What changed in this filing

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Item 1. Financial Statements

2025-05-09 compared with 2024-11-08 · 214 added, 280 removed, 650 unchanged (43% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30, 2024 (Unaudited) and December 31, 2023

March 31, 2025 (Unaudited) and December 31, 2024

(in thousands except share and per share data)

September 30, 2024

March 31, 2025

December 31, 2024

7 unchanged sentences

Banking premises and equipment, net

Federal Home Loan Bank ("FHLB") stock, at cost

Federal Reserve Bank stock, at cost

Non-public investments

3 unchanged sentences

Liabilities and shareholders' equity

Core deposits

Brokered deposits

Total deposits

Mortgagors' escrow accounts

7 unchanged sentences

Common stock, $ 0.01 par value, 120,000,000 shares authorized;

42,705,729 shares issued and outstanding at September 30, 2024 and December 31, 2023

40,570,443 and 42,705,729

shares issued and outstanding at March 31, 2025 and December 31, 2024 respectively

Additional paid-in capital

9 unchanged sentences

For the Three Months Ended

For the Nine Months Ended

September 30,

INTEREST AND DIVIDEND INCOME

Interest and fees on loans

Interest on investment securities

Interest on securities

Interest and dividends on cash equivalents and other

7 unchanged sentences

Provision for credit losses - loans

Provision for (release of) credit losses - unfunded commitments

Provision for credit losses - unfunded commitments

Total provision for credit losses

5 unchanged sentences

Swap contract income

Loss on sale of available-for-sale securities, net

Employee retention credit income

Total noninterest income

9 unchanged sentences

INCOME BEFORE TAXES

INCOME TAX EXPENSE

Weighted average common shares outstanding, basic

7 unchanged sentences

For the Three Months Ended

For the Nine Months Ended

September 30,

OTHER COMPREHENSIVE INCOME, NET OF TAX:

Net change in fair value of available-for-sale securities

Net change in fair value of cash flow hedge

TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX:

8 unchanged sentences

Income (Loss)

Balance, June 30, 2023

Other comprehensive income, net of tax

Balance, September 30, 2023

Balance, June 30, 2024

Other comprehensive income, net of tax

ESOP shares committed to be released ( 43,057 shares)

Balance, September 30, 2024

For the Nine Months Ended

Stock Held by

Comprehensive

Income (Loss)

Balance, December 31, 2023

Adoption of ASU 2016-13

Other comprehensive income, net of tax

Balance, September 30, 2023

Costs from stock offering and issuance of common shares

Purchase of common shares held by ESOP ( 2,416,458 shares)

ESOP shares committed to be released ( 42,121 shares)

Balance, March 31, 2024

Balance, December 31, 2024

Adoption of ASU 2023-02

Other comprehensive income, net of tax

Net costs from stock offering and issuance of common shares

Purchase of common shares by the ESOP ( 2,416,458 shares)

Repurchase of common shares under share repurchase plan ( 2,135,286 shares)

( 2,135,286 )

ESOP shares committed to be released ( 42,121 shares)

Balance, September 30, 2024

Balance, March 31, 2025

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2 unchanged sentences

(Unaudited - Dollars in thousands)

For the Nine Months Ended

September 30, 2024

September 30, 2023

For the Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

1 unchanged sentence

Net amortization (accretion) of available-for-sale securities

Loss on sale of available-for-sale securities

Amortization of core deposit intangible

Provision for credit losses

Loan hedge fair value adjustments, including amortization

Loan hedge fair value adjustments, net

Change in net deferred loan origination fees

3 unchanged sentences

Depreciation and amortization expense

Gain from BOLI death benefit

Increase in cash surrender values of BOLI

Establishment of solar income tax credit investment basis reduction deferred tax liability

Deferred income tax benefit

4 unchanged sentences

Accrued retirement liabilities

NET CASH PROVIDED BY OPERATING ACTIVITIES

NET CASH (PROVIDED BY) USED IN OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES

1 unchanged sentence

Purchases of available-for-sale securities

Proceeds from sales of available-for-sale securities

Proceeds from maturities, calls and paydowns of available-for-sale securities

Redemptions (purchases) of Federal Home Loan Bank stock, net

Purchases of Federal Reserve stock, net

Recoveries of loans previously charged off

Net change in non-public investments

Purchases of BOLI policies

Proceeds from BOLI death benefit

Purchases of banking premises and equipment

4 unchanged sentences

Purchase of common shares held by ESOP

Repurchase of common shares under share repurchase plan

Net change in mortgagors' escrow accounts

Increase (decrease) in FHLB borrowings, net

Decrease in FHLB borrowings, net

NET CASH PROVIDED BY FINANCING ACTIVITIES

4 unchanged sentences

Supplemental disclosure of non-cash transactions:

Cumulative effect adjustment of adoption of ASC 326, net of income taxes

Cumulative effect adjustment of adoption of ASU 2023-02, net of income taxes

Unrealized (gains) losses on available-for-sale securities

Unrealized holding losses on cash flow hedge

Unrealized gains on available-for-sale securities

Mortgage loans transferred to loans held for sale

2 unchanged sentences

Notes to Unaudited Consolidated Financial Statements

Note 1 – Conversion

Effective December 27, 2023, NB Financial, MHC (the “MHC”), the former mutual holding company of Needham Bank (the “Bank”) and the predecessor to NB Bancorp, Inc.

(the “Company”), consummated its mutual to stock conversion and the Company consummated its related stock offering.

In the offering, the Company sold 40,997,500 shares of common stock, par value $ 0.01 per share, at a per share price of $ 10.00 for gross offering proceeds of $ 410.0 million.

Additionally, the Company contributed 1,708,229 shares and $ 2.0 million in cash to the Needham Bank Charitable Foundation (the “Foundation”) .

The shares of the Company’s common stock sold in the offering began trading on The Nasdaq Capital Market on December 28, 2023 under the symbol “NBBK.”

In connection with the conversion, liquidation accounts were established by the Company and the Bank in an aggregate amount equal to (i) the MHC’s ownership interest in the shareholders’ equity of NB Financial, Inc.

as of the date of the latest statement of financial condition included in the Company’s definitive prospectus dated October 12, 2023, plus (ii) the value of the net assets of the MHC as of the date of the MHC’s latest statement of financial condition before the consummation of the Conversion (excluding the MHC’s ownership interest in NB Financial, Inc.).

Each eligible account holder and supplemental eligible account holder is entitled to a proportionate share of the liquidation accounts in the unlikely event of a liquidation of (i) the Company and the Bank or (ii) the Bank, and only in such events.

