What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-05-06 · 192 added, 125 removed, 350 unchanged (48% of the section changed)

8 unchanged sentences

Through our wholly-owned subsidiary, Bankwell Bank, or the Bank, we serve small and medium-sized businesses and retail clients.

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

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

The following discussion and analysis presents our results of operations and financial condition on a consolidated basis.

5 unchanged sentences

Executive Overview

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.

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.

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 investment securities for are particularly critical and susceptible to significant near-term change.

We believe that accounting estimates related to the measurement of the ACL-Loans and ACL-Securities are particularly critical and susceptible to significant near-term change.

Earnings and Performance Overview

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.

Revenues (net interest income plus noninterest income) for the three months ended June 30, 2026 were $32.8 million, versus $25.9 million for the three months ended June 30, 2025.

Revenues for the six months ended June 30, 2026 were $63.0 million, versus $49.5 million for the six months ended June 30, 2025.

The increase in revenues for the three months ended June 30, 2026 was attributable to a decrease in interest expense on deposits and higher interest income.

The increase in revenues for the six months ended June 30, 2026 was attributable to a decrease in interest expense on deposits, higher interest income, and higher gains from loan sales.

Net income available to common shareholders was $12.4 million, or $1.52 per diluted share, and $9.1 million, or $1.14 per diluted share, for the three months ended June 30, 2026 and 2025, respectively.

Net income available to common shareholders was $23.6 million, or $2.95 per diluted share, and $16.0 million, or $2.01 per diluted share, for the six months ended June 30, 2026 and 2025, respectively.

The increase in net income for the quarter and six months ended June 30, 2026 was primarily due to the aforementioned increase in revenues partially offset by an increase in provision for credit losses.

Returns on average shareholders' equity and average assets for the three months ended June 30, 2026 were 15.49% and 1.46%, respectively, compared to 12.98% and 1.14%, respectively, for the three months ended June 30, 2025.

Returns on average shareholders' equity and average assets for the six months ended June 30, 2026 were 15.19% and 1.41%, respectively, compared to 11.59% and 1.00%, respectively, for the six months ended June 30, 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 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.

FTE net interest income for the three months ended June 30, 2026 and 2025 was $29.6 million and $24.1 million, respectively.

FTE net interest income for the six months ended June 30, 2026 and 2025 was $56.6 million and $46.3 million, respectively.

FTE interest income for the three months ended June 30, 2026 increased by $3.6 million, or 7.3%, to $52.3 million, compared to FTE interest income for the three months ended June 30, 2025.

FTE interest income for the six months ended June 30, 2026 increased by $5.6 million, or 5.7%, to $103.0 million, compared to FTE interest income for the six months ended June 30, 2025.

This increase was due to an increase in average loan balances.

Interest expense for the three months ended June 30, 2026 decreased by $2.0 million compared to interest expense for the three months ended June 30, 2025.

Interest expense for the six months ended June 30, 2026 decreased by $4.7 million compared to interest expense for the six months ended June 30, 2025.

The decrease in interest expense for the three and six months ended June 30, 2026 was driven by a decrease in interest expense on deposits, resulting from a decrease in rates on interest bearing deposits and improved deposit mix.

Distribution of Assets, Liabilities and Shareholders’ Equity;

Interest Rates and Interest Differential

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.

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 six months ended June 30, 2026 and 2025.

For the Quarter Ended

March 31, 2026 March 31, 2025

June 30, 2026 June 30, 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 eq ui valency amounted to $109 thousand and $142 thousand for the three months ended March 31, 2026 and 2025, respectively.

