What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-06 compared with 2025-11-05 · 122 added, 212 removed, 353 unchanged (49% of the section changed)

16 unchanged sentences

Executive Overview

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

We aim to do this through:

• Responsive, client-centric products and services;

• Organic growth and strategic acquisitions when market opportunities present themselves;

• Utilization of efficient and scalable infrastructure;

• Disciplined focus on risk management.

We strive to be the preferred banking provider, offering a compelling alternative to larger institutions.

Our strategy rests

on our competitive strengths:

• Strategic Market Reach:

While we serve our client base within 100 miles of our branch network, we also selectively pursue commercial banking opportunities beyond this radius, leveraging established business relationships and technology to support our clients’ growth.

• Experienced Leadership:

Our Executive Management Team brings a proven track record of success and deep industry expertise.

• Dedicated Board of Directors:

Our Board combines valuable expertise with close community ties, ensuring we understand and respond to local needs and are positioned to capitalize on market opportunities.

• Disciplined Risk Management:

We employ a robust and proactive risk management framework to safeguard assets, ensure regulatory compliance, and support sustainable growth.

• Strong Capital Position:

Our capital position has facilitated our growth and is integral to the execution of our business

• Scalable Operating Platform:

Designed for efficiency and scalability, our platform supports our growth and provides a

seamless customer experience.

Critical Accounting Policies and Estimates

2 unchanged sentences

Actual results could differ from our current estimates, as a result of changing conditions and future events.

We believe that accounting estimates related to the measurement of the ACL-Loans, the valuation of derivative instruments, investment securities and deferred income taxes, and the evaluation of ACL-Securities are particularly critical and susceptible to significant near-term change.

We believe that accounting estimates related to the measurement of the ACL-Loans, the valuation of derivative instruments, investment securities and deferred income taxes, and the evaluation of investment securities for are particularly critical and susceptible to significant near-term change.

Earnings and Performance Overview

Revenues (net interest income plus noninterest income) for the three months ended September 30, 2025 were $28.5 million, versus $21.9 million for the quarter ended September 30, 2024.

Revenues for the nine months ended September 30, 2025 were $78.0 million, versus $65.8 million for the nine months ended September 30, 2024.

The increase in revenues for the quarter and nines months ended September 30, 2025 was attributable to increased earning asset yields, a decrease in interest expense on deposits, and higher gains from loan sales.

Net income available to common shareholders was $10.1 million, or $1.27 per diluted share, and $1.9 million, or $0.24 per diluted share, for the three months ended September 30, 2025 and 2024, respectively.

Net income available to common shareholders was $26.1 million, or $3.29 per diluted share, and $6.8 million, or $0.86 per diluted share, for the nine months ended September 30, 2025 and 2024, respectively.

The increase in net income for the quarter and nine months ended September 30, 2025 was primarily due to the aforementioned increase in revenues and a decrease in provision for credit losses.

Returns on average shareholders' equity and average assets for the three months ended September 30, 2025 were 13.84% and 1.24%, respectively, compared to 2.83% and 0.24%, respectively, for the three months ended September 30, 2024.

Returns on average shareholders' equity and average assets for the nine months ended September 30, 2025 were 12.37% and 1.08%, respectively, compared to 3.35% and 0.29%, respectively, for the nine months ended September 30, 2024.

Revenues (net interest income plus noninterest income) for the quarter ended March 31, 2026 were $30.2 million, versus $23.6 million for the quarter ended March 31, 2025.

The increase in revenues was mainly attributable to a decrease in interest expense, higher gains from loans sales, and an increase in earning asset yields.

Net income available to common shareholders was $11.3 million, or $1.41 per diluted share, and $6.9 million, or $0.87 per diluted share, for the three months ended March 31, 2026 and 2025, respectively.

The increase was primarily due to the aforementioned increase in revenues and a decrease in provision for credit losses.

Returns on average shareholders' equity and average assets for the three months ended March 31, 2026 were 14.88% and 1.35%, respectively, compared to 10.16% and 0.86%, respectively, for the three months ended March 31, 2025.

Results of Operations

7 unchanged sentences

Premium amortization and discount accretion are included in the respective interest income and interest expense amounts.

FTE net interest income for the three months ended September 30, 2025 and 2024 was $26.1 million and $20.8 million, respectively.

FTE net interest income for the nine months ended September 30, 2025 and 2024 was $72.4 million and $63.3 million, respectively.

FTE interest income for the three months ended September 30, 2025 increased by $2.4 million, or 5.0%, to $50.7 million, compared to FTE interest income for the three months ended September 30, 2024.

FTE interest income for the nine months ended September 30, 2025 increased by $3.8 million, or 2.6%, to $148.1 million, compared to FTE interest income for the nine months ended September 30, 2024.

This increase was due to an increase in interest and fees on loans due to higher overall loan yields.

Interest expense for the three months ended September 30, 2025 decreased by $2.9 million compared to interest expense for the three months ended September 30, 2024.

