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Item 9A. Controls and Procedures

2022-03-11 compared with 2021-03-11 · 1002 added, 1032 removed, 1414 unchanged (59% of the section changed)

22 unchanged sentences

of Independent Registered Public Accounting Firm

Internal Control over Financial Reporting

the Shareholders and Board of Directors

Western New England Bancorp, Inc.

On Internal Control over Financial Reporting

have audited Western New England Bancorp, Inc.

and subsidiaries’ (the “Company”) internal control over financial reporting as of

December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the

Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective

internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated

Framework (2013) issued by the COSO.

have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),

the Consolidated Financial Statements of the Company and our report dated March 11, 2021 expressed an unqualified opinion.

Company’s management is responsible for maintaining effective internal control over financial reporting, and for its

assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s

Annual Report on Internal Control over Financial Reporting .

Our responsibility is to express an opinion on the Company’s

internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and

are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the

applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material

audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness

exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit

provides a reasonable basis for our opinion.

and Limitations of Internal Control over Financial Reporting

company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally

accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures

that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and

dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures

of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide

reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s

assets that could have a material effect on the financial statements.

of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes

in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

To the Shareholders and Board of Directors of Western

New England Bancorp, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Western New England Bancorp, Inc.

and subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2021, based on criteria

established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of

the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control

over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013)

issued by the COSO.

We have also audited, in accordance with the standards

of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company

and our report dated March 11, 2022 expressed an unqualified opinion.

Basis for Opinion

The Company’s management is responsible for

maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial

reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting .

Our responsibility

is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting

firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards

of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal

control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control

over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness

of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in

the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control

over Financial Reporting

A company's internal control over financial reporting

is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over financial

reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately

and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions

are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and

that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition

of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control

over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods

are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the

policies or procedures may deteriorate.

Wolf & Company, P.C.

Massachusetts

REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

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“Information About Our Board

of Directors,” “Information About Our Executive Officers Who Are Not Directors,” and “Corporate

of Directors,” “Information About Our Executive Officers Who Are Not Directors,” and “Corporate Governance.”

COMPENSATION.

following information included in the Proxy Statement is incorporated herein by reference:

“Compensation Committee

Interlocks and Insider Participation,” “Compensation Discussion and Analysis,” “Compensation

Committee Report,” “Executive Compensation” and “Director Compensation.”

“Compensation Committee Interlocks

and Insider Participation,” “Compensation Discussion and Analysis,” “Compensation Committee Report,”

“Executive Compensation” and “Director Compensation.”

OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS.

9 unchanged sentences

“Independent Registered Public

Accounting Firm Fees and Services.”

Accounting Firm Fees and Services.” Our independent registered public accounting firm is Wolf & Company, P.C.

, Boston, Massachusetts ,

AND FINANCIAL STATEMENT SCHEDULES.

7 unchanged sentences

(a)(3) Exhibits

Articles of Organization of Western New England Bancorp, Inc.

(incorporated by reference to Exhibit 3.1 of the Form 8-K filed

with the SEC on October 26, 2016).

and Restated Bylaws of Western New England Bancorp, Inc.

(incorporated by reference to Exhibit 3.1 of the Form 8-K filed with

the SEC on February 2, 2017).

of Stock Certificate of Western New England Bancorp, Inc.

(f/k/a Westfield Financial, Inc.) (incorporated by reference to Exhibit

4.1 of the Registration Statement on Form S-1 (No.

Restated Articles of Organization of Western New England Bancorp, Inc.

(incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the SEC on October 26, 2016).

Amended and Restated Bylaws of Western New England Bancorp, Inc.

(incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the SEC on February 2, 2017).

Form of Stock Certificate of Western New England Bancorp, Inc.

(f/k/a Westfield Financial, Inc.) (incorporated by reference to Exhibit 4.1 of the Registration Statement on Form S-1 (No.

333-137024) filed with the SEC on August 31, 2006).

of Securities Registered Under Section 12 of the Securities Exchange Act of 1934.

of Director’s Deferred Compensation Plan (incorporated by reference to Exhibit 10.7 of the Form 8-K filed with the SEC on

December 22, 2005).

and Restated Benefit Restoration Plan of Western New England Bancorp, Inc.

(f/k/a Westfield Financial, Inc.) (incorporated by

reference to Exhibit 10.5 of the Form 8-K filed with the SEC on October 29, 2007).

of Amended and Restated Deferred Compensation Agreement with Donald A.

Williams (incorporated by reference to Exhibit 10.10 of

the Form 8-K filed with the SEC on December 22, 2005).

and Restated Employment Agreement between James C.

Hagan and Westfield Bank (incorporated by reference to Exhibit 10.9 of the

Form 8-K filed with the SEC on January 5, 2009).

and Restated Employment Agreement between James C.

Form of Director’s Deferred Compensation Plan (incorporated by reference to Exhibit 10.7 of the Form 8-K filed with the SEC on December 22, 2005).

Amended and Restated Benefit Restoration Plan of Western New England Bancorp, Inc.

(f/k/a Westfield Financial, Inc.) (incorporated by reference to Exhibit 10.5 of the Form 8-K filed with the SEC on October 29, 2007).

Amended and Restated Employment Agreement between James C.

Hagan and Westfield Bank (incorporated by reference to Exhibit 10.9 of the Form 8-K filed with the SEC on January 5, 2009).

Amended and Restated Employment Agreement between James C.

Hagan and Western New England Bancorp, Inc.

(f/k/a Westfield Financial, Inc.)

(incorporated by reference to Exhibit 10.12 of the Form 8-K filed with the SEC on January 5, 2009).

Agreement between Leo R.

and Westfield Bank (incorporated by reference to Exhibit 10.15 of the Form 8-K filed with

the SEC on January 5, 2009).

Agreement between Leo R.

(f/k/a Westfield Financial, Inc.) (incorporated by reference to Exhibit 10.12 of the Form 8-K filed with the SEC on January 5, 2009).

Employment Agreement between Leo R.

and Westfield Bank (incorporated by reference to Exhibit 10.15 of the Form 8-K filed with the SEC on January 5, 2009).

Employment Agreement between Leo R.

and Western New England Bancorp, Inc.

(f/k/a Westfield Financial, Inc.) (incorporated by reference

to Exhibit 10.16 of the Form 8-K filed with the SEC on January 5, 2009).

Agreement between Gerald P.

Ciejka and Westfield Bank (incorporated by reference to Exhibit 10.17 of the Form 8-K filed with the

SEC on January 5, 2009).

Agreement between Gerald P.

Ciejka and Western New England Bancorp, Inc.

(f/k/a Westfield Financial, Inc.) (incorporated by reference

to Exhibit 10.18 of the Form 8-K filed with the SEC on January 5, 2009).

Agreement between Allen J.

Miles, III and Westfield Bank (incorporated by reference to Exhibit 10.19 of the Form 8-K filed with

the SEC on January 5, 2009).

Agreement between Allen J.

(f/k/a Westfield Financial, Inc.) (incorporated by reference to Exhibit 10.16 of the Form 8-K filed with the SEC on January 5, 2009).

Employment Agreement between Allen J.

Miles, III and Westfield Bank (incorporated by reference to Exhibit 10.19 of the Form 8-K filed with the SEC on January 5, 2009).

Employment Agreement between Allen J.

Miles, III and Western New England Bancorp, Inc.

(f/k/a Westfield Financial, Inc.) (incorporated by

reference to Exhibit 10.20 of the Form 8-K filed with the SEC on January 5, 2009).

Agreement between William J.

Wagner and Western New England Bancorp, Inc.

(f/k/a Westfield Financial, Inc.) (incorporated by reference

to Exhibit 10.2 of the Registration Statement on Form S-4 (No.

333-212221) filed with the SEC on June 24, 2016).

Agreement between William J.

Wagner and Westfield Bank (incorporated by reference to Exhibit 10.3 of the Registration Statement

on Form S-4 (No.

333-212221) filed with the SEC on June 24, 2016).

(f/k/a Westfield Financial, Inc.) (incorporated by reference to Exhibit 10.20 of the Form 8-K filed with the SEC on January 5, 2009).

Employment Agreement between Darlene M.

5 unchanged sentences

333-212221) filed with the SEC on June 24, 2016).

Agreement between Guida R.

Sajdak and Western New England Bancorp (incorporated by reference to Exhibit 10.1 of the Form 8-K filed

with the SEC on February 8, 2018).

Agreement between Guida R.

Sajdak and Westfield Bank (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the

SEC on February 8, 2018).

Agreement between Louis Gorman, III and Western New England Bancorp (incorporated by reference to Exhibit 10.1 of the Form 8-K

filed with the SEC on March 23, 2018).

Agreement between Louis Gorman, III and Westfield Bank (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the

SEC on March 23, 2018).

Employment Agreement between Guida R.

Sajdak and Western New England Bancorp (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the SEC on February 8, 2018).

Employment Agreement between Guida R.

Sajdak and Westfield Bank (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the SEC on February 8, 2018).

Employment Agreement between Louis Gorman, III and Western New England Bancorp (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the SEC on March 23, 2018).

Employment Agreement between Louis Gorman, III and Westfield Bank (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the SEC on March 23, 2018).

Employment Agreement between Kevin C.

O’Connor and Westfield Bank dated February 17, 2017.

O’Connor and Westfield Bank dated February 17, 2017 (incorporated by reference to Exhibit 10.20 of the Form 10-K filed with the SEC on March 11, 2021).

Employment Agreement between Kevin C.

O’Connor and Western New England Bancorp, Inc.

dated February 17, 2017.

dated February 17, 2017 (incorporated by reference to Exhibit 10.21 of the Form 10-K filed with the SEC on March 11, 2021).

Change of Control Agreement between John Bonini and Western New England Bancorp, Inc.

dated as of January 1, 2021.

dated as of January 1, 2021 (incorporated by reference to Exhibit 10.22 of the Form 10-K filed with the SEC on March 11, 2021).

Change of Control Agreement between Christine Phillips and Western New England Bancorp, Inc.

dated as of January 1, 2021.

Amended and Restated Change of Control Agreement dated October 25, 2007 between Deborah J.

McCarthy and Western New England Bancorp, Inc.

(f/k/a Westfield Financial, Inc.).

dated as of January 1, 2021(incorporated by reference to Exhibit 10.23 of the Form 10-K filed with the SEC on March 11, 2021).

2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on May 19, 2014).

Bancorp, Inc.

2007 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-8

Chicopee Bancorp, Inc.

2007 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-8 (No.

333-214261) filed with the SEC on October 26, 2016).

First Amendment dated October 22, 2019 between William J.

and Western New England Bancorp to the Employment Agreement dated as of April 4, 2016, between William J.

Wagner and Westfield

Bank (incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the SEC on October 25, 2019).

of Western New England Bancorp, Inc.

of Wolf & Company, P.C.

Certification

of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification

of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification

of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification

of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Western New England Bancorp, Inc.

2021 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 of the Form S-8 filed with the SEC on May 19, 2021).

Form of Incentive Stock Option Agreement under the Western New England Bancorp, Inc.

2021 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 of the Form S-8 filed with the SEC on May 19, 2021).

Form of Non-Qualified Stock Option Agreement under the Western New England Bancorp, Inc.

2021 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.3 of the Form S-8 filed with the SEC on May 19, 2021).

Form of Director Incentive Award Agreement under the Western New England Bancorp, Inc.

2021 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.4 of the Form S-8 filed with the SEC on May 19, 2021).

Form of Restricted Stock Award Agreement under the Western New England Bancorp, Inc.

2021 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.5 of the Form S-8 filed with the SEC on May 19, 2021).

Form of Long-Term Incentive and Retention Equity Award Agreement under the Western New England Bancorp, Inc.

2021 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.6 of the Form S-8 with the SEC on May 19, 2021).

Subsidiaries of Western New England Bancorp, Inc.

Consent of Wolf & Company, P.C.

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

statements from the annual report on Form 10-K of Western

2 unchanged sentences

Business Reporting Language):

(i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Net Income, (iii) the Consolidated

Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated

Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements.

(i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Net Income, (iii) the

Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity,

(v) the Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements.

Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

contract or compensatory plan or arrangement.

to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are

deemed not filed or part of a registration statement or prospectus for purposes of Sections

11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes

of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not

subject to liability under those sections.

FORM 10-K SUMMARY.

to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration

statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for

purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those

10-K SUMMARY.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused

this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 11, 2022.

NEW ENGLAND BANCORP, INC.

WESTERN NEW ENGLAND BANCORP, INC.

Chief Executive Officer and President

(Principal Executive Officer)

Chief Financial Officer and Executive Vice President

(Principal Financial Officer and Principal Accounting Officer)

Chief Financial Officer and Executive Vice President (Principal Financial Officer and Principal

Accounting Officer)

person whose individual signature appears below hereby authorizes and appoints James C.

15 unchanged sentences

of Independent Registered Public Accounting Firm

the Shareholders and Board of Directors of

New England Bancorp, Inc.

on the Consolidated Financial Statements

have audited the accompanying Consolidated Balance Sheets of Western New England Bancorp, Inc.

and subsidiaries (the “Company”)

as of December 31, 2020 and 2019, the related Consolidated Statements of Net Income, Comprehensive Income, Changes in Shareholders’

Equity and Cash Flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred

to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for

each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in

the United States of America.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),

the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal

Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)

and our report dated March 11, 2021 expressed an unqualified opinion.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent

with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the

Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

Our audits included performing procedures to assess the risks of material misstatement of the financial statements,

whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a

test basis, evidence regarding the amounts and disclosures in the financial statements.

audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

To the Shareholders and Board of Directors of

Western New England Bancorp, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying Consolidated

Balance Sheets of Western New England Bancorp, Inc.

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related Consolidated

Statements of Net Income, Comprehensive Income, Changes in Shareholders’ Equity and Cash Flows for each of the three years in the

period ended December 31, 2021, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial

statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results

of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting

principles generally accepted in the United States of America.

We also have audited, in accordance with the

standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial

reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the

Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 11, 2022 expressed an unqualified opinion

on the effectiveness of the Company’s internal controls over financial reporting.