(2) The adjustment for securities and loans taxable eq uivalen cy amounted to $111 thousand and $143 thousand for the three months ended June 30, 2026 and 2025, 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 Six Months Ended

June 30, 2026 June 30, 2025

Balance Interest Yield/

Cash and Fed funds sold $ 238,382 $ 3,859 3.26 % $ 322,498 $ 6,600 4.13 %

Securities (1)

194,382 3,771 3.88 150,059 3,011 4.01

Commercial real estate 1,904,478 60,108 6.28 1,818,282 55,710 6.09

Residential real estate 30,931 879 5.68 39,544 1,230 6.22

Construction 158,465 5,715 7.17 187,674 7,320 7.76

Commercial business 700,801 26,433 7.50 533,310 21,204 7.91

Consumer 69,935 2,075 5.98 76,784 2,139 5.62

Total loans 2,864,610 95,210 6.61 2,655,594 87,603 6.56

Federal Home Loan Bank stock 5,111 153 6.05 4,799 196 8.21

Total earning assets 3,302,485 $ 102,993 6.20 % 3,132,950 $ 97,410 6.18 %

Other assets 89,445 89,353

Total assets $ 3,391,930 $ 3,222,303

Liabilities and shareholders' equity:

Interest bearing liabilities:

NOW $ 103,703 $ 108 0.21 % $ 103,675 $ 187 0.36 %

Money market 1,101,059 18,746 3.43 896,084 17,100 3.85

Savings 98,544 1,349 2.76 89,800 1,325 2.98

Time 1,164,124 22,994 3.98 1,325,630 29,243 4.45

Total interest bearing deposits 2,467,430 43,197 3.53 2,415,189 47,855 4.00

Borrowed Money 143,562 3,186 4.47 136,161 3,269 4.84

Total interest bearing liabilities 2,610,992 $ 46,383 3.58 % 2,551,350 $ 51,124 4.04 %

Noninterest bearing deposits 422,066 343,261

Other liabilities 44,944 49,752

Total liabilities 3,078,002 2,944,363

Shareholders' equity 313,928 277,940

Total liabilities and shareholders' equity $ 3,391,930 $ 3,222,303

Net interest income (2)

$ 56,610 $ 46,286

Interest rate spread 2.62 % 2.14 %

Net interest margin (3)

3.43 % 2.95 %

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

(2) The adjustment for securities and loans taxable equivalency amounted to $221 thousand and $285 thousand for the six months ended June 30, 2026 and 2025, 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.

Effect of changes in interest rates and volume of average earning assets and average interest bearing liabilities

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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

March 31, 2026 vs 2025

Three Months Ended June 30, 2026 vs 2025

Increase (Decrease) Six Months Ended

June 30, 2026 vs 2025

Increase (Decrease)

(In thousands) Volume Rate Total

(In thousands) Volume Rate Total Volume Rate Total

Interest and dividend income:

18 unchanged sentences

Change in net interest income $ 3,375 $ 2,159 $ 5,534 $ 6,318 $ 4,006 $ 10,324

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, economic and credit conditions, the direction of real estate values, and regulatory guidelines.

Provision (credit) for Credit Losses

The provision (credit) 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 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 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.

The provision for credit losses for the three months ended June 30, 2026 was $1.2 million compared to a credit for credit losses of $0.4 million for the three months ended June 30, 2025.

The provision for credit losses for the six months ended June 30, 2026 was $0.2 million compared to a provision for credit losses of $0.1 million for the six months ended June 30, 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 table compares noninterest income for the three months ended March 31, 2026 and 2025:

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

The following tables compare noninterest income for the three and six months ended June 30, 2026 and 2025:

Three Months Ended

March 31, Change

June 30, Change

(Dollars in thousands) 2026 2025 $ %

2 unchanged sentences

Service charges and fees 665 674 (9) (1.3)

Other (149) (94) (55) 58.5

Total noninterest income $ 3,280 $ 2,012 $ 1,268 63.0

Six Months Ended

June 30, Change

(Dollars in thousands) 2026 2025 $ %

Gains and fees from sales of loans $ 4,823 $ 1,522 $ 3,301 Favorable

Bank-owned life insurance 724 696 28 4.0

Service charges and fees 1,445 1,276 169 13.2

Other (369) 23 (392) Unfavorable

Total noninterest income $ 6,623 $ 3,517 $ 3,106 88.3

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 income increased by $1.3 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025.

