the loan is past due for a period of 90 days or more unless the obligation is well-secured and is in the process of collection.

The Company generally does not recognize an allowance for credit losses ("ACL") on accrued interest receivables, consistent with its policy to reverse interest income when interest is 90 days or more past due.

2 unchanged sentences

For collectively evaluated loans and related unfunded commitments, the Company utilizes software provided by a third party, which includes various models for forecasting expected credit losses, to calculate its ACL.

Management selected lifetime loss rate models, utilizing CRE, C&I, and Consumer specific models, to calculate the expected losses over the life of each loan based on exposure at default, loan attributes, and reasonable, supportable economic forecasts.

The models selected by the Company in its ACL calculation rely upon historical losses from a broad cross section of U.S.

2 unchanged sentences

The Company also noted the third party’s model development dataset has loan concentrations that are evenly distributed across the United States, while the Company’s portfolio is mainly concentrated in the Northeast.

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 "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.

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

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

19 unchanged sentences

Loan modifications

In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (ASU 326):

Troubled Debt Restructurings and Vintage Disclosures.

ASU 2022-02 eliminated the accounting guidance for TDRs by creditors while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

The Company adopted ASU 2022-02 effective January 1, 2023 and the impact was immaterial.

A loan will be considered modified as defined by ASC 326 when both of the following conditions are met:

1) the borrower is experiencing financial difficulties and 2) the modification constitutes a direct change in contractual cash flows for a significant period of time.

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

Interest and Fees on Loans

32 unchanged sentences

Depreciation is not recognized on any assets that are classified as held for sale.

The Company recognizes and measures it leases in accordance with ASC 842, " Leases" .

The Company leases real estate for its branch and headquarter offices under various operating lease agreements.

The Company recognizes and measures its leases in accordance with ASC 842, " Leases" .

The Company leases real estate for its branch and headquarters office under various operating lease agreements.

The Company determines if an arrangement is a lease, or contains a lease, at inception of a contract and when the terms of an existing contract are changed.

2 unchanged sentences

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.

28 unchanged sentences

We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense.

On July 4, 2025, the U.S.

government enacted tax legislation commonly referred to as the One Big Beautiful Bill Act.

The Company determined that the enactment of the Act did not have a material impact on its consolidated financial statements, including its income tax provision, deferred tax balances, or effective tax rate for the year ended December 31, 2025.

Accordingly, no material adjustments related to the Act were recorded in the accompanying consolidated financial statements.

The Company will continue to monitor future interpretive guidance and administrative developments related to the Act;

however, such guidance is not expected to materially affect the Company’s income tax provision.

Advertising Costs

1 unchanged sentence

Stock Compensation

The Company measures and recognizes compensation cost relating to share-based payment transactions based on the grant-date fair value of the equity instruments issued.

The Company measures and recognizes compensation costs relating to share-based payment transactions based on the grant-date fair value of the equity instruments issued.

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.

29 unchanged sentences

Derivative Instruments

The effective portion of unrealized changes in the fair value of derivatives accounted for as cash flow hedges is reported in other comprehensive income and subsequently reclassified to earnings in the same period or periods during which the hedged forecasted transaction affects earnings.

forecasted transaction affects earnings.

The Bank assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction.

The interest rate swap assets are presented in other assets and the interest rate swap liabilities are presented in accrued expenses and other liabilities in the consolidated balance sheets.

Interest rate swap assets are presented in other assets and interest rate swap liabilities are presented in accrued expenses and other liabilities in the consolidated balance sheets.

The hedge strategy converts the contractually specified interest rate on short-term rolling FHLB advances or brokered deposits to long-term fixed interest rates, thereby protecting the Bank from interest rate variability.

17 unchanged sentences

The Company is incorporated in the state of Connecticut.

Connecticut law does not provide for treasury shares, rather shares repurchased by the Company constitute authorized, but unissued shares.

Connecticut law does not provide for treasury shares, but rather shares repurchased by the Company constitute authorized, but unissued shares.

GAAP states that accounting for treasury stock shall conform to state law.

15 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.

2025-09—Derivatives and Hedging:

"Hedge Accounting Improvements":

The amendment in this update is to better align accounting with risk management and address reference rate reform challenges.

The update introduces changes across five areas, including broadening similar risk assessment for cash flow hedges, introducing a model for Choose-Your-Rate debt, and replacing the contractually specified component model for nonfinancial forecasted transactions.

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.

Recently issued accounting pronouncements that have been adopted.