Basis for Opinion

These financial statements are the responsibility

of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks

of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting

principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was

communicated or required to be communicated to the Company’s Audit Committee and that:

(1) relates to accounts or disclosures

that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.

The communication

of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not,

by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts

or disclosures to which it relates.

Audit Matter Description

described in Notes 1 and 3 to the financial statements, the Company has recorded an allowance for loan losses in the amount of

$21.2 million as of December 31, 2020, representing management’s estimate of the probable losses inherent in the loan portfolio

as of that date.

The allowance is established as losses are estimated to have occurred through a provision for loan

losses charged to earnings.

determination of the allowance for loan losses requires significant judgment by management including the identification of, and

estimated reserves on, problem loans and the determination of qualitative adjustments to historical loss experience.

the Critical Audit Matter was addressed in the Audit

principal audit procedures to evaluate management’s estimates of the allowance for loan losses included tests of the following:

● Management’s

identification of problem loans, including management’s loan review procedures

and monitoring of internal loan reports, including delinquency, non-accrual, and watch

list, to determine the completeness of impaired loans.

● Management’s

determination of specific reserves on impaired loans, including significant assumptions,

Critical Audit Matter

The critical audit matter communicated below

is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to

the Company’s Audit Committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and

(2) involved especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in

any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing

a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matter Description

As described in Notes 1 and 3 to the financial

statements, the Company has recorded an allowance for loan losses in the amount of $19.8 million as of December 31, 2021, representing

management’s estimate of the probable losses inherent in the loan portfolio as of that date.

The allowance is established

as losses are estimated to have occurred through a provision (credit) for loan losses charged to earnings.

The determination of the allowance for loan

losses requires significant judgment by management including the identification of, and estimated reserves on, problem loans and the determination

of qualitative adjustments to historical loss experience.

How the Critical Audit Matter was addressed

Our principal audit procedures to evaluate management’s

estimates of the allowance for loan losses included tests of the following:

· Management’s identification of problem loans, including management’s loan review procedures

and monitoring of internal loan reports, including delinquency, non-accrual, and watch list, to determine the completeness of impaired

· Management’s determination of specific reserves on impaired loans, including significant assumptions,

such as the fair value of collateral for collateral dependent loans.

● Management’s

determination of general reserves, including determination of historical loss experience

· Management’s determination of general reserves, including determination of historical loss experience

and qualitative adjustments to historical loss experience.

accuracy of management’s calculation of the allowance for loan losses, including

relevant internal controls.

· The accuracy of management’s calculation of the allowance for loan losses, including relevant internal

have served as the Company's auditor since 2004.

8 unchanged sentences

Cash and cash equivalents

Securities available-for-sale, at fair value

Available-for-sale securities, at fair value

Held-to-maturity securities, at amortized cost (Fair value of $ 219,748 at December 31, 2021)

Marketable equity securities, at fair value

Federal Home Loan Bank stock and other restricted stock, at cost

Loans, net of allowance for loan losses of $ 21,157 and $ 14,102 at December 31, 2020 and 2019, respectively

Loans, net of allowance f or loan losses of $ 19,787

and $ 21,157 at December 31, 2021 and

2020, respectively

Premises and equipment, net

7 unchanged sentences

Total deposits

Short-term borrowings

Long-term debt

Subordinated debt

Securities pending settlement

25 unchanged sentences

Debt securities, tax-exempt

Equity securities

Marketable equity securities

Other investments

3 unchanged sentences

Long-term debt

Subordinated debt

Short-term borrowings

1 unchanged sentence

Net interest and dividend income

Provision for loan losses

Net interest and dividend income after provision for loan losses

Non-interest income (loss):

(Credit) provision for loan losses

Net interest and dividend income after (credit) provision for loan losses

Non-interest income:

Service charges and fees

Income from BOLI

Gain on bank-owned life insurance death benefit

Gain (loss) on available-for-sale securities, net

Gain on sale of OREO

Unrealized gains (losses) on marketable equity securities, net

Income from bank-owned life insurance

Bank-owned life insurance death benefit

(Loss) gain on available-for-sale securities, net

Gain on sale of mortgages

Net unrealized (losses) gains on marketable equity securities

Gain on non-marketable equity investments

Loss on interest rate swap termination

16 unchanged sentences

Weighted average diluted shares outstanding

Dividends per share

See accompanying notes to consolidated financial statements.

5 unchanged sentences

Other comprehensive income (loss):

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

Unrealized holding gains (losses)

Reclassification adjustment for net (gains) losses realized in income (1)

Unrealized gains (losses)

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

Unrealized holding (losses) gains

Reclassification adjustment for net losses (gains) realized in income (1)

Unrealized (losses) gains

Net-of-tax amount

1 unchanged sentence

Change in fair value of derivatives used for cash flow hedges

Reclassification adjustment for loss realized in income for interest rate swap termination (2)

Reclassification adjustment for loss realized in interest expense (3)

3 unchanged sentences

Defined benefit pension plan:

(Losses) gains arising during the period

Amortization of defined benefit plans actuarial loss (4)

Unrecognized actuarial (losses) gains on defined benefit plan

Gains (losses) arising during the period

Amortization of defined benefit plan actuarial loss (5)

Unrecognized actuarial gains (losses) on defined benefit plan

Net-of-tax amount

1 unchanged sentence

Comprehensive income

(1) Realized gains and losses on available-for-sale securities

are recognized as a component of non-interest income in the consolidated statements of net income.

The tax effects

associated with the reclassification adjustments were $ 502,000 , $ ( 37,000 ) and $ ( 79,000 ) for the years ended December 31, 2020,

2019 and 2018, respectively.

(2) Loss realized in interest expense on derivative instruments

is recognized as a component of interest expense on long-term debt in the consolidated statements of net income.

Income tax effects

associated with the reclassification adjustments were $ 189,000 , $ 109,000 and $ 127,000 for the years ended December 31, 2020, 2019

and 2018, respectively.

(3) Termination fee realized in interest expense on derivative

instruments is recognized as a component of interest expense on long-term debt in the consolidated statements of net income.

tax effects associated with the reclassification adjustments were $ 237,000 , $ 300,000 and $ 300,000 for the years ended December

31, 2020, 2019 and 2018, respectively.

(4) Amounts represent the reclassification of defined benefit

plan amortization and have been recognized as a component of non-interest expense in the consolidated statements of net income.

tax effects associated with the reclassification adjustments were $ 118,000 , $ 38,000 and $ 50,000 for the years ended December 31,

2020, 2019 and 2018, respectively.

(1) Realized gains and losses on available-for-sale securities

are recognized as a component of non-interest income in the consolidated statements of net income.

The tax effects

associated with the reclassification adjustments were $502,000, $(37,000) and $(79,000) for the years ended December 31, 2020,

2019 and 2018, respectively.

(2) Loss realized in interest expense on derivative instruments

is recognized as a component of interest expense on long-term debt in the consolidated statements of net income.

Income tax effects

associated with the reclassification adjustments were $189,000, $109,000 and $127,000 for the years ended December 31, 2020, 2019

and 2018, respectively.

(3) Termination fee realized in interest expense on derivative

instruments is recognized as a component of interest expense on long-term debt in the consolidated statements of net income.

tax effects associated with the reclassification adjustments were $237,000, $300,000 and $300,000 for the years ended December

31, 2020, 2019 and 2018, respectively.

(4) Amounts represent the reclassification of defined benefit

plan amortization and have been recognized as a component of non-interest expense in the consolidated statements of net income.

tax effects associated with the reclassification adjustments were $118,000, $38,000 and $50,000 for the years ended December 31,

2020, 2019 and 2018, respectively.

See accompanying notes to consolidated financial statements.

gains and losses on available-for-sale securities are recognized as a component of non-interest

income in the consolidated statements of net income.

The tax effects associated with

the reclassification adjustments were $ ( 15,000 ) , $ 502,000 and $ ( 37,000 ) for the years

ended December 31, 2021, 2020 and 2019, respectively.

realized in income on interest rate swap termination is recognized as a component of non-interest income.

Income tax effects associated

with the reclassification adjustments were $ 113,000 and $ 661,000 for the years ended December 31, 2021 and 2020.

realized in interest expense on derivative instruments is recognized as a component of interest expense on long-term debt in the

consolidated statements of net income.

Income tax effects associated with the reclassification adjustments were $ 189,000 and $ 109,000

for the years ended December 31, 2020 and 2019, respectively.

(4) Termination

fee realized in interest expense on derivative instruments is recognized as a component of interest expense on long-term debt

in the consolidated statements of net income.

Income tax effects associated with the reclassification adjustments were $ 79,000 ,

$ 237,000 and $ 300,000 for the years ended December 31, 2021, 2020 and 2019, respectively.

represent the reclassification of defined benefit plan amortization and have been recognized as a component of non-interest expense

in the consolidated statements of net income.

Income tax effects associated with the reclassification adjustments were $ 256,000 ,

$ 118,000 and $ 38,000 for the years ended December 31, 2021, 2020 and 2019, respectively.

gains and losses on available-for-sale securities are recognized as a component of non-interest

income in the consolidated statements of net income.

The tax effects associated with

the reclassification adjustments were $(15,000), $502,000 and $(37,000) for the years

ended December 31, 2021, 2020 and 2019, respectively.

realized in income on interest rate swap termination is recognized as a component of non-interest income.

Income tax effects associated

with the reclassification adjustments were $113,000 and $661,000 for the years ended December 31, 2021 and 2020.

realized in interest expense on derivative instruments is recognized as a component of interest expense on long-term debt in the

consolidated statements of net income.

Income tax effects associated with the reclassification adjustments were $189,000 and $109,000

for the years ended December 31, 2020 and 2019, respectively.

(4) Termination

fee realized in interest expense on derivative instruments is recognized as a component of interest expense on long-term debt

in the consolidated statements of net income.

Income tax effects associated with the reclassification adjustments were $79,000,

$237,000 and $300,000 for the years ended December 31, 2021, 2020 and 2019, respectively.

represent the reclassification of defined benefit plan amortization and have been recognized as a component of non-interest expense

in the consolidated statements of net income.

Income tax effects associated with the reclassification adjustments were $256,000,

$118,000 and $38,000 for the years ended December 31, 2021, 2020 and 2019, respectively.

accompanying notes to consolidated financial statements.

WESTERN NEW ENGLAND BANCORP, INC.

2 unchanged sentences

YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019

in thousands, except share data)

(Dollars in thousands, except share data)

Compensation-

4 unchanged sentences

Comprehensive

income (loss)

Cumulative-effect

9 unchanged sentences

Comprehensive

Cumulative-effect

adjustment due to change in accounting principle (ASU 2017-08)

income (loss)

stock held by ESOP committed to be released ( 85,101 shares)

equity incentive plan shares ( 30,193 shares)

stock repurchased

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of common stock in connection with equity incentive plan

equity incentive plan shares reissued ( 32,544 shares)

dividends declared and paid on common stock ($ 0.20 per share)

AT DECEMBER 31, 2021

accompanying notes to consolidated financial statements.

See accompanying

notes to consolidated financial statements.

WESTERN NEW ENGLAND BANCORP, INC.

5 unchanged sentences

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for loan losses

(Credit) provision for loan losses

Depreciation and amortization of premises and equipment

Net (accretion) amortization of purchase accounting adjustments

Net amortization (accretion) of purchase accounting adjustments

Amortization of core deposit intangible

Net amortization of premiums and discounts on securities and mortgage loans

Amortization of subordinated debt issuance costs

Share-based compensation expense

Change in unrealized (gain) loss on marketable equity securities

Net (gain) loss on sales of available-for-sale securities

Net gain on sales of other real estate owned

Gain on sale of portfolio mortgages

Principal balance of loans originated for sale

Principal balance of loans sold

Change in unrealized loss (gain) on marketable equity securities

Net loss (gain) on sales of available-for-sale securities

Loss on prepayment of borrowings

Deferred income tax benefit

Income from bank-owned life insurance

Gain on bank-owned life insurance death benefit

Deferred income tax provision (benefit)

Income from bank-owned life insurance

Net change in:

3 unchanged sentences

INVESTING ACTIVITIES:

Securities, held-to-maturity:

Proceeds from calls, maturities, and principal collections

Securities, available-for-sale:

3 unchanged sentences

Redemption of Federal Home Loan Bank of Boston stock, net

Proceeds from sale of other real estate owned

Proceeds from sale of portfolio mortgages

Purchases of premises and equipment

Proceeds from sale of premises and equipment

Proceeds from payout on bank-owned life insurance

Net cash used in investing activities

3 unchanged sentences

Repayment of long-term debt

Proceeds from subordinated debt issuance

Payment of subordinated debt issuance costs

Proceeds from long-term debt

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TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018

ENDED DECEMBER 31, 2021, 2020 AND 2019

OF SIGNIFICANT ACCOUNTING POLICIES

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Corporation (“FDIC”) coverage limits.

Subsidiaries of the Bank .

Subsidiaries of the Ban k .

Elm Street Securities Corporation, WFD Securities, Inc.

14 unchanged sentences

Actual results could differ from those estimates.

Estimates that are

particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses,

accounting for non-performing loans and the realizability of deferred tax assets.

An estimate that is

particularly susceptible to significant change in the near-term relates to the determination of the allowance for loan losses.

Reclassifications .

8 unchanged sentences

and Mortgage-Backed Securities .

Debt securities, including mortgage-backed securities, which have been identified as assets

for which there is not a positive intent to hold to maturity are classified as available-for-sale and are carried at fair value

with unrealized gains and losses, net of income taxes, reported as a separate component of comprehensive income (loss).

equity securities are measured at fair value with changes in fair value reported on the Company’s consolidated statements

of net income as a component of non-interest income, regardless of whether such gains and losses are realized.

We do not acquire

securities and mortgage-backed securities for purposes of engaging in trading activities.

Debt securities, including mortgage-backed securities, which management has the positive intent

and ability to hold until maturity are classified as held to maturity and are carried at amortized cost.

