What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-03-08 compared with 2023-03-10 · 680 added, 475 removed, 870 unchanged (57% of the section changed)

21 unchanged sentences

The Bank also

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

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

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

38 unchanged sentences

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

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

The Bank also

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

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

In addition, we provide online banking

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

at www.westfieldbank.com.

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

The Bank also conducts business

through an additional fourteen freestanding and thirty-three seasonal or temporary ATMs that are owned and serviced by a third

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

In addition, we provide online banking services,

including online deposit account opening and residential mortgage and consumer loan applications through our website at www.westfieldbank.com.

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

15 unchanged sentences

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

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

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

Other employment and economic activity

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

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

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

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

This competition

stems from national and larger regional banks, numerous local savings banks, commercial banks, cooperative banks and credit unions

which have a large presence in the region.

Competition for loans, deposits and cash management services, and investment advisory

assets also comes from other businesses that provide financial services, including consumer finance companies, mortgage brokers

and lenders, private lenders, insurance companies, securities brokerage firms, institutional mutual funds, registered investment

advisors, non-bank electronic payment and funding channels, internet-based banks and other financial intermediaries.

Medical Center, Hartford Financial Services Group, Hartford Hospital, Institute of Living, Kaman Aerospace Corporation, Lego Systems

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

Other employment and economic

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

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

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

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

Company competes actively with local, regional, and national financial institutions, as well as credit unions which have a large

presence in the region.

Competition for loans, deposits and cash management services, and investment advisory assets also comes

from other businesses that provide financial services, including consumer finance companies, mortgage brokers and lenders, private

lenders, insurance companies, securities brokerage firms, institutional mutual funds, registered investment advisors, non-bank

electronic payment and funding channels, internet-based banks and other financial intermediaries.

expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing

7 unchanged sentences

June 30, 2023, which is the most recent date for which data is available from the FDIC, we held approximately 14.0% of the deposits

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

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

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

a culture of diversity, equity and inclusion.

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

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

to achieve their full potential.

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

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

veterans or persons with disabilities.

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

which we feel reflects and better serves our communities.

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.

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

The Company believes that it has had

and continues to have good employee relations.

and continues to have strong employee relations.

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

5 unchanged sentences

helps the Company operate efficiently and effectively.

As of December 31, 2023, our average employee tenure was 7.9 years.

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

We actively encourage and support the growth and development of our

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

organization.

We actively encourage and support the growth and development of

our employees.

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

the organization.

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

and externally developed training programs.

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

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

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

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

Each year, we also

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

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

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.

Compensation and Benefits

2 unchanged sentences

The Company maintains a comprehensive employee benefit program

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

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

including vacation days, personal days and paid holidays.

providing, among other benefits, group medical, dental and vision insurance, health savings accounts and flexible spending accounts,

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.

Health and Safety

7 unchanged sentences

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

All employees are working in person;

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

for COVID-19 as necessary.

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

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

billion, or 73.5% of total assets, at December 31, 2021.

The Company lends to individuals, business entities, non-profit organizations

and professional practices.

The Company’s primary lending focus is on the development of high quality commercial relationships

achieved through active business development efforts, long-term relationships with established commercial developers, community

involvement, and focused marketing strategies.

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

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

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.

2023, we established the Westfield Bank Wellness Committee (the “Wellness Committee”), which is comprised of a cross-section

of employees from the Bank.

The Wellness Committee is committed to promoting a culture of physical, mental and emotional well-being

for our employees by providing activities, services and support that will foster living healthy and happy lifestyles.

Committee looks to inspire and empower our employees to make their health a top priority through encouraging and providing employees

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.

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.

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

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.

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

2 unchanged sentences

Rates are also subject to competitive pressures, the current interest rate environment, availability of funds, and government

Company employs a seasoned commercial lending staff, with commercial lenders supporting the Company’s loan growth strategy.

The Company contracts with an external loan review company to review the internal credit ratings assigned to loans in the commercial

loan portfolio on a pre-determined schedule, based on the type, size, rating, and overall risk of the loan.

During the course

of their review, the third party examines a sample of loans, including new loans, existing relationships over certain dollar amounts

and classified assets.

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

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

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

Company employs a seasoned commercial lending staff, with commercial lenders to support the Company’s loan growth strategy.