Interest expense for the nine months ended September 30, 2025 decreased by $5.3 million compared to interest expense for the nine months ended September 30, 2024.

The decrease in interest expense for the three and nine months ended September 30, 2025 was driven by a decrease in interest expense on deposits, resulting from a decrease in rates on interest bearing deposits and improved deposit mix.

FTE net interest income for the three months ended March 31, 2026 and 2025 was $27.0 million and $22.2 million, respectively.

FTE interest income for the three months ended March 31, 2026 increased by $2.0 million, or 4.2%, to $50.6 million, compared to FTE interest income for the three months ended March 31, 2025.

This increase was due to an increase in interest and fees on loans due to higher overall loan balances.

Interest expense for the three months ended March 31, 2026 decreased by $2.8 million compared to interest expense for the three months ended March 31, 2025.

The decrease in interest expense was driven by a decrease in interest expense on deposits, resulting from a decrease in rates on interest bearing deposits.

Distribution of Assets, Liabilities and Shareholders’ Equity;

Interest Rates and Interest Differential

The following tables present the average balances and yields earned on interest earning assets and average balances and weighted average rates paid on our funding liabilities for the three and nine months ended September 30, 2025 and 2024.

The following table presents the average balances and yields earned on interest earning assets and average balances and weighted average rates paid on our funding liabilities for the three months ended March 31, 2026 and 2025.

For the Quarter Ended

September 30, 2025 September 30, 2024

Balance Interest Yield/

Cash and Fed funds sold $ 278,698 $ 2,853 4.06 % $ 253,664 $ 3,205 5.03 %

Securities (1)

142,677 1,463 4.10 147,431 1,390 3.78

Commercial real estate 1,856,645 29,662 6.25 1,905,506 28,288 5.81

Residential real estate 34,518 510 5.91 47,481 736 6.20

Construction 173,380 3,536 7.98 156,273 3,070 7.69

Commercial business 572,187 11,634 7.96 512,507 10,783 8.23

Consumer 63,627 986 6.15 41,845 719 6.84

Total loans 2,700,357 46,328 6.71 2,663,612 43,596 6.40

Federal Home Loan Bank stock 6,942 89 5.11 5,655 122 8.32

Total earning assets 3,128,674 $ 50,733 6.34 % 3,070,362 $ 48,313 6.16 %

Other assets 98,547 90,410

Total assets $ 3,227,221 $ 3,160,772

Liabilities and shareholders' equity:

Interest bearing liabilities:

NOW $ 99,087 $ 124 0.50 % $ 94,958 $ 44 0.18 %

Money market 883,440 8,479 3.81 832,430 8,597 4.11

Savings 94,290 700 2.95 89,463 692 3.07

Time 1,253,878 13,282 4.20 1,347,857 16,246 4.79

Total interest bearing deposits 2,330,695 22,585 3.84 2,364,708 25,579 4.30

Borrowed Money 169,867 2,020 4.72 159,349 1,895 4.73

Total interest bearing liabilities 2,500,562 $ 24,605 3.90 % 2,524,057 $ 27,474 4.33 %

Noninterest bearing deposits 383,153 303,213

Other liabilities 54,507 62,602

Total liabilities 2,938,222 2,889,872

Shareholders' equity 288,999 270,900

Total liabilities and shareholders' equity $ 3,227,221 $ 3,160,772

Net interest income (2)

$ 26,128 $ 20,839

Interest rate spread 2.44 % 1.83 %

Net interest margin (3)

3.34 % 2.72 %

(1) Average balances and yields for securities are based on amortized cost.

(2) The adjustment for securities and loans taxable equivalency amounted to $141 thousand and $122 thousand for the three months ended September 30, 2025 and 2024, respectively.

(3) Annualized net interest income as a percentage of earning assets.

(4) Yields are calculated using the contractual day count convention for each respective product type.

For the Nine Months Ended

September 30, 2025 September 30, 2024

March 31, 2026 March 31, 2025

Balance Interest Yield/

33 unchanged sentences

(1) Average balances and yields for securities are based on amortized cost.

(2) The adjustment for securities and loans taxable equivalency amounted to $427 thousand and $239 thousand for the nine months ended September 30, 2025 and 2024, respectively.

(2) The adjustment for securities and loans taxable eq ui valency amounted to $109 thousand and $142 thousand for the three months ended March 31, 2026 and 2025, respectively.

(3) Annualized net interest income as a percentage of earning assets.

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Changes attributable to both volume and rate have been allocated proportionately based on the relationship of the absolute dollar amount of change in each.

Three Months Ended September 30, 2025 vs 2024

Increase (Decrease) Nine Months Ended

September 30, 2025 vs 2024

Three Months Ended

March 31, 2026 vs 2025

Increase (Decrease)

(In thousands) Volume Rate Total Volume Rate Total

(In thousands) Volume Rate Total

Interest and dividend income:

19 unchanged sentences

Provision for Credit Losses

The provision for credit losses is based on management’s periodic assessment of the adequacy of our ACL-Loans and ACL-Unfunded Commitments which, in turn, is based on interrelated factors such as the composition of our loan portfolio and its inherent risk characteristics, the level of nonperforming loans and net charge-offs, both current and historic, local economic and credit conditions, the direction of real estate values, and regulatory guidelines.