Debt securities, including

mortgage-backed securities, which have been identified as assets for which there is not a positive intent to hold to maturity

are classified as available-for-sale and are carried at fair value with unrealized gains and losses, net of income taxes, reported

as a separate component of comprehensive income (loss).

Marketable equity securities are measured at fair value with changes in

fair value reported on the Company’s consolidated statements of net income as a component of non-interest income, regardless

of whether such gains and losses are realized.

We do not acquire securities and mortgage-backed securities for purposes of engaging

in trading activities.

gains and losses on sales of securities and mortgage-backed securities are computed using the specific identification method and

2 unchanged sentences

using the level yield method to the maturity date.

Non-marketable

Equity Securities .

Investments in equity securities without readily determinable fair values are measured at cost, less any

impairment, with re-measurement to fair value when there are observable price changes.

Impairment is evaluated on such securities

based on a qualitative assessment that considers various potential impairment indicators.

Upon determining that an impairment

exists, a loss is recognized for the amount by which the carrying value exceeds the fair value of the investment.

Derivatives .

8 unchanged sentences

Impairment of Securities .

On a quarterly basis, we review securities available-for-sale with a decline in fair value below

On a quarterly basis, we review available-for-sale securities with a decline in fair value below

the amortized cost of the investment to determine whether the decline in fair value is temporary or other-than-temporary (“OTTI”).

In estimating OTTI losses for securities available-for-sale, impairment is required to be recognized if (1) we intend to sell

In estimating OTTI losses for available-for-sale securities, impairment is required to be recognized if (1) we intend to sell

the security;

74 unchanged sentences

This historical loss factor is adjusted for the following qualitative factors:

trends in delinquencies and non-performing loans;

trends in delinquencies and nonperforming loans;

trends in volume and terms of loans;

14 unchanged sentences

for loan losses.

Subsequent to acquisition, there have been no indications that there has been any subsequent deterioration to

the acquired portfolio.

Due to the ongoing impacts and extended nature of the pandemic, during the year ended December 31, 2020,

the Company determined that it was prudent to provide an allowance for loan losses related to the acquired portfolio.

the COVID-19 qualitative factor category and the allowance for the acquired loan portfolio, there were no additional changes in

our policies or methodology pertaining to the general component of the allowance for loan losses during the periods presented

for disclosure.

Due to the ongoing impacts and extended nature of the pandemic, during the year ended December 31, 2020, the

Company determined that it was prudent to provide an allowance for loan losses related to the acquired portfolio.

Excluding the

COVID-19 qualitative factor category and the allowance for the acquired loan portfolio, there were no additional changes in our

policies or methodology pertaining to the general component of the allowance for loan losses during the periods presented for

qualitative factors are determined based on the various risk characteristics of each loan segment.

48 unchanged sentences

Accordingly, we do not separately identify individual consumer and residential real estate loans for impairment disclosures, unless

such loans are non-performing or subject to a troubled debt restructuring agreement.

such loans are nonperforming or subject to a troubled debt restructuring agreement.

loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect the

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The estimated useful lives of the assets are as follows:

of estimated useful lives of assets

The estimated useful lives of the assets are as follows:

and Equipment

103 unchanged sentences

and projected taxable income.

We do not have any uncertain tax positions at December 31, 2020 which require accrual or disclosure.

We do not have any uncertain tax positions at December 31, 2021 that require accrual or disclosure.

We record interest and penalties as part of income tax expense.

15 unchanged sentences

per common share have been computed based on the following:

of earrings per common share

Years Ended December 31,

4 unchanged sentences

Average unvested equity incentive plan shares

Average number of common shares outstanding used

to calculate basic earnings per common share

Average number of common shares outstanding used to calculate basic earnings per common

Effect of dilutive equity incentive plan

Effect of dilutive stock options

Average number of common

shares outstanding used to calculate diluted earnings per common share

Average number of common shares

outstanding used to calculate diluted earnings per common share

Basic earnings per share

2 unchanged sentences

outstanding but not included because the impact of these shares would be anti-dilutive

to the earnings per share calculation for the periods presented.

to the earnings per share calculation for the period presented.

Comprehensive

5 unchanged sentences

components of accumulated other comprehensive loss, included in shareholders’ equity, are as follows:

of accumulated other comprehensive loss included in shareholders equity

December 31, 2021

1 unchanged sentence

(In thousands)

Net unrealized gains (losses) on securities available-for-sale

Net unrealized (losses) gains on available-for-sale securities

Net-of-tax amount

Fair value of derivatives used for cash flow hedges

Termination fee on cancelled cash flow hedges

Total derivatives

Losses on terminated cash flow hedges

Net-of-tax amount

2 unchanged sentences

Accumulated other comprehensive loss

With regard to the defined benefit plan, an actuarial

loss of $ 934,000 is expected to be recognized as a component of net periodic pension cost during the year ending December 31,

Recent Accounting Pronouncements .

Accounting Pronouncements.

June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

13 unchanged sentences

to significantly change the approach to calculating our allowance for loan losses.

August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework – Changes to

the Disclosure Requirements for Fair Value Measurement .

This ASU removes and modifies the previously required disclosures

relating to fair value measurements.

Specifically, the ASU removes the required disclosure of amounts and reasons for transfers

between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, the valuation process

for Level 3 fair value measurements and the changes in unrealized gains and losses for the period included in earnings for recurring

Level 3 fair value measurements held at the end of a reporting period.

It also modifies the required roll forward of Level 3 fair

value measurements to a disclosure of any transfers into and out of Level 3, increases disclosure for investments in entities

that calculate net asset value, and clarifies the measurement of uncertainty disclosure.

The ASU became effective for the Company

on January 1, 2020, and as this standard relates to disclosures, its adoption did not have a material impact on our consolidated

financial statements.

amortized cost and fair values of available-for-sale investment securities at December 31, 2020 and 2019 are summarized as follows:

Available-for-sale

and held-to-maturity investment securities at December 31, 2021 and 2020 are summarized as follows:

December 31, 2021

Amortized Cost

(In thousands)

10 unchanged sentences

Total available-for-sale

Held-to-maturity securities:

Debt securities:

Treasury securities

Total debt securities

Mortgage-backed securities:

Government-sponsored mortgage-backed securities

Total mortgage-backed securities

Total held-to-maturity

December 31, 2020

11 unchanged sentences

Total available-for-sale

December 31, 2020, mortgage-backed securities with a fair value of $ 74.3 million were pledged to secure public deposits and for

other purposes as required or permitted by law.

The securities collateralizing public deposits are subject to fluctuations in

We monitor the fair value of the collateral on a periodic basis, and would pledge additional collateral if necessary

based on changes in fair value of collateral or the balances of such deposits.

amortized cost and fair value of available-for-sale debt securities at December 31, 2020, by final maturity, are shown below.

Actual maturities may differ from contractual maturities because certain issuers have the right to call or prepay obligations.

Also, because mortgage-backed securities require periodic principal pay downs, they are not included in the maturity categories

in the following summary.

December 31, 2020

December 31, 2021, government-sponsored enterprise obligations with a fair value of $ 9.5 million and mortgage-backed securities

with a fair value of $ 53.7 million were pledged to secure public deposits and for other purposes as required or permitted by law.

The securities collateralizing public deposits are subject to fluctuations in fair value.

We monitor the fair value of the collateral

on a periodic basis, and pledge additional collateral if necessary based on changes in fair value of collateral or the balances

of such deposits.

amortized cost and fair value of available-for-sale and held-to-maturity securities at December 31, 2021, by final maturity, are

Actual maturities may differ from contractual maturities because certain issuers have the right to call or prepay

Available-for-Sale

Held-to-Maturity

Amortized Cost

(In thousands)

Available-for-sale securities:

Debt securities:

4 unchanged sentences

Mortgage-backed securities:

Total available-for-sale securities

realized gains and losses on sales of securities available-for-sale for the years ended December 31, 2020, 2019 and 2018 are as

Due after five years through ten years

Due after ten years

mortgage-backed securities

Total securities

realized gains and losses on sales of available-for-sale securities for the years ended December 31, 2021, 2020 and 2019 are as

Years Ended December 31,

2 unchanged sentences

Gross losses realized

Net gain (loss) realized

from the sale and redemption of securities available-for-sale totaled $ 96.3 million, $ 72.2 million and $ 12.5 million for the years

Net (loss) gain realized

from the sale and redemption of available-for-sale securities totaled $ 9.6 million, $ 96.3 million and $ 72.2 million for the years

ended December 31, 2021, 2020 and 2019, respectively.

1 unchanged sentence

and length of time that individual securities have been in a continuous loss position are as follows :

Than Twelve Months

Twelve Months

from Amortized Cost Basis (%)

from Amortized

Cost Basis (%)

December 31, 2021

Less Than Twelve Months

Over Twelve Months

Number of Securities

Gross Unrealized Loss

Depreciation from Amortized Cost Basis (%)

Number of Securities

Gross Unrealized Loss

Depreciation from Amortized Cost Basis (%)

(Dollars in thousands)

Government-sponsored mortgage-backed

Available-for-sale:

Government-sponsored mortgage-backed securities

government guaranteed mortgage-backed securities

Government-sponsored enterprise

Than Twelve Months

Twelve Months

from Amortized Cost Basis (%)

from Amortized

Cost Basis (%)

Government-sponsored enterprise obligations

Total available-for-sale

Held-to-maturity:

Treasury securities

Government-sponsored mortgage-backed securities

Total held-to-maturity

December 31, 2020

Less Than Twelve Months

Over Twelve Months

(Dollars in thousands)

Government-sponsored mortgage-backed

Available-for-sale:

Government-sponsored mortgage-backed securities

government guaranteed mortgage-backed securities

Corporate bonds

Government-sponsored enterprise

Government-sponsored enterprise obligations

the years ended December 31, 2021 and 2020, the Company did not record any other-than-temporary impairment (“OTTI”)

16 unchanged sentences

and duration of the investments' unrealized loss position.

December 31, 2020, the Company's corporate and municipal bond portfolios did not contain any securities below investment grade,

as reported by major credit rating agencies.

At December 31, 2021, the Company's corporate and municipal bond portfolios

did not contain any securities below investment grade, as reported by major credit rating agencies.

classifications of loans at the periods indicated were as follows:

2 unchanged sentences

Residential real estate:

Residential 1-4 family

Residential one-to-four family

Total residential real estate

Commercial and industrial:

1 unchanged sentence

Commercial and industrial

Total commercial and industrial

Total gross loans

1 unchanged sentence

Unearned premiums and deferred loan fees and costs, net

Total loans, net

Allowance for loan losses

Modifications/Troubled Debt Restructurings .

banking regulatory agencies, through an Interagency Statement dated April 7, 2020, have encouraged financial institutions to work

“prudently” with borrowers who request loan modifications or deferrals as a result of the economic impacts of COVID-19.

Pursuant to Section 4013 of the CARES Act, loans less than 30 days past due as of December 31, 2019 will be considered current

for COVID-19 modifications.

banking regulatory agencies, through an Interagency Statement dated April 7, 2020, encouraged financial institutions to work “prudently”

with borrowers who request loan modifications or deferrals as a result of the economic impacts of COVID-19.

Pursuant to Section

4013 of the CARES Act, loans less than 30 days past due as of December 31, 2019 will be considered current for COVID-19 modifications.

Financial institutions can then suspend the requirements under U.S.

GAAP for loan modifications related

to COVID-19 that would otherwise be categorized as a TDR, and suspend any determination of a loan modified as a result of COVID-19

as being a TDR, including the requirement to determine impairment for accounting under U.S.

The Company has adopted this

policy election to address COVID-19 loan modification requests that have been received from the earlier of either January 1, 2022 or the 60 th day after the end of the COVID-19 national emergency.

a result of the COVID-19 pandemic, the Company granted deferred loan payments for impacted commercial, residential and consumer

customers who experienced financial hardship due to COVID-19.

The loan payment deferrals can be up to 90 days, depending upon

the financial needs of each customer.

Further deferrals will be re-evaluated on a customer-by-customer basis upon the expiration

of the existing deferral period.

As of June 30, 2020, the deferred loan payment modifications totaled $ 261 .0 million ( 525 loans),

for which principal and interest payments were deferred, and represented 15 % of the total loan portfolio, excluding PPP loans.

As of December 31, 2020, deferred loan payment modifications declined to $ 76.9 million ( 47 loans), or 4.4 % of total loans, excluding

PPP loans, in outstanding loans that continue to be modified under the CARES Act.

GAAP for loan modifications related to COVID-19 that would

otherwise be categorized as TDRs, and suspend any determination of a loan modified as a result of COVID-19 as being a TDR, including

the requirement to determine impairment for accounting under U.S.

The Company adopted this policy election to address COVID-19

loan modification requests that have been received from the earlier of either January 1, 2022 or the 60 th day after

the end of the COVID-19 national emergency.

Company granted deferred loan payments for impacted commercial, residential and consumer customers who experienced financial hardship

due to COVID-19.

The loan payment deferrals could be up to 90 days, depending upon the financial needs of each customer.

deferrals will be re-evaluated on a customer-by-customer basis upon the expiration of the existing deferral period.

As of December

31, 2021, modifications granted under the CARES Act declined to nine loans in the amount of $ 42.5 million, or 2.3 % of total loans,

excluding PPP loans.

As of December 31, 2021, of the $ 42.5 million in remaining modifications granted under the CARES Act, eight

loans in the amount of $ 33.5 million, or 78.8 % of the remaining modifications, were granted to the hotel industry, and one loan

in the amount of $ 9 .0 million was granted to an assisted living facility.

Of the $ 42.5 million in remaining outstanding modifications,

loans in the aggregate amount of $ 33.5 million, or 78.8 %, have resumed interest only payments.

table below breaks out the remaining modifications granted under the CARES Act at December 31, 2021:

December 31, 2020

CARES Act Modifications

Loan Segment (1)(2)

December 31, 2020

($ in millions)

Commercial real estate

Commercial and industrial

Residential real estate

table below breaks out the status of the remaining modifications granted under the CARES Act as of December 31, 2020:

Under 1 st Modification

Granted Subsequent Modification

Remaining CARES Act Modifications

Segment (1)(2)

Loan Segment (1)(2)

($ in millions)

2 unchanged sentences

Residential real estate

PPP loans and deferred fees

PPP loans of $ 25.3 million and the related deferred fees.

