What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-03-10 compared with 2022-03-11 · 331 added, 349 removed, 1014 unchanged (40% of the section changed)

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As of December

31, 2021, the Bank had twenty-five branches and seventeen freestanding automated teller machines (“ATMs”), and an

additional five seasonal or temporary ATMs.

The Bank also conducts business through an additional six freestanding and thirty

seasonal or temporary ATMs that are owned and serviced by a third party, whereby the Bank pays a rental fee and shares in the

surcharge revenue.

All branch and ATM locations serve Hampden County and Hampshire County in western Massachusetts and Hartford

County and Tolland County in northern Connecticut.

The Bank also provides a variety of banking services including telephone and

online banking, remote deposit capture, cash management services, overdraft facilities, night deposit services, and safe deposit

As a member of the Federal Deposit Insurance Corporation (“FDIC”), the Bank’s deposits are insured

up to the maximum FDIC insurance coverage limits.

The Bank is also a member of the Federal Home Loan Bank of Boston (“FHLB”).

31, 2022, the Bank had twenty-five branches and ten freestanding automated teller machines (“ATMs”).

The Bank also

conducts business through an additional fourteen freestanding and thirty-one seasonal or temporary ATMs that are owned and serviced

by a third party, whereby the Bank pays a rental fee and shares in the surcharge revenue.

All branch and ATM locations serve Hampden

County and Hampshire County in western Massachusetts and Hartford County and Tolland County in northern Connecticut.

also provides a variety of banking services including telephone and online banking, remote deposit capture, cash management services,

overdraft facilities, night deposit services, and safe deposit facilities.

As a member of the Federal Deposit Insurance Corporation

(“FDIC”), the Bank’s deposits are insured up to the maximum FDIC insurance coverage limits.

The Bank is also

a member of the Federal Home Loan Bank of Boston (“FHLB”).

October 21, 2016, the Company acquired Chicopee Bancorp, Inc.

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northern Connecticut.

The Bank operates 25 banking offices in Agawam, Chicopee, Feeding Hills, East Longmeadow, Holyoke, Huntington,

Ludlow, South Hadley, Southwick, Springfield, Ware, West Springfield and Westfield, Massachusetts and Bloomfield, Enfield, Granby

and West Hartford, Connecticut.

We operate full-service ATMs at our branch locations and have 17 freestanding ATM locations in

Chicopee, Holyoke, Ludlow, Southwick, Springfield, West Springfield and Westfield, Massachusetts and 5 traveling/seasonal ATMs.

The Bank also conducts business through an additional six freestanding and thirty seasonal or temporary ATMs that are owned and

serviced by a third party, whereby the Bank pays a rental fee and shares in the surcharge revenue.

In addition, we provide online

banking services, including online deposit account opening and residential mortgage and consumer loan applications through our

website at www.westfieldbank.com.

The Bank operates twenty-five banking offices in Agawam, Chicopee, Feeding Hills, East Longmeadow, Holyoke,

Huntington, Ludlow, South Hadley, Southwick, Springfield, Ware, West Springfield and Westfield, Massachusetts and Bloomfield,

Enfield, Granby and West Hartford, Connecticut.

We operate full-service ATMs at our branch locations and have ten freestanding

ATM locations in Chicopee, Holyoke, Ludlow, Southwick, Springfield, West Springfield and Westfield, Massachusetts.

The Bank also

conducts business through an additional fourteen freestanding and thirty-one seasonal or temporary ATMs that are owned and serviced

by a third party, whereby the Bank pays a rental fee and shares in the surcharge revenue.

In addition, we provide online banking

services, including online deposit account opening and residential mortgage and consumer loan applications through our website

at www.westfieldbank.com.

markets served by our branches are primarily suburban markets located in western Massachusetts and in northern Connecticut.

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The economies of our primary markets have benefited from

the presence of large employers such as Baystate Medical Center, Big Y World Class Markets, MassMutual Financial Group, Mercy

Medical Center/Trinity Health of New England, MGM Springfield and Westover Air Reserve Base in Massachusetts, and Air National

Guard, Collins Aerospace, Kaman Aerospace Corporation, Lego Systems Inc., Stanadyne LLC and Talcott Resolution Life Insurance

Company in Connecticut.

Other employment and economic activity is provided by financial institutions, colleges and universities,

hospitals, and a variety of wholesale and retail trade business.

Our Hampden County market also enjoys a strong tourism business

with attractions such as the Eastern States Exposition, which operates The Big E, the largest fair in the northeast, the Basketball

Hall of Fame, MGM Springfield and Six Flags New England.

the presence of large employers such as Baystate Medical Center, Big Y World Class Markets, Center for Human Development, Holyoke

Medical Center, MassMutual Financial Group, Mercy Medical Center/Trinity Health of New England, Mestek, Inc., MGM Springfield,

Verizon and Westover Air Reserve Base in Massachusetts, and Aetna, Inc., Air National Guard, Collins Aerospace, Connecticut Children’s

Medical Center, Hartford Financial Services Group, Hartford Hospital, Kaman Aerospace Corporation, Lego Systems Inc., Stanadyne

LLC, Talcott Resolution Life Insurance Company and Travelers Indemnity Company in Connecticut.