This share will be reduced if the eligible account holder’s or supplemental account holder’s deposit balance falls below the amounts on the date of record and will cease to exist if the account is closed.

The liquidation account will never be increased despite any increase after conversion in the related deposit balance.

The Bank may not pay a dividend on its capital stock if the effect thereof would cause retained earnings to be reduced below the liquidation account amount or regulatory capital requirements.

Note 2 – Basis of Presentation

The Company’s accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.

Accordingly, certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

The consolidated financial statements of NB Bancorp, Inc.

(referred to herein as the “Company," “we,” “us,” or “our”) include the balances and results of operations of the Company and the Bank, its wholly-owned subsidiary, as well as the Bank’s wholly-owned subsidiaries, Needco-op Investment Corporation, Inc., 1892 Investments LLC and Eaton Square Realty LLC.

Intercompany transactions and balances are eliminated in consolidation.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the Company's financial position as of September 30, 2024 and the results of operations and cash flows for the interim periods ended September 30, 2024 and 2023.

All interim amounts have not been audited, and the results of operations for the interim periods herein are not necessarily indicative of the results of operations to be expected for the fiscal year.

The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023 and accompanying notes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Note 1 – Corporate Structure and Nature of Operations;

Basis of Presentation

Corporate Structure and Nature of Operations

NB Bancorp, Inc., a Maryland corporation (the “Company”) (referred to herein as the “Company," “we,” “us,” or “our”), is a bank holding company.

Through its wholly-owned subsidiary, Needham Bank (the “Bank”), the Company provides a variety of banking services, through its full-service bank branches, located primarily in eastern Massachusetts.

The activities of the Company are subject to the regulatory supervision of the Board of Governors of the Federal Reserve System.

The activities of the Bank are subject to the regulatory supervision of the Massachusetts Commissioner of Banks and the Federal Deposit Insurance Corporation (“FDIC”).

The Company and the activities of the Bank and its subsidiaries are also subject to various Massachusetts business and banking-related regulations.

Basis of Presentation

The Company’s Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S.

GAAP”) as set forth by the Financial Accounting Standards Board (“FASB”) and its Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) as well as the rules and interpretive releases of the U.S.

Securities and Exchange Commission (“SEC”) under the authority of federal securities laws.

The Consolidated Financial Statements of the Company include the balances and results of operations of the Company and the Bank, its wholly-owned subsidiary, as well as the Bank’s wholly-owned subsidiaries, Needco-op Investment Corporation, Inc., 1892 Investments LLC and Eaton Square Realty LLC.

All intercompany accounts and transactions have been eliminated in consolidation.

Certain amounts, previously reported, have been reclassified to state all periods on a comparable basis and had no effect on shareholders’ equity or net income.

The accompanying Consolidated Balance Sheet as of March 31, 2025, the Consolidated Statements of Income, of Comprehensive Income, of Changes in Shareholders’ Equity and of Cash Flows for the three months ended March 31, 2025 and 2024 are unaudited.

The Consolidated Balance Sheet as of December 31, 2024 was derived from the Audited Consolidated Financial Statements as of that date.

The interim Consolidated Financial Statements and the accompanying notes should be read in conjunction with the annual Consolidated Financial Statements and the accompanying notes contained within the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC.

In the opinion of management, the Company’s Consolidated Financial Statements reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented.

The results for the three months ended March 31, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025, any other interim period, or any future year or period.

The Company qualifies as an emerging growth company (“EGC”) under the Jumpstart Our Business Startups Act of 2012 and has elected to defer the adoption of new or revised accounting standards until the nonpublic company effective dates.

As such, the Company will adopt standards on the nonpublic company effective dates until such time that we no longer qualify as an EGC.

Relevant standards that were adopted during the nine months ended September 30, 2024:

In March 2023, the FASB issued ASU 2023-02, Investments–Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (“ASU 2023-02”).

This update permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method (“PAM”) if the following conditions are met:

● It is probable that the income tax credits allocable to the tax equity investor will be available;

● The tax equity investor does not have the ability to exercise significant influence over the operating and financial policies of the underlying project;

● Substantially all of the projected benefits are from income tax credits and other income tax benefits.

Projected benefits include income tax credits, other income tax benefits, and other non-income-tax-related benefits.

The projected benefits are determined on a discounted basis, using a discount rate that is consistent with the cash flow assumptions used by the tax equity investor in making its decision to invest in the project;

● The tax equity investor’s projected yield based solely on the cash flows from the income tax credits and other income tax benefits is positive;

● The tax equity investor is a limited liability investor in the limited liability entity for both legal and tax purposes, and the tax equity investor’s liability is limited to its capital investment.

Under existing accounting standards, PAM is allowable only for equity investments in low-income-housing tax credit structures.

Under PAM, an entity amortizes the initial cost of the investment in proportion to the income tax credits and other income tax benefits received and recognizes the net amortization and income tax credits and other income tax benefits in the income statement as a component of income tax expense (benefit).

Updates made by ASU 2023-02 allow a reporting entity to make an accounting policy election to apply PAM on a tax-credit-program-by-tax-credit-program basis beyond just low-income-housing tax credits.

The Company has made an accounting policy election to account for its investments in solar income tax credit investments using PAM.

The Company adopted ASU 2023-02 during the quarter ended September 30, 2024, with a modified retrospective adoption reflected as of January 1, 2024, which resulted in a $ 10.2 million reduction in retained earnings and nonpublic investments.

Certain previously reported amounts have been reclassified to conform to the current period’s presentation.

Subsequent events are events or transactions that occur after the balance sheet date but before consolidated financial statements are issued.

1 unchanged sentence

Non-recognized subsequent events are events that provide evidence about conditions that did not exist at the date of the consolidated balance sheet but arose after that date.

Note 2 – Summary of Significant Accounting Policies

Use of Estimates

In preparing the Consolidated Financial Statements in conformity with U.S.

GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheets and income and expenses for the periods reported.

Actual results could differ from those estimates based on changing conditions, including economic conditions and future events.

Material estimates that are particularly susceptible to change relate to the determination of the allowance for credit losses, valuation and fair value measurements, the liabilities for benefit obligations (particularly pensions) and the provision for income taxes.

Recent Accounting Pronouncements

Relevant standards that were recently issued but not yet adopted as of March 31, 2025:

In November 2024, the FASB issued ASU 2024-03, “ Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Sub Topic 220-40):

Disaggregation of Income Statement Expenses ”.

ASU 2024-03 improves disclosures about a public business entity’s expenses and addresses requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, SG&A, and research and development).

ASU 20240-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The adoption of ASU 2024-03 is not expected to have a material impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” to improve the transparency of income tax disclosures.