The Company contracts with an external third-party loan review company to review the internal credit ratings assigned to loan

relationships in the commercial loan portfolio on a pre-determined schedule, based on the type, size, rating, and overall risk

During the course of their review, the third party examines a sample of loans, including new loans, existing relationships

over certain dollar amounts and classified loans.

The Company’s internal residential origination and underwriting staff

originate residential loans and are responsible for compliance with residential lending regulations, consumer protection and internal

policy guidelines.

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

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

certain prescribed dollar limits as outlined in the Company’s lending policy.

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.

1 unchanged sentence

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

The relationship is

This relationship is

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

2 unchanged sentences

Real Estate Loans and Commercial and Industrial Loans .

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

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.

25 unchanged sentences

commercial construction loans included within commercial real estate loans.

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

commercial and industrial loans totaling $217.6 million, or 10.9% of total loans, and Paycheck Protection Program (“PPP”)

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

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

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

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

Commercial and industrial loans include seasonal revolving lines

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

Commercial and industrial credits may be unsecured loans

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

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

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

fixed initial periods.

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

Our commercial and

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

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

the commercial loan portfolio as of December 31, 2022.

At December 31, 2022, our largest commercial and industrial loan relationship

was $32.2 million to a hardware merchant wholesaler.

The loan relationship is secured by business assets and real estate.

31, 2022, this relationship was performing according to its original terms.

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

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.

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

and industrial credits may be unsecured loans and lines to financially strong borrowers, loans secured in whole or in part by

real estate unrelated to the principal purpose of the loan or secured by inventories, equipment, or receivables, and are generally

guaranteed by the principals of the borrower.

Variable rate loans and lines in this portfolio have interest rates that are periodically

adjusted, with term loans generally having fixed initial periods.

Commercial and industrial loans have average repayment periods

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 borrowers.

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 $2.3 million, or 0.1%

of total loans, at December 31, 2022.

(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

31 unchanged sentences

located in western Massachusetts and northern Connecticut.

The Company processes and underwrites all of its originations internally

through its Residential Loan Center located in Westfield, MA.

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

15 unchanged sentences

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

in accordance with Westfield Bank’s policy.

in accordance with the Bank’s loan policies.

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

3 unchanged sentences

The Company may retain or sell the servicing when selling the loans.

The Company is an approved seller and servicer

with Fannie Mae, Freddie Mac and the FHLB.

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

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

to the secondary market, respectively.

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

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

The servicing rights will likely continue to be retained

on all loans sold over the life of the loan.

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

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

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.

24 unchanged sentences

At December 31,

Percent of Total

(Dollars in thousands)

6 unchanged sentences

Total gross loans

Unamortized PPP loan fees

Unamortized premiums and net deferred loan fees

Allowance for loan losses

Unamortized premiums and net

deferred loan fees and costs

Allowance for credit losses

Total loans, net

17 unchanged sentences

Total amount due:

Unamortized PPP loan fees

Net deferred loan origination fees and costs and premiums

Allowance for loan losses

Allowance for credit losses

following table presents, as of December 31, 2023, the dollar amount of all loans contractually due or scheduled to reprice after

11 unchanged sentences

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

Company’s policy requires 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 contracts with an external loan review company to review the internal risk ratings assigned to loans in the commercial

loan portfolio on a pre-determined schedule, based on the type, size, rating, and overall risk of the loan.

During the course

of their review, the third party examines a sample of loans, including new loans, existing relationships over certain dollar amounts

and classified assets.

The findings are reported to the Chief Credit Officer and the full report is then presented to the Audit

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

commercial loan portfolio on a pre-determined schedule, based on the type, size, rating, and overall risk of the loan.

the course of their review, the third party examines a sample of loans, including new loans, existing relationships over certain

dollar amounts and classified assets.

The findings are reported to the Chief Credit Officer and the full report is then presented

to the Audit Committee.

Problem Loans.

Company performs an internal analysis of the loan portfolio in order to identify and quantify loans with higher than normal risk.

Loans having a higher risk profile are assigned a risk rating corresponding to the level of weakness identified in the loan.

loans risk rated “Special Mention (5)”, “Substandard (6)”, “Doubtful (7)” and “Loss

(8)” are listed on the Company’s criticized report and are reviewed by management not less than on a quarterly basis

to assess the level of risk and to ensure that appropriate actions are being taken to minimize potential loss exposure.

identified as containing a loss are partially charged-off or fully charged-off.

In addition, the Company closely monitors the

classified loans for signs of deterioration to mitigate the growth in nonaccrual loans, including performing additional due diligence,

updating valuations and requiring additional financial reporting from the borrower.