Other employment and economic activity

is provided by financial institutions, colleges and universities, hospitals, and a variety of wholesale and retail trade business.

Our Hampden County market also enjoys a strong tourism business with attractions such as the Eastern States Exposition, which

operates The Big E, the largest fair in the northeast, the Basketball Hall of Fame, MGM Springfield and Six Flags New England.

Bank faces significant competition to attract and retain customers within existing and neighboring geographic markets.

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in Hampden County, which was the second largest market share out of the 16 banks and thrifts with offices in Hampden County.

remain focused on being a good corporate citizen and creating a culture where we prioritize providing an exceptional customer

experience and empowering our employees.

The Company believes that it has had and continues to have good employee relations.

talent management strategy ensures we leverage the talent needed, not just for today, but also for our future.

Our employees are

the foundation of our success and are responsible for upholding our guiding principles of integrity, trust, empathy, collaboration,

work ethic, courage, inclusion and positive attitude.

Equity and Inclusion

understand that our human capital is the most valuable asset we have and we are committed to fostering, cultivating and preserving

a culture of diversity, equity and inclusion.

The Company strives to create an intentionally inclusive, diverse and thriving workplace

where each person feels valued, respected and understood as well as a respectful, productive environment where everyone is encouraged

to achieve their full potential.

At December 31, 2022, our employees were representative of our commitment to recruit, develop,

and retain diverse individuals, wherein approximately 66% of our employees were women and 18% of our employees were ethnic minorities,

veterans or persons with disabilities.

We remain focused on bolstering our workforce through inclusive hiring and retention practices,

which we feel reflects and better serves our communities.

have been successful in attracting, developing and retaining qualified and competent staff.

The Company believes that it has had

and continues to have good employee relations.

Our talent management strategy ensures we leverage the talent needed, not just

for today, but also for our future.

Our employees are the foundation of our success and are responsible for upholding our guiding

principles of integrity, trust, empathy, collaboration, strong work ethic, loyalty, inclusion and a professional and positive

of December 31, 2022, the Bank employed 337 total employees, with 289 employed full-time and 48 employed part-time.

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helps the Company operate efficiently and effectively.

Management promotes its core values through prioritizing concern for employees’

well-being, supporting employees’ career goals, offering competitive wages, and providing valuable fringe benefits.

Bank employees may become stockholders of the Company through participation in its Employee Stock Ownership Plan (“ESOP”) and its

401(k) retirement plan, which offers a Company stock investment option.

Company actively encourages and supports the growth and development of its employees.

Management generally seeks to fill positions

by promotion and transfer from within the organization, whenever practical.

Career development is advanced through ongoing mentoring

and development programs, as well as internally developed training programs, customized corporate training engagements and educational

reimbursement programs.

Reimbursement is available to employees enrolled in pre-approved degree or certification programs at accredited

institutions that teach skills or knowledge relevant to the financial services industry.

Each year, we also attract rising juniors

and seniors from colleges and universities across our footprint who have the opportunity to be assigned a position with the Company

upon graduation.

and Diversity

Company strives to create an intentionally inclusive, diverse and thriving workplace where each person feels valued, respected

and understood as well as a respectful, productive environment where everyone is encouraged to achieve their full potential.

December 31, 2021, our employees were representative of our commitment to recruit, develop, and retain diverse individuals, wherein approximately

65% of our employees were women and 21% of our employees are either ethnic minorities, veterans or persons with disabilities.

We remain focused on bolstering our workforce through inclusive hiring and retention practices, which we feel reflects and better

serves our communities.

and Safety/Well-Being

The safety, health and wellness of our employees is considered a top priority.

The COVID-19 pandemic has presented a unique challenge with regard to maintaining employee safety while continuing successful operations.

All employees have returned to working in person;

however, when they experience signs or symptoms of a possible COVID-19 illness, they

have been asked not to come to work and test for COVID-19 as necessary.

We follow the Center for Disease Control (“CDC”) guidance

as to when employees may return to in-person work.

On an ongoing basis, the Company promotes the health and wellness of its employees

and strives to keep the employee portion of health care premiums competitive with local competition.

are many factors that contribute to the success of the Company.

We actively encourage and support the growth and development of our

Whenever practical, Management generally seeks to fill positions by promotion and transfer opportunities from within the

organization.

Career development is advanced through ongoing mentoring and professional development programs, as well as internally

and externally developed training programs.

In 2021, a customized Corporate Leadership Development Program was established for the

During 2022, fifty employees were nominated to participate in the program and successfully completed the program.

addition, the Company offers educational reimbursement programs to employees enrolled in pre-approved degree or certification

programs at accredited institutions that teach skills or knowledge relevant to the financial services industry.

Each year, we also

attract rising juniors and seniors from colleges and universities across our footprint who have the opportunity to be assigned an

internship within the Company and have the potential to be hired upon graduation.

Compensation and Benefits

promotes its core values through prioritizing concern for employees’ well-being, supporting employees’ career goals,

offering competitive wages, and providing valuable fringe benefits.

The Company maintains a comprehensive employee benefit program

providing, among other benefits, group medical, dental and vision insurance, life insurance and disability insurance, a 401(k)

Safe Harbor Plan, an employee stock ownership plan (“ESOP”), short-term and long-term incentive programs, paid time off

including vacation days, personal days and paid holidays.