The amendments are effective for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The Company does not expect the adoption of ASU 2023-09 to have a material effect on its consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

Note 3 – Securities

13 unchanged sentences

Credit Losses

September 30, 2024

March 31, 2025

(in thousands)

6 unchanged sentences

Municipal obligations

SBA securities

Allowance for

4 unchanged sentences

Treasury securities

Government agencies

Agency mortgage-backed securities

2 unchanged sentences

Municipal obligations

The Company did not record a provision for estimated credit losses on any available-for-sale securities for the three and nine months ended September 30, 2024.

Excluded from the table above is accrued interest on available-for-sale securities of $ 1.3 million and $ 1.2 million at September 30, 2024 and December 31, 2023, respectively, which is included within accrued interest receivable on the consolidated balance sheets.

Additionally, the Company did no t record any write-offs of accrued interest income on available-for-sale securities for the three and nine months ended September 30, 2024.

No securities held by the Company were delinquent on contractual payments at September 30, 2024, no r were any securities placed on non-accrual status for the three and nine months then ended.

The following is a summary of actual maturities of certain available-for-sale securities as of September 30, 2024.

SBA securities

The Company did not record a provision for estimated credit losses on any available-for-sale securities for the three months ended March 31, 2025 and 2024.

Excluded from the table above is accrued interest on available-for-sale securities of $ 1.8 million and $ 1.6 million at March 31, 2025 and December 31, 2024, respectively, which is included within accrued interest receivable on the consolidated balance sheets.

Additionally, the Company did no t record any write-offs of accrued interest income on available-for-sale securities for the three months ended March 31, 2025 and 2024.

No securities held by the Company were delinquent on contractual payments at March 31, 2025 or December 31, 2024, no r were any securities placed on non-accrual status for the three months ended March 31, 2025 and 2024.

The following is a summary of actual maturities of certain available-for-sale securities as of March 31, 2025.

The amortized cost and fair values are based on the contractual maturity dates.

10 unchanged sentences

When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale.

During the three and nine months ended September 30, 2024, the Company sold $ 29.3 million of available-for-sale securities and recognized gross realized losses of $ 1.9 million and gross realized gains of $ 30,000 .

There were no sales of available-for-sale securities during the three and nine months ended September 30, 2023.

The carrying value of securities pledged to secure borrowings from the Federal Reserve Bank was $ 42.5 million and $ 49.6 million as of September 30, 2024 and December 31, 2023, respectively.

There were no sales of available-for-sale securities during the three months ended March 31, 2025 and 2024.

There were no available-for-sale securities pledged to secure borrowings as of March 31, 2025 and December 31, 2024.

The following tables present fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates stated.

2 unchanged sentences

(Dollars in thousands)

September 30, 2024

March 31, 2025

Number of Securities

3 unchanged sentences

Municipal obligations

SBA securities

Less than 12 Months

4 unchanged sentences

Treasury securities

Government Agencies

Agency mortgage-backed securities

2 unchanged sentences

Municipal obligations

SBA securities

Management evaluates securities for expected credit losses at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.

Included in corporate bonds are investments in senior and subordinated debt of banks and bank holding companies, some of which do not have investment ratings.

At September 30, 2024, available-for-sale debt securities had unrealized losses with aggregate depreciation of 7.0 % from the Company’s amortized cost basis.

At March 31, 2025, available-for-sale debt securities had unrealized losses with aggregate depreciation of 4.9 % from the Company’s amortized cost basis.

These unrealized losses relate to changes in market interest rates since acquiring the securities.

As management has the intent and ability to hold available-for-sale debt securities until maturity or cost recovery, no allowance for credit losses on securities is deemed necessary as of September 30, 2024.

Note 4 – Loans Receivable, Allowance for Credit Losses and Credit Quality

15 unchanged sentences

The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.

Management’s determination of the adequacy of the ACL under FASB ASC 326 – Financial Instruments – Credit Losses is based on an evaluation of the composition of the loan portfolio, current economic conditions, historical loan loss experience, reasonable and supportable forecasts, and other risk factors.

Management’s determination of the adequacy of the ACL under Financial Accounting Standards Board (“ FASB”) Accounting Standards Codification (“ASC”) 326 – Financial Instruments – Credit Losses is based on an evaluation of the composition of the loan portfolio, current economic conditions, historical loan loss experience, reasonable and supportable forecasts, and other risk factors.

The Company uses a third-party Current Expected Credit Loss (“CECL”) model as part of its estimation of the ACL on a quarterly basis.

8 unchanged sentences

Qualitative adjustments to quantitative loss factors, either negative or positive, may include considerations of economic conditions, volume and severity of past due loans, value of underlying collateral, experience, depth, and ability of management, and concentrations of credit.

The Company made no significant changes to loss factors, assumptions nor qualitative factors within the CECL model during the three months ended March 31, 2025.

For those loans that do not share similar risk characteristics, the Company evaluates the ACL needs on an individual (or loan by loan) basis.

9 unchanged sentences

Loans consist of the following as of the dates stated:

September 30, 2024

March 31, 2025

December 31, 2024

11 unchanged sentences

Allowance for credit losses

Included in the above are approximately $ 458.0 million and $ 365.9 million in loans to borrowers in the cannabis industry at September 30, 2024 and December 31, 2023, respectively.

Of that total, $ 301.9 million and $ 207.7 million were direct loans to cannabis companies and were collateralized by real estate at September 30, 2024 and December 31, 2023, respectively.

For the reporting period ended December 31, 2023, the Company disclosed loans to borrowers in the cannabis industry of $ 320.5 million.

Based on revised classifications, the amount of loans to borrowers in the cannabis industry at December 31, 2023 was $ 365.9 million.

The reclassification did not have a significant impact on the calculation of the allowance for credit losses.

During the three months ended September 30, 2024 and 2023, the Company purchased approximately $ 13.3 million and $ 8.7 million of consumer loan pools, respectively.

During the nine months ended September 30, 2024 and 2023, the Company purchased approximately $ 32.9 million and $ 34.5 million of consumer loan pools, respectively.

The loans purchased during the three and nine months ended September 30, 2024 included loan pools collateralized by boats, recreational vehicles and automobiles.

The loans purchased during the three and nine months ended September 30, 2023 included loan pools collateralized by boats, recreational vehicles, automobiles and solar panels.

Included in the above are approximately $ 454.3 million and $ 459.6 million in loans to borrowers in the cannabis industry at March 31, 2025 and December 31, 2024, respectively.

Of that total, $ 320.3 million and $ 321.9 million were direct loans to cannabis companies and were collateralized by real estate at March 31, 2025 and December 31, 2024, respectively.