At December 31, 2022, criticized loans, inclusive

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

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

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

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

The Company performs

an internal analysis of the loan portfolio in order to identify and quantify loans with higher than normal risk.

a higher risk profile are assigned a risk rating corresponding to the level of weakness identified in the loan.

and Classified Loans.

Company’s internal credit risk grades are based on the definitions currently utilized by the banking regulatory agencies.

The grades assigned and definitions are as follows, and loans graded excellent, above average, good (risk ratings 1-4) are treated

as “pass” for grading purposes.

All loans risk rated special mention (5), substandard (6), Doubtful (7) and Loss (8)

are listed on the Company’s criticized report and are reviewed not less than on a quarterly basis to assess the level of

risk and to ensure that appropriate actions are being taken to minimize potential loss exposure.

In addition, the Company closely

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

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

Loans identified as containing a loss are partially charged-off or fully charged-off.

“criticized” risk rating (5) and the “classified” risk ratings (6-8) are detailed below:

– Special Mention- Loans rated 5 are considered “ Special Mention ” and may exhibit potential credit

weaknesses or downward trends and are being monitored by management.

Loans in this category are currently protected based on collateral

and repayment capacity and do not constitute undesirable credit risk, but have potential weakness that may result in deterioration

of the repayment process at some future date.

This classification is used if a negative trend is evident in the obligor’s

financial situation.

Special mention loans do not sufficiently expose the Company to warrant adverse classification.

– Substandard - Loans rated 6 are considered “ Substandard .” A loan is classified as substandard if

the borrower exhibits a well-defined weakness and may be inadequately protected by the current net worth and cash flow capacity

to pay the current debt.

– Doubtful - Loans rated 7 are considered “ Doubtful .” Loans classified as doubtful have all the weaknesses

inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation of the

loan highly questionable and improbable.

The possibility of some loss is extremely high, but because of specific pending factors

that may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more

exact status may be determined.

– Loss - Loans rated 8 are considered uncollectible.

The loss classification does not mean that the asset has absolutely

no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the asset because recovery

and collection time may be affected in the future.

grades are determined through the use of qualitative and quantitative matrices that consider various characteristics of the loan

such as payment performance, quality of management, principals’/guarantors’ character, balance sheet strength, collateral

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.

Adversely classified loans that were performing but possessed potential weaknesses

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

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

The remaining balance of adversely classified loans were nonaccrual

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

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

at December 31, 2021.

Total accruing impaired loans totaled $12.7 million and $15.5 million at December 31, 2022 and December

31, 2021, respectively, while nonaccrual impaired loans totaled $5.7 million and $5.0 million as of December 31, 2022 and December

31, 2021, respectively.

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.

Based on management’s assessment

at December 31, 2022 and December 31, 2021, no impaired loans required a specific reserve.

Management closely monitors these relationships

for collateral or credit deterioration.

December 31, 2022, 2021, 2020, nonaccrual loans totaled $5.7 million, or 0.29% of total loans, $5.0 million, or 0.27% of total

loans, and $7.8 million, and 0.41% of total loans, respectively.

If all nonaccrual loans had been performing in accordance with

their terms, we would have earned additional interest income of $257,000, $262,000 and $275,000 for the years ended December 31,

2022, 2021 and 2020, respectively.

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

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

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.

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,

at December 31, 2022.

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

interest income of $373,000, $257,000 and $262,000 for the years ended December 31, 2023, 2022 and 2021, 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

at the date of foreclosure, establishing a new cost basis.

Subsequent to foreclosure, valuations are periodically performed by

management and the assets are carried at the lower of carrying amount or fair value less cost to sell.

Costs relating to development

and improvement of property are capitalized, whereas costs relating to the holding of property are expensed.

At December 31, 2023

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

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

Years Ended December 31,

(Dollars in thousands)

Allowance for loan losses to total loans outstanding

Allowance for loan losses

Allowance for credit losses to total loans outstanding

Allowance for credit losses

Total loans outstanding

2 unchanged sentences

Total loans outstanding

Allowance for loan losses to nonaccrual loans

Allowance for loan losses

Allowance for credit losses to nonaccrual loans

Allowance for credit losses

Nonaccrual loans

9 unchanged sentences

Average amount outstanding

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

Net charge-offs (recoveries) during the period

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

Net (recoveries) charge-offs during the period

Average amount outstanding

5 unchanged sentences

Average amount outstanding

for Loan Losses .