The provision for credit losses is based on management’s periodic assessment of the adequacy of our ACL-Loans and ACL-Unfunded Commitments which, in turn, is based on interrelated factors such as the composition of our loan portfolio and its inherent risk characteristics, the level of nonperforming loans and net charge-offs, both current and historic, economic and credit conditions, the direction of real estate values, and regulatory guidelines.

The provision for credit losses is charged against earnings in order to maintain our ACL-Loans and ACL-Unfunded Commitments and reflects management’s best estimate of probable losses inherent in our loan portfolio as of the balance sheet date.

The credit for credit losses for the three months ended September 30, 2025 was $0.4 million compared to a provision for credit losses of $6.3 million for the three months ended September 30, 2024.

The provision for credit losses for the nine months ended September 30, 2025 was $0.4 million compared to a provision for credit losses of $18.2 million for the nine months ended September 30, 2024.

The reduction in the credit for credit losses was primarily driven by charge-offs recorded during the three- and nine-month periods of the prior year.

The credit for credit losses for the three months ended March 31, 2026 was $1.0 million compared to a provision for credit losses of $0.5 million for the three months ended March 31, 2025.

Noninterest Income

Noninterest income is a component of our revenue and is comprised primarily of fees generated from deposit relationships with our clients, fees generated from sales and referrals of loans, and income earned on bank-owned life insurance.

The following tables compare noninterest income for the three and nine months ended September 30, 2025 and 2024:

The following table compares noninterest income for the three months ended March 31, 2026 and 2025:

Three Months Ended

September 30, Change

March 31, Change

(Dollars in thousands) 2026 2025 $ %

3 unchanged sentences

Other (220) 117 (337) Unfavorable

Total noninterest income $ 2,495 $ 1,156 $ 1,339 Favorable

Nine Months Ended

September 30, Change

(Dollars in thousands) 2025 2024 $ %

Gains and fees from sales of loans $ 2,894 $ 499 $ 2,395 Favorable

Bank-owned life insurance 1,055 1,008 47 4.7

Service charges and fees 2,055 1,374 681 49.6

Other 8 (127) 135 Favorable

Total noninterest income $ 6,012 $ 2,754 $ 3,258 Favorable

Noninterest income increased by $1.3 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Noninterest income increased by $3.3 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

The increase in noninterest income for the three and nine months ended September 30, 2025 was driven by higher gains from SBA loan sales.

Total noninterest income $ 3,343 $ 1,505 $ 1,838 122.1 %

Noninterest income increased by $1.8 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The increase in noninterest income was mainly driven by higher gains from SBA loan sales.

Noninterest Expense

The following tables compare noninterest expense for the three and nine months ended September 30, 2025 and 2024:

The following table compares noninterest expense for the three months ended March 31, 2026 and 2025:

Three Months Ended

September 30, Change

(Dollars in thousands) 2025 2024 $ %

Salaries and employee benefits $ 7,995 $ 6,223 $ 1,772 28.5 %

Occupancy and equipment 2,469 2,334 135 5.8

Professional services 1,412 1,142 270 23.6

Data processing 633 851 (218) (25.6)

Director fees 333 292 41 14.0

FDIC insurance 610 853 (243) (28.5)

Marketing 140 73 67 91.8

Other 1,039 1,097 (58) (5.3)

Total noninterest expense $ 14,631 $ 12,865 $ 1,766 13.7 %

Nine Months Ended

September 30, Change

March 31, Change

(Dollars in thousands) 2026 2025 $ %

8 unchanged sentences

Total noninterest expense $ 16,889 $ 14,141 $ 2,748 19.4 %

Noninterest expense increased by $1.8 million to $14.6 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Noninterest expense increased by $4.9 million to $43.3 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

The increase in noninterest expense was primarily driven by an increase in salaries and employee benefits mainly related to incremental new hires aligned with strategic initiatives.

Additionally, professional services increased as a result of increased recruiting costs aligned with strategic initiatives.

Income tax expense for the three months ended September 30, 2025 and 2024 totaled $3.4 million and $0.8 million, respectively.

The effective tax rates for the three months ended September 30, 2025 and 2024 were 25.2% and 29.0%, respectively.

Income tax expense for the nine months ended September 30, 2025 and 2024 totaled $8.2 million and $2.5 million, respectively.

The effective tax rates for the nine months ended September 30, 2025 and 2024 were 23.9% and 26.6%, respectively.

Noninterest expense increased by $2.7 million to $16.9 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The increase in noninterest expense was primality attributable to an increase in salaries and employee benefits resulting from incremental new hires in support of strategic initiatives.

Income tax expense for the three months ended March 31, 2026 and 2025 totaled $3.1 million and $2.1 million, respectively.

The effective tax rates for the three months ended March 31, 2026 and 2025 were 21.5% and 23.2%, respectively.