2023-09—Income Taxes (Topic 740):

2 unchanged sentences

For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 20 24.

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:

“Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative”:

The amendments in this Update modify the disclosure or presentation requirements of a variety of Topics in the Codification.

Certain of the amendments represent clarifications to or technical corrections of the current requirements.

Because of the variety of Topics amended, a broad range of entities may be affected by one or more of those amendments.

The summary of the amendments applicable to the Company include:

Statement of Cash Flows - Requires an accounting policy disclosure in annual periods of where cash flows associated with derivative instruments and their related gains and losses are presented in the statement of cash flows.

Accounting Changes and Error Corrections - Requires that when there has been a change in the reporting entity, the entity disclose any material prior-period adjustment and the effect of the adjustment on retained earnings in interim financial statements.

Earnings Per Share - Requires disclosure of the methods used in the diluted earnings-per-share computation for each dilutive security and clarifies that certain disclosures should be made during interim periods.

Amends illustrative guidance to illustrate disclosure of the methods used in the diluted earnings-per-share computation.

Interim Reporting - Conforms to the amendments made to Topic 250 (Accounting Changes and Error Correction).

Commitments - Requires disclosure of assets mortgaged, pledged, or otherwise subject to lien and the obligations collateralized.

Debt - Requires disclosure of amounts and terms of unused lines of credit and unfunded commitments and the weighted-average interest rate on outstanding short-term borrowings.

Entities that are not public business entities are not required to provide information about the weighted-average interest rate.

Equity - Requires entities that issue preferred stock to disclose preference in involuntary liquidation if the liquidation preference is other than par or stated value.

Derivatives - Adds cross-reference to disclosure requirements related to where cash flows associated with derivative instruments and their related gains and losses are presented in the statement of cash flows in Topic 230.

Transfers and Servicing—Secured Borrowing and Collateral - Requires:

That accrued interest be included in the disclosure of liabilities incurred in securities borrowing or repurchase or resale transactions.

Separate presentation of the aggregate carrying amount of reverse repurchase agreements on the face of the balance sheet if that amount exceeds 10 percent of total assets.

Disclosure of the weighted-average interest rates of repurchase liabilities for public business entities.

Disclosure of amounts at risk with an individual counterparty if that amount exceeds more than 10 percent of shareholder’s equity.

Disclosure for reverse repurchase agreements that exceed 10 percent of total assets on whether there are any provisions in a reverse repurchase agreement to ensure that the market value of the underlying assets remains sufficient.

to protect against counterparty default and, if so, the nature of those provisions.

Financial Services - Requires that investment companies disclose the components of capital on the balance sheet.

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.

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

The Company adopted this ASU prospectively in December 2025 within the Income Tax Footnote disclosure and the Statement of Cash Flows.

Shareholders’ Equity

9 unchanged sentences

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.

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").

4 unchanged sentences

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, 2025, the Company purchased 44,550 shares of its Common Stock at a weighted average price of $ 29.93 per share.

During the year ended December 31, 2024, the Company did not purchase any shares under the New Plan.

Goodwill and Other Intangible Assets

21 unchanged sentences

Corporate bonds

Due from one through five years 4,000 2 ( 22 ) 3,980

Due from five through ten years 7,000 — ( 495 ) 6,505

7 unchanged sentences

Due after ten years 26,701 1,650 ( 200 ) 28,151

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

Government-sponsored mortgage backed securities

No contractual maturity 28 1 — 29

Total held to maturity securities $ 29,465 $ 1,780 $ ( 200 ) $ 31,045

17 unchanged sentences

State agency and municipal obligations

Less Than 1 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

1 unchanged sentence

Total held to maturity securities $ 36,553 $ 1,228 $ ( 1,090 ) $ 36,691

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.

There was one sale of an investment security during the year ended December 31, 2025 and no sales of i nvestment securities during the year ended December 31, 2024.

At December 31, 2025, $ 151.4 million of the Company's securities were pledged as collateral with Federal Home Loan Bank ("FHLB").

At December 31, 2024, none of the Company's securities were pledged as collateral with the FHLB or any other institution.

As of December 31, 2025, the actual duration of the Company's available for sale securities were significantly shorter than the notional maturities.

2 unchanged sentences

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

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:

There were twenty-nine investm ent securities as of December 31, 2025, in which the fair value of the security was less than the amortized cost of the s ecurity.

There were thirty-seven such investment securities as of December 31, 2024.