(2) Residential

includes home equity loans and lines of credit.

following table provides some insight into the composition of the Bank's loan portfolio and remaining loan modifications, excluding

PPP loans, as of December 31, 2020:

Commercial Real Estate

Bank Risk-Based Capital

Retail/Shopping

Residential non-owner

Adult care/Assisted living

College/school

Gas station/convenience store

Total commercial real estate

Commercial and Industrial Loans

Bank Risk-Based Capital

Manufacturing

Wholesale trade

Specialty trade

Heavy and civil engineering construction

Educational services

Transportation and warehouse

Healthcare and social assistance

All other C&I (3)

Total commercial and industrial loans

Residential and Consumer Loans

Bank Risk-Based Capital

Residential real estate

Total residential and consumer loans

Total Portfolio

Bank Risk-Based Capital

Commercial real estate

Commercial and industrial

Residential real estate

PPP loans of $ 167.3 million as of December 31, 2020.

balances as of December 31, 2020 (Commercial real estate loans $ 64.0 million;

and industrial loans $ 9.3 million;

and Residential loans $ 3.6 million).

consists of multiple industries.

the Bank's loan portfolio contains impacted sectors and the commercial real estate and residential real estate sectors represent

more than 100% of the Bank's total risk-based capital, the concentration limits remain acceptable.

The Company monitors lending

exposure by industry classification to determine potential risk associated with industry concentrations, if any, that could lead

to additional credit loss exposure.

As stated above, as a result of the COVID-19 pandemic, the Company identified sectors that

have been materially impacted including, but not limited to:

hospitality, transportation, retail, and restaurants and food service.

These sectors potentially carry a higher level of credit risk, as many of these borrowers have incurred a significant negative

impact to their businesses resulting from the governmental stay-at-home orders as well as travel limitations.

remaining modification balance includes $ 32.9 million, which resumed regular payments

in January of 2022.

PPP loans of $25.3 million and the related deferred fees.

(2) Residential

includes home equity loans and lines of credit.

remaining modification balance includes $32.9 million, which resumed regular payments

in January of 2022.

Serviced for Others.

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$ 38.1 million, respectively.

Net service fee income of $ 44,000 , $ 67,000 and $ 89,000 was recorded for the years ended December

Servicing fee income of $ 137,000 , $ 110,000 and $ 133,000 was recorded for the years ended December

31, 2021, 2020 and 2019, respectively, and is included in service charges and fees on the consolidated statements of net income.

3 unchanged sentences

Balance at the beginning of year:

Capitalized mortgage servicing rights

Write-down of mortgage servicing asset to fair value

3 unchanged sentences

analysis of changes in the allowance for loan losses by segment for the years ended December 31, 2021, 2020 and 2019 is as follows:

and Industrial

(In thousands)

Balance at December 31, 2018

Provision (credit)

Balance at December 31, 2019

Balance at December 31, 2020

Provision (credit)

Balance at December 31, 2021

following table presents information pertaining to the allowance for loan losses by segment, excluding PPP loans, for the dates

and Industrial

following table presents information pertaining to the allowance for loan losses by segment, excluding PPP loans, for the

dates indicated:

(In thousands)

6 unchanged sentences

Impaired loans acquired with deteriorated credit quality

and Industrial

(In thousands)

December 31, 2020

5 unchanged sentences

Impaired loans acquired with deteriorated credit quality

Due and Non-accrual loans.

Due and Nonaccrual loans.

following tables present an age analysis of past due loans, excluding PPP loans, as of the dates indicated:

Balance at December 31, 2021

30 – 59 Days Past Due

60 – 89 Days Past Due

90 Days or More Past Due

Total Past Due Loans

Total Current Loans

Non-Accrual Loans

(In thousands)

1 unchanged sentence

Residential real estate:

Residential one-to-four family

Commercial and industrial

Balance at December 31, 2020

30 – 59 Days Past Due

60 – 89 Days Past Due

90 Days or More Past Due

Total Past Due Loans

Total Current Loans

Non-Accrual Loans

(In thousands)

1 unchanged sentence

Residential real estate:

Residential one-to-four family

Commercial and industrial

December 31, 2020 and December 31, 2019, all loans past due 90 days or more were carried as non-accrual.

The ratio of non-accrual

December 31, 2021 and December 31, 2020, all loans past due 90 days or more were carried as nonaccrual.

The ratio of nonaccrual

loans to total loans, excluding PPP loans, was 0.27 % and 0.45 % at December 31, 2021 and December 31, 2020, respectively.

2 unchanged sentences

December 31, 2021

Recorded Investment

Unpaid Principal Balance

Related Allowance

Average Recorded Investment

Interest Income Recognized

Impaired Loans (1)

2 unchanged sentences

Residential real estate:

Residential one-to-four family

Commercial and industrial

2 unchanged sentences

December 31, 2020

Recorded Investment

Unpaid Principal Balance

Related Allowance

Average Recorded Investment

Interest Income Recognized

Impaired Loans:

2 unchanged sentences

Residential real estate:

Residential one-to-four family

Commercial and industrial

Total impaired loans

loans acquired with deteriorated credit quality and performing troubled debt restructurings.

majority of impaired loans are included within the non-accrual balances;

however, not every loan on non-accrual status has been

(1) Includes loans

acquired with deteriorated credit quality and performing troubled debt restructurings.

majority of impaired loans are included within the nonaccrual balances;

however, not every loan on nonaccrual status has been

designated as impaired.

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is amended in a TDR.

payments received on impaired loans in non-accrual status are applied to principal.

payments received on impaired loans in nonaccrual status are applied to principal.

There was no interest income recognized on

non-accrual impaired loans during the years ended December 31, 2020 and December 31, 2019.

nonaccrual impaired loans during the years ended December 31, 2021 and December 31, 2020.

The Company's obligation to fulfill

19 unchanged sentences

is recognized through a specific allowance or a charge-off to the allowance.

Non-performing TDRs are included in non-performing

modifications classified as TDRs during the twelve months ended December 31, 2020 and 2019 are included in the table below.

Twelve Months Ended

Nonperforming TDRs are included in nonperforming

were no charge-offs on TDRs during the years ended December 31, 2021 and 2020 .

Loan modifications classified as TDRs during the

twelve months ended December 31, 2020 are included in the table below.

Twelve Months Ended

December 31, 2020

December 31, 2019

Number of Contracts

Pre-Modification

Post-Modification

Number of Contracts

Pre-Modification

Post-Modification

Troubled Debt Restructurings

2 unchanged sentences

the years ended December 31, 2021 and 2020, no TDRs defaulted (defined as 30 days or more past due) within 12 months of restructuring.

There were no charge-offs on TDRs during the year ended December 31, 2020.

There were $ 715,000 in charge-offs on TDRs during the

year ended December 31, 2019.

Acquired with Deteriorated Credit Quality.

following is a summary of loans acquired with evidence of credit deterioration from Chicopee Savings Bank (“Chicopee”)

as of December 31, 2020.

following is a summary of loans acquired with evidence of credit deterioration from Chicopee as of December 31, 2021.

Cash Expected

To Be Collected

Non- Accretable

Accretable Yield

Loans Receivable

(In thousands)

4 unchanged sentences

residential real estate, home equity and consumer loans are grouped with “Pass” rated loans.

Non-performing residential

Nonperforming residential

real estate, home equity and consumer loans are monitored individually for impairment and risk rated as “Substandard.”

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following table presents our loans by risk rating for the periods indicated:

Commercial Real Estate

Residential 1-4 family

Commercial and Industrial

and Industrial

(In thousands)

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Substandard (Rated 6)

Commercial Real Estate

Residential 1-4 family

Commercial and Industrial

and Industrial

December 31, 2020

5 unchanged sentences

and equipment are summarized as follows:

of premises and equipment

(In thousands)

3 unchanged sentences

Premises and equipment, net

and amortization expense amounted to $ 2.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

and amortization expense for the years ended December 31, 2021, 2020 and 2019 amounted to $ 2.3 million, $ 2.1 million and $ 2.1

million, respectively.

AND OTHER INTANGIBLES

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At December 31, 2021, future amortization of the core deposit intangible totaled $ 375,000

for each of the next five years and $ 1.1 million thereafter.

for each of the next five years and $ 688,000 thereafter.

accounts, by type, are summarized as follows for the periods indicated:

of deposits accounts by type

At December 31,

3 unchanged sentences

Demand deposits

Regular accounts

Regular savings accounts

Money market accounts

1 unchanged sentence

Total deposits

deposits, which are included within time deposits, totaled $ 55.3 million and $ 21.5 million at December 31, 2020 and 2019, respectively.

deposits, which are included within time deposits, totaled $ 55.3 million at December 31, 2020.

There were no brokered deposits

at December 31, 2021.

deposits of $250,000 or more totaled $ 65.9 million at December 31, 2021.

Interest expense on time deposits of $250,000 or more

totaled $ 2.8 million and $ 3.5 million for the years ended December 31, 2020 and 2019, respectively.

totaled $ 412,000 and $ 2.8 million for the years ended December 31, 2021 and 2020, respectively.

scheduled maturities of time deposits for the periods indicated are as follows:

of maturities of time deposits

Years Ended December 31,

At December 31,

(In thousands)

1 unchanged sentence

expense on deposits for the years ended December 31, 2021, 2020 and 2019 is summarized as follows:

of interest expense on deposits

Years Ended December 31,

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There were no advances outstanding under this

line at December 31, 2020 and 2019, respectively.

line at December 31, 2021 and 2020.

Company has an available line of credit of $ 6.6 million with the FRB Discount Window at an interest rate determined and reset

2 unchanged sentences

portfolio not otherwise pledged.

As of December 31, 2020 and 2019, there were no advances outstanding under this line of credit.

As of December 31, 2021 and 2020, there were no advances outstanding under this line.

Company also has pre-established, non-collateralized overnight borrowing arrangements with large national and regional correspondent

4 unchanged sentences

At December 31, 2021 and 2020, we had no advances outstanding under these lines.

The following advances are collateralized by a blanket lien on our residential real estate loans and certain eligible

commercial real estate loans.

LONG-TERM DEBT

FHLB Advances.

The following advances

are collateralized by a blanket lien on our residential real estate loans and certain eligible commercial real estate loans.

Weighted Average Rate

2 unchanged sentences

Total long-term advances

paid for interest on long-term debt totaled $ 3.6 million, $ 4.4 million, and $ 4.2 million for the years ended December 31, 2020,

2019, and 2018, respectively.

PLANS AND EMPLOYEE STOCK OWNERSHIP PLAN

A summary of the status of our stock options at December 31, 2020 is presented below:

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term (in years)

Aggregate Intrinsic Value (in thousands)

Cash paid for interest on long-term FHLB

advances totaled $ 513,000 , $ 3.6 million, and $ 4.4 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Subordinated Debt.

On April 20, 2021, the Company completed

an offering of $ 20 million in aggregate principal amount of its 4.875 % fixed-to-floating rate subordinated notes (the “Notes”)

to certain qualified institutional buyers in a private placement transaction.

Unless earlier redeemed, the Notes mature

on May 1, 2031 .

The Notes will bear interest from the initial issue date to, but excluding, May 1, 2026, or the earlier redemption

date, at a fixed rate of 4.875 % per annum, payable quarterly in arrears on May 1, August 1, November 1 and February 1 of each year,

beginning August 1, 2021, and from and including May 1, 2026, but excluding the maturity date or earlier redemption date, equal

to the benchmark rate, which is the 90-day average secured overnight financing rate , plus 412 basis points, determined on the determination

date of the applicable interest period, payable quarterly in arrears on May 1, August 1, November 1 and February 1 of each year.

The Company may also redeem the Notes, in whole or in part, on or after May 1, 2026 , and at any time upon the occurrence of certain

events, subject in each case to the approval of the Board of Governors of the Federal Reserve System (the “Federal Reserve”).

The Notes were designed to qualify as Tier 2 capital under the Federal Reserve’s capital adequacy regulations.

The Notes are presented net of issuance

costs of $ 367,000 as of December 31, 2021, which are being amortized into interest expense over the life of the Notes.

of issuance costs into interest expense was $ 27,000 for the year ended December 31, 2021.

Cash paid for interest on subordinated

debt totaled $ 545,000 for the year ended December 31, 2021.

STOCK PLANS AND EMPLOYEE STOCK OWNERSHIP PLAN

Stock Options.

A summary of the

status of our stock options at December 31, 2021 is presented below:

Exercise Price

Remaining Contractual

Outstanding at December 31, 2020

1 unchanged sentence

Exercisable at December 31, 2021

received for options exercised during the years ended December 31, 2020, 2019 and 2018 was $ 43,000 , $ 106,000 and $ 114,000 , respectively.

Stock Awards.

May 2014, the Company’s shareholders approved the 2014 Omnibus Incentive Plan, a stock-based compensation plan (the “RSA

Under the RSA Plan, up to 516,000 shares of the Company’s common stock were reserved for grants of stock awards,

including stock options and restricted stock, which may be granted to any officer, key employee or non-employee director of WNEB.

Any shares that are not issued because vesting requirements are not met, will be available for future issuance under the RSA Plan.

January 2015, there were 48,560 shares granted under the RSA Plan.

These shares vest ratably over five years .

The fair market

value of shares awarded are based on the market price at the grant date and recorded as unearned compensation.

The shares are

amortized over the applicable vesting period, with the final tranche of shares vesting in January of 2020.

an annual basis, the Compensation Committee (the “Committee”) approves long-term incentive awards out of the RSA Plan,

whereby shares will be granted to eligible participants of the Company that are nominated by the Chief Executive Officer and approved

by the Committee, with vesting over a three-year term for employees and a one-year term for directors.

Annual employee grants

provide for a periodic award that is both performance and time-based and is designed to recognize the executive’s responsibilities,

reward performance and leadership and as a retention tool.

The objective of the award is to align compensation for the named executive

officers and directors over a multi-year period directly with the interests of our shareholders by motivating and rewarding creation

and preservation of long-term financial strength, shareholder value and relative shareholder return.