Health and Safety

safety, health and wellness of our employees is considered a top priority.

On an ongoing basis, the Company promotes the health

and wellness of its employees and strives to keep the employee portion of health care premiums competitive with local competition.

We communicate to our employees on a monthly basis through email and the Company’s intranet, sharing articles and best practices

on mental, emotional and physical well-being, health savings account and flexible spending account use, resources to find cheaper

prescriptions and other related topics.

Our employees also have access to a platform that gives them access to interactive activities

for wellness classes, stress management, mindfulness, healthy eating and health plan literacy.

All employees are working in person;

however, when they experience signs or symptoms of a possible COVID-19 illness, they have been asked not to come to work and test

for COVID-19 as necessary.

We follow the Center for Disease Control guidance as to when employees may return to in-person work.

The Company’s loan portfolio totaled $2.0 billion, or 78.0% of total assets, at December 31, 2022, compared to $1.9

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and classified assets.

The Company's internal residential origination and underwriting staff originate residential loans and are

responsible for compliance with residential lending regulations, consumer protection and internal policy guidelines.

The Company's

internal compliance department monitors the residential loan origination activity for regulatory compliance.

The Company’s internal residential origination and underwriting staff originate residential loans

and are responsible for compliance with residential lending regulations, consumer protection and internal policy guidelines.

Company’s internal compliance department monitors the residential loan origination activity for regulatory compliance.

Executive Committee of the Company’s Board of Directors (the “Board”) approves loan relationships exceeding

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Real Estate Loans and Commercial and Industrial Loans .

December 31, 2021, commercial real estate loans totaled $980.0 million, or 52.6% of total loans, compared to $833.9 million, or

December 31, 2022, commercial real estate loans totaled $1.1 billion, or 53.8% of total loans, compared to $980.0 million, or

52.6% of total loans, at December 31, 2021.

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loans totaling $2.2 million, or 0.1% of total loans.

This compares to our total commercial and industrial loan portfolio of $379.1

million, or 19.7% of total loans, at December 31, 2020, with commercial and industrial loans totaling $211.8 million, or 11.0%

of total loans, and PPP loans totaling $167.3 million, or 8.7% of total loans.

Commercial and industrial loans include seasonal

revolving lines of credit, working capital loans, equipment financing and term loans.

Commercial and industrial credits may be

unsecured loans and lines to financially strong borrowers, loans secured in whole or in part by real estate unrelated to the principal

purpose of the loan or secured by inventories, equipment, or receivables, and are generally guaranteed by the principals of the

Variable rate loans and lines in this portfolio have interest rates that are periodically adjusted, with loans generally

having fixed initial periods.

At December 31, 2021, our total commercial and industrial loan portfolio

was $226.6 million, or 12.2% of total loans, with commercial and industrial loans totaling $201.3 million, or 10.8% of total loans,

and PPP loans totaling $25.3 million, or 1.4% of total loans.

Commercial and industrial loans include seasonal revolving lines

of credit, working capital loans, equipment financing and term loans.

Commercial and industrial credits may be unsecured loans

and lines to financially strong borrowers, loans secured in whole or in part by real estate unrelated to the principal purpose

of the loan or secured by inventories, equipment, or receivables, and are generally guaranteed by the principals of the borrower.

Variable rate loans and lines in this portfolio have interest rates that are periodically adjusted, with loans generally having

fixed initial periods.

Commercial and industrial loans have average repayment periods of one to seven years.

Our commercial

and industrial loan portfolio does not have any significant loan concentration by type of property or borrower.

Our commercial and

industrial loan portfolio does not have any significant loan concentration by type of property or borrower.

largest concentration of commercial loans to an industry was to hotels and accommodation, which comprised approximately 6.9% of

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The Company originates and funds residential real estate loans,

secured by one-to-four family residential properties primarily located in western Massachusetts and northern Connecticut.

Company processes and underwrites all of its originations internally through its Residential Loan Center located in Westfield,

including first mortgages, home equity loans, and home equity lines, secured by one-to-four family residential properties primarily

located in western Massachusetts and northern Connecticut.

The Company processes and underwrites all of its originations internally

through its Residential Loan Center located in Westfield, MA.

residential properties may serve as the borrower’s primary residence, or as vacation homes or investment properties.

are originated in amounts up to 97% of the lesser of the appraised value or purchase price of the property.

Private mortgage insurance

is required on all loans with a loan-to-value ratios greater than 80%.

mortgages may be underwritten in amounts up to 97% of the lesser of the appraised value or purchase price of the property for

owner-occupied homes, 90% for second homes and 85% for investment properties.

Private mortgage insurance is required on all loans

with a loan-to-value ratio greater than 80%.

We do not grant subprime loans.

In addition, financing is provided for the construction

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market underwriting and documentation standards.

Home equity loans and lines are secured by first or second mortgages on one-to-four

family owner-occupied properties.

Equity loans and lines are underwritten by a maximum combined loan-to-value of 85% of the appraised

value of the property.

Underwriting approval is dependent on review of the borrower’s ability to repay and credit history

in accordance with Westfield Bank’s policy.