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

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

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

The adoption of the Current Expected Credit Loss

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

Upon implementation, the Company

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

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

of the estimated losses.

Our methodology for assessing the appropriateness of the allowance consists of a review of the components,

which includes a general allowance for non-impaired loans.

specific valuation allowance incorporates the results of measuring impairment for specifically identified non-homogenous problem

loans and, as applicable, troubled debt restructurings (“TDRs”).

A loan is recognized as impaired when it is probable

that principal and/or interest are not collectible in accordance with the loan’s contractual terms.

Impairment is measured

on a loan-by-loan basis for commercial real estate and commercial and industrial loans by either the present value of expected

future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral

An allowance is established when the discounted cash flows (or collateral value) of the impaired loan is lower than

the carrying value of that loan.

Once an impairment has been determined, the Company recognizes the charge-off.

general allowance is calculated by applying loss factors to outstanding loans by loan type, excluding loans determined to be impaired.

As part of this analysis, each quarter we prepare an allowance for loan losses worksheet which categorizes the loan portfolio

by risk characteristics such as loan type and loan grade.

The general allowance is inherently subjective as it requires material

estimates that may be susceptible to significant change.

There are a number of factors that are considered when evaluating the

appropriate level of the allowance.

These factors include current economic and business conditions that affect our key lending

areas, collateral values, loan volumes and concentrations, credit quality trends such as nonperforming loans, delinquency and

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

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

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

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

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

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

For information on our

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

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

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

are charged against the allowance when management believes that the collectability of the loan principal is unlikely.

on loans previously charged-off are credited to the allowance for loan losses.

making its assessment on the adequacy of the allowance for loan losses, management considers several quantitative and qualitative

factors that could have an effect on the credit quality of the portfolio.

Management closely monitors the credit quality of individual

delinquent and nonperforming relationships, the levels of impaired and adversely classified loans, net charge-offs, the growth

and composition of the loan portfolio, expansion in geographic market area, and any material changes in underwriting criteria,

and the strength of the local and national economy, among other factors.

level of delinquent and nonperforming assets is largely a function of economic conditions and the overall banking environment

and the individual business circumstances of borrowers.

Despite prudent loan underwriting, adverse changes within the Company’s

market area, or deterioration in local, regional or national economic conditions, could negatively impact management’s estimate

of probable credit losses.

continues to closely monitor the necessary allowance levels, including specific reserves.

The allowance for loan losses to total

loans ratio was 1.00% at December 31, 2022 compared to 1.06% at December 31, 2021.

The allowance for loan losses to total loans

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

The allowance for loan losses to

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

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

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

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

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

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

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

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

in the economic environment.

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

the current loan portfolio as of December 31, 2022.

of Allowance for Loan Losses .

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

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 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

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

The allowance for credit losses for loans held for investment, as reported in our consolidated balance sheet, is adjusted

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

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

which consist of commercial real estate loans, residential real estate loans, commercial and industrial loans, and consumer loans.

These segments are further disaggregated into loan classes, the level at which credit risk is monitored.

For each of these pools,

the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment

speed, curtailments, time to recovery, probability of default, and loss given default.

The modeling of expected prepayment speeds,

curtailment rates, and time to recovery are based on historical internal data.

The quantitative component of the ACL on loans

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 information on our methodology for assessing the appropriateness of the allowance for credit losses please see Footnote 1

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

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

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.

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.

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.

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

Cash Flow Method (“DCF”)

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

such loans are segregated into loan classes.

Loans are designated into loan classes based on loans pooled by product types and

similar risk characteristics or areas of risk concentration.

In determining the allowance for credit losses, we derive an estimated

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:

(1) lending policies and procedures;

(2) international, national, regional and local economic business conditions and developments that affect the collectability of

the portfolio;

(3) 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 nonaccrual loans;

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

for collateralized loans.

Additional factors include the existence and effect of any concentrations of credit, and changes in

the level of such concentrations and the effect of external factors such as competition and legal and regulatory requirements

on the level of estimated credit losses in the existing portfolio.

Such factors are used to adjust the historical probabilities

of default and severity of loss so that they reflect management expectation of future conditions based on a reasonable and supportable

The Company uses regression analysis of historical internal and peer data to determine which variables are best suited

to be economic variables utilized when modeling lifetime probability of default and loss given default.