Noninterest income increased by $3.1 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

The increase in noninterest income for the three and six months ended June 30, 2026 was driven by higher gains from SBA loan sales.

Noninterest Expense

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

The following tables compare noninterest expense for the three and six months ended June 30, 2026 and 2025:

Three Months Ended

March 31, Change

June 30, Change

(Dollars in thousands) 2026 2025 $ %

8 unchanged sentences

Total noninterest expense $ 15,255 $ 14,546 $ 709 4.9 %

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.

Six Months Ended

June 30, Change

(Dollars in thousands) 2026 2025 $ %

Salaries and employee benefits $ 18,508 $ 14,573 $ 3,935 27.0 %

Occupancy and equipment 5,521 5,080 441 8.7

Professional services 2,757 3,161 (404) (12.8)

Data processing 1,410 1,597 (187) (11.7)

Director fees 720 681 39 5.7

FDIC insurance 1,073 1,463 (390) (26.7)

Marketing 255 360 (105) (29.2)

Other 1,900 1,772 128 7.2

Total noninterest expense $ 32,144 $ 28,687 $ 3,457 12.1 %

Noninterest expense increased by $0.7 million to $15.3 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025.

Noninterest expense increased by $3.5 million to $32.1 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

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

Income tax expense for the three months ended June 30, 2026 and 2025 totaled $3.9 million and $2.7 million, respectively.

The effective tax rates for the three months ended June 30, 2026 and 2025 were 24.1% and 23.1%, respectively.

Income tax expense for the six months ended June 30, 2026 and 2025 totaled $7.0 million and $4.8 million, respectively.

The effective tax rates for the six months ended June 30, 2026 and 2025 were 22.9% and 23.1%, respectively.

Financial Condition

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.

Assets totaled $3.5 billion at June 30, 2026 an increase of $115.7 million or 3.4% compared to December 31, 2025.

Gross loans totaled $3.0 billion at June 30, 2026, an increase of $119.6 million or 4.2% compared to December 31, 2025.

Deposits totaled $3.0 billion at June 30, 2026, an increase of $171.0 million, or 6.0% compared to December 31, 2025.

Shareholders’ equity totaled $323.5 million as of June 30, 2026, an increase of $22.0 million compared to December 31, 2025, primarily a result of net income of $23.6 million for the six months ended June 30, 2026.

The increase was partially offset by dividends paid of $3.2 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.

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

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

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.

Total loans before deferred loan fees and the ACL-Loans were $3.0 billion at June 30, 2026 and $2.8 billion at December 31, 2025.

Total gross loans increased $119.6 million as of June 30, 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 March 31, 2026 At December 31, 2025 Change

(In thousands) At June 30, 2026

At December 31, 2025

Real estate loans:

6 unchanged sentences

Total loans $ 2,959,693 $ 2,840,072 $ 119,621

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

The following table compares the composition of our commercial real estate loan portfolio by non-owner occupied and owner occupied loans at June 30, 2026 and December 31, 2025:

At June 30, 2026

At December 31, 2025

Total % Total % Total

6 unchanged sentences

(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

The following table compares the composition of our commercial real estate loan portfolio by property type, and collateral location as of June 30, 2026 :

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

(Dollars in thousands)

1 unchanged sentence

$ 8,650 $ 36,855 $ 38,463 $ 20,800 $ 253,369 $ 116,538 $ 50,746 $ 280,852 $ 806,273

Retail 76,469 7,197 71,559 12,997 1,080 32,923 3,301 86,827 292,353

Multifamily 169,253 69,524 22,189 6,971 — — 22,473 38,200 328,610

Retail 75,854 7,161 71,191 12,938 1,080 3,280 31,747 109,797 313,048

Office 48,150 8,330 9,927 28,259 2,142 — — 40,287 137,095

8 unchanged sentences

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

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.