The following table provides information regarding the available for sale 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, 2025 and 2024:

Length of Time in Continuous Unrealized Loss Position

7 unchanged sentences

Corporate bonds — — — % 7,483 ( 517 ) 6.47 % 7,483 ( 517 ) 6.47 %

State agency and municipal

obligations 7,361 ( 254 ) ( 3.33 ) % 3,802 ( 836 ) 18.03 % 11,163 ( 1,090 ) 8.89 %

Total investment securities $ 7,361 $ ( 254 ) ( 3.33 ) % $ 101,227 $ ( 5,917 ) 5.52 % $ 108,588 $ ( 6,171 ) 5.38 %

Total Available for sale investment securities $ 50,496 $ ( 346 ) 0.68 % $ 61,803 $ ( 2,147 ) 3.36 % $ 112,299 $ ( 2,493 ) 2.17 %

December 31, 2024

1 unchanged sentence

Corporate bonds — — — % 15,846 ( 1,154 ) 6.79 % 15,846 ( 1,154 ) 6.79 %

State agency and municipal obligations — — — % 4,076 ( 631 ) 13.41 % 4,076 ( 631 ) 13.41 %

Total investment securities $ — $ — — % $ 103,829 $ ( 8,294 ) 7.40 % $ 103,829 $ ( 8,294 ) 7.40 %

Total Available for sale investment securities $ — $ — — % $ 97,425 $ ( 5,081 ) 4.96 % $ 97,425 $ ( 5,081 ) 4.80 %

Government and agency obligations owned are either direct obligations of the U.S.

3 unchanged sentences

The Company monitors its corporate bond, state agency and municipal bond portfolios and considers them to have minimal default risk.

The Company has the intent and ability to retain its investment securities in an unrealized loss position at December 31, 2024 until the decline in value has recovered or the security has matured.

The Company has the intent and ability to retain its investment securities in an unrealized loss position at December 31, 2025 and 2024 until the decline in value has recovered or the security has matured.

Loans Receivable and ACL-Loans

59 unchanged sentences

(Credits) provisions (1)

( 39 ) ( 1,795 ) 192 2,363 587 1,308

Ending balance $ 55 $ 20,255 $ 2,251 $ 6,635 $ 1,509 $ 30,705

4 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 )

1 unchanged sentence

(Credits) provisions (1)

( 55 ) 12,873 2,131 7,420 421 22,790

Ending balance $ 94 $ 21,838 $ 2,059 $ 4,070 $ 946 $ 29,007

(1) - This does not include the (Credit) for credit losses (unfunded commitments) of $ 268 thousand and $ 170 thousand for the years ended December 31, 2025 and December 31, 2024, respectively .

We evaluate whether a modification, extension or renewal of a loan is a current period origination in accordance with GAAP.

Generally, loans up for renewal are subject to a full credit evaluation before the renewal is granted and such loans are considered current period originations for purpose of the tables below.

The following tables present loans by origination and risk designation as of December 31, 2024 and December 31, 2023 (dollars in thousands):

The following tables present loans by origination, risk designation, and charge-offs as of December 31, 2025 and December 31, 2024 (dollars in thousands):

Amortized Cost Balances by Origination Year

134 unchanged sentences

Credit Quality Indicators

To measure credit risk for the loan portfolios, the Company employs a credit risk rating system.

This risk rating represents an assessed level of the loan’s risk based on the character and creditworthiness of the borrower/guarantor, the capacity of the borrower to adequately service the debt, any credit enhancements or additional sources of repayment, and the quality, value and coverage of the collateral, if any.

The Company measures credit risk within its loan portfolios through the use of a credit risk rating system.

The risk rating reflects management’s assessment of a loan’s overall risk, considering the character and creditworthiness of the borrower and any guarantor, the borrower’s capacity to service the debt, the availability of credit enhancements or other sources of repayment, and the quality, value, and coverage of collateral, if applicable.

The objectives of the Company’s risk rating system are to provide the Board of Directors and senior management with an objective assessment of the overall quality of the loan portfolio, to promptly and accurately identify loans with well-defined credit weaknesses so that timely action can be taken to minimize a potential credit loss, to identify relevant trends affecting the collectability of the loan portfolio, to isolate potential problem areas and to provide essential information for determining the adequacy of the ACL-Loans.

10 unchanged sentences

They are revised to reflect changes in the borrower's financial condition and outlook, debt service coverage capability, repayment performance, collateral value and coverage as well as other considerations.