Financial Condition

Assets totaled $3.2 billion at September 30, 2025 a decrease of $24.5 million or 0.7% compared to December 31, 2024.

Gross loans totaled $2.7 billion at September 30, 2025, an increase of $12.3 million or 0.5% compared to December 31, 2024.

Deposits totaled $2.8 billion at September 30, 2025, a decrease of $30.2 million, or 1.1% compared to December 31, 2024.

Shareholders’ equity totaled $292.8 million as of September 30, 2025, an increase of $22.3 million compared to December 31, 2024, primarily a result of net income of $26.1 million for the nine months ended September 30, 2025.

Assets totaled $3.4 billion at March 31, 2026, an increase of $14.0 million or 0.4% compared to December 31, 2025.

Gross loans totaled $2.9 billion at March 31, 2026, an increase of $26.5 million or 0.9% compared to December 31, 2025.

Deposits totaled $2.9 billion at March 31, 2026, an increase of $55.8 million, or 2.0% compared to December 31, 2025.

Shareholders’ equity totaled $311.9 million as of March 31, 2026, an increase of $10.4 million compared to December 31, 2025, primarily a result of net income of $11.3 million for the three months ended March 31, 2026.

The increase was partially offset by dividends paid of $1.6 million.

1 unchanged sentence

We originate commercial real estate loans, construction loans, commercial business loans and consumer loans in our market.

We also pursue certain types of commercial lending opportunities outside our market, particularly where we have strong business relationships.

We also pursue certain types of commercial lending opportunities outside our market.

Our loan portfolio is the largest category of our earning assets.

Total loans before deferred loan fees and the ACL-Loans were $2.7 billion at September 30, 2025 and $2.7 billion at December 31, 2024.

Total gross loans increased $12.3 million as of September 30, 2025 compared to the year ended December 31, 2024.

Total loans before deferred loan fees and the ACL-Loans were $2.9 billion at March 31, 2026 and $2.8 billion at December 31, 2025.

Total gross loans increased $26.5 million as of March 31, 2026 compared to the year ended December 31, 2025.

The following table compares the composition of our loan portfolio for the dates indicated:

(In thousands) At September 30, 2025

At December 31, 2024

(In thousands) At March 31, 2026 At December 31, 2025 Change

Real estate loans:

6 unchanged sentences

Total loans $ 2,866,618 $ 2,840,072 $ 26,546

The following table compares the composition of our commercial real estate loan portfolio by non-owner occupied and owner occupied loans at September 30, 2025 and December 31, 2024:

At September 30, 2025

At December 31, 2024

The following table compares the composition of our commercial real estate loan portfolio by non-owner occupied and owner occupied loans at March 31, 2026 and December 31, 2025:

At March 31, 2026

At December 31, 2025 Change

Total % Total % Total

5 unchanged sentences

$ 1,896,565 100.00 % $ 1,930,844 100.00 % $ (34,279)

(1) Excludes the positive fair value effect of the portfolio layer swap of $220 thousand and the positive fair value effective of the portfolio layer swap of $219 thousand for Commercial Real Estate at September 30, 2025 and December 31, 2024, respectively.

The following table compares the composition of our commercial real estate loan portfolio by property type, and collateral location as of September 30, 2025 :

Commercial Real Estate CT All Other NY NYC NJ FL OH PA All Other Total (1)

(1) Excludes the positive fair value effect of the portfolio layer swap of $135 thousand for Commercial Real Estate at December 31, 2025.

The following table compares the composition of our commercial real estate loan portfolio by property type, and collateral location as of March 31, 2026 :

Commercial Real Estate CT NYC All Other NY NJ FL PA OH All Other Total

(Dollars in thousands)

11 unchanged sentences

$ 456,793 $ 207,374 $ 202,456 $ 88,081 $ 290,282 $ 109,267 $ 102,843 $ 439,469 $ 1,896,565

(1) Excludes the positive fair value effect of the portfolio layer swap of $220 thousand for Commercial Real Estate at September 30, 2025.

(1) Primarily consists of skilled nursing and assisted living facilities.

(2) Includes Special use, self storage, and land.

As of September 30, 2025, the Bank had $144.5 million of loans collateralized by offices, which represented 7.6% of the total loan portfolio.

As of March 31, 2026, the Bank had $154.1 million of loans collateralized by offices, which represented 11.9% of the total loan portfolio.

Most of the properties in this portfolio are in suburban locations.

95.7% of this portfolio was pass rated, and there was one relationship totaling $5.1 million on nonaccrual status.

As of September 30, 2025, the Bank had $264.3 million of loans collateralized by multifamily properties, which represented 9.7% of the total loan portfolio.

We also performed an additional review of our multifamily exposure.

As of March 31, 2026, we had $266.8 million of loans collateralized by multifamily properties, which represented 9.3% of the total loan portfolio.

89.4% of this portfolio is pass rated and current.

these properties are all located in Connecticut, New York, or New Jersey, with eight properties, totaling $49.9 million, located in New York City.