During the three months ended March 31, 2025 and 2024, the Company purchased approximately $ 14.4 million and $ 5.5 million of consumer loan pools, respectively.

The loans purchased during the three months ended March 31, 2025 included loan pools collateralized by automobiles.

The loans purchased during the three months ended March 31, 2024 included loan pools collateralized by boats, recreational vehicles and automobiles.

The outstanding balances of these consumer purchased loan pools, shown net of premium (discount) are as follows as of the dates stated:

September 30, 2024

March 31, 2025

Premium (Discount)

13 unchanged sentences

Home improvement loans

The carrying value of loans pledged to secure advances from the FHLB were $ 1.25 billion and $ 1.24 billion as of September 30, 2024 and December 31, 2023, respectively.

The carrying value of loans pledged to secure advances from the FHLB were $ 1.25 billion and $ 1.24 billion as of March 31, 2025 and December 31, 2024, respectively.

The following table presents the aging of the amortized cost of loans receivable by loan category as of the date stated:

September 30, 2024

March 31, 2025

More Past Due

18 unchanged sentences

The following table presents the amortized cost of nonaccrual loans receivable by loan category as of the dates stated:

September 30, 2024

March 31, 2025

December 31, 2024

3 unchanged sentences

Commercial real estate

Multi-family residential

Construction and land development

Commercial and industrial

During the three and nine months ended September 30, 2024, the Company reversed $ 232,000 of interest income for loans that were placed on non-accrual.

During the three and nine months ended September 30, 2023, the Company did no t reverse any interest income for loans that were placed on non-accrual.

During the three months ended March 31, 2025 and 2024, the Company reversed $ 378,000 and $ 159,000 of interest income for loans that were placed on non-accrual respectively.

Credit Quality Information

9 unchanged sentences

There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected.

Non-accrual residential real estate loans that are well secured (LTV< 60 %) are not considered to warrant a downgrade to a substandard risk rating.

Non-accrual commercial loans are downgraded to a substandard risk rating.

Non-accrual residential real estate and commercial loans are downgraded to a substandard risk rating.

Loans rated 8:

6 unchanged sentences

Management uses the results of these reviews as part of its annual review process.

The following table presents the amortized cost of loans receivable by internal risk grade by year of origination as of September 30, 2024.

Also presented are current period gross charge-offs by loan type and vintage year for the three months ended September 30, 2024:

The following table presents the amortized cost of loans receivable by internal risk grade by year of origination as of March 31, 2025.

Also presented are current period gross charge-offs by loan type and vintage year for the three months ended March 31, 2025:

Term Loans Amortized Cost Basis by Origination Year (in thousands)

28 unchanged sentences

Current period gross charge-offs

(1) Consumer loans are not formally risk rated and included $ 2.1 million of loans on non-accrual as of September 30, 2024.

(1) Consumer loans are not formally risk rated and included $ 1.8 million of loans on non-accrual as of March 31, 2025.

The following table presents the amortized cost of loans receivable by internal risk grade by year of origination as of December 31, 2024.

32 unchanged sentences

The following table presents an analysis of the change in the ACL by major loan segment for the periods stated:

For the Three Months Ended September 30, 2024

Commercial and

(in thousands)

Balance at June 30, 2024

Provision for (release of) credit losses

Recoveries of loans previously charged-off

Balance at September 30, 2024

For the Nine Months Ended September 30, 2024

For the Three Months Ended March 31, 2025

Commercial and

3 unchanged sentences

Recoveries of loans previously charged-off

Balance at September 30, 2024

For the Three Months Ended September 30, 2023

Construction and

Commercial and

Land Development

(in thousands)

Balance at June 30, 2023

Provision for (release of) credit losses

Recoveries of loans previously charged off

Balance at September 30, 2023

For the Nine Months Ended September 30, 2023

Balance at March 31, 2025

For the Three Months Ended March 31, 2024

Construction and

3 unchanged sentences

Balance at December 31, 2023

Adjustment to allowance for adoption of ASU 2016-13

Provision for (release of) credit losses

Recoveries of loans previously charged off

Balance at September 30, 2023

The following table presents the amortized cost of collateral-dependent loans as of September 30, 2024 and December 31, 2023:

September 30, 2024

Balance at March 31, 2024

The following table presents the amortized cost of collateral-dependent loans as of March 31, 2025 and December 31, 2024:

March 31, 2025

December 31, 2024

5 unchanged sentences

The Company closely monitors the performance of borrowers experiencing financial difficulty to understand the effectiveness of its loan modification efforts.

During the nine months ended September 30, 2024, the Company modified one participation commercial real estate loan with an amortized cost basis of $ 6.2 million, or 0.01 % of total commercial real estate loans, through an interest rate reduction and maturity extension.

The modified loan experienced a $ 4.0 million charge-off during the three and nine months ended September 30, 2024 resulting from a shortfall in the projected sale price of the underlying real estate collateral.

The Company did no t modify any loans to borrowers experiencing financial difficulty during the three months ended September 30, 2024 nor the three and nine months ended September 30, 2023.

During the three months ended March 31, 2025 and 2024, the Company did no t modify any loans to borrowers experiencing financial difficulty.

Note 5 – Employee Benefits

401(k) Plan – The Company has an employee tax deferred incentive plan (the “401(k) plan”) under which the Company makes voluntary contributions within certain limitations.

All employees who meet specified age and length of service requirements are eligible to participate in the 401(k) plan.

The amount contributed by the Company to the 401(k) Plan is included in salaries and employee benefits in the consolidated statements of income .

The amounts contributed to the 401(k) plan for the three months ended March 31, 2025 and 2024 were $ 688,000 and $ 619,000 , respectively.

Employee Pension Plan – The Company provided pension benefits through a defined benefit plan maintained with the Co-operative Banks Employees Retirement Association (“CBERA”) (the “Plan”).

2 unchanged sentences

The Company determined to freeze benefit accruals and withdraw from the CBERA Plan as of December 31, 2023.

For the three months ended March 31, 2024, an expense of $ 390,000 was recorded to reflect an increase in the liability related to the withdrawal from the Plan.

The Company withdrew from the Plan in the second quarter of 2024.

During the three months ended March 31, 2025, as part of the final CBERA Plan liquidation, the Company contributed an additional $1.1 million to the CBERA Plan.

During the three months ended March 31, 2024, an expense of $ 390,000 was recorded to reflect an increase in the liability related to the withdrawal from the CBERA Plan.

The increase was primarily driven by final computations for estimated payouts to participants.

In March 2024, the final increase to reflect the withdrawal liability was determined to be $ 390,000 .