In addition to internal review at multiple points, outsourced loan review opines on risk ratings with regard to the sample of loans their review covers.

In addition to internal review at multiple points, a reputable independent third party loan review opines on risk ratings with regard to the sample of loans their review covers.

The following tables present credit risk ratings by loan segment as of December 31, 2025 and December 31, 2024:

68 unchanged sentences

An individually evaluated loan is generally one for which it is probable, based on current information, that the Company will not collect all the amounts due in accordance with the contractual terms of the loan.

Individually evaluated loans are individually evaluated for credit losses.

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.

These loans are individually evaluated for credit losses.

Within the Consumer portfolio segment, the Company also individually evaluated all insurance premium loans as well as a cash-secured loans to individuals, 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, 2025 and December 31, 2024:

38 unchanged sentences

Loan Modifications

A loan will be considered modified as defined by ASU 2022-02 when both of the following conditions are met:

A loan will be considered modified as defined by ASC 326 when both of the following conditions are met:

1) the borrower is experiencing financial difficulties and 2) the modification constitutes a direct change in contractual cash flows for a significant period of time.

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

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 was one new loan modification reportable under ASC 326 for $ 0.3 million at December 31, 2025.

There was one loan modification reportable under ASC 326 for $ 4.0 million at December 31, 2024.

There were no nonaccrual modified loans at December 31, 2025.

There was one nonaccrual modified loan at December 31, 2024.

There were no loans modified that re-defaulted during the years ended December 31, 2025 or December 31, 2024.

4 unchanged sentences

Balance at Beginning of period $ 756 $ 926

Reversal of prior unfunded reserve — ( 80 )

Day 1 effect of CECL — 1,273

(Credit) for credit losses (unfunded commitments) ( 268 ) ( 170 )

17 unchanged sentences

Premises and equipment, net $ 21,582 $ 23,856

For the years ended December 31, 2024 and December 31, 2023, depreciation and amortization expense related to premises and e quipment totaled $ 2.2 million and $ 2.1 million, respectively.

For the years ended December 31, 2025 and December 31, 2024, depreciation and amortization expense related to premises and equipment totaled $ 2.3 million and $ 2.2 million, respectively.

For the years ended December 31, 2025 and December 31, 2024, depreciation and amortization expense includes amortization of the right-of-use-asset, totaling $ 1.8 million and $ 1.6 million, respectively.

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 f rom 2028 to 2033, so me of which include options to extend th e lease term.

As of December 31, 2025 , the Company leases real estate for nine full-service branch locations and headquarter office under various operating lease agreements.

The Bank also operates in a limited service Domestic Representative Office in New Canaan, Connecticut and in Garden City, New York.

During 2025, the Bank received regulatory approval from the FDIC, the CT DOB, and the NY DFS to establish a new full-service branch in Brooklyn, New York, which opened during the first quarter of 2026.

The branch leases and the limited service Domestic Representative Office have maturities ranging from 2028 to 2033, some of which include options to extend the 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 4.5 years as of December 31, 2025.

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 co sts were $ 2.2 million and $ 2.3 million for the years ended December 31, 2024 and December 31, 2023, respectively.

The Company utilized a weighted average discount rate of 5.2 % in determining the lease liability for its branch locations and limited service Domestic Representative Office and a discount rate of 4.5 % for its headquarters office.

The total fixed operating lease costs were $ 2.3 million and $ 2.2 million for the years ended December 31, 2025 and December 31, 2024, respectively.

The total variable operating lease costs were $ 0.3 million and $ 0.2 million for the years ended December 31, 2025 and December 31, 2024, respectively.

The right-of-use-asset, included in premises and equipment, net was $ 11.1 million as of December 31, 2024 and the corresponding lease liability, included in accrued expenses and other liabilities was $ 12.0 million as of December 31, 2024.

The right-of-use-asset, included in premises and equipment, net was $ 10.0 million as of December 31, 2025 and the corresponding lease liability, included in accrued expenses and other liabilities was $ 11.0 million and $ 12.0 million as of December 31, 2025 and December 31, 2024, respectively.

Future minimum lease payments as of December 31, 2025 are as follows:

14 unchanged sentences

Servicing assets, net of valuation allowance 1,035 558

Derivative assets 7,472 8,819

Derivative assets (reference Footnote 18) 4,970 7,472

Other 15,290 13,310

2 unchanged sentences

The Company has a non-qualified deferred compensation plan for the Board of Directors that allows for the deferral of fees earned related to services rendered for the Co mpany.