These properties are all located in Connecticut, New York, New Jersey, or Pennsylvania, with eight properties, totaling $49.7 million, located in New York City.

78.3% of the New York City exposure is located in Brooklyn, 11.9% in Manhattan and the remaining 9.8% in Queens.

The following table presents an analysis of the commercial real estate portfolio's loan to value at origination and by property type as of September 30, 2025 .

Commercial Real Estate Total CRE Portfolio (1)

Percentage of Total CRE Portfolio Original Loan to Value %

The following table presents an analysis of the commercial real estate portfolio's loan to value at origination and by property type as of March 31, 2026 .

Commercial Real Estate Total CRE Portfolio Percentage of Total CRE Portfolio Loan to Value %

(Dollars in thousands)

11 unchanged sentences

Total $ 1,896,565 100.0 % 63.5 %

(1) Excludes the positive fair value effect of the portfolio layer swap of $220 thousand for Commercial Real Estate at September 30, 2025.

(1) Primarily consists of skilled nursing and assisted living facilities.

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Our Board of Directors monitors credit risk management.

The Directors Loan Committee ("DLC") has primary oversight responsibility for the credit-granting function including approval authority for credit-granting policies, review of management’s credit-granting activities and approval of large exposure credit requests, as well as loan review and problem loan management and resolution.

The Directors Loan Committee has primary oversight responsibility for the credit-granting function including approval authority for credit-granting policies, review of management’s credit-granting activities and approval of large exposure credit requests, as well as loan review and problem loan management and resolution.

The committee reports the results of its respective oversight functions to our Board of Directors.

4 unchanged sentences

The Company has established credit policies applicable to each type of lending activity in which it engages.

The Company evaluates the creditworthiness of each client and extends credit of up to 80% of the market value of the collateral, (85% maximum for owner occupied commercial real estate), depending on the client's creditworthiness and the type of collateral.

The Company evaluates the creditworthiness of each client and, for conventional loans, extends credit of up to 80% of the market value of the collateral, (85% maximum for owner occupied commercial real estate), depending on the client's creditworthiness and the type of collateral.

The client’s ability to service the debt is monitored on an ongoing basis.

6 unchanged sentences

This risk rating represents an assessed level of a 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 following table presents credit risk ratings as of September 30, 2025 and December 31, 2024:

The following table presents credit risk ratings as of March 31, 2026 and December 31, 2025:

Credit Risk Ratings

September 30, 2025

March 31, 2026

December 31, 2025

6 unchanged sentences

Total loans $ 2,866,618 $ 2,840,072

(1) 99.9% and 99.6% of Risk Rated 6 loans are current on payments, 97.7% and 93.0% are guaranteed by ultra-high net worth sponsors as of September 30, 2025 and December 31, 2024, respectively.

( 1) 95.7% and 100.0% of Risk Rated 6 loans are current on payments of which 99.6% and 99.3% are guaranteed by ultra-high net worth sponsors as of March 31, 2026 and December 31, 2025, respectively.

Credit risk management involves a partnership between our relationship managers and our credit approval, portfolio management, credit administration and collections teams.

3 unchanged sentences

The following table presents nonperforming assets and additional asset quality data for the dates indicated:

(In thousands) At September 30, 2025

At December 31, 2024

(In thousands) At March 31, 2026 At December 31, 2025

Nonaccrual loans:

8 unchanged sentences

Nonperforming assets to total assets 0.56 % 0.49 %

Nonaccrual loans to total loans 0.62 % 1.97 %

Nonaccrual loans to total gross loans 0.66 % 0.57 %

ACL-loans as a % of total loans 1.03 % 1.08 %

ACL-loans as a % of nonperforming loans 155.39 % 188.33 %

Total past due loans to total loans 0.76 % 1.63 %

Nonaccrual loans totaled $17.0 million at September 30, 2025 and $53.3 million at December 31, 2024.

In the first quarter of 2025, the Company sold a $27.1 million multifamily commercial real estate loan on nonperforming status at par value.

There was $1.3 million Other Real Estate Owned ("OREO") at September 30, 2025 and $8.3 million of OREO at December 31, 2024.

During the first quarter of 2025, the Company sold a property that it had acquired during the fourth quarter of 2024 and held as an OREO asset.

The OREO asset had previously secured a non-performing construction loan.

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

In the second quarter of 2025, the Company took title to an industrial property, resulting in an OREO asset of $1.3 million.

Efforts to market the property for sale are ongoing.

Total past due loans to total gross loans 0.62 % 0.31 %

Nonaccrual loans totaled $19.0 million at March 31, 2026 and $16.3 million at December 31, 2025.

There was no Other Real Estate Owned ("OREO") at March 31, 2026 and December 31, 2025, respectively.