As of June 30, 2026, the Bank had $137.1 million of loans collateralized by offices, which represented 4.6% of the total loan portfolio.

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

95.3% of this portfolio was pass rated, and there was one relationship totaling $4.9 million on nonaccrual status.

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.

As of June 30, 2026, the Bank had $328.6 million of loans collateralized by multifamily properties, which represented 11.1% of the total loan portfolio.

93.2% of this portfolio is pass rated and current;

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 March 31, 2026 .

these properties are all located in Connecticut, New York, or New Jersey, with nine properties, totaling $69.5 million, located in New York City.

55.8% of the New York City exposure is located in Brooklyn, 28.8% in the Bronx, 8.5% in Manhattan and the remaining 7.0% 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 June 30, 2026 .

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

3 unchanged sentences

$ 806,273 40.5 % 64.5 %

Retail 292,353 15.4 63.3

Multifamily 328,610 16.5 63.5

Retail 313,048 15.7 62.7

Office 137,095 6.9 63.0

9 unchanged sentences

Our Board of Directors monitors credit risk management.

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 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 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, 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 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 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 March 31, 2026 and December 31, 2025:

The following table presents credit risk ratings as of June 30, 2026 and December 31, 2025:

Credit Risk Ratings

March 31, 2026

June 30, 2026

December 31, 2025

6 unchanged sentences

Total loans $ 2,959,693 $ 2,840,072

( 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.

(1) 98.6% and 100.0% of Risk Rated 6 loans are current on payments, 88.0% and 99.3% are guaranteed by ultra-high net worth sponsors as of June 30, 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 March 31, 2026 At December 31, 2025

(In thousands) At June 30, 2026

At December 31, 2025

Nonaccrual loans:

8 unchanged sentences

Nonperforming assets to total assets 0.46 % 0.49 %

Nonaccrual loans to total gross loans 0.66 % 0.57 %

Nonaccrual loans to total loans 0.54 % 0.57 %

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

ACL-loans as a % of nonperforming loans 193.15 % 188.33 %

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.

Total past due loans to total loans 0.59 % 0.31 %

Nonaccrual loans totaled $15.9 million at June 30, 2026 and $16.3 million at December 31, 2025.

There was no Other Real Estate Owned ("OREO") at June 30, 2026 and December 31, 2025, respectively.

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

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(Dollars in thousands) 2026 2025 2026 2025

5 unchanged sentences

Total charge-offs (48) (20) (269) (120)

Residential real estate — — — —

Commercial real estate 10 — 14 —

2 unchanged sentences

Total recoveries 50 122 102 162

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

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

Net recoveries (charge-offs) 2 102 (167) 42

Provision (credit) for credit losses - loans 1,045 (331) 89 207

Balance at end of period $ 30,627 $ 29,256 $ 30,627 $ 29,256

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.

Net recoveries (charge-offs) to average loans — % — % — % — %

ACL-Loans to total loans 1.03 % 1.10 % 1.03 % 1.10 %

At June 30, 2026, our ACL-Loans was $30.6 million and represented 1.03% of total loans, compared to $30.7 million or 1.08% of total 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:

At March 31, 2026 At December 31, 2025

June 30, 2026

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 $ 30,627 100.0% 100.0 % $ 30,705 100.0 % 100.0 %

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.

The allocation of the ACL-Loans at June 30, 2026 reflects our assessment of credit risk and probable loss within each portfolio.

We believe that the level of the ACL-Loans at June 30, 2026 is appropriate to cover probable losses.

ACL- Unfunded Commitments

3 unchanged sentences

Investment Securities

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.

At June 30, 2026, the carrying value of our investment securities portfolio totaled $205.6 million and represented 5.9% 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 June 30, 2026 was $1.6 million and included gross unrealized gains of $1.8 million.