The deferred compensation balance increased $ 0.3 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The d eferred compensation balance increased $ 1.9 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Loan Servicing

16 unchanged sentences

Balance at end of year $ 1,035 $ 558

Assets held for sale

For the years ended December 31, 2024 and 2023, the Bank did not have any assets held for sale.

Assets held for sale are included in other assets on the consolidated balance sheets.

At December 31, 2025 and December 31, 2024, deposits consisted of the following:

14 unchanged sentences

2028 1,038 6,222

2028 6,222 6,215

2030 and thereafter 25 9,993

Total $ 1,230,362 $ 1,370,972

Th e aggregate amount of individual certificate accounts, with balances of $250,000 or more, were approximately $ 232.6 million a nd $ 151.6 million at December 31, 2024 and December 31, 2023, respectively.

Th e aggr egate amount of individual certificate accounts, with balances of $250,000 or more, were approximately $ 245.0 million and $ 232.6 million at December 31, 2025 and December 31, 2024, respectively.

Brokered certificate of deposits totaled $ 505.0 million and $ 651.5 million at December 31, 2025 and December 31, 2024, respectively.

Brokered money market accounts totaled $ 53.7 million and $ 53.5 million at December 31, 2025 and 2024, 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, 2024 or December 31, 2023.

Certificates of deposits from national listing services were $ 42.3 million and $ 109.1 million as of December 31, 2025 and December 31, 2024 , respectively.

There were no ce rtifi cates of deposits from one-way buy CDARS or one-way buy ICS at December 31, 2025 or December 31, 2024.

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 $ 110,000 4.42 % $ 90,000 3.91 %

(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 $ 3.1 million and $ 3.6 million for the years ended December 31, 2025 and December 31, 2024, respectively.

1 unchanged sentence

In accordance with agreements with the FHLB, the qualified collateral must be free a nd clear of liens, pledges and encumbrances.

At December 31, 2024, the Company had pledged eligible loans with a book value of $ 742.6 million as collateral to support borrowing capacity at the FHLB of Boston.

At December 31, 2025, the Comp any had pledged eligible loans and investment securities with a book value of $ 847.6 million as collateral to support borrowing capacity at the FHLB of Boston.

As of December 31, 2025, the Company has immediate availability to borrow an additional $ 426.0 million based on q ualified collateral.

12 unchanged sentences

As a member of the FHLB, the Bank is required to maintain investments in their capital stock.

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

The Bank o wned 62,067 shares and 56,545 shares at December 31, 2025 and December 31, 2024, respectively.

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 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:

25 unchanged sentences

Debt issuance costs amortize over the expected life of the related debt.

For the years ended December 31, 2024 and 2023 the amortization expense for debt issuance co sts were $ 0.2 million and $ 0.2 million, respe ctively, and were recognized as an increase to interest expense on borrowings within the consolidated statements of income.

The Company recognized $ 3.2 million and $ 3.2 million in interest expense related to its subordinated debt for the years ended December 31, 2024 and 2023, respectivel y.

For the years ended December 31, 2025 and 2024 the amortization expense for debt issuance costs were $ 0.2 million and $ 0.2 million, respectively, and were recognized as an increase to interest expense on borrowings within the consolidated statements of income.

The Company recognized $ 3.2 million and $ 3.2 million in interest expense related to its subordinated debt for the years ended December 31, 2025 and 2024, respectively.

Commitments and Contingencies

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.

As of December 31, 2025, the Company leases real estate for nine full-service branch locations and headquarter office under various operating lease agreements.

The Bank also operates in a limited service Domestic Representative Office in New Canaan, Connecticut and in Garden City, New York.

The branch leases and the limited service Domestic Representative Office have maturities ranging from 2028 to 2033, some of which include options to extend the lease term.

Reference Note 7 for further detail.

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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.

Loan commitments, undisbursed construction loans, and unused home equity lines of credit are agreements to lend to a client if 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.

1 unchanged sentence

The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counter party.

Collateral held varies, but may include residential and commercial property, deposits and securities.

The types of collateral held varies, but may include residential and commercial property, deposits and securities.

These commitments subject the Company to potential exposure in excess of amounts recorded in the financial statements, and therefore, management maintains a specific reserve for unfunded credit commitments.

1 unchanged sentence

The reserve for unfunded commitments tot aled $ 487 thousand a t December 31, 2025.

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.

As of December 31, 2025, the Company had rema ining capital commitments totaling $ 5.0 million to three Small Business Investment Companies ("SBIC") and remaining capital commitments totaling $ 3.6 million to three private equity investment companies.