The overall health of the economy, including unemployment rates and housing

pricing, will have an effect on the credit quality in this segment.

on the current interest rate environment, management may elect to sell those fixed and adjustable rate residential mortgage loans

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In order to reduce interest rate risk, during the twelve months ended December 31,

2021, the Company sold $59.7 million of fixed rate, low coupon residential real estate loans to the secondary market.

no loans sold during 2020.

At December 31, 2021 and December 31, 2020, the Company serviced $88.2 million and $38.1 million, respectively,

in residential loans sold to the secondary market.

The servicing rights will likely continue to be retained on all loans sold

over the life of the loan.

The largest owner-occupied residential real estate loan was $2.0 million and was performing according

to its original terms as of December 31, 2021.

2022 and December 31, 2021, the Company sold $277,000 and $59.7 million of fixed rate, low coupon residential real estate loans

to the secondary market, respectively.

At December 31, 2022 and December 31, 2021, the Company serviced $79.3 million and $88.2

million, respectively, in residential loans sold to the secondary market.

The servicing rights will likely continue to be retained

on all loans sold over the life of the loan.

The largest owner-occupied residential real estate loan was $1.9 million and was

performing according to its original terms as of December 31, 2022.

Equity Loans.

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Generally at the end of ten years, the line may be

frozen to future advances, and principal plus interest payments are collected over a fifteen-year amortization schedule or, for

eligible borrowers meeting certain requirements, the line availability may be extended for an additional interest only period.

frozen to future advances, and principal plus interest payments are collected over a fifteen-year amortization schedule.

December 31, 2022 and December 31, 2021, consumer loans totaled $5.0 million, or 0.3%, of total loans and $4.3 million, or 0.2%,

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At December 31,

Percent of Total

(Dollars in thousands)

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Unamortized PPP loan fees

Unamortized premiums and net deferred loan fees and costs

Unamortized premiums and net deferred loan fees

Allowance for loan losses

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After one year:

One to three years

Three to five years

Five to ten years

Ten to twenty years

Over twenty years

One to five years

Five to fifteen years

Over fifteen years

Total due after one year

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Allowance for loan losses

The following table presents, as of December 31, 2021, the dollar amount of all loans contractually due or scheduled to reprice after December 31, 2022, and whether such loans have fixed interest rates or adjustable interest rates.

following table presents, as of December 31, 2022, the dollar amount of all loans contractually due or scheduled to reprice after

December 31, 2023, and whether such loans have fixed interest rates or adjustable interest rates.

Due After December 31, 2023

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Total other loans

following table presents our loan originations, purchases and principal payments for the years indicated:

For the Years Ended December 31,

(In thousands)

Balance outstanding at beginning of year

Originations:

Real estate loans:

Residential one-to-four family

Total mortgage originations

Commercial and industrial loans

Paycheck Protection Program ("PPP")

Consumer loans

Total originations

Principal repayments, unadvanced funds and other, net

Sales of residential one-to-four family loans to secondary market

Loan charge-offs, net

Total deductions

Ending balance

a high level of asset quality continues to be one of the Company’s key objectives.

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At December 31, 2022, criticized loans, inclusive

of “adversely classified loans”, totaled $82.6 million, or 4.4% of total loans, compared to $147.1 million, or 7.6%

of total loans, at December 31, 2020.

Company’s adversely classified loans (defined as "Substandard (6)", "Doubtful (7)" or "Loss (8)")

totaled $31.1 million, or 1.7% of total loans, at December 31, 2021 and $55.0 million, or 2.9%, of total loans, at December 31,

Adversely classified loans that were performing but possessed potential weaknesses and, as a result, could ultimately become

nonperforming loans totaled $26.4 million, or 1.4% of total loans, at December 31, 2021 and $47.2 million, or 2.4% of total loans,

at December 31, 2020.

The remaining balance of adversely classified loans were nonaccrual loans totaling $4.7 million, or 0.3%

of total loans, at December 31, 2021 and $7.8 million, or 0.4% of total loans, at December 31, 2020.

of “adversely classified loans” (defined as “Substandard,” “Doubtful” or “Loss”),

totaled $64.0 million, or 3.2% of total loans, compared to $82.6 million, or 4.4% of total loans, at December 31, 2021.

Company’s adversely classified loans totaled $42.3 million, or 2.1% of total loans, at December 31, 2022 and $31.1 million,

or 1.7%, of total loans, at December 31, 2021.

Adversely classified loans that were performing but possessed potential weaknesses

and, as a result, could ultimately become nonperforming loans totaled $36.6 million, or 1.8% of total loans, at December 31, 2022

and $26.4 million, or 1.4% of total loans, at December 31, 2021.

The remaining balance of adversely classified loans were nonaccrual

loans totaling $5.7 million, or 0.3% of total loans, at December 31, 2022 and $4.7 million, or 0.3% of total loans, at December

impaired loans totaled $18.4 million, or 0.9% of total loans, at December 31, 2022 and $20.5 million, or 1.1% of total loans,

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2022, 2021 and 2020, respectively.

December 31, 2021, 2020 and 2019, the Company carried no OREO balances.

following table presents information regarding nonperforming commercial real estate loans, commercial and industrial term loans,

residential real estate loans, consumer loans, and foreclosed real estate as of the dates indicated.