May 2017, there were 89,042 shares granted.

Of the 89,042 shares, 55,159 shares are time-based, with 21,276 vesting in one year

and 33,883 vesting ratably over a three-year period.

The remaining 33,883 shares granted were performance-based and are subject

to the achievement of the 2017 performance metric.

Vesting is realized after a three-year period.

The primary performance metric

for 2017 grants was return on equity.

Performance-based shares will be earned based upon how the Company performs relative to

threshold, target and maximum absolute goals (i.e.

Company-specific, not relative to a peer index) on an annual performance period,

but will be distributed at the end of the three-year period.

Eligible participants will be able to earn between 50 % (“threshold”

performance), 100 % (“target” performance) and 150 % (“maximum” performance).

a result of the Tax Cuts and Jobs Act of 2017, the return on equity performance metrics were adjusted to incorporate the

impact and benefits of the corporate tax rate reductions thereunder.

The original and adjusted threshold, target and maximum

metrics for 2019 under the 2017 grants are as follows:

Return on Equity

December 31, 2019

of December 31, 2019, the three-year performance period for the 2017 grants ended.

Performance-based shares were earned based

on the Company achieving the annual 2017 performance metrics adjusted threshold, target or maximum metrics at the end of each

year of the three-year performance period.

Of the original 33,883 performance-based shares granted in 2017, 15,898 performance-based

shares vested and were issued to eligible recipients, while 16,803 shares were forfeited in February of 2020.

Shares forfeited

become available for reissuance under future grants.

January 2018, there were 83,812 shares granted.

Of the 83,812 shares, 50,852 shares were time-based, with 17,908 vesting in one

year and 32,944 vesting ratably over a three-year period.

The remaining 32,960 shares granted are performance-based and are subject

to the achievement of the 2018 performance metric.

Cash received for options exercised during

the years ended December 31, 2021, 2020 and 2019 was $ 193,000 , $ 43,000 and $ 106,000 , respectively.

Restricted Stock Awards.

In May 2014, the Company’s shareholders

approved the 2014 Omnibus Incentive Plan, a stock-based compensation plan (the “2014 RSA Plan”).

Under the 2014 RSA

Plan, up to 516,000 shares of the Company’s common stock were reserved for grants of stock awards, including stock options

and restricted stock, which may be granted to any officer, key employee or non-employee director of WNEB.

Any shares that are not

issued because vesting requirements are not met were available for future issuance under the 2014 RSA Plan.

On an annual basis, the Compensation Committee

(the “Committee”) approves long-term incentive awards out of the 2014 RSA Plan, whereby shares will be granted to eligible

participants of the Company that are nominated by the Chief Executive Officer and approved by the Committee, with vesting over

a three -year term for employees and a one -year term for directors.

Annual employee grants provide for a periodic award that is

both performance and time-based and is designed to recognize the executive’s responsibilities, reward performance and leadership

and as a retention tool.

The objective of the award is to align compensation for the named executive officers and directors over

a multi-year period directly with the interests of our shareholders by motivating and rewarding creation and preservation of long-term

financial strength, shareholder value and relative shareholder return.

In February 2019, 108,718 shares were granted.

Of the 108,718 shares, 64,496 shares were time-based, with 20,262 vesting in one year and 44,234 vesting ratably over a three -year

The remaining 44,222 shares granted are performance-based and are subject to the achievement of the 2019 long-term incentive

performance metric.

The primary performance metric for 2019 grants was return on equity.

shares will be earned based upon how the Company performs relative to threshold, target and maximum absolute goals (i.e.

Company-specific,

not relative to a peer index) on an annual performance period, but will be distributed at the end of the three-year period.

threshold, target and stretch metrics under the 2018 grants are as follows:

Performance shares will be earned based

upon how the Company performs relative to threshold, target and maximum absolute goals (i.e.

Company-specific, not relative to

a peer index) on an annual performance period, but will be distributed at the end of the three-year period.

The threshold, target and stretch metrics

under the 2019 grants are as follows:

Return on Equity Metrics

3 unchanged sentences

December 31, 2021

participants will be able to earn between 50 % (“threshold” performance), 100 % (“target” performance) and

150 % (“maximum” performance).

February 2019, there were 108,718 shares granted.

Of the 108,718 shares, 64,496 shares were time-based, with 20,262 vesting in

one year and 44,234 vesting ratably over a three-year period.

The remaining 44,222 shares granted are performance-based and are

subject to the achievement of the 2019 long-term incentive performance metric.

The primary performance metric for 2019 grants

was return on equity.

Performance shares will be earned based upon how the Company performs relative to threshold, target and

maximum absolute goals (i.e.

Company-specific, not relative to a peer index) on an annual performance period, but will be distributed

at the end of the three-year period.

threshold, target and stretch metrics under the 2019 grants are as follows:

Eligible participants will be able to earn

between 50 % (“threshold” performance), 100 % (“target” performance) and 150 % (“maximum” performance).

In February 2020, 120,053 shares were granted.

Of the 120,053 shares, 69,898 shares were time-based, with 19,760 vesting in one year and 50,138 vesting ratably over a three -year

The remaining 50,155 shares granted are performance-based and are subject to the achievement of the 2020 long-term incentive

performance metrics, with 50 % of the performance-shares vesting for each performance metric.

The primary performance metrics for

the 2020 grants were return on equity and earnings per share.

Performance shares will be earned based upon how the Company performs

relative to threshold, target and maximum absolute goals (i.e.

Company-specific, not relative to a peer index) on an annual performance

period for return on equity metrics and for a three-year cumulative performance period for earnings per share, but will be distributed

at the end of the three -year period as earned.

The threshold, target and stretch metrics

under the 2020 grants are as follows:

Return on Equity Metrics

3 unchanged sentences

December 31, 2022

participants will be able to earn between 50 % (“threshold” performance), 100 % (“target” performance) and

150 % (“maximum” performance).

February 2020, there were 120,053 shares granted.

Of the 120,053 shares, 69,898 shares were time-based, with 19,760 vesting in

one year and 50,138 vesting ratably over a three-year period.

The remaining 50,155 shares granted are performance-based and are

subject to the achievement of the 2020 long-term incentive performance metrics, with 50 % of the performance-shares vesting for

each performance metric.

The primary performance metrics for the 2020 grants were return on equity and earnings per share.

shares will be earned based upon how the Company performs relative to threshold, target and maximum absolute goals (i.e.

Company-specific,

not relative to a peer index) on an annual performance period for return on equity metrics and for a three-year cumulative performance

period for earnings per share, but will be distributed at the end of the three-year period as earned.

The threshold, target and

stretch metrics under the 2020 grants are as follows:

Earnings Per Share Metrics

Performance Period Ending

Three-year Cumulative Diluted Earnings Per Share

Eligible participants will be able to earn

between 50 % (“threshold” performance), 100 % (“target” performance) and 150 % (“maximum” performance).

The fair market value of shares awarded

is based on the market price at the grant date, recorded as unearned compensation and amortized over the applicable vesting period.

Performance-based metrics are monitored on a quarterly basis in order to compare actual results to the performance metric, with

any necessary adjustments being recognized through share-based compensation expense and unearned compensation.

In February 2021, 19,827 shares were granted

to our directors, with a one-year vesting period.

At December 31, 2021, there were no remaining shares available to grant under

the 2014 RSA Plan.

In May 2021, the Company’s shareholders

approved the 2021 Omnibus Incentive Plan, a stock-based compensation plan (the “2021 RSA Plan”).

Under the 2021 RSA

Plan, up to 700,000 shares of the Company’s common stock were reserved for grants of stock awards, including stock options

and restricted stock, which may be granted to any officer, key employee or non-employee director of the Company.

Any shares that

are not issued because vesting requirements are not met will be available for future issuance under the 2021 RSA Plan.

In May 2021, 122,362 shares were granted.

Of the 122,362 shares, 61,181 shares were time-based, vesting ratably over a three -year period.

The remaining 61,181 shares granted

are performance-based and are subject to the achievement of the 2021 long-term incentive performance metrics, with 50 % of the performance-shares

vesting for each performance metric.

The primary performance metrics for the 2021 grants were return on equity and earnings per

Performance shares will be earned based upon how the Company performs relative to threshold, target and maximum absolute

Company-specific, not relative to a peer index) on an annual performance period for return on equity metrics and for

a three -year cumulative performance period for earnings per share, but will be distributed at the end of the three-year period

The threshold, target and stretch metrics

under the 2021 grants are as follows:

Return on Equity Metrics

6 unchanged sentences

Three-year Cumulative Diluted Earnings Per Share

participants will be able to earn between 50 % (“threshold” performance), 100 % (“target” performance) and

150 % (“maximum” performance).

fair market value of shares awarded is based on the market price at the grant date, recorded as unearned compensation and amortized

over the applicable vesting period.

Performance-based metrics are monitored on a quarterly basis in order to compare actual results

to the performance metric, with any necessary adjustments being recognized through share-based compensation expense and unearned

compensation.

December 2020, there were 25,927 shares granted under the RSA Plan, which vested immediately upon grant.

At December 31, 2020,

there were no remaining shares available to grant under the RSA Plan.

summary of the status of restricted stock awards at December 31, 2020 and 2019 is presented below:

At December 31, 2021, there were 577,638 remaining shares available

to grant under the 2021 RSA Plan.

A summary of the status of restricted stock awards at December

31, 2021 and 2020 is presented below:

Weighted Average

9 unchanged sentences

Shares granted

Shares vested

Shares forfeited

Shares vested

Balance at December 31, 2020

recorded total expense for restricted stock awards of $ 834,000 , $ 773,000 and $ 845,000 for the years ended December 31, 2020, 2019

and 2018, respectively.

The aggregate fair value of restricted stock vested during 2020 was $ 844,000 .

Tax (shortfall) benefits

related to equity incentive plan expense were $ ( 23,000 ) , $ 21,000 and $ 24,000 for the years ended December 31, 2020, 2019 and 2018,

We recorded total

expense for restricted stock awards of $ 1.3 million, $ 834,000 and $ 773,000 for the years ended December 31, 2021, 2020 and 2019,

respectively.

Unrecognized compensation cost for stock awards was $ 966,000 at December 31, 2020 with a remaining term of 1.6 years.

Stock Ownership Plan (“ESOP”).

We established an ESOP for the benefit of each employee that has reached the age

of 21 and has completed at least 1,000 hours of service in the previous 12-month period.

In January 2002, as part of the initial

stock conversion, we provided a loan to the ESOP Trust which was used to purchase 8 %, or 1,305,359 shares, of the common stock

sold in the initial public offering.

January 2007, as part of the second-step stock conversion, we provided an additional loan to the ESOP Trust which was used to

purchase 4.0 %, or 736,000 shares, of the 18,400,000 shares of common stock sold in the offering.

The 2002 and 2007 loans bear

an interest rate of 8.0 % and provide for annual payments of interest and principal.

December 31, 2020, the remaining principal balances are payable as follows:

The aggregate fair value of restricted stock vested during 2021 was $ 823,000 .

Tax (shortfall) benefits related to

equity incentive plan expense were $ ( 5,000 ) , $ ( 23,000 ) and $ 21,000 for the years ended December 31, 2021, 2020 and 2019, respectively.

Unrecognized compensation cost for stock awards was $ 1.2 million at December 31, 2021 with a remaining term of 1.7 years.

Employee Stock

Ownership Plan (“ESOP”).

We established an ESOP for the benefit of each employee that has reached the age of 21

and has completed at least 1,000 hours of service in the previous 12-month period.

In January 2002, as part of the initial stock

conversion, we provided a loan to the ESOP Trust which was used to purchase 8 %, or 1,305,359 shares, of the common stock sold in

the initial public offering.

In January 2007, as

part of the second-step stock conversion, we provided an additional loan to the ESOP Trust which was used to purchase 4.0 %, or

736,000 shares, of the 18,400,000 shares of common stock sold in the offering.

The 2002 and 2007 loans bear an interest rate of

8.0 % and provide for annual payments of interest and principal.

At December 31, 2021,

the remaining principal balances are payable as follows:

(In thousands)

have committed to make contributions to the ESOP sufficient to support the debt service of the loans.

The loans are secured by

the shares purchased, which are held in a suspense account for allocation among the participants as the loans are paid.

compensation expense applicable to the ESOP amounted to $ 551,000 , $ 834,000 and $ 960,000 for the years ended December 31, 2020,

2019 and 2018, respectively.

held by the ESOP include the following at December 31, 2020 and 2019:

We have committed to make contributions

to the ESOP sufficient to support the debt service of the loans.

The loans are secured by the shares purchased, which are held

in a suspense account for allocation among the participants as the loans are paid.

Total compensation expense applicable to the

ESOP amounted to $ 682,000 , $ 551,000 and $ 834,000 for the years ended December 31, 2021, 2020 and 2019, respectively.

Shares held by the ESOP include the following

at December 31, 2021 and 2020:

Committed to be allocated

dividends declared and received on allocated shares are allocated to participants and charged to retained earnings.

Cash dividends

declared and received on unallocated shares are held in suspense and are applied to repay the outstanding debt of the ESOP.

fair value of unallocated shares was $ 3.6 million and $ 5.9 million at December 31, 2020 and 2019, respectively.

ESOP shares are

considered outstanding for earnings per share calculations when they are committed to be allocated.

Unallocated ESOP shares are

excluded from earnings per share calculations.

The cost of unearned shares to be allocated to ESOP participants for future services

not yet performed is reflected as a reduction of shareholders’ equity.

PLANS AND EMPLOYEE BENEFITS

We provide a defined benefit pension plan for eligible employees (the “Plan”).

Employees must work a minimum

of 1,000 hours per year to be eligible for the Plan.

Cash dividends declared

and received on allocated shares are allocated to participants and charged to retained earnings.

Cash dividends declared and received

on unallocated shares are held in suspense and are applied to repay the outstanding debt of the ESOP.

The fair value of unallocated

shares was $ 3.9 million and $ 3.6 million at December 31, 2021 and 2020, respectively.

ESOP shares are considered outstanding for

earnings per share calculations when they are committed to be allocated.

Unallocated ESOP shares are excluded from earnings per

share calculations.