These contributions represent equity investments for the Company.

The components of income tax expense for the years ended December 31, 2025 and December 31, 2024 consisted of:

7 unchanged sentences

State ( 290 ) ( 184 )

Total deferred ( 469 ) ( 191 )

Total deferred (credit) provision ( 1,821 ) ( 469 )

Total income tax expense $ 13,297 $ 3,559

8 unchanged sentences

Income tax expense at statutory federal rate $ 10,191 21.0 %

State tax expense 1,205 1,980

Income exempt from tax ( 428 ) ( 236 )

Stock compensation 43 ( 57 )

Deferred director fees ( 6 ) —

Other items, net ( 54 ) ( 396 )

State tax expense, net of federal income tax benefit (1)

Nontaxable or nondeductible items:

Other, net (2)

( 587 ) ( 1.2 ) %

Changes in unrecognized tax benefits 947 2.0 %

Other adjustments 185 0.4 %

Income tax expense $ 13,297 27.4 %

(1) State taxes in Florida and New York consisted of the majority (greater than 50%) of the tax effect.

(2) Includes nondeductible expenses, shortfalls, and windfalls.

(In thousands)

Income tax expense at statutory federal rate $ 2,799

State tax expense, net of federal income tax benefit 1,205

Nontaxable or nondeductible items:

Other, net ( 428 )

Other adjustments ( 17 )

Income tax expense $ 3,559

At December 31, 2025 and December 31, 2024, the components of deferred tax assets and liabilities were as follows:

16 unchanged sentences

Gross deferred tax liabilities 4,762 5,948

Net deferred tax asset $ 9,742 $ 9,383

Net deferred tax assets $ 11,356 $ 9,742

A valuation allowance against deferred tax assets is required if, based on the weight of available evidence, it is more-likely-than-not that some or all of the deferred tax assets will not be realized.

2 unchanged sentences

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

The losses will expire after 2032 and are subject to certain annual limitations which amount to $ 176 thousand per annum.

The losses will expire after 2032 and are limited to $ 176 thousand per annum.

As a result of management's analysis of the Company's tax position, a reserve has been established for uncertain tax positions in conjunction with the Company's out of state lending activity.

7 unchanged sentences

Balance, beginning of year $ 1,645 $ 1,045

Net additions (reductions) relating to potential liability with taxing authorities 600 545

Additions relating to potential liability with taxing authorities 1,296 600

(Reductions) relating to potential liability with taxing authorities ( 1,256 ) —

Balance, end of year $ 1,685 $ 1,645

16 unchanged sentences

For the Years Ended December 31,

(In thousands, except per share data)

(In thousands)

Net income $ 35,198 $ 9,770

Dividends to participating securities (1)

( 156 ) ( 164 )

Undistributed earnings allocated to participating securities (1)

14 unchanged sentences

All equity awards made under the 2022 Plan and prior equity award plans are made by means of an award agreement, which contains the specific terms and conditions of the grant.

To date, all equity awards have been in the form restricted stock.

To date, all equity awards have been in the form of restricted stock.

At December 31, 2025, there were 274,300 shares reserved for future issuance under the 2022 Plan.

16 unchanged sentences

The Co mpany’s restricted stock expense for the years ended December 31, 2025 and December 31, 2024 was $ 2.3 million and $ 3.0 million, respectively.

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.

At December 31, 2025 , there was $ 4.0 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 :

The Company has 74,921 shares of performance based restricted stock outstanding as of December 31, 2025 pursuant to the Company’s Stock Plans.

The awards vest over a three year service period, provided certain performance metrics are met.

The awards vest between a one and three year service period, provided certain performance metrics are met.

The share quantity that ultimately vests can range between 0 % and 200 %, which is dependent on the degree to which the performance metrics are met.

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.

Certain awards vest in full upon the completion of a specified service period, while others vest ratably over the requisite service period.

Comprehensive Income

23 unchanged sentences

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

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

Other comprehensive (loss) income before reclassifications, net of tax 1,978 1,722 3,700

Amounts reclassified from accumulated other comprehensive

7 unchanged sentences

(In thousands)

Unrealized gains (losses) on derivatives $ 4,295 $ 4,596 Interest expense on borrowings

Tax benefit ( 1,015 ) ( 976 ) Income tax expense

Unrealized gains on derivatives $ 985 $ 4,295 Interest expense on borrowings

Tax expense ( 233 ) ( 1,015 ) Income tax expense

Net of tax $ 752 $ 3,280

2 unchanged sentences

The Company does not use derivatives for speculative purposes.