All loans where the payment

is 90 days or more in arrears as of the closing date of each month are placed on nonaccrual status unless the loan is well secured

and in the process of collection.

At December 31,

December 31, 2022, 2021 and 2020, the Company carried no other real estate owned (“OREO”) balances.

following table presents, for the years indicated, an analysis of the allowance for loan losses and other related data.

Years Ended December 31,

(Dollars in thousands)

Nonaccrual real estate loans:

Residential one-to-four family

Commercial real estate

Total nonaccrual real estate loans

Commercial and industrial

Total nonaccrual other loans

Total nonperforming loans

Foreclosed real estate, net

nonperforming assets (1)

Nonperforming loans to total loans

Nonperforming assets to total assets

Troubled debt restructurings on accrual status not included above totaled $4.1 million, $9.8 million, $1.5 million, $2.4

million and $1.8 million at December 31, 2021, 2020, 2019, 2018 and 2017, respectively.

Allowance for loan losses to total loans outstanding

Allowance for loan losses

Total loans outstanding

Nonaccrual loans to total loans outstanding

Nonaccrual loans

Total loans outstanding

Allowance for loan losses to nonaccrual loans

Allowance for loan losses

Nonaccrual loans

Net charge-offs (recoveries) during the period to daily average loans outstanding:

Residential one-to-four family recoveries to daily average loans outstanding

Net recoveries during the period

Average amount outstanding

Commercial real estate charge-offs to daily average loans outstanding

Net charge-offs during the period

Average amount outstanding

Commercial and industrial charge-offs to daily average loans outstanding

Net charge-offs during the period

Average amount outstanding

Home equity charge-offs (recoveries) to daily average loans outstanding

Net charge-offs (recoveries) during the period

Average amount outstanding

Consumer charge-offs to daily average loans outstanding

Net charge-offs during the period

Average amount outstanding

Total Loan Charge-offs to Daily Average Loans Outstanding

Net charge-offs during the period

Average amount outstanding

for Loan Losses .

allowance for loan losses is an estimate of probable credit risk inherent in the loan portfolio as of the specified balance sheet

On a quarterly basis, management prepares an estimate of the allowance necessary to cover estimated probable credit losses.

The Company maintains the allowance at a level that it deems adequate to absorb all reasonably anticipated probable losses from

specifically known and other credit risks associated with the portfolio.

The Company has deferred the adoption of the Current

Expected Credit Loss allowance methodology, as permitted by its classification as a Smaller Reporting Company by the Securities

and Exchange Commission.

The Company maintains the allowance at a level that it deems adequate to absorb all reasonably anticipated probable losses

from specifically known and other credit risks associated with the portfolio.

The adoption of the Current Expected Credit Loss

(“CECL”) allowance methodology became effective for the Company as of January 1, 2023.

Upon implementation, the Company

elected to leverage a CECL compliant Discounted Cash Flow (“DCF”) model to calculate projected potential loan losses.

Company maintains an allowance for loan losses to absorb losses inherent in the loan portfolio based on ongoing quarterly assessments

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loan losses, and specific industry concentrations within the portfolio segments that may impact the collectability of the loan

During the year ended December 31, 2020, the Company significantly increased the general allowance as a result of the

COVID-19 pandemic.

For information on our methodology for assessing the appropriateness of the allowance for loan losses please

see Footnote 1 – “ Summary of Significant Accounting Policies ” of our notes to consolidated financial

In 2020, the Bank added a new qualitative factor category to the allowance calculation – “Economic Impact

of COVID-19” based upon an analysis of the loan portfolio that included identifying borrowers sensitive to the shutdown.

During the year ended December 31, 2021, the qualitative adjustment factors related to the COVID-19 pandemic and the uncertainty

in the economic environment were reduced as Management continued to assess the exposure of the Company’s loan portfolio

to the COVID-19 pandemic related factors, economic trends and their potential effect on asset quality.

For information on our

methodology for assessing the appropriateness of the allowance for loan losses please see Footnote 1 – “ Summary

of Significant Accounting Policies ” of our notes to consolidated financial statements.

allowance for loan losses is established through a provision for loan losses, which is a direct charge to earnings.

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ratio, excluding PPP loans, was 1.00% and 1.08%, at December 31, 2022 and 2021, respectively.

The allowance for loan losses to

nonperforming loans ratio was 350.0% and 398.6%, at December 31, 2022 and 2021, respectively.

on the foregoing, as well as management’s judgment as to the existing credit risks inherent in the loan portfolio, management

believes that the Company's allowance for loan losses is adequate to absorb probable losses from specifically known and other

probable credit risks associated with the portfolio as of December 31, 2021.

following table presents the activity in our allowance for loan losses and other ratios at or for the dates indicated.

or for Years Ended December 31,

in thousands)

at beginning of year

one-to-four family

and industrial

one-to-four family

and industrial

(charge-offs) recoveries

provision for loan losses

at end of year

loans receivable (1)

loans outstanding

for loan losses as a percent of total loans receivable

for loan losses as a percent of total loans receivable, excluding PPP loans

loans charged-off as a percent of average loans outstanding

not include premiums, deferred costs and fees, or the allowance for loan losses.

summary of the components of the allowance for loan losses is as follows:

(In thousands)

Commercial real estate

Residential real estate:

Residential one-to-four

Commercial and industrial

(In thousands)

one-to-four family

and industrial

the years ended December 31, 2021 and December 31, 2020, the Company recorded a credit for loan losses of $925,000, compared to

a provision for loan losses of $7.8 million to the allowance for loan losses based on our evaluation of the items discussed above.