The cost of unearned shares to be allocated to ESOP participants for future services not yet performed is reflected

as a reduction of shareholders’ equity.

RETIREMENT PLANS AND EMPLOYEE BENEFITS

Pension Plan .

We provide a defined

benefit pension plan for eligible employees (the “Plan”).

Employees must work a minimum of 1,000 hours per year to

be eligible for the Plan.

Eligible employees become vested in the Plan after five years of service.

The Plan assets are currently invested in various pooled separate investment accounts offered by Principal Life Insurance Company,

a division of Principal Financial Group, who is the Custodian of the Plan (the “Custodian”).

The Plan is administered

by an officer of Westfield Bank (the “Plan Administrator”).

On September 30, 2016, we effected a soft freeze on the

Plan and therefore no new participants will be included in the Plan after such effective date.

following table provides information for the Plan at or for the years ended December 31:

The Plan assets are currently

invested in various pooled separate investment accounts offered by Principal Life Insurance Company, a division of Principal Financial

Group, who is the Custodian of the Plan (the “Custodian”).

The Plan is administered by an officer of Westfield Bank

(the “Plan Administrator”).

On September 30, 2016, we effected a soft freeze on the Plan and therefore no new participants

will be included in the Plan after such effective date.

The following table provides information

for the Plan at or for the years ended December 31 :

Years Ended December 31,

2 unchanged sentences

Benefit obligation at beginning of year

Actuarial loss (gain)

Actuarial (gain) loss

Benefits paid

2 unchanged sentences

Fair value of plan assets at beginning of year

Actual return (loss) on plan assets

Actual return on plan assets

Employer contribution

3 unchanged sentences

Accumulated benefit obligation at end of year

following actuarial assumptions were used in determining the pension benefit obligation :

The following actuarial assumptions were

used in determining the pension benefit obligation:

Discount rate

Rate of compensation increase

pension cost includes the following components for the years ended December 31:

The discount rate used to determine the

pension benefit obligation increased from 2.50 % at December 31, 2020 to 2.85 % at December 31, 2021, resulting in a decrease in

the Plan’s pension benefit obligation for the year ended December 31, 2021.

Net pension cost includes the following

components for the years ended December 31:

(In thousands)

3 unchanged sentences

Net periodic pension cost

following actuarial assumptions were used in determining the net periodic pension cost for the years ended December 31:

The following actuarial assumptions were

used in determining the net periodic pension cost for the years ended December 31:

Discount rate

1 unchanged sentence

Rate of compensation increase

following is a summary of the Plan’s investments for the years ended December 31:

The following is a summary of the Plan’s investments for

the years ended December 31:

(In thousands)

2 unchanged sentences

Small/mid U.S.

Balanced/asset allocation

separate accounts are valued at the Net Asset Value (“NAV”) of units held by the Plan at year end.

The NAV is used

as a practical expedient to estimate fair value.

This practical expedient would not be used if it was determined to be probable

that the funds will sell the underlying investments for an amount different from the reported NAV.

Participant transactions (purchases

and sales) may occur daily.

The preceding method described may produce a fair value calculation that may not be indicative of

net realizable value or reflective of future fair values.

Furthermore, although the Plan administrators believes the valuation

methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine

the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

following table summarizes the investments for which fair value is measured using NAV per share as a practical expedient for the

years ended December 31, 2020 and 2019.

There are no pertinent redemption restrictions for these investments;

the redemption notice

period is applicable only to the Plan.

(if Currently Eligible)

Redemption Notice Period

Pooled separate accounts are valued at

the Net Asset Value (“NAV”) of units held by the Plan at year end.

The NAV is used as a practical expedient to estimate

This practical expedient would not be used if it was determined to be probable that the funds will sell the underlying

investments for an amount different from the reported NAV.

Participant transactions (purchases and sales) may occur daily.

preceding method described may produce a fair value calculation that may not be indicative of net realizable value or reflective

of future fair values.

Furthermore, although the Plan administrators believes the valuation methods are appropriate and consistent

with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial

instruments could result in a different fair value measurement at the reporting date.

The following table summarizes the investments

for which fair value is measured using NAV per share as a practical expedient for the years ended December 31, 2021 and 2020 .

are no pertinent redemption restrictions for these investments;

the redemption notice period is applicable only to the Plan.

Frequency (if

Currently Eligible)

Redemption Notice

(In thousands)

1 unchanged sentence

December 31, 2020

defined benefit plan offers a mixture of fixed income, equity and real assets as the underlying investment structure for its retirement

structure for the pension plan.

The target allocation mix for the pension plan for 2019 was an equity-based investment deployment

of 50 % of total portfolio assets based on advice received from an external advisory firm with confirmation by the Bank’s

Investment Committee.

The remainder of the portfolio is allocated to fixed income at 50 % of total assets.

The investment objective

is to diversify investments across a spectrum of investment types to limit risks from large market swings and to provide anticipated

stabilized investment returns.

Trustees of the Plan select investment managers for the portfolio and a second investment advisory

firm is retained to provide allocation analysis.

The overall investment objective is to diversify equity investments across a

spectrum of types, small cap, large cap and international, along with investment styles such as growth and value.

estimate that the benefits to be paid from the pension plan for years ended December 31 are as follows:

The defined benefit plan offers a mixture

of fixed income, equity and real assets as the underlying investment structure for its retirement structure for the pension plan.

The target allocation mix for the pension plan for 2021 was an equity-based investment deployment of 50 % of total portfolio assets

based on advice received from an external advisory firm with confirmation by the Bank’s Investment Committee.

The remainder

of the portfolio is allocated to fixed income at 50 % of total assets.

The investment objective is to diversify investments across

a spectrum of investment types to limit risks from large market swings and to provide anticipated stabilized investment returns.

Trustees of the Plan select investment managers for the portfolio and a second investment advisory firm is retained to provide

allocation analysis.

The overall investment objective is to diversify equity investments across a spectrum of types, small cap,

large cap and international, along with investment styles such as growth and value.

We estimate that the benefits to be paid from

the pension plan for years ended December 31 are as follows:

Benefit Payments to Participants

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In aggregate for 2027 – 2031

have not yet determined the amount of the contribution we expect to make to the plan during the fiscal year ending December 31,

Defined Contribution Plan.

Company has a 401(k) defined contribution employee benefit plan.

The 401(k) plan allows eligible employees to contribute a percentage

of their earnings to the plan.

A portion of the employee contribution, as determined by the Compensation Committee of the Board

of Directors, is matched by the Company.

In 2020, 2019 and 2018, the Company’s percentage match was 50 % up to the first

6 % contributed by the employee.

Company’s expense for the 401(k) plan match was $ 468,000 , $ 423,000 and $ 398,000 for the years ended December 31, 2020, 2019

and 2018, respectively.

We have not yet determined the amount of

the contribution we expect to make to the plan during the fiscal year ending December 31, 2022.

401(k) Defined Contribution Plan.

The Company has a 401(k) defined contribution

employee benefit plan.

The 401(k) plan allows eligible employees to contribute a percentage of their earnings to the plan.

of the employee contribution, as determined by the Compensation Committee of the Board of Directors, is matched by the Company.

In 2021, 2020 and 2019, the Company’s percentage match was 50 % up to the first 6 % contributed by the employee.

The Company’s expense for the 401(k)

plan match was $ 476,000 , $ 468,000 and $ 423,000 for the years ended December 31, 2021, 2020 and 2019, respectively.

DERIVATIVES AND HEDGING ACTIVITIES

Management Objective of Using Derivatives.

Company is exposed to certain risks arising from both our business operations and economic conditions.

We principally manage our

exposures to a wide variety of business and operational risks through management of our core business activities.

We manage economic

risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of our assets

and liabilities and the use of derivative financial instruments.

Specifically, we entered into derivative financial instruments

to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash

amounts, the value of which are determined by interest rates.

Our derivative financial instruments are used to manage differences

in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally

related to certain variable rate loan assets and variable rate borrowings.

following table presents information about interest rate swaps at December 31, 2020 and December 31, 2019:

Risk Management Objective of Using Derivatives.

The Company is exposed to certain risks

arising from both our business operations and economic conditions.

We principally manage our exposures to a wide variety of business

and operational risks through management of our core business activities.

We manage economic risks, including interest rate, liquidity,

and credit risk, primarily by managing the amount, sources, and duration of our assets and liabilities and the use of derivative

financial instruments.

Specifically, we entered into derivative financial instruments to manage exposures that arise from business

activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined

by interest rates.

Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our

known or expected cash receipts and our known or expected cash payments principally related to certain variable rate loan assets

and variable rate borrowings.

The following table presents information

about interest rate swaps at December 31, 2021 and December 31, 2020:

December 31, 2021

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(In thousands)

Cash flow hedges:

Interest rate swaps on FHLB borrowings

Non-hedging derivatives:

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Loan-level swaps – borrower

December 31, 2020, the Company had $ 71.9 million in derivatives designated as non-hedging instruments and no derivatives designated

as hedging instruments, compared to $ 13 .0 million in derivatives designated as non-hedging instruments and $ 35 .0 million in derivatives

designated as hedging instruments at December 31, 2019.

Flow Hedges of Interest Rate Risk.

Company’s objectives in using interest rate derivatives are to add stability to interest income and expense and to manage

its exposure to interest rate movements.

To accomplish this objective, we entered into interest rate swaps as part of our interest

rate risk management strategy.

These interest rate swaps are designated as cash flow hedges and involve the receipt of variable

rate amounts from a counterparty in exchange for our making fixed payments.

derivatives designated as cash flow hedges, the changes in the fair value of the derivative is initially reported in other comprehensive

income (outside of earnings), net of tax, and subsequently reclassified to earnings when the hedged transaction affects earnings.

We are hedging our exposure to the variability in future cash flows for forecasted transactions over a maximum period of six years

(excluding forecasted payment of variable interest on existing financial instruments).

not designated as hedges are not speculative but rather result from a service the Company provides to certain customers.

executes loan level derivative products such as interest-rate swap agreements with commercial banking customers to aid them in

managing their interest-rate risk by converting floating-rate loan payments to fixed-rate loan payments.

The Company concurrently

enters into offsetting swaps with a third party financial institution, effectively minimizing its net risk exposure resulting

from such transactions.

The third-party financial institution exchanges the customer’s fixed-rate loan payments for floating-rate

loan payments.

As the interest-rate swap agreements associated with this program do not meet hedge accounting requirements, changes

in the fair value are recognized directly in earnings.

Values of Derivative Instruments on the Balance Sheet.

table below presents the fair value of our derivative financial instruments designated as hedging instruments as well as our classification

on the balance sheet as of December 31, 2020 and December 31, 2019.

Forward starting loan-level swaps - dealer

Forward starting loan-level swaps - borrower

At December 31, 2021, the Company had $ 76.8

million in derivatives designated as non-hedging instruments and no derivatives designated as hedging instruments, compared to

$ 71.9 million in derivatives designated as non-hedging instruments and no derivatives designated as hedging instruments at December

Cash Flow Hedges of Interest Rate Risk.

The Company’s objectives in using

interest rate derivatives are to add stability to interest income and expense and to manage its exposure to interest rate movements.

To accomplish this objective, we entered into interest rate swaps as part of our interest rate risk management strategy.

interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in

exchange for our making fixed payments.

For derivatives designated as cash flow

hedges, the changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings),

net of tax, and subsequently reclassified to earnings when the hedged transaction affects earnings.

We are hedging our exposure

to the variability in future cash flows for forecasted transactions over a maximum period of six years (excluding forecasted payment

of variable interest on existing financial instruments).

Non-hedging Derivatives.

Derivatives not designated as hedges are

not speculative but rather result from a service the Company provides to certain customers.

The Company executes loan level derivative

products such as interest-rate swap agreements with commercial banking customers to aid them in managing their interest-rate risk

by converting floating-rate loan payments to fixed-rate loan payments.

The Company concurrently enters into offsetting swaps with

a third party financial institution, effectively minimizing its net risk exposure resulting from such transactions.

The third-party

financial institution exchanges the customer's fixed-rate loan payments for floating-rate loan payments.

As the interest-rate swap

agreements associated with this program do not meet hedge accounting requirements, changes in the fair value are recognized directly

Fair Values of Derivative Instruments

on the Balance Sheet.

The table below presents the fair value

of our derivative financial instruments not designated as hedging instruments as well as our classification on the balance sheet

as of December 31, 2021 and December 31, 2020.

Asset Derivatives

Liability Derivatives

Balance Sheet Location

Balance Sheet

(In thousands)

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Interest rate swap – with customers

Other Liabilities

Interest rate swap – with counterparties

Total derivatives not designated as hedging instruments

December 31, 2019

Asset Derivatives

Liability Derivatives

Balance Sheet Location

Balance Sheet

(In thousands)

Derivatives designated as hedging instruments:

Interest rate swaps – cash flow hedge

Other Liabilities

Total derivatives designated as hedging instruments

Derivatives not designated as hedging instruments:

Interest rate swap – with customers

Interest rate swap – with counterparties

Other Liabilities

Interest rate swap – with counterparties

Total derivatives not designated as hedging instruments

of Derivative Instruments in the Consolidated Statements of Net Income and Changes in Shareholders’ Equity.

table below presents the pre-tax net gains (losses) of our cash flow hedges for the periods indicated:

Effect of Derivative Instruments in

the Consolidated Statements of Net Income and Changes in Shareholders’ Equity.

The table below presents the pre-tax net gains (losses) of our

cash flow hedges for the periods indicated:

Amount of Gain (Loss) Recognized in OCI on Derivative

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Interest rate swaps

reported in accumulated other comprehensive loss related to these derivatives are reclassified to interest expense as interest

payments are made on our designated rate sensitive liabilities.

The table below presents the amount reclassified from accumulated

other comprehensive loss into net income for interest rate swaps and termination fees:

Amounts reported in accumulated other comprehensive

loss related to these derivatives are reclassified to interest expense as interest payments are made on our designated rate sensitive

The table below presents the amount reclassified from accumulated other comprehensive loss into net income for interest

rate swaps and termination fees:

Amount of Gain Reclassified from OCI into Expense (Effective Portion)

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Interest rate swaps

the next 12 months, we estimate that $ 569,000 will be reclassified as an increase in interest expense.