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.

As of December 31, 2025, the Company was a party to one cash flow swap, designated as a hedging instrument, 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 the swap is $ 25 million and the Company has entered into the pay-fixed cash flow swap to convert rolling 90 - day FHLB advances or 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.

The Company terminated two cash flow swaps with a total notional amount of $ 50 million during the year ended December 31, 2022.

The underlying debt associated with the terminated swaps was kept in place.

The fair value of the terminated swaps totaled $ 127.6 thousand as of December 31, 2024 .

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

9 unchanged sentences

$ 150,142 $ 150,250 $ ( 108 ) $ ( 665 )

(1) These amounts include the amortized cost basis of closed portfolios of fixed rate loans used to designate hedging relationships in which the hedged item is the stated a mount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period.

(1) These amounts include the amortized cost basis of closed portfolios of fixed rate loans used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period.

As of December 31, 2025, the amortized cost basis of the closed portfolio used in this hedging relationship was $ 470.6 million, the cumulative basis adjustments associated with this hedging relationships was $ 0.2 million, and the amount of the designated hedged item was $ 150.0 million.

14 unchanged sentences

Derivatives designated as hedging instruments:

Interest rate swaps $ 75,000 Other assets $ 3,259 $ — Accrued expenses and other liabilities $ —

Interest rate swap $ 25,000 Other assets $ 1,925 $ — Accrued expenses and other liabilities $ —

Fair value swap $ — Other assets $ — $ 150,000 Accrued expenses and other liabilities $ 156

3 unchanged sentences

(1) Represents interest rate swaps with commercial banking clients, which are offset by derivatives with a third party.

Accrued interest receivable related to interest rate swaps as of December 31, 2024 totaled $ 0.6 million and is excluded from the fair value presented in the table above.

Accrued interes t receivable related to interest rate swaps as of December 31, 2025 totaled $ 0.1 million and is excluded from the fair value presented in the table above.

The fair value of interest rate swaps in a net asset position, including accrued interest, totaled $ 1.9 million as of December 31, 2025.

13 unchanged sentences

The fair value of interest ra te swaps in a net asset position, including accrued interest, totaled $ 3.7 million as of December 31, 2024.

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.

forecasted transaction affects earnings.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

57 unchanged sentences

However, borrowers with fixed rate obligations are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment.

Conversely, depositors who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment.

Conversely, depositors

who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment.

Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk.

12 unchanged sentences

FHLB stock 6,207 6,207 — 6,207 —

Servicing asset, net of valuation allowance 558 558 — — 558

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

Servicing assets, net of valuation allowance 1,035 1,035 — — 1,035

Derivative assets 4,970 4,970 — 4,970 —

Other real estate owned — — — — —

7 unchanged sentences

Subordinated debentures 69,697 70,075 — — 70,075

Servicing liability — — — — —

Derivative liability 4,472 4,472 — 4,472 —

Servicing liabilities — — — — —

Derivative liabilities 3,201 3,201 — 3,201 —

December 31, 2024

10 unchanged sentences

FHLB stock 5,655 5,655 — 5,655 —

Servicing asset, net of valuation allowance 869 869 — — 869

Derivative asset 8,819 8,819 — 8,819 —

Servicing assets, net of valuation allowance 558 558 — — 558

Derivative assets 7,472 7,472 — 7,472 —

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

Financial liabilities:

6 unchanged sentences

Subordinated debentures 69,451 66,167 — — 66,167

Servicing liability 4 4 — — 4

Derivative liability 4,496 4,496 — 4,496 —

Servicing liabilities — — — — —

Derivative liabilities 4,472 4,472 — 4,472 —

The following methods and assumptions were used by management in estimating the fair value of its financial instruments:

16 unchanged sentences

The fair value estimate of the loans includes an expected credit loss.

Derivative asset (liability):

Derivative assets (liabilities):

The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative.

7 unchanged sentences

Contractual cash flows for the subordinated debt are reduced based on the estimated rates of default, the severity of losses to be incurred on a default, and the rates at which the subordinated debt is expected to prepay after the call date.

Servicing asset (liability):

Servicing assets (liabilities):

Servicing assets and liabilities do not trade in an active, open market with readily observable prices.

6 unchanged sentences

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

At December 31, 2025, there was no OREO.