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

Deposit Activities and Other Sources of Funds

March 31, 2026 December 31, 2025

June 30, 2026

December 31, 2025

(Dollars in thousands) Amount Percent Amount Percent

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Total deposits $ 3,000,530 100.0 % $ 2,829,481 100.0 %

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.

Total deposits were $3.0 billion at June 30, 2026, an increase of $171.0 million, from the balance at December 31, 2025.

Brokered certificates of depo sits to taled $453.0 million at June 30, 2026 and $505.0 million at December 31, 2025, respectively.

Brokered money market accounts totaled $53.7 million a t June 30, 2026 and $53.7 million at December 31, 2025, respectively.

Certificates of deposits from national listing services were $26.8 million and $42.3 million as of June 30, 2026 and December 31, 2025, respectively.

There were no one-way buy CDARS or one-way buy ICS at June 30, 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 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

As of June 30, 2026, our FDIC insured deposits were $1,831.0 million, or 61% of total deposits.

Additionally, deposits totaling $80.1 million, or 3% of total d eposits, are secured by standby letters of credit with the Federal Home Loan Bank of Boston.

At June 30, 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) June 30, 2026

December 31, 2025

Within 3 months $ 252,181 $ 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 were $60.0 million and $110.0 million at March 31, 2026 and December 31, 2025, respectively.

Total FHLB advances w ere $30.0 million and $110.0 million June 30, 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 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

At June 30, 2026, the Bank had pledged $919.7 million of eligible loans and investment securities as collateral to support borrowing capacity at the FHLB.

As of June 30, 2026, the Bank had immediate availability to borrow an additional $562.9 million from the FHLB based on qualified collateral.

At June 30, 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 June 30, 2026 is summarized below:

June 30, 2026

Total Letter or Line of Credit Total Outstanding

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Capital Resources

The increase was partially offset by dividends paid of $3.2 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 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.

At June 30, 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 June 30, 2026, the Bank’s ratio of Common Equity Tier 1 capital to risk-weighted assets was 11.67%, Tier 1 capital to risk-weighted assets was 11.67%, total capital to risk-weighted assets was 12.70% and Tier 1 capital to average assets was 10.39%.

At June 30, 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 June 30, 2026, the Company’s ratio of Common Equity Tier 1 capital to risk-weighted assets was 10.58%, Tier 1 capital to risk-weighted assets was 10.58%, total capital to risk-weighted assets was 13.92% and Tier 1 capital to average assets was 9.41%.

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.

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

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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 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:

As of June 30, 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 June 30, 2026 and December 31, 2025:

Parallel Ramp Estimated Percent Change in Net Interest Income

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

Rate Changes (basis points) June 30, 2026 December 31, 2025

-100 0.10 % 0.10 %

-200 1.20 1.10

+200 1.30 1.00

Parallel Shock Estimated Percent Change in Net Interest Income

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

Rate Changes (basis points) June 30, 2026 December 31, 2025

-100 (0.80) % (0.60) %

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+300 9.00 6.40

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%.

Based on our model, which was run as of June 30, 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 6.60%, while a 200 basis-point parallel ramp decrease in interest rates would increase net interest income by 9.00%.

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 200 basis-point parallel ramp decrease in interest rates would increase net interest income by 12.90%.

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

The change in sensitivity between June 30, 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.

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

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

Rate Changes (basis points) June 30, 2026 December 31, 2025

-100 0.10 % 1.10 %

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Income simulation results assume that changes in both core savings deposit rates and balances are related to changes in short-term interest rates.

Lastly, mortgage-backed securities and mortgage loans involve a level of risk that unforeseen changes in prepayment speeds may cause related cash flows to vary significantly in differing rate environments.

Lastly, mortgage-backed securities and mortgage

loans involve a level of risk that unforeseen changes in prepayment speeds may cause related cash flows to vary significantly in differing rate environments.

Such changes could affect the level of reinvestment risk associated with cash flow from these instruments, as well as their market value.

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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