We believe that the allowance for loan losses adequately reflects the level of incurred losses in the current loan portfolio as

of December 31, 2021.

believes that the Company’s allowance for loan losses is adequate to absorb probable losses from specifically known and

other probable credit risks associated with the portfolio as of December 31, 2022.

the years ended December 31, 2022 and December 31, 2021, the Company recorded a provision for loan losses of $700,000, compared

to a credit for loan losses of $925,000 to the allowance for loan losses based on our evaluation of the items discussed above.

The credit for loan losses during the year ended December 31, 2021 was primarily due to a reduction of qualitative adjustment

factors that had previously been increased in the allowance for credit losses related to the COVID-19 pandemic and the uncertainty

in the economic environment.

We believe that the allowance for loan losses adequately reflects the level of incurred losses in

the current loan portfolio as of December 31, 2022.

of Allowance for Loan Losses .

following tables set forth the allowance for loan losses allocated by loan category, the total loan balances by category, and

the percent of loans in each category to total loans, excluding PPP loans.

the percent of loans in each category to total loans.

December 31, 2022

December 31, 2021

Loan Category

of Allowance for Loan Losses

Balances by Category

of Loans in Each Category to Total Loans

of Allowance for Loan Losses

Balances by Category

of Loans in Each Category to Total Loans

of Allowance for Loan Losses

Balances by Category

of Loans in Each Category to Total Loans

Amount of Allowance for Loan Losses

Loan Balances by Category

Percent of Loans in Each Category to Total Loans

Amount of Allowance for Loan Losses

Loan Balances by Category

Percent of Loans in Each Category to Total Loans

(In thousands)

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Real estate mortgage:

one-to-four family

Commercial and industrial

Residential one-to-four family

Commercial and industrial loans

Consumer loans

Total allowances for loan

of Allowance for Loan Losses

Balances by Category

of Loans in Each Category to Total Loans

of Allowance for Loan Losses

Balances by Category

of Loans in Each Category to Total Loans

estate mortgage:

one-to-four family

and industrial loans

allowances for loan losses

Total allowances for loan losses

Acquired with Deteriorated Credit Quality .

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values, timing of principal payments and credit risk are considered when purchasing securities.

Company's investment portfolio activities are an integral part of the overall asset liability management program of the Company.

Company’s investment portfolio activities are an integral part of the overall asset liability management program of the

The investment function provides readily available funds to support loan growth, as well as to meet withdrawals and maturities

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in other comprehensive income/loss, net of applicable taxes.

Prior to January 1, 2018, marketable equity securities were evaluated

for OTTI based upon the severity and duration of the impairment and, if deemed to be other than temporary, the declines in fair

value were reflected in earnings as realized losses.

Marketable equity securities are measured at fair value with changes in fair

value reported on the Company’s income statement as a component of non-interest income, regardless of whether such gains

and losses are realized.

Marketable equity securities are measured at fair value with changes

in fair value reported on the Company’s income statement as a component of non-interest income, regardless of whether such

gains and losses are realized.

reports investment transactions, portfolio allocation, effective duration, market value at risk and projected cash flows to the

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its investment in FHLB stock for impairment based on, among other factors, the capital adequacy of the FHLB and its overall financial

both December 31, 2021 and 2020, the Company held $423,000 of Atlantic Community Bankers Bank stock.

The stock is restricted and

carried in other assets at cost.

The stock is evaluated for impairment based on an estimate of the ultimate recovery to the par

December 31, 2022 and 2021, the Company held $423,000 of Atlantic Community Bankers Bank stock.

The stock is restricted and carried

in other assets at cost.

The stock is evaluated for impairment based on an estimate of the ultimate recovery to the par value.

No impairment losses have been recorded through December 31, 2022.

following table sets forth the composition of our securities portfolio at the dates indicated.

(In thousands)

Available-for-sale:

Debt securities:

Government-sponsored

enterprise obligations

State and municipal bonds

debt securities

Mortgage-backed securities:

Government-sponsored mortgage-backed

government guaranteed mortgage-backed securities

mortgage-backed securities

available-for-sale securities

Held-to-maturity:

Debt securities:

Treasury securities

debt securities

Mortgage-backed securities:

Government-sponsored

mortgage-backed securities

held-to-maturity

Portfolio Maturities .

