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Item 1A. Risk Factors

2026-02-27 compared with 2025-02-28 · 191 added, 148 removed, 185 unchanged (65% of the section changed)

An investment in the Company’s securities is subject to risks inherent in its business.

The material risks and uncertainties that management believes affect the Company are described below.

Additional risks and uncertainties that management is not aware of or that management currently deems immaterial may also impact the Company’s business operations.

If any of the events described in the risk factors occur, the Company’s financial condition and results of operations could be materially and adversely affected.

If this were to happen, the value of the Company’s securities could decline significantly, which would impact the value of your investment in the Company’s stock.

External and Market-Related Risks

Changes in global, national or local economic conditions, including those in the states of Massachusetts and New Hampshire, may pose significant challenges for the Company and could adversely affect its financial condition and results of operations.

The Company’s business is impacted by factors outside of its control as economic growth may slow down and the global, national or local economies may experience downturns, including recessionary periods.

Market disruption, including potential disruption resulting from inflation, tariffs and global supply chain interruptions, government and central bank policy actions, changes in investor expectations regarding compensation for market risk, credit risk and liquidity risk and changing economic data could impact both the volatility and magnitude of the directional movements of interest rates and negatively impact the Company’s business.

Additionally, potential sovereign debt defaults or actions taken by the U.S.

government to avoid exceeding the debt ceiling may severely impact global and domestic economies and may lead to significantly tighter liquidity and impact the availability of credit.

Additionally, as described further below, changes in market interest rates can have a material adverse effect on the Company’s profitability.

Substantially all of the loans the Company originates are secured by properties located in, or are made to businesses that operate in, Massachusetts and the broader New England area.

Because of the current concentration of the Company’s loan origination activities in its geographic footprint, in the event of adverse economic conditions impacting the region (including, but not limited to, increased unemployment, downward pressure on the value of residential or commercial real estate, or political or business developments that may affect the ability of property owners and businesses to make payments of principal and interest on the underlying loans in the Bank’s geographic footprint), the Company would likely experience higher rates of loss and delinquency on its loans than if its loan portfolio were more geographically diversified, which could have an adverse effect on the Company’s results of operations or financial condition.

Although inflation has slowed from the levels experienced in recent years, possible inflationary pressures and any increases in market interest rates could cause the value of investment securities, particularly those with longer maturities, to

decrease, although this effect can be less pronounced for floating rate instruments.

In addition, inflation generally increases the cost of goods and services the Company uses in business operations, such as electricity and other utilities, which increases the Company’s non-interest expenses.

Furthermore, the Company’s customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their deposits and/or ability to repay their loans or other obligations increasing the Company’s credit risk.

The Company is currently operating in an environment in which the Federal Reserve has shifted toward reducing interest rates, having implemented modest interest rate cuts in the fourth quarter of 2025.

However, the inflationary outlook in the United States is currently uncertain.

If inflationary pressures do not sufficiently subside, sustained higher interest rates by the Federal Reserve may be needed to tame persistent inflationary price pressures, which could push down asset prices and weaken economic activity.

Negative developments in the banking industry could adversely affect the Company’s financial conditions and results of operations.

Certain events impacting the financial services industry, including the bank failures of 2023, have in the past had, and may in the future have, an adverse impact on the market price and volatility of the Company’s common stock.

Moreover, these events have resulted in, and may continue to result in, decreased confidence in banks among certain depositors, as well as increased regulatory scrutiny and expectations, and could lead to further changes to laws or regulations applicable to the Company, which could have a material adverse impact on the Company’s business and result in increased costs necessary to comply with any such changes.

Any further negative developments in the financial services industry may result in decreased confidence in banks among depositors, investors and other counterparties, as well as competition for deposits and significant disruption, volatility and depressed valuations of equity and other securities of banks in the capital markets.

Changes in debt and equity markets or economic downturns could affect the level of assets under administration and the demand for other fee-based services .

Economic downturns could affect the volume of income earned from and demand for fee-based services.

Revenues from the investment management business depend in large part on the level of assets under administration.

Market volatility that results in customers liquidating investments, as well as lower asset values, can reduce the level of assets under administration and decrease the Company’s investment management revenues, which could materially adversely affect the Company’s results of operations.

The soundness of other financial institutions could adversely affect the Company’s liquidity and operations.

The Company’s ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions.

Financial services institutions are interrelated as a result of trading, clearing, counterparty and other relationships.

The Company has exposure to many different counterparties, and routinely executes transactions with counterparties in the financial industry, including brokers and dealers, commercial banks, government sponsored entities, investment banks, and other institutional clients.