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

10 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(Dollars in thousands) 2026 2025

4 unchanged sentences

Consumer (73) (33)

Construction — (616) — (616)

Total charge-offs (221) (100)

Residential real estate — — — 141

Commercial real estate 5 —

1 unchanged sentence

Consumer 33 36

Construction — — — —

Total recoveries 53 40

Net recoveries (charge-offs) 308 (14,847) 350 (18,776)

Net (charge-offs) recoveries (168) (60)

(Credit) provision for credit losses - loans (957) 538

Balance at end of period $ 29,580 $ 29,485

Net (recoveries) charge-offs to average loans (0.01) % 0.56 % (0.01) % 0.70 %

ACL-Loans to total loans 1.10 % 1.06 % 1.10 % 1.06 %

At September 30, 2025, our ACL-Loans was $30.0 million and represented 1.10% of total gross loans, compared to $29.0 million or 1.07% of total gross loans, at December 31, 2024.

Net charge-offs to average loans 0.01 % 0.00 %

ACL-Loans to total gross loans 1.03 % 1.11 %

At March 31, 2026 , our ACL-Loans was $29.6 million and represented 1.03% of total gross loans, compared to $30.7 million or 1.08% of total gross loans, at December 31, 2025.

The following table presents the allocation of the ACL-Loans balance and the related allocation percentage of these loans across the total loan portfolio:

September 30, 2025

December 31, 2024

At March 31, 2026 At December 31, 2025

(Dollars in thousands) ACL-Loans Amount ACL-Loans Percentage Loan Segment to Total Loans Percentage ACL-Loans Amount ACL-Loans Percentage Loan Segment to Total Loans Percentage

5 unchanged sentences

Total ACL-Loans $ 29,580 100.0 % 100.0 % $ 30,705 100.0 % 100.0 %

The allocation of the ACL-Loans at September 30, 2025 reflects our assessment of credit risk and probable loss within each portfolio.

We believe that the level of the ACL-Loans at September 30, 2025 is appropriate to cover probable losses.

The allocation of the ACL-Loans at March 31, 2026 reflects our assessment of credit risk and probable loss within each portfolio.

We believe that the level of the ACL-Loans at March 31, 2026 is appropriate to cover probable losses.

ACL- Unfunded Commitments

3 unchanged sentences

Investment Securities

At September 30, 2025, the carrying value of our investment securities portfolio totaled $128.2 million and represented 4.0% of total assets, compared to $146.1 million, or 4.5% of total assets, at December 31, 2024.

The net unrealized loss position on our investment portfolio at September 30, 2025 was $1.3 million and included gross unrealized gains of $1.7 million.

The net unrealized loss position on our investment portfolio at December 31, 2024 was $4.9 million and included gross unrealized gai ns of $1.3 million.

At March 31, 2026, the carrying value of our investment securities portfolio totaled $187.6 million and represented 5.6% of total assets, compared to $192.1 million, or 5.7% of total assets, at December 31, 2025.

The net unrealized loss position on our investment portfolio at March 31, 2026 was $1.9 million and included gross unrealized gains of $1.3 million.

The net unrealized loss position on our investment portfolio at December 31, 2025 was $0.7 million and included gross unrealized gains of $2.0 million.

Deposit Activities and Other Sources of Funds

September 30, 2025

December 31, 2024

March 31, 2026 December 31, 2025

(Dollars in thousands) Amount Percent Amount Percent

5 unchanged sentences

Total deposits $ 2,885,249 100.00 % $ 2,829,481 100.00 %

Total deposits were $2.8 billion at September 30, 2025, a decrease of $30.2 million, from the balance at December 31, 2024.

Brokered certificates of depo sits to taled $555.0 million at September 30, 2025 and $651.5 million at December 31, 2024, respectively.

Brokered money market accounts totaled $53.7 million a t September 30, 2025 and $53.5 million at December 31, 2024, respectively.

Certificates of deposits from national listing services were $54.6 million and $109.1 million as of September 30, 2025 and December 31, 2024, respectively.

There were no one-way buy CDARS or one-way buy ICS at September 30, 2025 or December 31, 2024.

Tota l de posits were $2.9 billion at March 31, 2026, an increase of $55.8 million, from t he balance at December 31, 2025.

Brokered certificates of deposits totaled $460.6 million at March 31, 2026 and $505.0 million at December 31, 2025, respectively.

Brokered money market accounts totaled $53.7 million at March 31, 2026 and $53.7 million at December 31, 2025, respectively.

Certificate of deposits from national listing services were $32.9 million and $42.3 million as of March 31, 2026 and December 31, 2025, respectively.

There were no one-way buy CDARS or one-way buy ICS at March 31, 2026 or December 31, 2025.

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

As of September 30, 2025, our FDIC insured deposits were $1,974.7 million, or 72% of total deposits.

Additionally, deposits totaling $78.3 million, or 3% of total deposits, are secured by standby l etters of credit with the Federal Home Loan Bank of Boston.

At September 30, 2025 and December 31, 2024, time deposits with a denomination of $100 thousand or more, including CDARS and brokered deposits, totaled $1.1 billion and $1.2 billion, respectively, maturing during the periods indicated in the table below:

(Dollars in thousands) September 30, 2025

December 31, 2024

As of March 31, 2026, our FDIC insured deposits were $1,851.8 million, or 64% of total deposits.