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of securities divided by the total amortized cost of the segment, and does not adjust for tax-equivalent basis for any tax-exempt

than One Year

than Five Years

than Ten Years

in thousands)

One Year or Less

More than One Year through Five

More than Five Years through

More than Ten Years

Total Securities

Amortized Cost

Weighted Average Yield

Amortized Cost

Weighted Average Yield

Amortized Cost

Weighted Average Yield

Amortized Cost

Weighted Average Yield

Amortized Cost

Weighted Average Yield

(Dollars in thousands)

Available-for-sale:

Government-sponsored

enterprise obligations

and municipal bonds

Debt securities:

Mortgage-backed

Government-sponsored

residential mortgage-backed

Government-sponsored enterprise obligations

State and municipal bonds

Corporate bonds

debt securities

Mortgage-backed securities:

Government-sponsored residential mortgage-backed

Government guaranteed residential mortgage-backed

mortgage-backed securities

available-for-sale

Total available-for-sale

Held-to-maturity:

Debt securities:

Treasury securities

debt securities

Mortgage-backed

Government-sponsored

residential mortgage-backed

Mortgage-backed securities:

held-to-maturity

Government-sponsored residential mortgage-backed

Total mortgage-backed securities

Total held-to-maturity

have traditionally been the principal source of the Company’s funds.

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from three months to sixty months.

As a member of the FDIC, the Bank's depositors are provided deposit protection up to the maximum

FDIC insurance coverage limits.

As a member of the FDIC, the Bank’s depositors are provided deposit protection up to

the maximum FDIC insurance coverage limits.

determines the interest rates offered on deposit accounts based on current and expected economic conditions, competition, and

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Brokered deposits along with borrowed funds may be referred to as wholesale funding.

At December 31, 2020, brokered deposits were included within time deposits and totaled $55.3 million.

There were no brokered deposits

on the balance sheet at December 31, 2021.

There were no brokered deposits on the balance sheet at December 31, 2022 and December 31, 2021.

deposits (defined as regular accounts, money market accounts, interest-bearing and noninterest-bearing demand accounts) represented

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Distribution and Weighted Average Rates.

following table sets forth the distribution of our deposit accounts, by account type, at the dates indicated.

following table sets forth the Company’s average deposit balances and weighted average rates for the periods presented:

the Years Ended December 31,

Average Rates

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Average Rates

in thousands)

Interest-bearing

checking accounts

savings accounts

market accounts

core deposit accounts

deposit accounts

following table sets forth the maturity of time deposits at the dates indicated:

Average Rates

(Dollars in thousands)

Demand deposits

Interest-bearing checking accounts

Regular savings accounts

Money market accounts

Total core deposit accounts

Time deposits:

Due within the year

Over 1 year through 3 years

Total time deposit accounts

The following table sets forth the uninsured portion of our core deposit

accounts, by account type, at the dates indicated.

Over 1 year through

certificated accounts

following table sets forth the uninsured portion of our core deposit accounts, by account type, at the dates indicated.

At December 31,

(Dollars in thousands)

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Regular savings accounts

Money market accounts

Total core deposit accounts

The following table sets forth the uninsured portion of our time deposits,

by remaining maturity.

following table sets forth the uninsured portion of our time deposits, by remaining maturity.

At December 31, 2022

(Dollars in thousands)

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Total time deposit accounts

_______________

(1) Uninsured

deposits for the periods indicated have been estimated using the same methodologies and assumptions

used for the Bank’s regulatory reporting requirements.

deposits for the periods indicated have been estimated using the same methodologies and

assumptions used for the Bank’s regulatory reporting requirements.

Deposit Maturities.

summary of time deposits totaling $250,000 or more by maturity is as follows:

December 31, 2022

December 31, 2021

Weighted Average Rate

(In thousands)

Over 3 months through

Over 6 months through

3 months or less

Over 3 months through 6 months

Over 6 months through 12 months

Over 12 months

Deposit Balances by Rates.

summary of time deposits by maturity is as follows:

December 31, 2021

than One Year

to Three Years

than Three Years

0.10% and under

0.11% to 0.20%

0.21% to 0.30%

0.31% to 0.40%

0.41% and over

Sources of Funds.

discussed above, deposit gathering has been the Company’s principal source of funds.

Asset growth in excess of deposits may be

funded through cash flows from our loan and investment portfolios, or the following sources:

borrowing capacity includes borrowing arrangements at the FHLB, the Federal Reserve Bank (“FRB”), and borrowing arrangements

with correspondent banks.

Asset growth in excess of deposits

may be funded through cash flows from our loan and investment portfolios, or the following sources:

borrowing capacity includes borrowing arrangements at the FHLB, the Federal Reserve Bank of Boston (“FRB”), and borrowing

arrangements with correspondent banks.

Company is a member of the FHLB and uses borrowings as an additional source of funding to finance the Company’s lending

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debt with the FHLB, compared to $2.7 million in long-term debt with the FHLB at December 31, 2021.

Bank also provides access to insurance and investment products through Westfield Investment Services through a partnership with

LPL Financial (“LPL”), a third-party registered broker-dealer.

Westfield Investment Services representatives provide

a broad range of wealth management, investment, insurance, financial planning and strategic asset management services, helping

clients meet all of their financial needs.

and advisory services are offered through LPL, a registered investment advisor and broker-dealer (member FINRA/SIPC).

products are offered through LPL or its licensed affiliates.

Westfield Bank and Westfield Investment Services are not registered

as a broker-dealer or investment advisor.

Registered representatives of LPL offer products and services using Westfield Investment

Services, and may also be employees of Westfield Bank.

These products and services are being offered through LPL or its affiliates,

which are separate entities from and not affiliates of Westfield Bank or Westfield Investment Services.