Credit-risk-related

Contingent Features

using derivative financial instruments, we expose ourselves to credit risk.

Credit risk is the risk of failure by the counterparty

to perform under the terms of the derivative contract.

When the fair value of a derivative contract is positive, the counterparty

owes us, which creates credit risk for us.

When the fair value of a derivative is negative, we owe the counterparty and, therefore,

it does not possess credit risk.

The credit risk in derivative instruments is mitigated by entering into transactions with highly-rated

counterparties that we believe to be creditworthy and by limiting the amount of exposure to each counterparty.

As of December 31, 2021, the Company no

longer has any outstanding cash flow hedges.

Credit-risk-related Contingent Features

By using derivative financial instruments,

we expose ourselves to credit risk.

Credit risk is the risk of failure by the counterparty to perform under the terms of the derivative

When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us.

When the fair value of a derivative is negative, we owe the counterparty and, therefore, it does not possess credit risk.

risk in derivative instruments is mitigated by entering into transactions with highly-rated counterparties that we believe to be

creditworthy and by limiting the amount of exposure to each counterparty.

We have agreements with our derivative

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manner, we may be required to fully collateralize our obligations under the derivative instrument.

At December 31, 2020 and December 31, 2019,

we had a net liability position of $ 1.5 million and $ 1.8 million with our counterparties, respectively.

At December 31, 2021, we had a net asset

position of $ 368,000 , and at December 31, 2020, a net liability position $ 1.3 million with our counterparties.

As of December 31,

we had minimum collateral posting thresholds with certain of our derivative counterparties and $ 1.3 million in cash posted as collateral

against our obligations under these agreements.

If we had breached any of these provisions at December 31, 2020, we could have

been required to settle our obligations under the agreements at the termination value.

2021, we had minimum collateral posting thresholds with certain of our derivative counterparties and no collateral against our

obligations under these agreements.

If we had breached any of these provisions at December 31, 2021, we could have been required

to settle our obligations under the agreements at the termination value.

The Company determines if an arrangement

is a lease at inception.

Effective in 2019, operating leases are included within other assets and other liabilities in our consolidated

balance sheets.

Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease

liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities

are recognized at commencement date based on the present value of lease payments over the lease term.

As our leases do not provide

an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining

the present value of lease payments.

Our lease terms may include options to extend or terminate the lease when it is reasonably

certain that we will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease

Operating leases are included within other assets and other liabilities in our consolidated balance sheets.

Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities

represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized

at commencement date based on the present value of lease payments over the lease term.

As our leases do not provide an implicit

rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present

value of lease payments.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that

we will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease

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Our leases have remaining lease terms of less than one year to

eighteen years , some of which include options to extend the leases for additional five-year terms up to fifteen years .

seventeen years , some of which include options to extend the leases for additional five-year terms up to fifteen years .

The components of lease expense were as follows:

Twelve Months Ended December 31,

Year Ended December 31,

(In thousands)

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Supplemental cash flow information related to leases was as

Twelve Months Ended December 31,

Year Ended December 31,

(In thousands)

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Operating lease liabilities

The weighted average remaining lease term for our

operating leases was 10.7

years with a weighted average discount rate of

2.82 % at December 31, 2020.

Maturities of the Company’s operating lease liabilities

were as follows (in thousands):

The weighted average remaining lease term for our operating

leases was 10.2 years with a weighted average discount rate of 2.81 % at December 31, 2021.

Maturities of the Company’s operating

lease liabilities were as follows (in thousands):

Years Ending December 31,

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2021 and December 31, 2020 are also presented in the following table .

For Capital Adequacy Purpose

To Be Well Capitalized Under Prompt Corrective Action Provisions

in thousands)

Total Capital (to Risk

Weighted Assets):

Tier 1 Capital (to Risk

Weighted Assets):

Common Equity Tier 1

Capital (to Risk Weighted Assets):

Tier 1 Leverage Ratio

(to Adjusted Average Assets):

Total Capital (to Risk

Weighted Assets):

Tier 1 Capital (to Risk

Weighted Assets):

Common Equity Tier 1

Capital (to Risk Weighted Assets):

Tier 1 Leverage Ratio

(to Adjusted Average Assets):

Minimum For Capital

Adequacy Purpose

Minimum To Be Well

Capitalized Under Prompt

Corrective Action Provisions

(Dollars in thousands)

December 31, 2021

Total Capital (to Risk Weighted Assets):

Tier 1 Capital (to Risk Weighted Assets):

Common Equity Tier 1 Capital (to Risk Weighted

Tier 1 Leverage Ratio (to Adjusted Average Assets):

December 31, 2020

Total Capital (to Risk Weighted Assets):

Tier 1 Capital (to Risk Weighted Assets):

Common Equity Tier 1 Capital (to Risk Weighted Assets):

Tier 1 Leverage Ratio (to Adjusted Average Assets):

The following is a reconciliation of our GAAP capital to regulatory

2 unchanged sentences

Consolidated GAAP capital

Net unrealized (gains) losses on available-for-sale securities, net of tax

Net unrealized losses (gains) on available-for-sale securities, net of tax

Unrealized loss on defined benefit pension plan, net of tax

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Tier 1 and Common Equity Tier 1 capital

Allowance for loan losses

Allowance for loan losses for regulatory capital

Subordinated debt

Total regulatory capital

On January 29, 2019, the Board of Directors

authorized an additional stock repurchase program (the “2019 Plan”) under which the Company may purchase up to 2,814,200

shares, or 10 %, of its outstanding common stock following the completion of the 2017 Plan, to be affected via a combination of

Rule 10b5-1 plans and discretionary share repurchases.

On October 19, 2020, the Company announced the completion of the 2019 Plan.

On October 27, 2020, the Board of Directors authorized the 2020 stock repurchase program (the “2020 Plan”), pursuant

to which the Company may purchase up to 1.3 million shares, or approximately 5 % of its outstanding common stock.

During the three

months ended December 31, 2020, the Company repurchased 264,630 shares of common stock under the 2020 Plan at an average price

per share of $ 6.58 .

During the twelve months ended December 31, 2020, the Company repurchased a total of 1,391,496 shares under

both of the 2019 and 2020 Plans.

There were 1,035,370 shares remaining under the 2020 Plan at December 31, 2020.

On October 27, 2020, the Company announced

that the Board of Directors authorized a stock repurchase plan (the “2020 Plan”) under which the Company was authorized

to purchase up to 1.3 million shares, or 5 % of its outstanding common stock.

On May 20, 2021, the Company announced the completion

of the 2020 Plan.

On April 27, 2021, the Company announced that the Board of Directors authorized a stock repurchase plan (the

“2021 Plan”) under which the Company is authorized to repurchase up to 2.4 million shares, or 10 % of its outstanding

common stock.

During the twelve months ended December 31, 2021, the Company repurchased 2,758,051 shares under both the 2020 Plan

and 2021 Plan at an average price of $ 8.33 .

At December 31, 2021, there were 677,319 shares available for repurchase under the

We are subject to dividend restrictions

16 unchanged sentences

Current tax provision:

Deferred tax benefit:

The differences between the statutory federal income tax and

the effective tax are summarized below :

Deferred tax provision (benefit):

Total tax provision

The differences between the statutory federal income tax at

a rate of 21% and the effective tax are summarized below:

Years Ended December 31,

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Bank-owned life insurance (BOLI)

Option exercise tax shortfall (benefit)

BOLI death benefit

Option exercise tax (benefit) shortfall

Effective tax

9 unchanged sentences

Employee benefit and share-based compensation plans

Non-accrual interest

Nonaccrual interest

Net unrealized loss on derivative and hedging activity

Net unrealized loss on securities available-for-sale

Net unrealized loss on available-for-sale securities

Purchased mortgage servicing rights

4 unchanged sentences

Purchase accounting adjustments, net

Net unrealized gain on securities available-for-sale

Net unrealized gain on available-for-sale securities

Deferred loan fees

20 unchanged sentences

however, no years prior to 2018 are open.

WITH DIRECTORS AND EXECUTIVE OFFICERS

have had, and expect to have in the future, loans with our directors and executive officers including their affiliates.

in our opinion, do not include more than the normal risk of collectability or other unfavorable features.

Following is a summary

of activity for such loan s:

TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS

We have had, and expect

to have in the future, loans with our directors and executive officers including their affiliates.

Such loans, in our opinion,

do not include more than the normal risk of collectability or other unfavorable features.

Following is a summary of activity for

Years Ended December 31,

3 unchanged sentences

Repayments of principal

Change in related party status

Balance at end of year

AND CONTINGENCIES

the normal course of business, various commitments and contingent liabilities are outstanding, such as standby letters of credit

and commitments to extend credit with off-balance-sheet risk that are not reflected in the consolidated financial statements.

Financial instruments with off-balance-sheet risk involve elements of credit, interest rate, liquidity and market risk.

do not anticipate any significant losses as a result of these transactions.

The following summarizes these financial instruments

and other commitments and contingent liabilities at their contract amounts:

COMMITMENTS AND CONTINGENCIES

Loan Commitments.

In the normal course of business, various

commitments and contingent liabilities are outstanding, such as standby letters of credit and commitments to extend credit with

off-balance-sheet risk that are not reflected in the consolidated financial statements.

Financial instruments with off-balance-sheet

risk involve elements of credit, interest rate, liquidity and market risk.

We do not anticipate any significant losses

as a result of these transactions.

The following summarizes these financial instruments and other commitments and contingent liabilities

at their contract amounts:

(In thousands)

4 unchanged sentences

Standby letters of credit

use the same credit policies in making commitments and conditional obligations as for on balance sheet instruments.

to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.

Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.

Since some commitments

expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

each customer’s creditworthiness on a case-by-case basis.

The amount of collateral obtained, if deemed necessary by us upon

extension of credit, is based on management’s credit evaluation of the counterparty.

Collateral held varies but may include

accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.

letters of credit are written conditional commitments issued by us that guarantee the performance of a customer to a third party.

Those guarantees are primarily issued to support public and private borrowing arrangements.

The credit risk involved in issuing

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

December 31, 2020, outstanding commitments to extend credit totaled $ 460.4 million , with $ 86.5 million in fixed rate commitments

with interest rates ranging from 2.45 % to 18.00 % and $ 373.9 million in variable rate commitments.

At December 31, 2019, outstanding

commitments to extend credit totaled $ 381.7 million , with $ 48.3 million in fixed rate commitments with interest rates ranging

from 2.45 % to 18.00 % and $ 333.4 million in variable rate commitments.

also have risk participation agreements (“RPAs”) with another financial institution.

The RPAs are a guarantee to share

credit risk associated with an interest rate swap on participation loans in the event of counterparty default.

As such, we accept

a portion of the credit risk in order to participate in the loans and we receive a one-time fee.

The interest rate swap is collateralized

(generally by real estate or business assets) by us and the third party, which limits the credit risk associated with the RPAs.

Per the terms of the RPAs, we must pledge collateral equal to our exposure for the interest rate swap.

We monitor overall collateral

as part of our off-balance sheet liability analysis, and at December 31, 2020, believe sufficient collateral is available to cover

potential swap losses.

We use the same credit policies in making

commitments and conditional obligations as for on balance sheet instruments.

Commitments to extend credit are agreements

to lend to a customer as long as there is no violation of any condition established in the contract.

Commitments generally have

fixed expiration dates or other termination clauses and may require payment of a fee.

Since some commitments expire without being

drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

We evaluate each customer’s

creditworthiness on a case-by-case basis.

The amount of collateral obtained, if deemed necessary by us upon extension of credit,

is based on management’s credit evaluation of the counterparty.

Collateral held varies but may include accounts receivable,

inventory, property, plant and equipment, and income-producing commercial properties.

Standby letters of credit are written conditional

commitments issued by us that guarantee the performance of a customer to a third party.

Those guarantees are primarily issued to

support public and private borrowing arrangements.

The credit risk involved in issuing letters of credit is essentially the same

as that involved in extending loan facilities to customers.

At December 31, 2021, outstanding commitments

to extend credit totaled $ 543.2 million, with $ 101.5 million in fixed rate commitments with interest rates ranging from 2.75 % to

18.00 % and $ 441.7 million in variable rate commitments.

At December 31, 2020, outstanding commitments to extend credit totaled

$ 460.4 million, with $ 86.5 million in fixed rate commitments with interest rates ranging from 2.45 % to 18.00 % and $ 373.9 million

in variable rate commitments.

We also have risk participation agreements

(“RPAs”) with another financial institution.

The RPAs are a guarantee to share credit risk associated with an interest

rate swap on participation loans in the event of counterparty default.

As such, we accept a portion of the credit risk in order

to participate in the loans and we receive a one-time fee.

The interest rate swap is collateralized (generally by real estate or

business assets) by us and the third party, which limits the credit risk associated with the RPAs.

Per the terms of the RPAs, we

must pledge collateral equal to our exposure for the interest rate swap.

We monitor overall collateral as part of our off-balance

sheet liability analysis, and at December 31, 2021, believe sufficient collateral is available to cover potential swap losses.

At December 31, 2021, we had no off-balance sheet exposure to RPAs.

the ordinary course of business, we are party to various legal proceedings, none of which, in our opinion, will have a material

effect on our consolidated financial position or results of operations.

Bank is a limited partner in a Small Business Investment Company (“SBIC”) and committed to contribute capital of $ 3 .0 million to the partnership.

At December 31, 2020, the SBIC currently has a book value of $ 2.4 million and is included in other

The unfunded commitment to the partnership was $ 600,000 at December 31, 2020.

and change of control agreements.

have entered into employment and change of control agreements with certain senior officers.

The initial term of the employment

agreements is for three years subject to separate one-year extensions as approved by the Board of Directors at the end of each

applicable fiscal year.

Each employment agreement provides for minimum annual salaries, discretionary cash bonuses and other fringe

benefits as well as severance benefits upon certain terminations of employment that are not for cause.

The change of control agreements

expire one year following a notice of non-extension and only provide for severance benefits upon certain terminations of employment

that are not for cause and that are related to a change of control of the Company or the Bank.