The Company accrued for this amount at March 31, 2024 and withdrew from the Plan in the second quarter of 2024.

The Company is in the process of liquidating the Plan.

Officers’ Deferred Compensation Plan – During 2014, the Company put into place an unfunded, defined contribution, Non-qualified Deferred Compensation Plan (“Officers’ Deferred Comp Plan”) for select employees of the Company.

The Officers’ Deferred Comp Plan was provided to key management of the Company and results in 5 % - 20 % of the employee’s then current base salary being credited to the participant’s account annually, subject to increases based upon increases in annual base compensation and the possibility of additional discretionary contributions.

The employees vest at varying dates in accordance with each individual’s deferred compensation participation agreement;

however, all key officers will be fully vested upon the attainment of age 65.

The obligations under these plans are included in accrued retirement liabilities in the Company’s consolidated balance sheets and approximated $ 2.7 million and $ 2.6 million at March 31, 2025 and December 31, 2024, respectively.

The expense under the Officers’ Deferred Comp Plan (recorded in salaries and employee benefits in the consolidated statements of income) approximated $ 89,000 and $ 100,000 for the the three months ended March 31, 2025 and 2024, respectively.

Deferred Compensation Plans – In January 2022, the Company put into place an unfunded Non-qualified Deferred Compensation Plan (“Deferred Comp Plan”) for select employees of the Company.

The Deferred Comp Plan was provided to key management of the Company and allows for the employees to defer amounts from their salary, bonus, or Long-Term Incentive Plan (“LTIP”) into the Deferred Comp Plan to be paid out at a future date.

Amounts deferred under the Deferred Comp Plan increase in value based upon the growth of the Bank’s tangible capital, with the Compensation Committee holding discretionary authority.

The obligations under the Deferred Comp Plan are included in accrued retirement liabilities on the Company’s consolidated balance sheets and approximated $ 5.8 million and $ 878,000 at March 31, 2025 and December 31, 2024, respectively.

LTIP – In January 2020, the Company put into place a long-term incentive plan for certain members of its management team where benefits are awarded annually on a discretionary basis and cliff vest after three years .

Under this plan, individuals are granted “phantom shares” and benefits are accrued based upon the projected growth of the Bank’s capital.

The obligations under this plan are included in accrued retirement liabilities on the Company’s consolidated balance sheets and approximated $ 5.9 million and $ 14.6 million as of March 31, 2025 and December 31, 2024, respectively.

The expense under this plan (recorded in salaries and employee benefits in the consolidated statements of income) approximated $ 832,000 and $ 1.4 million for the three months ended March 31, 2025 and 2024, respectively.

Director Pension Plan – The Company has a director defined benefit pension plan (“Director Pension Plan”), c overing directors who were in service prior to 2023 and have met the plan’s vesting requirements .

The Company’s liabilities for the Director Pension Plan are calculated by an independent actuary who uses the “projected unit credit” actuarial method to determine the normal cost and actuarial liability.

The liability for the Director Pension Plan amounted to $ 5.9 million and $ 5.7 million as of September 30, 2024 and December 31, 2023, respectively, and is recorded on the consolidated balance sheets.

The expense under this plan (recorded in salaries and employee benefits in the consolidated statements of income) approximated $ 181,000 and $ 283,000 for the three months ended September 30, 2024 and 2023, respectively, and $ 542,000 and $ 849,000 for the nine months ended September 30, 2024 and 2023, respectively.

The liability for the Director Pension Plan amounted to $ 5.9 million and $ 5.7 million as of March 31, 2025 and December 31, 2024, respectively, and is recorded on the consolidated balance sheets.

The expense under this plan (recorded in salaries and employee benefits in the consolidated statements of income) approximated $ 162,000 and $ 181,000 for the three months ended March 31, 2025 and 2024, respectively.

The Company records an estimate of net periodic pension cost for the director pension plan to accrued retirement liabilities on the consolidated balance sheet on a quarterly basis.

Equity adjustments, to accumulated other comprehensive loss, in conjunction with the pension plan are recorded by the Company annually upon receipt of the independent actuarial report.

Deferred Compensation Plans – During 2014, the Company put into place an unfunded, defined contribution, Non-qualified Deferred Compensation Plan (“Deferred Comp Plan”) for select employees of the Company.

The Deferred Comp Plan was provided to key management of the Company and results in 5 % - 20 % of the employee’s then current base salary being credited to the participant’s account annually, subject to increases in annual base compensation and the possibility of additional discretionary contributions.

The employees vest at varying dates in accordance with each individual’s deferred compensation participation agreement;

however, all key officers will be fully vested upon the attainment of age 65.

The obligations under these plans are included in accrued retirement liabilities on the Company’s consolidated balance sheets and approximated $ 2.6 million and $ 2.4 million as of September 30, 2024 and December 31, 2023, respectively.

The expense under these plans (recorded in salaries and employee benefits in the consolidated statements of income) approximated $ 100,000 and $ 89,000 for the three months ended September 30, 2024 and 2023, respectively, and $ 299,000 and $ 266,000 for the nine months ended September 30, 2024 and 2023, respectively.

Long-Term Incentive Plan – In January 2020, the Company put into place a long-term incentive plan for certain members of its management team where benefits are awarded annually on a discretionary basis and cliff vest after three years .

Under this plan, individuals are granted “phantom shares” and benefits are accrued based upon the projected growth of the Bank’s capital.

The obligations under this plan are included in accrued retirement liabilities on the Company’s consolidated balance sheets and approximated $ 13.5 million and $ 11.1 million as of September 30, 2024 and December 31, 2023, respectively.

The expense under this plan (recorded in salaries and employee benefits in the consolidated statements of income) approximated $ 1.8 million and $ 1.1 million for the three months ended September 30, 2024 and 2023, respectively, and $ 5.0 million and $ 3.4 million for the nine months ended September 30, 2024 and 2023, respectively.

401(k) Plan – The Company has an employee tax deferred incentive plan (the “401(k) plan”) under which the Company makes voluntary contributions within certain limitations.

All employees who meet specified age and length of service requirements are eligible to participate in the 401(k) plan.

The amount contributed by the Company to the 401(k) Plan is included in salaries and employee benefits in the consolidated statements of income .

The amounts contributed to the 401(k) plan for the three months ended September 30, 2024 and 2023 were $ 626,000 and $ 559,000 , respectively, and $ 2.0 million and $ 1.5 million for the nine months ended September 30, 2024 and 2023, respectively.

Employment and Change in Control Agreements – The Company entered into employment agreements with the Chief Executive Officer and the Chief Operating Officer that renew for one additional year each January 1 st .