This analysis also determines

how expected probability of default and loss given default will react to forecasted levels of the economic variables.

all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts

back to a historical loss rate over four quarters on a straight-line basis.

Other internal and external indicators of economic

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

Evaluated Financial Assets

a loan that does not share risk characteristics with other loans, expected credit loss is measured based on net realizable value,

that is, the difference between the discounted value of the expected future cash flows, based on the original effective interest

rate, and the amortized cost basis of the loan.

For these loans, we recognize expected credit loss equal to the amount by which

the net realizable value of the loan is less than the amortized cost basis of the loan (which is net of previous charge-offs and

deferred loan fees and costs), except when the loan is collateral dependent, that is, when the borrower is experiencing financial

difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral.

In these cases,

expected credit loss is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral.

The fair value of the collateral is adjusted for the estimated cost to sell if repayment or satisfaction of a loan is dependent

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

Company maintains a separate allowance for credit losses from off-balance-sheet credit exposures, including unfunded loan commitments,

which is included in other liabilities on the balance sheet.

Management estimates the amount of expected losses by calculating

a commitment usage factor over the contractual period for exposures that are not unconditionally cancellable by the Company and

applying the loss factors used in the ACL methodology to the results of the usage calculation to estimate the liability for credit

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.

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

forecast period as of December 31, 2023.

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.

of Allowance for Credit Losses .

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

the percent of loans in each category to total loans.

2 unchanged sentences

Loan Category

Amount of Allowance for Loan Losses

Amount of Allowance for Credit Losses

Loan Balances by Category

9 unchanged sentences

Consumer loans

Total allowances for loan losses

Acquired with Deteriorated Credit Quality .

acquired in a transfer, including business combinations, where there is evidence of credit deterioration since origination and

it is probable at the date of acquisition the Company will not collect all contractually required principal and interest payments,

are accounted for under accounting guidance for purchased credit-impaired loans.

This guidance provides that the excess of the

cash flows initially expected to be collected over the fair value of the loans at the acquisition date (i.e., the accretable yield)

is accreted into interest income over the estimated remaining life of the loans, provided that the timing and amount of future

cash flows is reasonably estimated.

The difference between the contractually required payments and the cash flows expected to

be collected at acquisition is referred to as the non-accretable difference.

Subsequent to acquisition, probable decreases in

expected cash flows are recognized through a provision for loan losses, resulting in an increase to the allowance for loan losses.

If the Company has probable and significant increases in cash flows expected to be collected, the Company will first reverse any

previously established allowance for loan losses and then increase interest income as a prospective yield adjustment.

31, 2022 and 2021, the Company had $5.2 million and $6.9 million in purchased credit- impaired loans.

Board of Directors reviews and approves our investment policy on an annual basis.

The Chief Executive Officer and Chief Financial

Officer, as authorized by the Board of Directors, implement this policy based on the established guidelines within the written

The Company’s internal investment policy sets limits as a percentage of the total portfolio, identifies acceptable

and unacceptable investment practices, and denotes approved security dealers.

The effect of changes in interest rates, market

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

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

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

of deposits, and attempts to provide maximum return consistent with liquidity constraints and general prudence, including diversification

and safety of investments.

securities in which the Company may invest are limited by regulation.

Federally-chartered savings banks have authority to invest

in various types of assets, including U.S.

Treasury obligations, securities of various government-sponsored enterprises, mortgage-backed

securities, certain certificates of deposit of insured financial institutions, repurchase agreements, overnight and short-term

loans to other banks, corporate debt instruments and marketable equity securities.

of the balance sheet dates reflected in this annual report, held-to-maturity securities are carried at amortized cost and available-for-sale

securities are carried at fair value.

On a quarterly basis, we review debt securities with a decline in fair value below the amortized

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

In estimating OTTI losses for debt securities, impairment is required to be recognized if (1) we intend to sell the security;

(2) it is “more likely than not” that we will be required to sell the security before recovery of its amortized cost

or (3) for debt securities, the present value of expected cash flows is not sufficient to recover the entire amortized

For all impaired debt securities that we intend to sell, or more likely than not will be required to sell, the full

amount of the other-than-temporary impairment is recognized through earnings.

For all other impaired debt securities, credit-related

other-than-temporary impairment is recognized through earnings, while non-credit-related other-than-temporary impairment is recognized

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

Marketable equity securities are measured at fair value with changes

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

gains and losses are realized.