Securities and insurance

offered through LPL or its affiliates are:

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.

The Company intends to use the net proceeds of the offering for general corporate purposes, including organic growth and repurchase

of the Company’s common shares.

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 (ii) 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.

Bank also provides access to insurance and investment products through Westfield Investment Services through LPL Financial (“LPL”),

a third-party registered broker-dealer.

Westfield Investment Services representatives provide a broad range of wealth management,

investment, insurance, financial planning and strategic asset management services, helping clients meet all of their financial

and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC).

Insurance products are offered through LPL or its licensed affiliates.

Westfield Bank and Westfield Investment Services

are not registered as a broker/dealer or investment advisor.

Registered representatives of LPL offer products and

services using Westfield Investment Services, and may also be employees of Westfield Bank.

These products and services are being

offered through LPL or its affiliates, which are separate entities from and not affiliates of Westfield Bank or Westfield Investment

Securities and insurance offered through LPL or its affiliates are:

Insured by FDIC or Any Other Government Agency

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or indirect acquisition of more than 5% of the voting shares of a savings association or its parent holding company and for a

company, other than a savings and loan holding company, to acquire 25% or more of any class of voting securities of a savings

association or a savings and loan holding company.

Under the Change in Bank Control Act, no person, including a company, may acquire,

directly or indirectly, control of an insured depository institution without providing 60 days’ prior notice and receiving

a non-objection from the appropriate federal banking agency.

company, other than a savings and loan holding company, to acquire “control” of a savings association or a savings

and loan holding company.

A company can be deemed to “control” a savings association or a savings and loan holding

company by owning or controlling, directly or indirectly, more than 25% of the voting shares, but even below that threshold, a

company can be found to have “control” through other controlling influences.

Under the Change in Bank Control Act,

no person, including a company, may acquire, directly or indirectly, control of an insured depository institution without providing

60 days’ prior notice and receiving a non-objection from the appropriate federal banking agency.

the Bank Merger Act, the prior approval of the OCC is required for a federal savings association to merge with another insured

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case, subject to the Capital Rules’ specific requirements.

to the Capital Rules, the minimum capital ratios as of January 1, 2015 are:

to the Capital Rules, the minimum capital ratios are:

CET1 to risk-weighted assets;

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on dividends, equity and other capital instrument repurchases and compensation based on the amount of the shortfall.

conservation buffer became fully phased-in on January 1, 2019 and requires an additional capital conservation buffer of 2.5% of

CET1, effectively resulting in minimum ratios inclusive of the capital conservation buffer of (i) CET1 to risk-weighted assets

of at least 7%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, and (iii) Total capital to risk-weighted assets

of at least 10.5%.

Capital Rules provide for a number of deductions from and adjustments to CET1.

These include, for example, the requirement that

mortgage servicing rights, deferred tax assets arising from temporary differences that could not be realized through net operating

loss carrybacks and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any

one such category exceeds 10% of CET1 or all such items, in the aggregate, exceed 15% of CET1.

In November 2017, the FRB finalized

a rule pausing the phase-in of these deductions and adjustments for non-advanced approaches institutions.

In July 2019, the OCC,

FRB and FDIC adopted a final rule intended to simply the Capital Rules described above for non-advanced approaches institutions.

Institutions were required to implement the provisions of the simplification rule by April 1, 2020.

The transition provisions

to the Capital Rules issued by these agencies in November 2017 ceased to apply to an institution in the quarter in which it adopted

the simplification rule.

The additional

capital conservation buffer must be 2.5% of CET1, effectively resulting in minimum ratios inclusive of the capital conservation

buffer of (i) CET1 to risk-weighted assets of at least 7%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, and (iii)

Total capital to risk-weighted assets of at least 10.5%.

Capital Rules provide for a number of deductions from and adjustments to CET1, which have been simplified for non-advanced approaches

institutions since the time the Capital Rules were initially finalized.

addition, under the current general risk-based capital rules, the effects of accumulated other comprehensive income or loss (“AOCI”)

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and will be considered to have met the well-capitalized ratio requirements for PCA (as defined below) purposes.

Company and the Bank evaluated the simplified Capital Rules to determine our adoption status for the applicable filings periods

beginning in 2020 and decided not to opt in to the community bank leverage ratio framework.

The Company and

the Bank evaluated the simplified Capital Rules to determine our adoption status for the applicable filings periods beginning

in 2020 and decided not to opt in to the community bank leverage ratio framework.

Corrective Action.

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Thrift Lender Test.

federal law, as a federal savings association, the Bank must comply with the qualified thrift lender, or “QTL” test.

federal law, as a federal savings association, the Bank must comply with the qualified thrift lender test (the “QTL test”).

Under the QTL test, the Bank is required to maintain at least 65% of its “portfolio assets” in certain “qualified

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Assessment rates are calculated using formulas that take into account the risk of the institution being assessed.

Depositor Preference.

FDIA provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the

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The Bank must also comply with the Customer Due Diligence Rule, which clarifies and

strengthens the existing obligations for identifying new and existing customers and explicitly include risk-based procedures for

strengthens the existing obligations for identifying new and existing customers and explicitly includes risk-based procedures for

conducting ongoing customer due diligence.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business