Employment and Change in Control Agreements – The Company entered into an employment agreement with the Chief Executive Officer that renew for one additional year each January 1 st .

During 2025, the Company entered into Change in Control agreements with certain executive officers, which provide severance payments in the event of the executive’s involuntary or constructive termination of employment, including upon a termination following a change in control as defined in the agreements.

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As the loan is internally leveraged, the loan receivable from the ESOP to the Company is not reported as an asset nor is the debt of the ESOP shown as a liability on the Company’s consolidated balance sheets.

Total compensation expense recognized in connection with the ESOP was $ 762,000 and $ 2.0 million for the three and nine months ended September 30, 2024, respectively.

The Company did no t recognize any compensation expense related to the ESOP for the three and nine months ended September 30, 2023.

Total compensation expense recognized in connection with the ESOP was $ 783,000 and $ 588,000 for the three months ended March 31, 2025 and 2024, respectively.

The following table presents share information held by the ESOP:

September 30, 2024

March 31, 2025

December 31, 2024

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Fair value of unallocated shares

Stock-Based Compensation – On April 23, 2025, the shareholders of the Company approved the NB Bancorp, Inc.

2025 Equity Incentive Plan (“2025 Plan”).

The 2025 Plan provides for the issuance of up to 5,987,802 shares of common stock pursuant to grants of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), non-qualified stock options and incentive stock options, any or all of which can be granted with performance-based vesting conditions.

Under the 2025 Plan, 1,708,229 shares may be issued as RSAs or RSUs, including those issued as performance shares and PSUs, and 4,270,573 shares may be issued upon the exercise of stock options.

These shares may be awarded from the Company’s authorized but unissued shares.

However, the 2025 Plan permits the grant of additional awards of restricted stock or RSUs above the aforementioned limit, provided that, for each additional share of RSA or RSU awarded in excess of such limit, the pool of shares available to be issued upon the exercise of stock options will be reduced by three shares.

Pursuant to the terms of the 2025 Plan, each of the Company’s non-employee directors were automatically granted awards of restricted stock on April 23, 2025.

Such RSAs vest pro-rata on an annual basis over a five-year period.

During the three months ended March 31, 2025, the Company did not grant any RSAs, RSUs, non-qualified stock options or incentive stock options.

Note 6 – Fair Value Measurements

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A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities carried at fair value for September 30, 2024 and December 31, 2023.

These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities carried at fair value for March 31, 2025 and December 31, 2024.

Available-for-sale securities – Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy.

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In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy.

Derivative arrangements – The fair values of derivative arrangements are estimated by the Company using a third-party derivative valuation expert who relies on Level 2 inputs, namely discounted cash flow models to determine a fair value by calculating a settlement termination value with the counterparty.

Derivative arrangements – The fair values of derivative arrangements are estimated by the Company using a third-party derivative valuation expert who relies on Level 2 inputs, namely discounted cash flow models to determine fair value by calculating a settlement termination value with the counterparty.

Assets measured and reported at estimated fair value on a recurring basis are summarized below:

September 30, 2024

March 31, 2025

(in thousands)

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Municipal obligations

SBA securities

Total available-for-sale debt securities

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Treasury securities

Government agencies

Agency mortgage-backed securities

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Municipal obligations

SBA securities

Total available-for-sale debt securities

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Derivative liabilities

The Company had no purchases, sales, transfers or changes in fair value of level 3 assets during the three and nine months ended September 30, 2024 and 2023.

The Company had no purchases, sales or transfers of level 3 assets during the three months ended March 31, 2025 and 2024.

The Company may also be required from time to time to measure certain other assets on a non-recurring basis in accordance with U.S.

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Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3).

In limited circumstances, the collateral value for a collater-dependent loan may be based on the enterprise value of a company.

The enterprise value method involves assessing the borrower’s ability to repay the loan by estimating the total value of its business, including both debt and equity.

This approach is typically used where the recoverable value is based on the fair value of the company as a going concern, adjusted for the prioriry of the Company’s claim.

Fair value adjustments are recorded in the period incurred as provision for credit losses in the consolidated statements of income.

Mortgage Servicing Rights – Mortgage servicing rights do not trade in an active market with readily observable market data.

As a result, the Company estimates the fair value of mortgage servicing rights by using a discounted cash flow model to calculate the present value of estimated future net servicing income.

The assumptions used in the discounted cash flow model are those that market participants would use in estimating future net servicing income.

Assumptions in the valuation of mortgage servicing rights may include estimated loan repayment rates, the discount rate, servicing costs, and the timing of cash flows, among other factors.

The Company measures the fair value of mortgage servicing rights accounted for using the amortization method as nonrecurring Level 3.

The Company had no liabilities measured at fair value on a non-recurring basis.

The following table summarizes assets measured at fair value on a non-recurring basis:

September 30, 2024

March 31, 2025

(in thousands)

Collateral-dependent loans

Mortgage servicing rights

Collateral-dependent loans, net of reserve

December 31, 2024

(in thousands)

Collateral-dependent loans

Mortgage servicing rights

For Level 3 assets and liabilities measured at fair value on a nonrecurring basis as of September 30, 2024 and December 31, 2023, the significant unobservable inputs used in the fair value measurements were as follows:

Collateral-dependent loans, net of reserve

For Level 3 assets and liabilities measured at fair value on a nonrecurring basis as of March 31, 2025 and December 31, 2024, the significant unobservable inputs used in the fair value measurements were as follows:

Collateral-dependent loans

Appraisal Value/ Comparison Sales

Appraisals and/or sales of comparable properties

Appraisal Value / Comparison Sales / Enterprise Value

Appraisals and/or sales of comparable properties or financial statements of the business

Appraisals discounted 5 to 20 % for sales commission and other holding costs;

Mortgage servicing rights

Discounted Cash Flows

Comparable sales

Weighted average discount rate - 12 % Constant prepayment rate – 7.81 %

Enterprise value discounts of assets, liabilities and equity

ASC Topic 825, Financial Instruments (ASC 825) , requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring or non-recurring basis.

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The exit price notion is a market-based measurement of fair value that is represented by the price to sell an asset or transfer a liability in the principal market (or most advantageous market in the absence of a principal market) on the measurement date.

As of September 30, 2024 and December 31, 2023, fair values of loans are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors.

As of March 31, 2025 and December 31, 2024, fair values of loans are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors.