Additionally, deposits totaling $80.0 million, or 3% of total deposits, are insured by standby letters of credit with the Federal Home Loan Bank of Boston.

At March 31, 2026 and December 31, 2025, time deposits with a denomination of $100 thousand or more, including CDARS and brokered deposits, totaled $1.0 billion and $1.1 billion, respectively, maturing during the periods indicated in the table below:

(Dollars in thousands) March 31, 2026 December 31, 2025

Within 3 months $ 377,829 $ 318,803

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We utilize advances from the Federal Home Loan Bank of Boston, or FHLB, as part of our overall funding strategy and to meet short-term liquidity needs, and to a lesser degree, manage interest rate risk arising from the difference in asset and liability maturities.

Total FHLB advances w ere $75.0 million and $90.0 million at September 30, 2025 and December 31, 2024, respectively.

Total FHLB advances were $60.0 million and $110.0 million at March 31, 2026 and December 31, 2025, respectively.

The Bank has addition al borrowing capacity at the FHLB up to a certain percentage of the value of qualified collateral.

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

At September 30, 2025, the Bank had pledged $716.6 million of eligible loans as collateral to support borrowing capacity at the FHLB.

As of September 30, 2025, the Bank had immediate availability to borrow an additional $312.5 million from the FHLB based on qualified collateral.

At September 30, 2025 , the Bank had a secured borrowing line with the FRB, a letter of credit with the FHLB, and unsecured lines of credit with Zions Bank, Pacific Coast Bankers Bank ("PCBB"), and Atlantic Community Bankers Bank ("ACBB").

The total borrowing line, letter, or line of credit and the amount outstanding at September 30, 2025 is summarized below:

September 30, 2025

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

At March 31, 2026, the Bank had pledged $889.3 million of eligible loans and investment securities as collateral to support

borrowing capacity at the FHLB.

As of March 31, 2026, the Bank had immediate availability to borrow an additional $509.1 million from the FHLB based on qualified collateral.

At March 31, 2026 , the Bank had a secured borrowing line with the FRB, a letter of credit with the FHLB, and unsecured lines of credit with Zions Bank, Pacific Coast Bankers Bank ("PCBB"), and Atlantic Community Bankers Bank ("ACBB").

The total borrowing line, letter, or line of credit and the amount outstanding at March 31, 2026 is summarized below:

March 31, 2026

Total Letter or Line of Credit Total Outstanding

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Capital Resources

The increase was partially offset by dividends paid of $1.6 million.

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

At September 30,

2025, the Bank met all capital adequacy requirements to which it was subject and exceeded the regulatory minimum capital levels to be considered well-capitalized under the reg ulatory framework for prompt corrective action.

At September 30, 2025, the Bank’s ratio of Common Equity Tier 1 capital to risk-weighted assets was 12.39%, total capital to risk-weighted assets was 12.39%, Tier 1 capital to risk-weighted assets was 13.48% and Tier 1 capital to average assets was 10.71%.

At September 30, 2025, the Company met all capital adequacy requirements to which it was subject and exceeded the regulatory minimum capital levels to be considered well-capitalized under the regulatory framework for prompt corrective action.

At September 30, 2025, the Company’s ratio of Common Equity Tier 1 capital to risk-weighted assets was 10.39%, total capital to risk-weighted assets was 10.39%, Tier 1 capital to risk-weighted assets was 13.98% and Tier 1 capital to average assets was 8.99%.

At March 31, 2026, the Bank met all capital adequacy requirements to which it was subject and exceeded the regulatory minimum capital levels to be considered well-capitalized under the regulatory framework for prompt corrective action.

At March 31, 2026, the Bank’s ratio of Common Equity Tier 1 capital to risk-weighted assets was 11.97%, Tier 1 capital to risk-weighted assets was 11.97%, total capital to risk-weighted assets was 13.00% and Tier 1 capital to average assets was 10.32%.

At March 31, 2026, the Company met all capital adequacy requirements to which it was subject and exceeded the regulatory minimum capital levels to be considered well-capitalized under the regulatory framework for prompt corrective action.

At March 31, 2026, the Company’s ratio of Common Equity Tier 1 capital to risk-weighted assets was 10.59%, Tier 1 capital to risk-weighted assets was 10.59%, total capital to risk-weighted assets was 14.01% and Tier 1 capital to average assets was 9.13%.

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 “adequately 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.

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Per Company policy, the Bank should not be outside these limits for twelve consecutive months unless the Bank's forecasted capital ratios are considered to be "well capitalized".

As of September 30, 2025, the Bank has met all minimum regulatory capital requirements to be considered "well capitalized".

The following tables set forth the estimated percentage change in our net interest income at risk over one-year simulation periods beginning September 30, 2025 and December 31, 2024:

As of March 31, 2026, the Bank has met all minimum regulatory capital requirements to be considered "well capitalized".