As a result, defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by other institutions.

Credit risk may be exacerbated when the collateral held by the Company cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the financial instrument exposure due the Company.

There is no assurance that any such losses would not materially and adversely affect the Company’s results of operations.

Risks Related to Changes in Interest Rates

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However, certain assets and liabilities may react differently to changes in market interest rates.

Further, interest rates on some types of assets and liabilities may fluctuate prior to changes in broader market interest rates, while rates on other types of assets and liabilities may lag behind.

Any substantial, unexpected, or prolonged change in market interest rates could have a material adverse effect on the Company’s business, financial condition and results of operations.

Factors such as inflation, recession, unemployment, money supply, global disorder, instability in domestic and foreign financial markets, political uncertainty, and other factors beyond the Company’s control, may affect interest rates.

Given the Company is unable to predict fluctuations in market interest rates, interest rates on some types of assets and liabilities may fluctuate prior to changes in broader market interest rates, while rates on other types of assets and liabilities may lag behind.

Changes in market interest rates could either positively or negatively affect the Company’s net interest income and profitability, depending upon the magnitude, direction and duration of the change.

Further, any substantial, unexpected, or prolonged change in market interest rates could have a material adverse effect on the Company’s business, financial condition and results of operations.

Factors such as inflation, tariffs, recession, unemployment, money supply, global disorder, instability in domestic and foreign financial markets, political uncertainty, and other factors beyond the Company’s control, may affect interest rates.

Changes in market interest rates also affect the level of voluntary prepayments on loans and the receipt of payments on mortgage-backed securities, which can impact the expected timing of receipt of proceeds.

Particularly in a decreasing interest rate environment, prepayments may result in proceeds having to be reinvested at a lower rate than the loan or mortgage-backed security being prepaid.

Conversely, in a period of rising interest rates, the interest income earned on the Company’s assets may not increase as rapidly as the interest that the Company pays on its liabilities.

Conversely, in a period of rising interest rates, the interest income earned on the Company’s assets may

not increase as rapidly as the interest that the Company pays on its liabilities.

Additionally, increases in interest rates may decrease loan demand or make it more difficult for borrowers to repay variable rate loans.

Although inflation has slowed since the levels experienced in recent years, possible inflationary pressures and any increases in market interest rates could cause the value of investment securities, particularly those with longer maturities, to decrease, although this effect can be less pronounced for floating rate instruments.

The inflationary outlook in the United States is currently uncertain.

If inflationary pressures do not significantly subside, sustained higher interest rates by the Federal Reserve may be needed to tame persistent inflationary price pressures, which could push down asset prices and weaken economic activity.

Economic growth may slow down and the national or global economy may experience downturns, including recessionary periods.

Market disruption, including potential disruption resulting from inflation, tariffs and global supply chain interruption, government and central bank policy actions designed to counteract the effects of recession, changes in investor expectations regarding compensation for market risk, credit risk and liquidity risk and changing economic data could impact both the volatility and magnitude of the directional movements of interest rates.

Additionally, potential sovereign debt defaults or actions taken by U.S.

government to avoid exceeding the debt ceiling may severely impact global and domestic economies and may lead to significantly tighter liquidity and impact the availability of credit.

Although the Company pursues an asset/liability management strategy designed to manage its risk arising from changes in interest rates, the Company’s strategy may not be fully effective, or may be effective in part, and changes in market interest rates can have a material adverse effect on the Company’s profitability.

Risks Related to Recent Events Impacting the Financial Services Industry

Events impacting the financial services industry may result in decreased confidence in banks among depositors, investors and other counterparties, as well as competition for deposits and significant disruption, volatility and depressed valuations of equity and other securities of banks in the capital markets.

Certain events impacting the financial services industry, including recent bank failures, have had, and may continue to have, an adverse impact on the market price and volatility of the Company’s common stock.

Moreover, these events have resulted in, and may continue to result in, increased regulatory scrutiny and expectations, and could lead to further changes to laws or regulations applicable to the Company, which could have a material adverse impact on the Company’s business and result in increased costs necessary to comply with any such changes.

Additionally, the cost of resolving recent bank failures may prompt the FDIC to increase its premiums above the current levels or result in additional special assessments.

Any of the above factors could have a material adverse effect on the Company’s financial condition and results of operations.

Although the Company pursues an asset/liability management strategy designed to manage its risk arising from changes in interest rates, the Company’s strategy may not be fully effective, or may only be effective in part, and changes in market interest rates can have a material adverse effect on the Company’s profitability.