The following tables present the estimated fair values, related carrying amounts, and valuation level of the financial instruments as of the dates stated:

September 30, 2024

March 31, 2025

(In thousands)

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Accrued interest receivable

Federal Reserve Bank stock

Non-public investments

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Accrued interest receivable

Federal Reserve Bank stock

Non-public investments

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The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

As of September 30, 2024 and December 31, 2023, the maximum potential amount of the Company’s obligation was $ 6.5 million and $ 7.5 million, respectively, for standby letters of credit.

As of March 31, 2025 and December 31, 2024, the maximum potential amount of the Company’s obligation was $ 6.3 million and $ 6.0 million, respectively, for standby letters of credit.

The Company’s outstanding letters of credit generally have a term of less than one year.

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Financial instruments whose contract amounts represents off-balance sheet credit risk and are not reflected on the Company’s consolidated balance sheets consist of the following at the dates stated:

September 30, 2024

March 31, 2025

December 31, 2024

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Potential losses on off-balance sheet loan commitments are estimated using the same risk factors used to determine the allowance for credit losses on loans, adjusted for the likelihood that funding will occur.

The allowance for off-balance sheet commitments is recorded within other liabilities on the consolidated balance sheets and amounted to $ 3.4 million and $ 6.0 million as of September 30, 2024 and December 31, 2023, respectively.

For the three months ended September 30, 2024, the Company recorded a release of the allowance for unfunded commitments of $ 2.4 million.

For the three months ended September 30, 2023, the Company did not record a provision for unfunded commitments.

For the nine months ended September 30, 2024 and 2023, the Company recorded a release of the allowance for unfunded commitments of $ 2.6 million and a provision for unfunded commitments of $ 86,000 , respectively.

The allowance for off-balance sheet commitments is recorded within other liabilities on the consolidated balance sheets and amounted to $ 3.4 million and $ 3.2 million as of March 31, 2025 and December 31, 2024, respectively.

For the three months ended March 31, 2025 and 2024, the Company recorded a provision for unfunded commitments of $ 211,000 and $ 539,000 respectively.

Note 8 – Derivatives and Hedging Activities

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For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in interest income.

The Company had previously entered into two “last of layer hedges” on a significant portion of its fixed rate residential loan pool.

These amounts include the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the last layer expected to remain at the end of the hedging relationship.

During September 2021, the Company terminated these last of layer hedges by paying out $ 2.2 million to the respective third parties.

These fees were capitalized into loans receivable and are being amortized against loan income over the contractual lives of the remaining designated residential loans.

The unamortized amount of this cost basis adjustment is $ 949,000 and $ 1.0 million at September 30, 2024 and December 31, 2023, respectively.

During the three months ended September 30, 2024 and 2023, the Company recognized amortization expense related to this cost basis adjustment of $ 31,000 and $ 41,000 , respectively.

During the nine months ended September 30, 2024 and 2023, the Company recognized amortization expense related to this cost basis adjustment of $ 81,000 and $ 113,000 , respectively.

Non-designated Hedges – Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements and/or the Company has not elected to apply hedge accounting.

Changes in the fair value of derivatives not designated in hedging relationships, exclusive of credit valuation adjustments, are recorded directly in earnings.

The Company executes interest rate swaps and cap agreements with commercial banking customers to facilitate its respective risk management strategies.

The Company executes interest rate swaps and cap agreements with commercial banking customers to facilitate their respective risk management strategies.

Those interest rate swap and cap agreements are simultaneously hedged by offsetting interest rate swaps and caps that are executed with a third party, such that the Company minimizes its net risk exposure resulting from such transactions.

As of September 30, 2024, the Company had 58 interest rate swap agreements with an aggregate notional amount of $ 383.8 million compared to 52 interest rate swap agreements and one interest rate cap agreement with an aggregate notional amount of $ 338.6 million related to this program as of December 31, 2023.

Risk Participation Agreements – Risk Participation Agreements (“RPAs”) are guarantees issued by the Company to other parties for a fee, whereby the Company agrees to participate in the credit risk of a derivative customer of the other party.

As of March 31, 2025, the Company had 69 interest rate swap agreements with an aggregate notional amount of $ 415.5 million compared to 67 interest rate swap agreements with an aggregate notional amount of $ 429.9 million related to this program as of December 31, 2024.

Risk Participation Agreements (“RPAs”) – RPAs are guarantees issued by the Company to other parties for a fee, whereby the Company agrees to participate in the credit risk of a derivative customer of the other party.

Under the terms of these agreements, the “participating bank” receives a fee from the “lead bank” in exchange for the guarantee of reimbursement if the customer defaults on an interest rate swap.

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Settlement amounts are generally calculated based on the fair value of the swap plus outstanding accrued interest receivable from the customer.

As of September 30, 2024, the Company had 17 RPAs with an aggregate notional amount of $ 45.0 million related to this program compared to 16 RPAs with an aggregate notional amount of $ 44.5 million as of December 31, 2023.

As of March 31, 2025, the Company had 17 RPAs with an aggregate notional amount of $ 44.8 million related to this program compared to 17 RPAs with an aggregate notional amount of $ 44.9 million as of December 31, 2024.

These RPAs all represent “participations-in” and generally have terms ranging from five to ten years .

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Liabilities (2)

September 30, 2024

March 31, 2025

(in thousands)

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(2) Recorded in accrued expenses and other liabilities on the consolidated balance sheets.

The table below presents the financial impact of the Company’s derivative financial instruments not designated as hedges in the consolidated statements of income, caused by changes in fair value for the periods indicated:

Location of Gain or (Loss)

Three months ended September 30,

Nine months ended September 30,

in Income on Derivative

(in thousands)

Derivatives Not Designated as Hedging Instruments:

RPA credit contracts-fair value adjustments

Other non-interest income

Swap contract fees, net of brokerage costs, recognized in earnings on the above noted interest rate products and RPA contracts approximated $ 375,000 and $ 950,000 for the three months ended September 30, 2024 and 2023, respectively, and $ 1.1 million and $ 2.1 million for the nine months ended September 30, 2024 and 2023, respectively.

Swap contract fees, net of brokerage costs, recognized in earnings on the above noted interest rate products and RPA contracts approximated $ 88,000 and $ 487,000 for the three months ended March 31, 2025 and 2024, respectively.

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults (or is capable of being declared in default) on any of its indebtedness, then the Company could also be declared in default on its derivative obligations, and it could be required to terminate its derivative positions with the counterparty.

The Company also has agreements with certain of its derivative counterparties that contain a provision whereby if the counterparty fails to maintain its status as a well-capitalized institution, then the Company could be required to terminate its derivative positions with the counterparty.

In order to mitigate counterparty default risk in conjunction with these interest rate products and RPA credit contracts, the Company was required to maintain $ 9.1 million of collateral deposit accounts with the counterparties to these agreements as of September 30, 2024 and December 31, 2023.