The following tables set forth the estimated percentage change in our net interest income at risk over one-year simulation periods beginning March 31, 2026 and December 31, 2025:

Parallel Ramp Estimated Percent Change in Net Interest Income

Rate Changes (basis points) September 30, 2025 December 31, 2024

Year 1 from Year 1 Base

Rate Changes (basis points) March 31, 2026 December 31, 2025

-100 (0.30) % 0.10 %

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Parallel Shock Estimated Percent Change in Net Interest Income

Rate Changes (basis points) September 30, 2025 December 31, 2024

Year 1 from Year 1 Base

Rate Changes (basis points) March 31, 2026 December 31, 2025

-100 (0.80) % (0.60) %

2 unchanged sentences

+300 7.90 6.40

The net interest income simulation model attempts to measure the change in net interest income over the next one-year period, and over the next two year period on a cumulative basis, assuming certain changes in the general level of interest rates.

Based on our model, which was run as of September 30, 2025, we estimated that over the next one-year period a 200 basis-point parallel ramp increase of interest rates would increase our net interest income by 1.40%, while a 100 basis-point parallel ramp decrease of interest rates would decrease net interest income by 0.70%.

As of December 31, 2024, we estimated that over the next one-year period a 200 basis-point parallel ramp increase of interest rates would decrease our net interest income by 1.00%, while a 100 basis-point parallel ramp decrease of interest rates would increase net interest income by 0.40%.

Based on our model, which was run as of September 30, 2025, we estimated that over the next two years, on a cumulative basis, a 200 basis-point parallel ramp increase of interest rates would increase our net interest income by 5.50%, while a 100 basis-point parallel ramp decrease in interest rates would increase net interest income by 7.60%.

As of December 31, 2024, we estimated that over the next two years, on a cumulative basis, a 200 basis-point parallel ramp increase of interest rates would decrease our net interest income by 2.90%, while a 100 basis-point parallel ramp decrease in interest rates would increase net interest income by 12.80%.

The change in sensitivity between September 30, 2025 and December 31, 2024 was impacted by an increase in variable-rate loans.

We conduct an economic value of equity at risk simulation in tandem with net interest income simulations, to ascertain a longer term view of our interest rate risk position by capturing longer-term repricing risk and options risk embedded in the balance sheet.

It measures the sensitivity of economic value of equity to changes in interest rates.

The economic value of equity at risk simulation values only the current balance sheet and does not incorporate the growth assumptions used in one of the income simulations.

As with the net interest income simulation, this simulation captures product characteristics such as loan resets, repricing terms, maturity dates, rate caps and floors.

Key assumptions include loan prepayment speeds, deposit pricing elasticity and non-maturity deposit attrition rates.

These assumptions can have significant impacts on valuation results as the assumptions remain in effect for the entire life of each asset and liability.

All key assumptions are subject to a periodic review.

The net interest income at risk simulation results indicate that, as of March 31, 2026, we remain liability sensitive.

The liability sensitivity is due to the fact that there are more liabilities than assets subject to repricing as market rates change.

Based on our model, which was run as of March 31, 2026, we estimated that over the next one-year period a 200 basis-point parallel ramp increase of interest rates would increase our net interest income by 2.00%, while a 100 basis-point parallel ramp decrease of interest rates would decrease net interest income by 0.30%.

As of December 31, 2025, we estimated that over the next one-year period a 200 basis-point parallel ramp increase of interest rates would increase our net interest income by 1.00%, while a 100 basis-point parallel ramp decrease of interest rates would increase net interest income by 0.10%.

Based on our model, which was run as of March 31, 2026, we estimated that over the next two years, on a cumulative basis, a 200 basis point parallel ramp increase of interest rates would increase our net interest income by 6.80%, while a 100 basis-point parallel ramp decrease in interest rates would increase net interest income by 6.70%.

As of December 31, 2025, we estimated that over the next two years, on a cumulative basis, a 200 basis-point parallel ramp increase of interest rates would increase our net interest income by 6.00%, while a 100 basis-point parallel ramp decrease in interest rates would increase net interest income by 7.90%.

The change in sensitivity between March 31, 2026 and December 31, 2025 was impacted by an increase in variable-rate loans.

We also conduct an economic value of equity at risk simulation in tandem with our net interest income simulations, which measures the sensitivity of economic value of equity to changes in interest rates.

Base case economic value of equity at risk is calculated by estimating the net present value of all future cash flows from existing assets and liabilities using current interest rates.

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Estimated Percent Change in Economic Value of Equity ("EVE")

Rate Changes (basis points) September 30, 2025 December 31, 2024

Rate Changes (basis points) March 31, 2026 December 31, 2025

-100 0.50 % 1.10 %

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Changes in prepayment speeds could also increase or decrease the amortization of premium or accretion of discounts related to such instruments, thereby affecting interest income.

Accordingly, although the above measurements provide an indication of the Company’s interest rate risk exposure at a particular point in time, such measurements are not intended to provide a precise forecast of the effect of changes in market interest rates.

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-Q

Item 2. Management’s Discussion and Analysis