VALUE OF ASSETS AND LIABLITIES

Determination

of Fair Value.

use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.

The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability

in an orderly transaction between market participants at the measurement date.

Fair value is best determined based upon quoted

market prices.

However, in many instances, there are no quoted market prices for our various financial instruments.

In cases where

quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.

Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash

Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

and assumptions for valuing our financial instruments are set forth below.

Estimated fair values are calculated based on the value

without regard to any premium or discount that may result from concentrations of ownership of a financial instrument, possible

tax ramifications or estimated transaction cost.

The securities measured at fair value in Level 1 are based on quoted market prices in an active exchange market.

These securities

include marketable equity securities.

All other securities are measured at fair value in Level 2 and are based on pricing models

that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer

quotes, credit spreads and new issue data.

These securities include government-sponsored enterprise obligations, state and municipal

obligations, residential mortgage-backed securities guaranteed and sponsored by the U.S.

In the ordinary course of business, we

are party to various legal proceedings, none of which, in our opinion, will have a material effect on our consolidated financial

position or results of operations.

Vendor Contract.

The Company entered into a long-term contractual

obligation with a vendor for use of its core provider and ancillary services beginning in 2016.

Total remaining contractual obligations

outstanding with this vendor as of December 31, 2021 were estimated to be $ 14.2 million, with $ 4.5 million expected to be paid

within one year and the remaining $ 9.7 million to be paid within the next five years.

Investment Commitments.

The Bank is a limited partner in a Small

Business Investment Company (“SBIC”) and committed to contribute capital of $ 3 .0 million to the partnership.

31, 2021, the SBIC currently has a book value of $ 2.7 million and is included in other assets.

The unfunded commitment to the partnership

was $ 300,000 at December 31, 2021.

Employment and change of control agreements.

We have entered into employment and change

of control agreements with certain senior officers.

The initial term of the employment agreements is for three years subject to

separate one-year extensions as approved by the Board of Directors at the end of each applicable fiscal year.

Each employment agreement

provides for minimum annual salaries, discretionary cash bonuses and other fringe benefits as well as severance benefits upon certain

terminations of employment that are not for cause.

The change of control agreements expire one year following a notice of non-extension

and only provide for severance benefits upon certain terminations of employment that are not for cause and that are related to

a change of control of the Company or the Bank.

FAIR VALUE OF ASSETS AND LIABLITIES

Determination of Fair Value.

We use fair value measurements to record

fair value adjustments to certain assets and liabilities and to determine fair value disclosures.

The fair value of a financial

instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date.

Fair value is best determined based upon quoted market prices.

However, in many instances,

there are no quoted market prices for our various financial instruments.

In cases where quoted market prices are not available,

fair values are based on estimates using present value or other valuation techniques.

Those techniques are significantly affected

by the assumptions used, including the discount rate and estimates of future cash flows.

Accordingly, the fair value estimates

may not be realized in an immediate settlement of the instrument.

Methods and assumptions

for valuing our financial instruments are set forth below.

Estimated fair values are calculated based on the value without regard

to any premium or discount that may result from concentrations of ownership of a financial instrument, possible tax ramifications

or estimated transaction cost.

The securities measured

at fair value in Level 1 are based on quoted market prices in an active exchange market.

These securities include marketable equity

All other securities are measured at fair value in Level 2 and are based on pricing models that consider standard input

factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and

new issue data.

These securities include government-sponsored enterprise obligations, state and municipal obligations, residential

mortgage-backed securities guaranteed and sponsored by the U.S.

government or an agency thereof.

value measurements are obtained from a third-party pricing service and are not adjusted by management.

The valuation of our interest rate swaps is obtained from a third-party pricing service and is determined using

a discounted cash flow analysis on the expected cash flows of each derivative.

The pricing analysis is based on observable inputs

for the contractual terms of the derivatives, including the period to maturity and interest rate curves.

We have determined that

the majority of the inputs used to value our interest rate derivatives fall within Level 2 of the fair value hierarchy.

and Liabilities Measured at Fair Value on a Recurring Basis.

and liabilities measured at fair value on a recurring basis are summarized below:

Fair value measurements are obtained

from a third-party pricing service and are not adjusted by management.

Interest rate swaps.

The valuation

of our interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis

on the expected cash flows of each derivative.

The pricing analysis is based on observable inputs for the contractual terms of

the derivatives, including the period to maturity and interest rate curves.

We have determined that the majority of the inputs

used to value our interest rate derivatives fall within Level 2 of the fair value hierarchy.

Assets and Liabilities Measured at Fair

Value on a Recurring Basis.

Assets and liabilities measured at fair

value on a recurring basis are summarized below:

December 31, 2021

(In thousands)

Securities available-for-sale

Available-for-sale securities

Marketable equity securities

3 unchanged sentences

(In thousands)

Securities available-for-sale

Available-for-sale securities

Marketable equity securities

1 unchanged sentence

Interest rate swaps

were no transfers to or from Level 1 and 2 for assets measured at fair value on a recurring basis during the years ended December

31, 2020 and 2019.

Measured at Fair Value on a Non-recurring Basis.

may also be required, from time to time, to measure certain other financial assets at fair value on a nonrecurring basis in accordance

with generally accepted accounting principles.

These adjustments to fair value usually result from application of lower-of-cost-or-market

accounting or write-downs of individual assets.

The following table summarizes the fair value hierarchy used to determine the

carrying values of the related assets as of December 31, 2020 and 2019.

There were no transfers to or from Level

1 and 2 for assets measured at fair value on a recurring basis during the years ended December 31, 2021 and 2020.

Assets Measured at Fair Value on a Non-recurring

We may also be required, from time to time,

to measure certain other financial assets at fair value on a nonrecurring basis in accordance with generally accepted accounting

These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs

of individual assets.

The following table summarizes the fair value hierarchy used to determine the carrying values of the related

assets as of December 31, 2021 and 2020.

At December 31, 2021

8 unchanged sentences

Impaired Loans

amount of impaired loans represents the carrying value, and net of the related write-down or valuation allowance of impaired loans

for which adjustments are based on the estimated fair value of the underlying collateral.

The fair value of impaired

loans with specific allocations of the allowance for loan losses is generally based on real estate appraisals performed by independent

licensed or certified appraisers.

These appraisals may utilize a single valuation approach or a combination of approaches

including comparable sales and the income approach.

Adjustments are routinely made in the appraisal process by the

appraisers to adjust for differences between the comparable sales and income data available.

Management will discount

appraisals as deemed necessary based on the date of the appraisal and new information deemed relevant to the valuation.

adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

The resulting

losses were recognized in earnings through the provision for loan losses.

were no liabilities measured at fair value on a non-recurring basis at December 31, 2020 and 2019.

of Fair Values of Financial Instruments.

estimated fair values of our financial instruments are as follows:

The amount of impaired loans represents

the carrying value, net of the related write-down or valuation allowance of impaired loans for which adjustments are based on the

estimated fair value of the underlying collateral.

The fair value of impaired loans with specific allocations of the

allowance for loan losses is generally based on real estate appraisals performed by independent licensed or certified appraisers.

appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.

are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income

data available.

Management will discount appraisals as deemed necessary based on the date of the appraisal and new information

deemed relevant to the valuation.

Such adjustments are typically significant and result in a Level 3 classification

of the inputs for determining fair value.

The resulting losses were recognized in earnings through the provision for loan losses.

There were no liabilities measured at fair value on a non-recurring basis at December 31, 2021 and 2020.

Summary of Fair Values of Financial

The estimated fair values of our financial

instruments are as follows:

December 31, 2021

1 unchanged sentence

Cash and cash equivalents

Securities held-to-maturity

Securities available-for-sale

16 unchanged sentences

Derivative asset

Short-term borrowings

Long-term debt

2 unchanged sentences

Limitations .

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial

These estimates do not reflect any premium or discount that could result from offering for sale at one time our entire

holdings of a particular financial instrument.

Where quoted market prices are not available, fair value estimates are based on

judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments,

and other factors.

Fair value estimates

are made at a specific point in time, based on relevant market information and information about the financial instrument.

estimates do not reflect any premium or discount that could result from offering for sale at one time our entire holdings of a

particular financial instrument.

Where quoted market prices are not available, fair value estimates are based on judgments regarding

future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other

These estimates are subjective in nature and involve uncertainties and matters of significant judgment.

in assumptions could significantly affect the estimates.

Company, through its bank subsidiary, provides a broad range of financial services to individuals and companies primarily in western

Massachusetts and northern Connecticut.

These services include commercial lending, residential lending and consumer lending, checking,

savings and time deposits, cash management, and wealth management.

Substantially all of the Company's revenues, profits, and assets

are derived by the Bank from banking products and services.

The Company did not have any reportable segments for the years ended

December 31, 2020, 2019 or 2018.

PARENT COMPANY FINANCIAL STATEMENTS

condensed balance sheets of the parent company are as follows:

Changes in assumptions

could significantly affect the estimates.

The Company, through its bank subsidiary,

provides a broad range of financial services to individuals and companies primarily in western Massachusetts and northern Connecticut.

These services include commercial lending, residential lending and consumer lending, checking, savings and time deposits, cash

management, and wealth management.

Substantially all of the Company's revenues, profits, and assets are derived by the Bank from

banking products and services.

The Company did not have any reportable segments for the years ended December 31, 2021, 2020 or

CONDENSED PARENT COMPANY FINANCIAL STATEMENTS

The condensed balance sheets

of the parent company are as follows :

(In thousands)

5 unchanged sentences

TOTAL LIABILITIES AND EQUITY

condensed statements of net income for the parent company are as follows:

The condensed statements of net income for the parent company

are as follows:

Years Ended December 31,

8 unchanged sentences

Income before equity in undistributed income of subsidiaries and income taxes

Equity in undistributed loss of subsidiaries

Equity in undistributed income (loss) of subsidiaries

Net income before taxes

Income tax benefit

condensed statements of cash flows of the parent company are as follows:

The condensed statements of cash flows of the parent company

are as follows:

Years Ended December 31,

1 unchanged sentence

OPERATING ACTIVITIES:

Equity in undistributed loss of subsidiaries

Equity in undistributed (income) loss of subsidiaries

Net amortization of premiums on subordinated debt

Change in other liabilities

1 unchanged sentence

Net cash provided by operating activities

INVESTING ACTIVITIES:

Purchase of securities

1 unchanged sentence

Net cash provided by investing activities

FINANCING ACTIVITIES:

Cash dividends paid

Common stock repurchased

Issuance of common stock in connection with

stock option exercises

Proceeds from issuance of subordinated debt

Payment of subordinated debt issue costs

Issuance of common stock in connection with stock option exercises

Net cash used in financing activities

NET CHANGE IN CASH AND CASH EQUIVALENTS

NET CHANGE IN CASH AND

CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS

2 unchanged sentences

Net change in due to broker for common stock repurchased

OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

following tables present a summary of our quarterly financial information for the periods indicated.

The year-to-date totals may

differ slightly due to rounding.

All unaudited interim financial statements furnished shall reflect all adjustments which are,

in the opinion of management, necessary to a fair statement of the results for interim periods presented and are of a normal and

recurring nature, unless otherwise noted.

SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following tables

present a summary of our quarterly financial information for the periods indicated.

The year-to-date totals may differ slightly

due to rounding.

All unaudited interim financial statements furnished shall reflect all adjustments which are, in the opinion of

management, necessary to a fair statement of the results for interim periods presented and are of a normal and recurring nature,

unless otherwise noted.

First Quarter

6 unchanged sentences

Net interest and dividend income

Provision for loan losses

Gain on available-for-sale securities, net

Unrealized gains (losses) on marketable equity securities, net

Swap fee income

Provision (credit) for loan losses

(Loss) gain on available-for-sale securities, net

Unrealized (losses) gains on marketable equity securities, net

Loss on interest rate swap termination

Gain on non-marketable equity investments

BOLI death benefit

Gain on sale of mortgages

Other non-interest income

14 unchanged sentences

Provision for loan losses

Gain (loss) on available-for-sale securities, net

Gain on available-for-sale securities, net

Unrealized gains (losses) on marketable equity securities, net

Swap fee income

Loss on interest rate swap termination

Other non-interest income

5 unchanged sentences

Diluted earnings per share

decrease in interest expense for the three months ended December 31, 2020 was due to

a decrease of $ 933,000 in interest expense on deposits and $ 611,000 in interest expense

on FHLB borrowings, both resulting from repricing liabilities in the continued low-rate

environment as well as the pay down of high-rate FHLB borrowings.

increase in non-interest expense for the three months ended December 31, 2020 was primarily

driven by a $ 987,000 expense resulting from the early extinguishment of $ 50 .0 million

in FHLB borrowings.

decrease in interest expense for the three months ended December 31, 2020 was due to

a decrease of $933,000 in interest expense on deposits and $611,000 in interest expense

on FHLB borrowings, both resulting from repricing liabilities in the continued low-rate

environment as well as the pay down of high-rate FHLB borrowings.

increase in non-interest expense for the three months ended December 31, 2020 was primarily

driven by a $987,000 expense resulting from the early extinguishment of $50.0 million

in FHLB borrowings.

(1) The decrease in interest expense for the three months ended December 31, 2020 was due to a decrease

of $ 933,000 in interest expense on deposits and $ 611,000 in interest expense on FHLB borrowings, both resulting from repricing

liabilities in the continued low-rate environment as well as the pay down of high-rate FHLB borrowings.

(2) The increase in non-interest expense for the three months ended December 31, 2020 was primarily driven by a $ 987,000 expense

resulting from the early extinguishment of $ 50 .0 million in FHLB borrowings.

(1) The decrease in interest expense for the three months ended December 31, 2020 was due to a decrease

of $933,000 in interest expense on deposits and $611,000 in interest expense on FHLB borrowings, both resulting from repricing

liabilities in the continued low-rate environment as well as the pay down of high-rate FHLB borrowings.

(2) The increase in non-interest expense for the three months ended December 31, 2020 was primarily driven by a $987,000 expense

resulting from the early extinguishment of $50.0 million in FHLB borrowings.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures