What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2025-03-10 compared with 2024-03-08 · 501 added, 492 removed, 1058 unchanged (48% of the section changed)

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As of December

31, 2023, the Bank had twenty-five branches and ten freestanding automated teller machines (“ATMs”).

31, 2024, the Bank had twenty-five branches and eight freestanding automated teller machines (“ATMs”).

The Bank also

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Enfield, Granby and West Hartford, Connecticut.

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

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

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

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June 30, 2024, which is the most recent date for which data is available from the FDIC, we held approximately 13.2% of the deposits

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

Equity and Inclusion

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

understand that our human capital is one of our most valuable assets and a key to our success.

We are committed to fostering,

cultivating and preserving a culture of diversity, equity and inclusion.

We are dedicated to providing a workplace for our employees

that is inclusive, supportive, and free of any form of discrimination or harassment;

rewarding and recognizing our employees based

on their individual results and performance as well as that of their department and the Company overall;

and recognizing and respecting

all of the characteristics and differences that make each of our employees unique.

December 31, 2023, our employees were representative of our commitment to recruit, develop, and retain diverse individuals, wherein

approximately 64% of our employees were women and 24% 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.

embrace and value our inclusive culture of belonging that celebrates unique perspectives and experiences.

We leverage our strong

and inclusive culture to provide quality service to our customers, the communities in which we operate and each other.

we established the Westfield Bank Culture and Diversity Committee (the “Diversity Committee”), which is comprised

of a cross-section of employees representing diverse backgrounds.

The Diversity Committee is committed to creating opportunities

for our employees to connect with each other, learn from one another and celebrate employee commonalities and differences.

The Company is an equal opportunity

employer and maintains hiring practices and policies that foster and promote a diverse and inclusive workforce.

We strive to create

a workplace for our employees that is inclusive, supportive, and free of any form of discrimination or harassment;

rewarding and

recognizing our employees based on their individual results and performance as well as that of their department and the Company

We are dedicated to recruiting, developing and promoting a diverse workforce to meet the current and future demands of

our business.

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

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and externally developed training programs.

2021, a customized Corporate Leadership Development Program was established for the Company to enhance the core capabilities of

our top talent in leadership, including through the development of management skills to prepare them for future roles in the Company.

During 2023, twenty-seven employees were nominated to participate in the program and successfully completed the program.

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.

2021, the customized Corporate Leadership Development Program was established for the Company to enhance the core capabilities

of our top talent in leadership, including through the development of management skills to prepare them for future roles in the

During 2024, twenty-four employees were nominated to participate in the program and successfully completed the program.

In 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

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life insurance and disability insurance, a 401(k) Safe Harbor Plan with a competitive company match, an employee stock ownership

plan (“ESOP”), short-term and long-term incentive compensation programs, tuition reimbursement, paid time off, including

vacation days and paid holidays, and wellness and employee assistance programs.

plan, short-term and long-term incentive compensation programs, tuition reimbursement, paid time off, including vacation days

and paid holidays, and wellness and employee assistance programs.

Health and Safety

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healthy lifestyle choices and options.

The Bank has loan policies which are approved by its Board of Directors on an annual basis.

The loan policies govern the conditions

under which loans may be made, addresses the lending authority of loan officers, documentation requirements, appraisal policy,

charge-off policies and desired portfolio mix.

The Bank’s lending limit to any one borrower is subject to regulation by

The Bank continually monitors its loan portfolio to review compliance with new and existing regulations.

Bank offers a variety of loan products to its customers, including residential and commercial real estate mortgage loans, commercial

loans, and installment loans.

Approval Procedures and Authority.

lending activities follow written, nondiscriminatory underwriting standards and loan origination procedures established by the

Company’s Board of Directors (the “Board”) and Management.

On an annual basis, the Board approves the Bank’s

Loan Policy (the “Loan Policy”).

The Loan Policy governs the conditions under which loans are made, addresses the

lending authority of loan officers, documentation requirements, appraisal policy, charge-off policies and desired portfolio mix.

The Executive Committee of the Board approves loan relationships exceeding certain prescribed dollar limits as outlined in the

to One Borrower Limit.

Bank may not make a loan or extend credit to a single borrower or related group of borrowers if the aggregate of all loans or

extensions of credit to that single borrower or related group of borrowers would be in excess of 15% of the bank’s unimpaired

capital and surplus.

At December 31, 2024, the Bank’s regulatory limit on loans to one borrower was $40.6 million.

loan to one borrower limit is $38.8 million.

At December 31, 2024, our largest lending relationship, primarily secured by business

assets and commercial real estate located in Agawam, Massachusetts, had a total loan exposure of $22.8 million, of which $7.7

million was outstanding.

At December 31, 2024, this loan was performing in accordance with their original repayment terms.

December 31, 2024, our top ten largest lending relationships have an average exposure of $18.4 million, or 6.8% of total bank

risk based capital, with a range in exposure from $15.6 million, or 5.7% of total bank risk based capital, to $22.8 million, or

8.4% or total bank risk based capital.

The Bank continually monitors its loan portfolio to review compliance with new and existing

Bank offers a variety of loan products to its customers, including residential and commercial real estate loans, commercial loans,

and installment loans.

The Bank primarily extends loans to customers located within the Company’s footprint.

income on loans represented 90.2% of the total interest income of the Company in 2023 compared with 89.9% in 2022.

loan portfolio totaled $2.0 billion, or 79.1% of total assets, at December 31, 2023, compared to $2.0 billion, or 78.0% of total

assets, at December 31, 2022.

2023, interest income on loans represented 90.0% and 90.2% of the total interest income of the Company, respectively.

31, 2024, the Bank’s loan portfolio totaled $2.1 billion, or 78.0% of total assets, compared to $2.0 billion, or 79.1% of

total assets, at December 31, 2023.

Company’s primary lending focus is to generate high quality commercial loan relationships achieved through active business

development efforts, long-term relationships with established commercial developers, community involvement, and focused marketing

Loans made to businesses, non-profits, and professional practices may include commercial mortgage loans, construction

Loans made to businesses, non-profits, and professional practices may include commercial real estate loans, construction

and land development loans, commercial and industrial loans, including lines of credit and letters of credit.

Loans made to individuals

may include conventional residential mortgage loans, home equity loans and lines, residential construction loans on owner-occupied

primary and secondary residences, and secured and unsecured personal loans and lines of credit.

The Company manages its loan portfolio

to avoid concentration by industry, relationship size, and source of repayment to lessen its credit risk exposure.

may include conventional residential real estate loans, home equity loans and lines of credit, residential construction loans

on owner-occupied primary and secondary residences, and secured and unsecured personal loans and lines of credit.

manages its loan portfolio to avoid concentration by industry, property type, relationship size, and source of repayment to lessen

its credit risk exposure.

rates on loans may be fixed or variable and variable rate loans may have fixed initial periods before periodic rate adjustments

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

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

certain prescribed dollar limits as outlined in the Bank’s loan policies.

December 31, 2023, our general regulatory limit on loans to one borrower was $40.7 million.

Our largest lending exposure was a

$24.9 million commercial lending relationship, of which $9.9 million was outstanding at December 31, 2023.

This relationship is

primarily secured by business assets and commercial real estate located in Agawam, Massachusetts.

At December 31, 2023, this relationship

was performing in accordance with its original terms.

Real Estate Loans and Commercial and Industrial Loans .

December 31, 2023, commercial real estate loans totaled $1.1 billion, or 53.3% of total loans, compared to $1.1 billion, or 53.8%

of total loans, at December 31, 2022.

Real Estate Loans.

December 31, 2024, commercial real estate loans, including commercial construction loans, totaled $1.1 billion, or 52.0% of total

loans, and consisted of $410.0 million of fixed-rate loans and $665.7 million of adjustable-rate loans.

At December 31, 2024,

the largest commercial real estate loan, a 100 unit apartment building in Massachusetts, had an outstanding balance of $19.2 million,

and represented 0.9% of total loans and 7.1% of total bank risk-based capital.

This loan was performing in accordance with the

original repayment terms at December 31, 2024.

For more information relating to the Company’s commercial real estate portfolio

as of December 31, 2024 and 2023, see “ Item 7 - Management’s Discussion and Analysis of Financial Condition and

Results of Operations – CRE Concentrations.

Company originates commercial real estate loans throughout its market area for the purpose of acquiring, developing, and refinancing

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commercial construction loans included within commercial real estate loans.

At December 31, 2023, the largest concentration of

commercial loans to an industry was to hotels, which comprised approximately 2.3% of total loans and 16.4% of total risk-based

capital as of December 31, 2023.

December 31, 2023, our total commercial and industrial loan portfolio totaled $217.4 million, or 10.7% of our total loans.

December 31, 2022, our total commercial and industrial loan portfolio totaled $219.8 million, or 11.0% of our total loans.

and Industrial Loans.

December 31, 2024, our total commercial and industrial loan portfolio totaled $211.7 million, or 10.3% of total loans, compared

to $217.4 million, or 10.7% of total loans, at December 31, 2023.

At December 31, 2024, the largest commercial and industrial

loan, with an outstanding balance of $16.8 million and total loan exposure of $18.0 million, was to a commercial borrower, located

in Westfield, Massachusetts.

Total exposure represented 0.9% of total loans and 6.6% of total bank risk-based capital at December

This loan was performing in accordance with their original repayment terms at December 31, 2024.

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

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of one to seven years.

a Preferred Lender with the Small Business Administration (“SBA”), the Company offered Paycheck Protection Program

(“PPP”) loans through the March 27, 2020 $2.2 trillion fiscal stimulus bill known as the Coronavirus Aid, Relief and

Economic Security Act (the “CARES Act”) launched by the U.S.

Department of Treasury (“Treasury”) and the

An eligible business was able to apply for a PPP loan up to the lesser of:

(1) 2.5 times its average monthly “payroll

costs,” or (2) $10.0 million.

PPP loans have:

(a) an interest rate of 1.0%, (b) a two-year loan term to maturity, subsequently

extended to a five-year loan term maturity for loans granted on or after June 5, 2020 and (c) principal and interest payments

deferred from six months to ten months from the date of disbursement.

The SBA will guarantee 100% of the PPP loans made to eligible

The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be reduced

by the loan forgiveness amount under the PPP so long as employee and compensation levels of the business are maintained and 60%

of the loan proceeds are used for payroll expenses, with the remaining 40% of the loan proceeds used for other qualifying expenses.

PPP loans totaled $756,000 and $2.3 million, at December 31, 2023 and 2022, and were included in total commercial and industrial

of credit are conditional commitments issued by the Company to guarantee the financial obligation or performance of a customer

to a third party.

letters of credit are conditional commitments issued by the Company to guarantee the financial obligation or performance of a

customer to a third party.

The credit risk involved in issuing letters of credit is essentially the same as that involved in extending

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loan, with the same criteria associated with similar commercial loans.

Company participates with other banks in the financing of certain commercial projects.

Participating loans with other institutions

provide banks the opportunity to retain customer relationships and reduce credit risk exposure among each participating bank,

while providing customers with larger credit facilities than the individual bank might be willing or able to offer independently.

In some cases, the Company may act as the lead lender, originating and servicing the loans, but participating out a portion of

the funding to other banks.

In other cases, the Company may participate in loans originated by other institutions.

In each case,

the participating bank funds a percentage of the loan commitment and takes on the related pro-rata risk.

In each case in which

the Company participates in a loan, the rights and obligations of each participating bank are divided proportionately among the

participating banks in an amount equal to their share of ownership and with equal priority among all banks.

The Company performs

an independent credit analysis of each commitment and a review of the participating institution prior to participation in the

loan, and an annual review of the borrower thereafter.

Loans originated by other banks in which the Company is a participating

institution are carried in the loan portfolio at the Company’s pro-rata share of ownership.

Loans originated by other banks

in which the Company is a participating institution amounted to $129.9 million at December 31, 2023 and $132.6 million at December

The Company was servicing commercial loans originated by the Company and participated out to various other institutions

totaling $65.0 million and $70.5 million at December 31, 2023 and December 31, 2022, respectively.

December 31, 2024, our largest concentration of commercial loans was to hotels, which comprised approximately 2.2% of total loans

and 15.9% of total bank risk-based capital.

Participation

Company cultivates relationships with other financial institutions to mitigate the risk of our lending activities by participating

either as the lead bank or as a participant in various loan transactions.

Participating in loans with other institutions provides

the Company with the opportunity to retain customer relationships and reduce credit risk exposure among each participating bank,

while providing the customer with larger credit facilities than the Company might be willing to, or able to, offer independently.

The Company purchases participation interests in larger balance loans from other financial institutions generally in our market

Such participations are evaluated with the same level of due diligence and care as loans originated internally.

The participations

are underwritten, reviewed for compliance, and approved in accordance with the Company’s underwriting policies and criteria.

The performance of participation loans is actively monitored and updated financial statements of the borrower are received periodically

from the participant in accordance with loan reporting requirements and covenant testing.

These loans are reviewed annually in

accordance with the Company’s Loan Policy and graded based on credit risk.

Loan grades assigned are also tested by the Company’s

external loan review firm in accordance with the Company’s loan review policy.

Company participated in commercial real estate loans with outstanding balances of $116.2 million, commercial construction loans

with outstanding balances of $14.0 million, and commercial and industrial loans with outstanding balances of $2.4 million at December

At December 31, 2023, we participated in commercial real estate loans with outstanding balances of $116.7 million, commercial

construction loans with outstanding balances of $10.3 million, and commercial and industrial loans with outstanding balances of

$2.9 million.

Company sells loan participations in the ordinary course of business when a loan originated by the Company exceeds our legal lending

limit or we otherwise deem it prudent to share the risk with another lending institution.

At December 31, 2024, the Company was

the lead bank in commercial real estate loans of $80.9 million, commercial construction loans of $1.5 million, and commercial

and industrial loans of $22.8 million, with participation balances sold that totaled $52.0 million for commercial real estate

loans, $1.5 million for commercial construction loans and $12.2 million for commercial and industrial loans, respectively.

December 31, 2023, the Company was the lead bank in commercial real estate loans of $67.3 million, commercial construction loans

of $16.1 million, and commercial and industrial loans of $22.6 million, with participation balances sold that totaled $46.3 million

for commercial real estate loans, $7.5 million for commercial construction loans and $11.2 million for commercial and industrial

loans, respectively.

Real Estate Loans.

December 31, 2024 and December 31, 2023, the residential real estate loan portfolio totaled $653.8 million, or 31.6% of total

loans, and $589.5 million, or 29.6%, of total loans, respectively.

The Company originates and funds residential real estate loans,

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.

loans, and $612.3 million, or 30.3%, of total loans, respectively, and consisted of $568.8 million of fixed-rate loans and $85.0

million in adjustable-rate loans.

The Company originates and funds residential real estate loans, 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.

At December 31, 2024, the largest residential real estate loan was $2.0 million.

The loan was secured

by the borrower’s secondary residence located in New Hampshire and was performing according to its original terms as of

December 31, 2024.

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

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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 the Bank’s loan policies.

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

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

Home equity loans and lines of credit are secured by first or second mortgages

on one-to-four family owner-occupied properties.

Equity loans and lines of credit 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 the Bank’s loan policies.

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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The Company is an approved servicer with Fannie

Mae and an approved seller and servicer with Freddie Mac and the FHLB.

In order to reduce interest rate risk, during the twelve

months ended December 31, 2022, the Company sold $277,000 of fixed rate, low coupon residential real estate loans to the secondary

The Company did not sell residential real estate loans during the twelve months ended December 31, 2023.

At December 31,

2023 and December 31, 2022, the Company serviced $72.7 million and $79.3 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.

owner-occupied residential real estate loan was $2.0 million and was performing according to its original terms as of December

Equity Loans.

December 31, 2023 and December 31, 2022, home equity loans totaled $109.8 million, or 5.4% of total loans, and $105.6 million,

or 5.3% of total loans, respectively.

The Company originates home equity revolving loans and lines of credit for one-to-four family

residential properties with maximum original loan-to-value ratios generally up to 85%.

Home equity lines generally have interest

rates that adjust monthly based on changes in the Wall Street Journal Prime Rate, although minimum rates may be applicable.

home equity line rates may be fixed for a period of time and then adjusted monthly thereafter.

The payment schedule for home equity

lines require interest only payments for the first ten years of the lines.

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.

Mae, an approved seller and servicer with Freddie Mac and the FHLB, and an approved Mass Housing lender.

In order to reduce interest

rate risk, during the twelve months ended December 31, 2024, the Company sold $20.1 million in fixed rate residential loans to

the secondary market with servicing retained.

The Company did not sell residential real estate loans during the twelve months

ended December 31, 2023.

At December 31, 2024 and December 31, 2023, the Company serviced $84.8 million and $72.7 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.

Equity Loans and Lines of Credit.

December 31, 2024 and December 31, 2023, home equity loans and lines of credit totaled $121.9 million, or 5.9% of total loans,

and $109.8 million, or 5.4% of total loans, respectively.

The Company originates home equity revolving loans and lines of credit

for one-to-four family residential properties with maximum original loan-to-value ratios generally up to 85%.

Home equity lines

generally have interest rates that adjust monthly based on changes in the Wall Street Journal Prime Rate, although minimum rates

may be applicable.

Some home equity line rates may be fixed for a period of time and then adjusted monthly thereafter.

schedule for home equity lines require interest only payments for the first ten years of the lines.

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

December 31, 2024 and December 31, 2023, consumer loans totaled $4.4 million, or 0.2%, of total loans and $5.5 million, or 0.3%,

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Real estate loans:

Commercial real estate:

Non-owner occupied

Owner occupied

Total commercial real estate

Residential real estate:

Residential one-to-four family

Total residential real estate loans

Total real estate loans

Commercial and industrial loans

Commercial and industrial

Total commercial and industrial

Total gross loans

Unamortized premiums and net

deferred loan fees and costs

Unamortized premiums and net deferred loan fees and costs

Allowance for credit losses

Total loans, net

Maturity and Repricing.

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At December 31, 2024

Commercial Real Estate

Non-Owner Occupied Commercial Real Estate

Owner Occupied Commercial Real

Residential One-to-Four Family

Commercial and Industrial

(In thousands)

(Dollars in thousands)

Within one year

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Due After December 31, 2025

(In thousands)

(Dollars in thousands)

Real estate loans:

Residential one-to-four family

Commercial real estate

Non-owner occupied commercial real estate

Owner occupied commercial real estate

Total real estate loans

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to the Chief Credit Officer and is responsible for the completion of independent credit analyses for all loans above a specific

Company’s loan policies require that management continuously monitor the status of the loan portfolio and report to the

Board of Directors on a monthly basis.

These reports include information on concentration levels, delinquent loans, nonaccrual

loans, criticized loans and foreclosed real estate, as well as our actions and plans to cure the nonaccrual status of the loans

and to dispose of the foreclosed property.

Company’s Loan Policy requires that management continuously monitor the status of the loan portfolio and report to the Board

on a monthly basis.

These reports include information on concentration levels, delinquent loans, nonperforming loans, criticized

loans and foreclosed real estate, as well as our actions and plans to cure the nonperforming status of the loans and to dispose

of the foreclosed property.

Company contracts with an external third-party loan review company to review the internal risk ratings assigned to loans in the

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Problem Loans.

Bank’s loan policies contain an internal rating system which evaluates the overall risk of a problem loan.

Bank’s Loan Policy contain an internal rating system which evaluates the overall risk of a problem loan.

The Company performs

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In addition, the Company closely

monitors classified loans, defined as substandard, doubtful, and loss for signs of deterioration to mitigate the growth in nonaccrual

monitors classified loans, defined as substandard, doubtful, and loss for signs of deterioration to mitigate the growth in nonperforming

loans, including performing additional due diligence, updating valuations and requiring additional financial reporting from the

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quality, cash flow coverage, position within the industry, loan structure and documentation.

December 31, 2023, the Company’s criticized loans totaled $39.5 million, or 1.9% of total loans, compared to $64.0 million,

or 3.2% of total loans, at December 31, 2022.

The Company’s classified loans totaled $33.7 million, or 1.7% of total loans,

at December 31, 2023 and $42.3 million, or 2.1%, of total loans, at December 31, 2022.

Classified loans that were performing but

possessed potential weaknesses and, as a result, could ultimately become nonperforming loans totaled $27.7 million, or 1.4% of

total loans, at December 31, 2023 and $36.6 million, or 1.8% of total loans, at December 31, 2022.

The remaining balance of classified

loans were nonaccrual loans totaling $6.0 million, or 0.3% of total loans, at December 31, 2023 and $5.7 million, or 0.3% of total

loans, at December 31, 2022.

impaired loans totaled $29.7 million, or 1.5% of total loans, at December 31, 2023, while individually analyzed and impaired loans

totaled $18.4 million, or 0.9% of total loans, at December 31, 2022.

Total accruing impaired loans totaled $23.3 million at December

31, 2023, while individually analyzed and impaired loans totaled $12.7 million at December 31, 2022.

Nonaccrual impaired loans

totaled $6.4 million as of December 31, 2023, while individually analyzed and impaired nonaccrual loans totaled $5.7 million as

of December 31, 2022.

management’s opinion, all impaired loan balances at December 31, 2023 and 2022, were supported by expected future cash flows

or, for those collateral dependent loans, the net realizable value of the underlying collateral.

At December 31, 2023, commercial

and industrial impaired loans with a recorded investment of $517,000 carried a related reserve amount of $179,000.

loans required a specific reserve at December 31, 2022.

December 31, 2024, the Company’s criticized loan portfolio totaled $38.4 million, or 1.9% of total loans, compared to $39.5

million, or 1.9% of total loans, at December 31, 2023.

The Company’s special mention loans totaled $11.4 million, or 0.6%

of total loans, at December 31, 2024 and $5.8 million, or 0.3%, of total loans, at December 31, 2023.

Classified loans totaled

$27.0 million, or 1.3% of total loans, at December 31, 2024 and $33.7 million, or 1.7% of total loans, at December 31, 2023.

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

$21.6 million, or 1.0% of total loans, at December 31, 2024 and $27.7 million, or 1.4% of total loans, at December 31, 2023.

remaining balance of classified loans were nonperforming loans totaling $5.4 million, or 0.3% of total loans, at December 31,

2024 and $6.0 million, or 0.3% of total loans, at December 31, 2023.

individually evaluated loans totaled $14.3 million, or 0.7% of total loans, at December 31, 2024, while individually evaluated

loans totaled $29.7 million, or 1.5% of total loans, at December 31, 2023.

Total accruing individually evaluated loans totaled

$8.9 million at December 31, 2024, while accruing individually evaluated loans totaled $23.3 million at December 31, 2023.

Nonperforming

individually evaluated loans totaled $5.4 million as of December 31, 2024, while nonperforming individually evaluated loans totaled

$6.4 million as of December 31, 2023.

management’s opinion, all individually evaluated loan balances at December 31, 2024 and 2023, were supported by expected

future cash flows or, for those collateral dependent loans, the net realizable value of the underlying collateral.

31, 2024, commercial and industrial individually evaluated loans with a recorded investment of $494,000 carried a related reserve

amount of $156,000.

At December 31, 2023, commercial and industrial individually evaluated loans with a recorded investment of

$517,000 carried a related reserve amount of $179,000.

Management closely monitors these relationships for collateral or credit

deterioration.

nonaccrual loans totaled $6.4 million, or 0.32% of total loans, at December 31, 2023, and $5.7 million, or 0.29% of total loans,

nonperforming loans totaled $5.4 million, or 0.26% of total loans, at December 31, 2024, and $6.4 million, or 0.32% of total loans,

at December 31, 2023.

If all nonaccrual loans had been performing in accordance with their terms, we would have earned additional

If all nonperforming loans had been performing in accordance with their terms, we would have earned additional

interest income of $373,000, $373,000 and $257,000 for the years ended December 31, 2024, 2023 and 2022, respectively.

Real Estate Owned (“OREO”)

acquired through, or in lieu of, loan foreclosures are held for sale and are initially recorded at fair value less cost to sell

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At December 31, 2024

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

and 2023, the Company carried no OREO balances.

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

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Total loans outstanding

Nonaccrual loans to total loans outstanding

Nonaccrual loans

Nonperforming loans to total loans outstanding

Nonperforming loans

Total loans outstanding

Allowance for credit losses to nonaccrual loans

Allowance for credit losses to nonperforming loans

Allowance for credit losses

Nonaccrual loans

Nonperforming 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

Residential one-to-four family charge-offs (recoveries) to daily average loans outstanding

Net charge-offs (recoveries) during the period

Average amount outstanding

Commercial and industrial charge-offs to daily average loans outstanding

Net charge-offs during the period

Commercial real estate (recoveries) charge-offs to daily average loans outstanding

Net (recoveries) charge-offs during the period

Average amount outstanding

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

Commercial and industrial (recoveries) charge-offs to daily average loans outstanding

Net (recoveries) 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

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Average amount outstanding

Total Loan Charge-offs to Daily Average Loans Outstanding

Net charge-offs during the period

Total loan (recoveries) charge-offs to daily average loans outstanding

Net (recoveries) charge-offs during the period

Average amount outstanding

Company adopted ASU 2016-13 on January 1, 2023 with a modified retrospective approach.

Accordingly, beginning at January 1, 2023, the allowance for credit losses was determined

in accordance with ASC 326, “ Financial Instruments-Credit Losses .”

the year ended December 31, 2023, the Company recorded net charge-offs of $1.2 million on the commercial and industrial loan portfolio.

the year ended December 31, 2024, the Company recorded net recoveries of $87,000, compared to net charge-offs of $2.0 million

for the twelve months ended December 31, 2023.

During the year ended December 31, 2023, the Company recorded net charge-offs of

$1.2 million on the commercial and industrial loan portfolio and net charge-offs of $755,000 on the commercial real estate portfolio.

The charge-offs during the year ended December 31, 2023 were related to one commercial relationship acquired on October 21, 2016

from Chicopee Bancorp, Inc., which was recently placed on nonaccrual status.

During the year ended December 31, 2023, the Company

recorded a $1.9 million charge-off on the relationship, which represented the non-accretable credit mark that was required to

be grossed-up to the loan’s amortized cost basis with a corresponding increase to the allowance for credit losses under

from Chicopee Bancorp, Inc., which was placed on nonperforming status.

During the year ended December 31, 2023, the Company recorded

a $1.9 million charge-off on the acquired commercial relationship, which represented the non-accretable credit mark that was required

to be grossed-up to the loan’s amortized cost basis with a corresponding increase to the allowance for credit losses under

the Current Expected Credit Losses (“CECL”) implementation.

At December 31, 2023, the Company has charged-off 61%

of the total relationship and the remaining exposure of $940,000 is collateralized at this time.

for Credit Losses .

January 1, 2023, the Company adopted ASU 2016-13 Financial Instruments - Credit Losses ( Topic326 ):

of Credit Losses on Financial Instruments , which requires the recognition of the allowance for credit losses be estimated

using the CECL methodology.

The measurement of expected credit losses under the CECL methodology is applicable to financial assets

measured at amortized cost, including loan receivables and held-to-maturity (“HTM”) debt securities.

It also applies

to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees,

and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases.

addition, ASC 326 made changes to the accounting for available-for-sale (“AFS”) debt securities.

One such change is

to require credit losses to be presented as an allowance rather than as a write-down on AFS debt securities that are determined

to have impairment related to credit losses.

Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance

sheet credit exposures.

Results for reporting periods beginning January 1, 2023 are presented under ASC 326 while prior period

amounts continue to be reported in accordance with previously applicable GAAP.

The Company recorded a net increase to retained

earnings of $9,000 as of January 1, 2023 for the cumulative effect of adopting ASC 326, which includes a net deferred tax liability

The transition adjustment includes a $1.2 million increase to the allowance for credit losses and the recording of

a $918,000 allowance for credit losses on off-balance sheet credit exposures.

allowance for credit losses is an estimate of expected losses inherent within the Company’s existing loans held for investment

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by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries.

interest receivable on loans held for investment was $7.5 million at December 31, 2023 and is excluded from the estimate of credit

interest receivable on loans held for investment was $7.4 million and $7.5 million at December 31, 2024 and 2023, respectively,

and is excluded from the estimate of credit losses.

credit loss estimation process involves procedures to appropriately consider the unique characteristics of loan portfolio segments,

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is model-based and utilizes a forward-looking macroeconomic forecast.

The Company uses a discounted cash flow method, incorporating

probability of default and loss given default forecasted based on statistically derived economic variable loss drivers, to estimate

expected credit losses.

This process includes estimates which involve modeling loss projections attributable to existing loan

balances, and considering historical experience, current conditions, and future expectations for pools of loans over a reasonable

and supportable forecast period.

The historical information either experienced by the Company or by a selection of peer banks,

when appropriate, is derived from a combination of recessionary and non-recessionary performance periods for which data is available.

For commercial real estate loans, residential real estate

loans, and commercial and industrial loans, the Company uses a discounted cash flow method, incorporating probability of default

and loss given default forecasted based on statistically derived economic variable loss drivers, to estimate expected credit losses.

This process includes estimates which involve modeling loss projections attributable to existing loan balances, and considering

historical experience, current conditions, and future expectations for pools of loans over a reasonable and supportable forecast

The historical information either experienced by the Company or by a selection of peer banks, when appropriate, is derived

from a combination of recessionary and non-recessionary performance periods for which data is available.

The expected loss estimates

for the consumer loan segment are based on historical loss rates using the weighted average remaining maturity (“WARM”)

For information on our methodology for assessing the appropriateness of the allowance for credit losses please see Footnote

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real estate loans .

Loans in this segment include commercial real estate, multi-family dwellings, owner-occupied commercial

real estate and income producing investment properties, as well as commercial construction loans for commercial development projects

Loans in this segment include owner-occupied and non-owner occupied commercial real estate, multi-family

dwellings, and income producing investment properties, as well as commercial construction loans for commercial development projects

throughout New England.

The underlying cash flows generated by the properties or operations can be adversely impacted by a downturn

in the economy due to increased vacancy rates or diminished cash flows, which in turn, would have an effect on the credit quality

in this segment.

Management obtains financial information annually and continually monitors the cash flows of these loans.

Typically, commercial real estate loans are secured by office buildings, apartment buildings, industrial

properties, warehouses, retail facilities, hotels, assisted living facilities, and educational facilities.

Collateral values are

established by independent third-party appraisals and evaluations.

Primary repayment sources for commercial real estate loans

include operating income and cash flow generated by the real estate, sale of the real estate and, funds from any liquidation of

the collateral.

Under its lending guidelines, the Company generally requires a corporate or personal guarantee from individuals

that hold material ownership in the borrowing entity.

The underlying cash flows generated by the properties or operations can

be adversely impacted by a downturn in the economy due to increased vacancy rates or diminished cash flows, which in turn, would

have an effect on the credit quality in this segment.

Management obtains financial information annually and continually monitors

the cash flows of these loans.

real estate loans .

This portfolio segment consists of first mortgages, home equity loans, and home equity lines secured by

one-to-four family residential properties.

First mortgages may be underwritten to a maximum loan-to-value of 97% for owner-occupied

homes, 90% for second homes and 85% for investment properties.

Mortgages with loan-to-values greater than 80% require private

mortgage insurance.

We do not grant subprime loans.

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 to 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 the Company’s loan policies.

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

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

This portfolio segment consists of first mortgages secured by one-to-four family residential properties

and home equity loans and home equity lines secured by first or second mortgages on one-to-four family owner-occupied properties.

First mortgages may be underwritten to a maximum loan-to-value of 97% for owner-occupied homes, 90% for second homes and 85% for

investment properties.

Mortgages with loan-to-values greater than 80% require private mortgage insurance.

We do not grant subprime

Home equity loans and lines are underwritten to 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 principal and interest on a monthly basis,

credit history, financial resources and the value of the collateral.

Residential real estate loans are originated either for sale

to investors or retained in the Company’s loan portfolio.

Decisions about whether to sell or retain residential real estate

loans are made based on the interest rate, pricing for loans in the secondary market, and the Company’s liquidity and capital

The overall health of the economy, including unemployment rates and housing pricing, will have an effect on the credit

quality in this segment.

and industrial loans .

Loans in this segment include commercial business loans and are generally secured by assignments of

corporate assets and personal guarantees of the business owners.

Repayment is expected from the cash flows of the business.

weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment.

The primary risk associated with commercial and industrial loans is the ability of borrowers to achieve

business results and cash flows consistent with those projected at loan origination.

Collateral frequently consists of a first

lien position on business assets including, but not limited to, accounts receivable, inventory, and equipment.

The primary repayment

source is operating cash flow, followed by liquidation of assets.

Under its lending guidelines, the Company generally requires

a corporate or personal guarantee from individuals that hold material ownership in the borrowing entity.

A weakened economy and

resultant decreased consumer spending will have an effect on the credit quality in this segment.

Loans in this segment are both secured and unsecured and repayment is dependent on the credit quality of the individual

Cash Flow Method (“DCF”)

for Credit Losses Methodology

estimating the component of the allowance for credit losses for loans that share similar risk characteristics with other loans,

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credit loss assumption from a model that categorizes loan pools based on loan type and purpose.

This model calculates an expected

loss percentage for each loan class by considering the probability of default, using life-of-loan analysis periods for all loan

segments, and the historical severity of loss, based on the aggregate net lifetime losses incurred per loan class.

and severity factors used to calculate the allowance for credit losses for loans that share similar risk characteristics with

other loans are adjusted for differences between the historical period used to calculate historical default and loss severity

rates and expected conditions over the remaining lives of the loans in the portfolio related to:

discounted cash flow (“DCF”) model calculates an expected loss percentage for each loan class by considering the probability

of default, using life-of-loan analysis periods for the commercial and industrial, commercial real estate, residential real estate

loan segments, and the historical severity of loss, based on the aggregate net lifetime losses incurred per loan class.

loss estimates for the consumer loan segment are based on historical loss rates using the remaining life method.

The default and

severity factors used to calculate the allowance for credit losses for loans that share similar risk characteristics with other

loans are adjusted for differences between the historical period used to calculate historical default and loss severity rates

and expected conditions over the remaining lives of the loans in the portfolio related to:

(1) lending policies and procedures;

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(5) the volume and severity of past due and adversely classified

loans and the volume of nonaccrual loans;

loans and the volume of nonperforming loans;

(6) the quality of our loan review system and (7) the value of underlying collateral

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forecasts are also considered by management when developing the forecast metrics.

company uses a WARM method to estimate the ACL for the consumer loan segment.

Under this method, the historical average annual

charge-off rate is applied to the weighted average remaining maturity of the loan portfolio, currently calculated at 2.5 years.

This calculation is adjusted based on additional factors that include (1) lending policies and procedures;

(2) international,

national, regional and local economic business conditions and developments that affect the collectability of the portfolio;

the nature and volume of the loan portfolio including the terms of the loans;

(4) the experience, ability, and depth of the lending

management and other relevant staff;

(5) the volume and severity of past due and adversely classified loans and the volume of

nonperforming loans;

(6) the quality of our loan review system and (7) the value of underlying collateral for collateralized loans.

evaluated financial assets

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on the sale (rather than only on the operation) of the collateral.

Credit Deteriorated Loans

Company has loans acquired with evidence of credit deterioration from Chicopee Bancorp, Inc.

Prior to the adoption of CECL, these

loans were accounted for under accounting guidance for purchased credit-impaired (“PCI”) loans.

The Company did not

elect the practical expedient to maintain pool accounting for these loans and will measure credit loss at the loan level.

adoption of ASC 326, PCI loans are accounted for as purchase credit deteriorated (“PCD Loans”).

PCD Loans are recorded

at the amount paid.

An allowance for credit losses is determined using the same methodology as other loans held for investment.

The initial allowance for credit losses determined on a collective basis is allocated to individual loans.

The sum of the loan’s

purchase price and allowance for credit losses becomes its initial amortized cost basis.

The difference between the initial amortized

cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the

life of the loan.

Subsequent changes to the allowance for credit losses are recorded through credit loss expense.

for credit losses on off-balance sheet credit exposures, including unfunded loan commitments

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losses related to unfunded commitments for each loan type.

No credit loss estimate is reported for off-balance-sheet credit exposures

that are unconditionally cancellable by the Company, such as undrawn amounts under such arrangements that may be drawn prior to

the cancellation of the arrangement.

The allowance for credit losses on off-balance sheet credit exposures is adjusted as credit

loss expense.

Categories of off-balance sheet credit exposures correspond to the loan portfolio segments described above.

evaluates the need for a reserve on unfunded loan commitments in a manner consistent with loans held for investment.

No credit loss estimate is reported for outstanding off-balance-sheet

credit exposures that are unconditionally cancellable by the Company.

The allowance for credit losses on off-balance sheet credit

exposures is adjusted as credit loss expense.

Categories of off-balance sheet credit exposures correspond to the loan portfolio

segments described above.

Management evaluates the need for a reserve on unfunded loan commitments in a manner consistent with

loans held for investment.

on the foregoing, management believes that the Company is appropriately provisioned for the current economic environment and supportable

forecast period as of December 31, 2024.

For the year ended December 31, 2023, the Company recorded a provision for credit losses

of $872,000, which was comprised of a $1.2 million provision for credit losses, which was partially offset by a $321,000 reversal

of credit losses for unfunded commitments.

The provision expense during the year ended December 31, 2023 was primarily due to

changes in the economic environment and related adjustments to the quantitative components of the CECL methodology.

reversal of credit losses for unfunded commitments for the year ended December 31, 2023 was primarily related to the impact of

lower unfunded loan commitments, with off-balance sheet unfunded commitment exposures decreasing $46.8 million for the year ended

December 31, 2023.

For the year ended December 31, 2024, the Company recorded a reversal of credit losses

of $665,000, compared to a provision for credit losses of $872,000 during the year ended December 31, 2023.

The $665,000 reversal

of credit losses during the year ended December 31, 2024 was comprised of an $825,000 reversal of credit losses, which was offset

by a $160,000 reserve on unfunded loan commitments related to the impact of higher unfunded loan commitments for the period.

of Allowance for Credit Losses .

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Percent of Loans in Each Category to Total Loans

(In thousands)

(Dollars in thousands)

Commercial real estate

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Total allowances for credit losses

Company adopted ASU 2016-13 on January 1, 2023 with a modified retrospective approach.

Accordingly, beginning at January 1, 2023,

the allowance for credit losses was determined in accordance with ASC 326, “ Financial Instruments-Credit Losses .”

primary objectives of the Bank’s securities portfolio are to provide liquidity and maximize income while preserving safety

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of tax-exempt securities and tax planning considerations.

The Bank’s Board of Directors is responsible for establishing

overall policy and reviewing performance of the Bank’s investments.

The Bank’s Board of Directors (the “Bank’s Board”)

is responsible for establishing overall policy and reviewing performance of the Bank’s investments.

the Bank’s policy, acceptable portfolio investments include:

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carried at fair value.

On January 1, 2023, the Company adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic

Measurement of Credit Losses on Financial Instruments , as amended, which replaces the incurred loss methodology with

an expected loss methodology that is referred to as CECL methodology.

The measurement of expected credit losses under the CECL

methodology is applicable to financial assets measured at amortized cost, including loan receivables and HTM debt securities.

The Company measures expected credit losses on HTM debt securities on a collective basis by security type and risk rating where

Any expected credit losses on HTM securities would be presented as an allowance for credit loss.

addition, ASC 326 made changes to the accounting for AFS debt securities.

The Company measures expected credit losses on AFS debt

securities based upon the gain or loss position of the security.

If the Company does not expect to recover the entire amortized

cost basis of an AFS debt security, an allowance for credit losses would be recorded, with a related charge to earnings, limited

by the amount of the fair value of the security less its amortized cost.

If the Company intends to sell the AFS debt security

or it is more likely than not that the Company will be required to sell the AFS debt security before recovery of its amortized

cost basis, the Company recognizes the entire difference between the amortized cost basis of the security and its fair value in

Any impairment that has not been recorded through an allowance for credit loss is recognized in other comprehensive

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.

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.

Equity Securities .

December 31, 2024 and December 31, 2023, the Company held $5.4 million and $3.3 million, respectively, of FHLB stock.

is classified as a restricted investment and carried at cost which management believes approximates the fair value.

The investment

must be held as a condition of membership in the FHLB and as a condition for the Bank to borrow from the FHLB.

The Company periodically

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

overall financial condition.

stock is carried at cost and classified as a restricted equity security.

The investment must be held as a condition of membership

in the FHLB and as a condition for the Bank to borrow from the FHLB.

We may be required to purchase additional FHLB stock if we

increase FHLB borrowings in the future.

The Company periodically evaluates its investment in FHLB stock for impairment based on,

among other factors, the capital adequacy of the FHLB and its overall financial condition.

December 31, 2024 and December 31, 2023, the Company held $423,000 of Atlantic Community Bankers Bank stock.

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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

More than One Year

More than Five Years

than One Year

than Five Years

than Ten Years

(Dollars in thousands)

in thousands)

Available-for-sale:

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enterprise obligations

State and municipal

debt securities

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Treasury securities

Government guaranteed obligations

debt securities

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we determine there to be incurred credit losses for those securities in an unrealized loss position.

December 31, 2023, the Company reported unrealized losses on the AFS securities portfolio of $29.2 million, or 17.5% of the amortized

cost basis of the AFS securities portfolio, compared to unrealized losses of $32.2 million, or 18.0% of the amortized cost basis

of the AFS securities at December 31, 2022.

At December 31, 2023, the Company reported unrealized losses on the HTM securities

portfolio of $35.7 million, or 16.0%, of the amortized cost basis of the HTM securities portfolio, compared to $39.2 million,

or 17.0% of the amortized cost basis of the HTM securities portfolio at December 31, 2022.

As of December 31, 2023, management

concluded that there were no incurred credit losses at December 31, 2023 as all unrealized losses were related to interest rate

fluctuations rather than any underlying credit quality of the issuers.

Additionally, the Company has no plans to sell these securities

and has concluded that it is unlikely it would have to sell these securities prior to the anticipated recovery of the unrealized

deposits represent the primary source of the Bank’s funds for lending and other investment purposes.

The Company offers

a wide variety of deposit products, including commercial, small business, nonprofit and municipal checking, money market and sweep

accounts, as well as time deposits.

A broad selection of competitive retail deposit products are also offered, including interest-bearing

and noninterest-bearing checking, money market and savings accounts, as well as time deposits and individual retirement accounts,

with terms on time deposits ranging 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.

December 31, 2024, the Company reported unrealized losses on the available-for-sale securities portfolio of $31.2 million, or

16.2% of the amortized cost basis of the available-for-sale securities portfolio, compared to unrealized losses of $29.2 million,

or 17.5% of the amortized cost basis of the available-for-sale securities at December 31, 2023.

At December 31, 2024, the Company

reported unrealized losses on the held-to-maturity securities portfolio of $39.4 million, or 19.2% of the amortized cost basis

of the held-to-maturity securities portfolio, compared to $35.7 million, or 16.0% of the amortized cost basis of the held-to-maturity

securities portfolio at December 31, 2023.

As of December 31, 2024, management concluded that there were no incurred credit losses

at December 31, 2024 as all unrealized losses were related to interest rate fluctuations rather than any underlying credit quality

of the issuers.

Additionally, the Company has no plans to sell these securities and has concluded that it is unlikely it would

have to sell these securities prior to the anticipated recovery of the unrealized losses.

December 31, 2024 and December 31, 2023, total deposits were $2.3 billion and $2.1 billion, respectively.

Customer deposits represent

the primary source of the Bank’s funds for lending and other investment purposes.

The Company offers a wide variety of deposit

products, including commercial, small business, nonprofit and municipal checking, money market and sweep accounts, as well as

time deposits.

A broad selection of competitive retail deposit products are also offered, including interest-bearing and noninterest-bearing

checking, money market and savings accounts, as well as time deposits and individual retirement accounts, with terms on time deposits

ranging 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.

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.

There were $1.7 million in brokered deposits on the balance sheet at December 31, 2023 reported within time deposits.

no brokered deposits on the balance sheet at December 31, 2022.

There were $1.7 million in brokered deposits on the balance sheet at December 31, 2024 and 2023 reported within time deposits.

December 31, 2024, uninsured deposits, defined as deposits that exceed the limits provided by the FDIC, were 28.4% of total deposits,

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At December 31, 2024, time deposits with remaining terms to maturity of less than one year

amounted to $596.3 million and $288.7 million, respectively.

See “Management’s Discussion and Analysis of Financial

Condition and Results of Operations — Net Interest and Dividend Income” for information relating to the average

balances and costs of our deposit accounts for the years ended December 31, 2023, 2022 and 2021.

amounted to $694.9 million.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations

— Net Interest and Dividend Income” for information relating to the average balances and costs of our deposit

accounts for the years ended December 31, 2024, 2023 and 2022.

Management Services.

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and domestic wire transfers and corporate credit cards.

IntraFi/CDARS .

Network, Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep Service (“ICS” ) .

participate in the IntraFi Network which provides depositors with FDIC pass-through insurance.

Depositors can open a reciprocal

time deposit through the Certificate of Deposit Account Registry Service (“CDARS”) or an Insured Cash Sweep Service

(“ICS”) account.

We use CDARS and ICS to place client funds into time deposit accounts and money market accounts,

respectively, into other participating banks.

These transactions occur in amounts that are less than FDIC insurance limits to

ensure that deposits are eligible for FDIC insurance on the full amount of their deposits.

The IntraFi Network allows for up to

$250.0 million per customer of pass-through FDIC insurance.

At December 31, 2023 and December 31, 2022, there were $28.7 million

and $250,000, respectively, in CDARS deposits reported within time deposits, and $35.1 million and $3.2 million, respectively,

in ICS accounts reflected within core deposits.

time deposit through CDARS or a reciprocal checking or money market account through ICS.

We use CDARS to place client funds into

time deposit accounts and ICS to place client funds into checking and money market accounts, respectively, into other participating

These transactions occur in amounts that are less than FDIC insurance limits to ensure that deposits are eligible for FDIC

insurance on the full amount of their deposits.

The IntraFi Network allows for up to $250.0 million per customer of pass-through

FDIC insurance.

At December 31, 2024 and December 31, 2023, there were $36.9 million and $28.7 million, respectively, in CDARS

deposits reported within time deposits, and $22.3 million and $35.1 million, respectively, in ICS accounts reflected within core

Distribution and Weighted Average Rates.

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(Dollars in thousands)

Demand deposits

Interest-bearing checking

Regular savings

Demand accounts

Interest-bearing accounts

Savings accounts

Money market accounts

Total core deposits

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Core deposits:

Demand deposits

Interest-bearing checking

Regular savings

Demand accounts

Interest-bearing accounts

Savings accounts

Money market accounts

Total core deposits

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Total time deposits

_______________

(1) Uninsured

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Weighted Average Rate

(In thousands)

(Dollars in thousands)

3 months or less

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Over 12 months

deposit balances represent those exceeding the fully-insured FDIC limitation of $250,000.

Sources of Funds.

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The Bank had satisfied its collateral requirement at December 31, 2024.

March 12, 2023, the FRB made available the Bank Term Funding Program (“BTFP”), which enhances the ability of banks

to borrow greater amounts against certain high-quality, unencumbered investments at par value.

During the year ended December

31, 2023, the Company participated in the BTFP, which enabled the Company to pay off higher rate FHLB advances.

With the BTFP,

the Company has the ability to pay off the BTFP advance prior to maturity without incurring a penalty or termination fee.

December 31, 2023, total borrowings increased $94.1 million, or 221.6%, from $42.6 million at December 31, 2022 to $136.7 million.

Short-term borrowings decreased $25.3 million, or 61.1%, to $16.1 million, at December 31, 2023 compared to $41.4 million at December

Long-term borrowings increased $119.4 million, from $1.2 million at December 31, 2022, to $120.6 million at December

31, 2023, to replace deposit attrition.

Long-term borrowings consisted of $30.6 million outstanding with the FHLB and $90.0 million

outstanding under the FRB’s BTFP.

There were no borrowings at the Federal Reserve at December 31, 2022.

Company utilized the Bank Term Funding Program (“BTFP”), which was created in March 2023 to enhance banking system

liquidity by allowing institutions to pledge certain securities at par value and borrow at a rate of ten basis points over the

one-year overnight index swap rate.

The BTFP was available to federally insured depository institutions in the U.S., with advances

having a term of up to one year with no prepayment penalties.

The BTFP ceased extending new advances in March 2024.

31, 2023, the Company’s outstanding balance under the BTFP was $90.0 million.

There was no outstanding balance under the

BTFP at December 31, 2024.

December 31, 2024, total short-term borrowings and long-term debt decreased $33.4 million, or 24.4%, from $136.7 million at December

31, 2023 to $103.4 million.

At December 31, 2024, short-term borrowings decreased $10.7 million, or 66.5%, to $5.4 million, compared

to $16.1 million at December 31, 2023.

Long-term borrowings decreased $22.6 million, or 18.8%, from $120.6 million at December

31, 2023 to $98.0 million at December 31, 2024.

At December 31, 2024, long-term borrowings consisted of $98.0 million outstanding

with the FHLB, whereas at December 31, 2023, long-term borrowings consisted of $30.6 million outstanding with the FHLB and $90.0

million outstanding under the BTFP.

short-term borrowings and long-term debt outstanding and weighted average rates at the periods indicated are presented below:

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Balance Outstanding

(In millions)

Weighted Average Rate

Balance Outstanding

(In millions)

Weighted Average Rate

(Dollars in millions)

Short-term borrowings

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based on qualified collateral.

At December 31, 2023, the Company had $23.6 million in available borrowing capacity under the BTFP

and available borrowing capacity of $48.6 million from the Federal Reserve Discount Window.

Company also has an available overnight Ideal Way line of credit with the FHLB of $9.5 million.

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the facility.

addition, the Company has an available line of credit of $48.6 million with the FRB Discount Window at an interest rate determined

and reset on a daily basis.

Borrowings from the FRB Discount Window are secured by certain securities from the Company’s

investment portfolio not otherwise pledged.

As of December 31, 2023 and December 31, 2022, there were no advances outstanding

under either of these lines.

addition, at December 31, 2024 and 2023, the Company had an available line of credit of $382.9 million and $48.6 million, respectively,

with the FRB Discount Window at an interest rate determined and reset on a daily basis.

Borrowings from the FRB Discount Window

are secured by certain loans and securities from the Company’s investment portfolio not otherwise pledged.

As of December

31, 2024 and December 31, 2023, there were no advances outstanding under the Discount Window.

following table lists FHLB and FRB liquidity information as of December 31, 2024:

At December 31, 2024

Total Available Borrowing Capacity

Total Available

Borrowing Capacity

Required Collateral on Balance Outstanding

Net Available Borrowing Capacity

(In millions)

(Dollars in millions)

FRB Discount Window

________________

required collateral includes short and long-term advances, FHLB letters of credit and

Ideal Way Line of Credit availability.

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

banks to provide additional overnight and short-term borrowing capacity for the Company.

At December 31, 2023, the Company had

a $15.0 million line of credit with a correspondent bank and a $10.0 million line of credit with another correspondent bank, both

at an interest rate determined and reset on a daily basis.

required collateral includes short and long-term advances and FHLB letters of credit.

Net available borrowing capacity includes the $9.5 million in Ideal Way Line of Credit

availability.

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

to provide additional overnight and short-term borrowing capacity for the Company.

At December 31, 2024, the Company had borrowing

capacity with two correspondent banks consisting of a $15.0 million and a $10.0 million unsecured lines of credit, both arrangements

were at an interest rate determined and reset on a daily basis.

As of December 31, 2024 and December 31, 2023, there were no advances

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under the Federal Reserve’s capital adequacy regulations.

At December 31, 2024, $19.8 million aggregate principle amount

of the Notes was outstanding.

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

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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

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:

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The Company is a Massachusetts-chartered stock holding

company and a registered savings and loan holding company under the Home Owners’ Loan Act (the “HOLA”), as amended,

company and a registered savings and loan holding company under the Home Owners’ Loan Act, as amended (the “HOLA”),

and is subject to the supervision of and regular examination by the Board of Governors of the Federal Reserve System (the “FRB,”

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to priority of payment.

principal source of Western New England Bancorp’s liquidity is dividends from the Bank.

The OCC imposes various restrictions

and requirements on the Bank’s ability to make capital distributions, including cash dividends.

The OCC’s prior approval

is required if the total of all distributions, including the proposed distribution, declared by a federal savings association

in any calendar year would exceed an amount equal to the Bank’s net income for the year-to-date plus the Bank’s retained

net income for the previous two years, or that would cause the Bank to be less than well capitalized.

In addition, section 10(f)

of the HOLA requires a subsidiary savings association of a savings and loan holding company, such as the Bank, to file a notice

with the Federal Reserve prior to declaring certain types of dividends.

New England Bancorp and the Bank are also subject to other regulatory policies and requirements relating to the payment of dividends,

including requirements to maintain adequate capital above regulatory minimums.

The appropriate federal banking agency is authorized

to determine, under certain circumstances relating to the financial condition of a savings and loan holding company or a savings

association, that the payment of dividends would be an unsafe or unsound practice and to prohibit payment thereof.

banking agencies have indicated that paying dividends that deplete an insured depository institution’s capital base to an

inadequate level would be an unsafe and unsound banking practice and that banking organizations should generally pay dividends

only out of current operating earnings.

Company is a legal entity separate and distinct from its subsidiaries.

The revenue of the Company (on a parent-only basis) is

derived primarily from dividends paid to it by the Bank and the Company’s other subsidiaries.

The right of the Company,

and consequently the right of shareholders of the Company, to participate in any distribution of the assets or earnings of its

subsidiaries through the payment of dividends or otherwise is subject to the prior claims of creditors of the subsidiaries, including,

with respect to the Bank, depositors of the Bank, except to the extent that certain claims of the Company in a creditor capacity

may be recognized.

on Bank Holding Company Dividends .

Federal Reserve has the authority to prohibit bank holding companies from paying dividends if such payment is deemed to be an

unsafe or unsound practice.

The Federal Reserve has indicated generally that it may be an unsafe or unsound practice for bank

holding companies to pay dividends unless the bank holding company’s net income over the preceding year is sufficient to

fund the dividends and the expected rate of earnings retention is consistent with the organization’s capital needs, asset

quality, and overall financial condition.

Further, under the Federal Reserve’s capital rules, the Company’s ability

to pay dividends is restricted if it does not maintain capital above the capital conservation buffer (See Capital Adequacy

on Bank Dividends.

OCC has the authority to use its enforcement powers to prohibit a bank from paying dividends if, in its opinion, the payment of

dividends would constitute an unsafe or unsound practice.

Federal law also prohibits the payment of dividends by a bank that will

result in the bank failing to meet its applicable capital requirements on a pro forma basis.

principal source of Company’s liquidity is dividends from the Bank.

The OCC oversees the ability of the Bank to make capital

distributions, including dividends.

The OCC generally prohibits a depository institution from making any capital distributions

(including payment of a dividend) if the bank would thereafter be undercapitalized.

The OCC’s prior approval is required

if the total of all dividends declared by a federal savings association in any calendar year would exceed the sum of the bank’s

net income for that year and its undistributed net income for the preceding two calendar years, less any required transfers to

surplus, or if the bank would not be well capitalized after the dividend.

addition, section 10(f) of the HOLA requires a subsidiary savings association of a savings and loan holding company, such as the

Bank, to file a notice with the Federal Reserve prior to declaring certain types of dividends.

July 2013, the FRB, the OCC and the FDIC approved final rules (the “Capital Rules”) that established a new capital

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under the Capital Rules at December 31, 2024.

September 2019, the Office of the Comptroller of the Currency, the Federal Reserve Board and the FDIC adopted a final rule that

was intended to further simplify the Capital Rules for depository institutions and their holding companies that have less than

$10 billion in total consolidated assets, such as us, if such institutions meet certain qualifying criteria.

This final rule became

effective on January 1, 2020.

Under this final rule, if we meet the qualifying criteria, including having a leverage ratio (equal

to tier 1 capital divided by average total consolidated assets) of greater than 9 percent, we will be eligible to opt into the

community bank leverage ratio framework.

If we opt into this framework, we will be considered to have satisfied the generally

applicable risk-based and leverage capital requirements in the Capital Rules (as modified pursuant to the simplification rule)

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

September 2019, the OCC, the Federal Reserve Board and the FDIC adopted a final rule that was intended to further simplify the

Capital Rules for depository institutions and their holding companies that have less than $10 billion in total consolidated assets,

such as us, if such institutions meet certain qualifying criteria.

This final rule became effective on January 1, 2020.

this final rule, if we meet the qualifying criteria, including having a leverage ratio (equal to tier 1 capital divided by average

total consolidated assets) of greater than 9 percent, we will be eligible to opt into the community bank leverage ratio framework.

If we opt into this framework, we will be considered to have satisfied the generally applicable risk-based and leverage capital

requirements in the Capital Rules (as modified pursuant to the simplification rule) 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

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to One Borrower.

a federal savings bank may not make a loan or extend credit to a single borrower or related group of borrowers in excess of 15%

of unimpaired capital and surplus.

An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the

loan is secured by readily marketable collateral, which generally does not include real estate.

As of December 31, 2023, we were

in compliance with these limitations on loans to one borrower.

a federal savings bank may not make a loan or extend credit to a single borrower or related group of borrowers if the aggregate

of all loans or extensions of credit to that single borrower or related group of borrowers would be in excess of 15% of the bank’s

unimpaired capital and surplus.

An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the aggregate

amount of any loan above 15% of the bank’s unimpaired capital and surplus is fully secured by readily marketable collateral,

which generally does not include real estate.

As of December 31, 2024, we were in compliance with these limitations on loans to

one borrower.

Commercial Real Estate Lending Regulations.

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Revenue Code.

Failure by the Bank to maintain its status as a QTL would result in restrictions on activities, including restrictions

on branching and the payment of dividends.

If the Bank were unable to correct that failure within a specified period of time,

it must either continue to operate under those restrictions on its activities or convert to a national bank charter.

met the QTL test in each of the prior 12 months and, therefore, is a “qualified thrift lender.”

Failure by the Bank to maintain its status as a qualified thrift lender (“QTL”) would result in restrictions

on activities, including restrictions on branching and the payment of dividends.

If the Bank were unable to correct that failure

within a specified period of time, it must either continue to operate under those restrictions on its activities or convert to

a national bank charter.

The Bank met the QTL Test in each of the prior 12 months and, therefore, is a “qualified thrift

Community Reinvestment Act.

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Home Loan Bank System.

Bank is a member of the FHLB, which is one of the regional Federal Home Loan Banks comprising the Federal Home Loan Bank System.

Bank is a member of the Federal Home Loan Bank of Boston, which is one of the regional Federal Home Loan Banks comprising the

Federal Home Loan Bank System.

Each Federal Home Loan Bank serves as a central credit facility primarily for its member institutions.

The Bank, as a member of

the FHLB, is required to acquire and hold shares of capital stock in the FHLB.

Required percentages of stock ownership are subject

to change by the FHLB, and the Bank was in compliance with this requirement with an investment in FHLB capital stock at December

If there are any developments that cause the value of our stock investment in the FHLB to become impaired, we would

be required to write down the value of our investment, which could affect our net income and shareholders’ equity.

The Bank, as a member of the FHLB, is required to acquire and hold shares of capital stock in the FHLB.

Required percentages of

stock ownership are subject to change by the FHLB, and the Bank was in compliance with this requirement with an investment in

FHLB capital stock at December 31, 2024.

If there are any developments that cause the value of our stock investment in the FHLB

to become impaired, we would be required to write down the value of our investment, which could affect our net income and shareholders’

Requirements.

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October 15, 2015, pursuant to section 1094 of the Dodd-Frank Act, the CFPB issued amended rules in regards to the collection,

reporting and disclosure of certain residential mortgage transactions under the Home Mortgage Disclosure Act (the “HMDA

The Dodd-Frank Act mandated additional loan data collection points in addition to authorizing the CFPB to require

other data collection points under implementing Regulation C.

Most of the provisions of the HMDA Rule went into effect on January

1, 2018 and apply to data collected in 2018 and reporting in 2019 and later years.

The HMDA Rule adopts a uniform loan volume

threshold for all financial institutions, modifies the types of transactions that are subject to collection and reporting, expands

the loan data information being collected and reported, and modifies procedures for annual submission and annual public disclosures.

reporting and disclosure of certain residential mortgage transactions under the HMDA (the “HMDA Rules”).

The Dodd-Frank

Act mandated additional loan data collection points in addition to authorizing the CFPB to require other data collection points

under implementing Regulation C.

Most of the provisions of the HMDA Rule went into effect on January 1, 2018 and apply to data

collected in 2018 and reporting in 2019 and later years.

The HMDA Rule adopts a uniform loan volume threshold for all financial

institutions, modifies the types of transactions that are subject to collection and reporting, expands the loan data information

being collected and reported, and modifies procedures for annual submission and annual public disclosures.

regulatory agencies have increasingly used a general consumer protection statute to address “unethical” or otherwise

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that could lead to material financial loss to the entity.

The federal banking agencies and the SEC most recently proposed such

regulations in 2016.

The regulations have not yet been finalized, but it is expected that this rulemaking will be a priority in

If the regulations are adopted in the form initially proposed or a similar form, they will restrict the manner in which

executive compensation is structured.

The federal banking agencies and the SEC proposed such regulations in

2016 and issued re-proposed regulations in substantially the same form in May 2024, which have not been finalized.

If the regulations

are adopted in the form initially proposed or a similar form, they will restrict the manner in which executive compensation is

Dodd-Frank Act also gives the SEC authority to prohibit broker discretionary voting on elections of directors, executive compensation

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officers of Western New England Bancorp annually.

In light of the results, the Western New England Bancorp Board of Directors

determined to hold the vote annually.

In light of the results, the Board determined to hold the vote annually.

Legislative and Regulatory Initiatives.

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Such initiatives may include proposals to expand or contract the powers of bank holding companies, savings and loan holding companies

and/or depository institutions.

Proposed legislation and regulatory initiatives could change banking statutes and the operating

environment of Western New England Bancorp in substantial and unpredictable ways.

If enacted, such legislation could increase

or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks,

savings associations, credit unions, and other financial institutions.

Western New England Bancorp cannot predict whether any

such legislation will be enacted, and, if enacted, the effect that it or any implementing regulations would have on the financial

condition or results of operations of Western New England Bancorp.

Other legislation may be introduced in Congress, which would

further regulate, deregulate or restructure the financial services industry, including proposals to substantially reform the financial

and/or depository institutions, and may also include changes in priorities and operations of regulatory agencies in connection

with new leadership.

Proposed legislation and regulatory initiatives could change banking statutes and the operating environment

of Western New England Bancorp in substantial and unpredictable ways.

If enacted or implemented, such legislation and regulatory

initiatives could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive

balance among banks, savings associations, credit unions, and other financial institutions.

Western New England Bancorp cannot

predict whether any such legislation and regulatory initiatives will be enacted or implemented, and, if enacted or implemented,

the effect that it or any implementing regulations would have on the financial condition or results of operations of Western New

England Bancorp.

Other legislation may be introduced in Congress, or other regulatory initiatives introduced, which would further

regulate, deregulate or restructure the financial services industry, including proposals to substantially reform the financial

regulatory framework.

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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