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

22 unchanged sentences

Corporate bonds — 10,485 —

Derivative asset — 7,472 —

Derivative liability — 4,472 —

Derivative assets — 4,970 —

Derivative liabilities — 3,201 —

December 31, 2024

3 unchanged sentences

Corporate bonds — 15,846 —

Derivative asset — 8,819 —

Derivative liability — 4,496 —

Derivative assets — 7,472 —

Derivative liabilities — 4,472 —

Marketable equity securities and available for sale securities:

16 unchanged sentences

Individually evaluated loans $ — $ — $ 78,933

Servicing asset, net — — 558

Servicing assets, net — — 1,035

December 31, 2024

Individually evaluated loans $ — $ — $ 113,901

Servicing asset, net — — 865

Servicing assets, net — — 558

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, 2025 and December 31, 2024:

6 unchanged sentences

3,077 Discounted cash flows Discount rate 3.38 – 10.00 %

Servicing asset, net $ 558 Discounted cash flows Discount rate 10.00 %

Servicing assets, net $ 1,035 Discounted cash flows Discount rate 10.00 %

Prepayment rate 3.00 - 18.00 %

3 unchanged sentences

10,335 Discounted cash flows Discount rate 3.38 – 10.25 %

Servicing asset, net $ 865 Discounted cash flows Discount rate 10.00 %

Servicing assets, net $ 558 Discounted cash flows Discount rate 10.00 %

Prepayment rate 3.00 - 18.00 %

2 unchanged sentences

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.

11 unchanged sentences

Regulatory Matters

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

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

banking organizations.

Under the current guidelines, banking organizations must have a minimum total risk-based capital ratio of 8.0 %, a minimum Tier 1 risk-based capital ratio of 6.0 %, a minimum common equity Tier 1 risk-based capital ratio of 4.5 %, and a minimum leverage ratio of 4.0 % in order to be "adequately capitalized." In addition to these requirements, banking organizations must maintain a capital conservation buffer consisting of common Tier 1 equity in an amount above the minimum risk-based capital requirements for “adeq uately capitalized” institutions equal to 2.5 % of total risk-weighted assets, resulting in a requirement for the Company and the Bank to effectively maintain common equity Tier 1, Tier 1 and total capital ratios of 7.0 %, 8.5 % and 10.5 %, respectively.

Under the current guidelines, banking organizations must have a minimum total risk-based capital ratio of 8.0 %, a minimum Tier 1 risk-based capital ratio of 6.0 %, a minimum common equity Tier 1 risk-based capital ratio of 4.5 %, and a minimum Tier 1 capital to average assets ratio of 4.0 % in order to be "adequately capitalized." In addition to these requirements, banking organizations must maintain a capital conservation buffer consisting of common Tier 1 equity in an amount above the minimum risk-based capital requirements for “adeq uately capitalized” institutions equal to 2.5 % of total risk-weighted assets, resulting in a requirement for the Company and the Bank to effectively maintain common equity Tier 1, Tier 1 and total capital ratios of 7.0 %, 8.5 % and 10.5 %, respectively.

The Company and the Bank must maintain the capital conservation buffer to avoid restrictions on the ability t o pay dividends, pay discretionary bonuses, or to engage in share repurchases.

36 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 %

Regulatory Restrictions on Dividends

8 unchanged sentences

There were no related party loans outstanding during the years ending December 31, 2025 and December 31, 2024.

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

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.

Related party deposits aggregated to approximately $ 56.8 million and $ 53.3 million at December 31, 2025 and December 31, 2024, respectively.

During the year ended December 31, 2025, the Company had no payments to related parties for services provided to the Company.

Parent Corporation Only Financial Statements

40 unchanged sentences

Cash flows from investing activities

Decrease in premises and equipment, net — —

Net cash provided by investing activities — —

Cash flows from financing activities

Issuance of subordinated debt — —

Retirement of subordinated debt — —

Proceeds from exercise of options — 155

Dividends paid on common stock ( 6,267 ) ( 6,283 )

2 unchanged sentences

Net cash provided by financing activities 13,399 5,080

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

Net increase (decrease) in cash and cash equivalents 9,900 ( 312 )

Cash and cash equivalents:

6 unchanged sentences

Subsequent Events

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 .

The Parent Corporation's Board of Directors declare d a $ 0.20 per share cash dividend, payable February 20, 2026 to shareholders of record on February 10, 2026.

On February 20, 2026, the Company opened its Brooklyn branch located in Bay Ridge.

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