Note 9 – Other Comprehensive Income (Loss)

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income.

Note 9 – Other Comprehensive Income

GAAP generally requires that recognized revenue, expenses, gains and losses be included in net income.

Although certain changes in assets and liabilities are reported as a separate component of the shareholders' equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income (loss).

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For the Three Months Ended

September 30, 2024

September 30, 2023

(In thousands)

Tax (Expense)

Change in fair value of available-for-sale securities

Reclassification adjustment for realized (losses) gains in net income

Net change in fair value of available-for-sale securities

Change in fair value of cash flow hedge

Net cash flow hedge gains (losses) reclassified into interest income or interest expense

Net change in fair value of cash flow hedge, net of tax

Total other comprehensive income (loss)

For the Nine Months Ended

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

(In thousands)

Tax (Expense)

Change in fair value of available-for-sale securities

Reclassification adjustment for realized (losses) gains in net income

Net change in fair value of available-for-sale securities

Change in fair value of cash flow hedge

Net cash flow hedge gains (losses) reclassified into interest income or interest expense

Net change in fair value of cash flow hedge, net of tax

Total other comprehensive income (loss)

The following table presents the components of accumulated other comprehensive loss as of September 30, 2024 and December 31, 2023:

September 30, 2024

The following table presents the components of accumulated other comprehensive loss as of March 31, 2025 and December 31, 2024:

March 31, 2025

December 31, 2024

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The Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Effective January 1, 2020, the federal banking agencies published a final rule on a Community Bank Leverage Ratio (“CBLR”) Framework that provides a simplified measure of capital adequacy for qualified community banking organizations.

Management had determined that the Company meets the standards to qualify under the CBLR framework and opted into this framework for FDIC call reporting purposes during 2020.

Under the CBLR framework, a bank that maintains a CBLR of 9.0% (defined as Tier 1 capital divided by total average assets) is considered to have satisfied its capital requirements, determined to be well-capitalized, and will no longer be required to calculate risk-based capital ratios.

As of December 31, 2023 the Bank met the minimum requirement with a CBLR of 13.6 %.

The Company no longer meets the requirement for the CBLR framework due to its unfunded loan commitments being over 25.0% of its capital for more than two consecutive quarters.

As a result, the Company operated under the risk-based framework for the three and nine months ended September 30, 2024.

The Company operated under the risk-based framework as of March 31, 2025 and December 31, 2024.

Under this framework, quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of Total Capital, Tier 1 Capital and Common Equity Tier 1 Capital to Risk-Weighted Assets, and Tier 1 Capital to Total Average Assets (as defined in the regulations).

Management believes, as of September 30, 2024, that the Company and the Bank meet all capital adequacy requirements to which each is subject.

As of September 30, 2024, the Company and the Bank were categorized as well capitalized under the regulatory framework for prompt corrective action.

Management believes, as of March 31, 2025 and December 31, 2024, that the Company and the Bank meet all capital adequacy requirements to which each is subject.

As of March 31, 2025 and December 31, 2024, the Company and the Bank were categorized as well capitalized under the regulatory framework for prompt corrective action.

To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, Common Equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below.

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action provisions

September 30, 2024

March 31, 2025

(in thousands)

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(to Total Average Assets)

To be well capitalized

For minimum capital

under prompt corrective

adequacy purposes

action provisions

December 31, 2024

(in thousands)

Total Capital

(to Risk-Weighted Assets)

Tier 1 Capital

(to Risk-Weighted Assets)

Common Equity Tier I Capital

(to Risk-Weighted Assets)

Tier 1 Capital

(to Total Average Assets)

The Company’s actual consolidated capital amounts and ratios are presented in the table as of the date indicated:

4 unchanged sentences

action provisions

September 30, 2024

March 31, 2025

(in thousands)

7 unchanged sentences

(to Total Average Assets)

To be well capitalized

For minimum capital

under prompt corrective

adequacy purposes

action provisions

December 31, 2024

(in thousands)

Total Capital

(to Risk-Weighted Assets)

Tier 1 Capital

(to Risk-Weighted Assets)

Common Equity Tier I Capital

(to Risk-Weighted Assets)

Tier 1 Capital

(to Total Average Assets)

Note 11 – Earnings Per Share (“EPS”)

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Diluted EPS have been calculated in a manner similar to that of basic EPS except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares (such as those resulting from the exercise of stock options) were issued during the period, computed using the treasury stock method.

There were no securities that had a dilutive effect during the three and nine months ended September 30, 2024 and 2023.

There were no securities that had a dilutive effect during the three months ended March 31, 2025 and 2024.

Unallocated ESOP shares are not deemed outstanding for EPS calculations.

For the Three Months Ended

For the Nine Months Ended

September 30,

(Dollars in thousands, except per share data)

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Basic and diluted

For the three and nine months ended September 30, 2024 and 2023, there were no anti-dilutive shares.

Note 12 — Investments in Solar Income Tax Credit Projects

The Company has investments in qualified solar income tax credit projects (“SITCPs”) that provide solar income tax credits (“SITC”) and operating loss benefits over a five-year period.

Effective September 30, 2024, with a modified retrospective application to January 1, 2024, the Company adopted ASU No.

2023-02 and began to apply the proportional amortization method of accounting for its SITCPs.

Prior to the adoption of ASU No.

2023-02, the Company applied the equity method of accounting for its SITCPs.

For the three and nine months ended September 30, 2024, the Company recorded $ 14.7 million and $ 17.3 in solar income tax credit, respectively and $ 18.0 million of amortization attributable to the SITCPs within Income Tax Expense in its Consolidated Statements of Income.

For the three and nine months ended September 30, 2023, the Company recorded no tax credits within Income Tax Expense in its Consolidated Statements of Income and amortization of $ 341,000 and $ 1.0 million, respectively, within Other Noninterest Expense on the Consolidated Statement of Income.

At September 30, 2024 and December 31, 2023, the Company’s carrying value of SITCPs was $ 731,000 and $ 10.2 million, respectively, recorded in Non-Public Investments on the Consolidated Balance Sheets.

Remaining funding obligations related to these SITCPs recorded in Accrued Expenses and Other Liabilities on the Consolidated Balance Sheets amounted to $ 5.6 million and $ 0 at September 30, 2024 and December 31, 2023, respectively.

For the remaining funding obligations at September 30, 2024, 100 % are expected to be funded during 2025.

For more information on the adoption of ASU 2023-02, refer to Note 2 — Basis of Presentation.

For the three months ended March 31, 2025 and 2024, there were no anti-dilutive shares.

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 1. Financial Statements