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

Board on a periodic basis.

The Board also approves the Company’s ongoing investment strategy.

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

of principal.

Secondary objectives include:

providing collateral to secure local municipal deposits, the investment of funds during

periods of decreased loan demand, interest rate sensitivity considerations, supporting local communities through the purchase

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 policy, acceptable portfolio investments include:

United States Government obligations, obligations of federal

agencies or U.S.

Government-sponsored enterprises, mortgage-backed securities, municipal obligations (general obligations, revenue

obligations, school districts and non-rated issues from the Bank’s general market area), banker’s acceptances, certificates

of deposit, Industrial Development Authority Bonds, Public Housing Authority Bonds, corporate bonds (each corporation limited

to the Bank’s legal lending limit), marketable equity securities, collateralized mortgage obligations, Small Business Investment

Companies (SBIC), Federal Reserve stock and FHLB stock.

Bank’s internal investment policy sets limits as a percentage of the total portfolio, identifies acceptable and unacceptable

investment practices, and denotes approved security dealers.

The effect of changes in interest rates, market values, timing of

principal payments and credit risk are considered when purchasing securities.

of the balance sheet dates reflected in this annual report, HTM securities are carried at amortized cost and AFS securities are

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 .

December 31, 2022 and 2021, the Company held $2.9 million and $2.2 million, respectively, of FHLB stock.

This 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

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

The stock is restricted and carried

in other assets at cost.

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

December 31, 2023 and December 31, 2022, the Company held $3.3 million and $2.9 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.

December 31, 2023 and December 31, 2022, the Company held $423,000 of Atlantic Community Bankers Bank stock.

The stock is restricted

and carried in other assets at cost.

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

No impairment losses have been recorded through December 31, 2023.

6 unchanged sentences

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

One Year or Less

More than One Year through Five

More than Five Years through

More than Ten Years

Total Securities

Amortized Cost

Weighted Average Yield

Amortized Cost

Weighted Average Yield

Amortized Cost

Weighted Average Yield

Amortized Cost

Weighted Average Yield

Amortized Cost

Weighted Average Yield

More than One Year

More than Five Years

than Ten Years

(Dollars in thousands)

1 unchanged sentence

Debt securities:

Government-sponsored enterprise obligations

State and municipal bonds

Corporate bonds

Government-sponsored

enterprise obligations

State and municipal

debt securities

Mortgage-backed securities:

Government-sponsored residential mortgage-backed

Government-sponsored

residential mortgage-backed

Government guaranteed residential mortgage-backed

mortgage-backed securities

Total available-for-sale

available-for-sale

Held-to-maturity:

3 unchanged sentences

Mortgage-backed securities:

Government-sponsored residential mortgage-backed

Total mortgage-backed securities

Total held-to-maturity

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

The Company offers commercial checking, small business,

nonprofit and municipal checking, money market and sweep accounts, as well as certificates of deposit and specialty products including

escrow management accounts, Interest on Lawyers Trust Accounts, and Interest on Real Estate Brokers Trust Accounts.

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 certificates of deposit 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.

Government-sponsored

residential mortgage-backed

mortgage-backed securities

held-to-maturity

December 31, 2023, the Company had $137.1 million in securities classified as AFS, $223.4 million in HTM, marketable equity securities

of $196,000, and no securities classified as trading.

Securities classified as AFS were reported for financial reporting purposes

at the fair value with net changes in the fair value from period to period included as a separate component of shareholders’

equity, net of income taxes.

Changes in the fair value of debt securities classified as HTM or AFS do not affect our income, unless

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.

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

5 unchanged sentences

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

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

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

81.5% of total deposits on December 31, 2022 and 82.2% on December 31, 2021.

At December 31, 2022 and December 31, 2021, time

deposits with remaining terms to maturity of less than one year amounted to $288.7 million and $363.3 million, respectively.

“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, 2022, 2021 and 2020.

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.

December 31, 2023, uninsured deposits, defined as deposits that exceed the limits provided by the FDIC, were 27% of total deposits,

compared to 31% of total deposits, at December 31, 2022.

deposits (which the Company defines as all deposits except time deposits) represented 71.5% of total deposits at December 31,

2023 and 81.5% at December 31, 2022.

At December 31, 2023, 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.

Management Services.

addition to the deposit products discussed above, commercial banking and municipal customers may take advantage of cash management

services including remote deposit capture, Automated Clearing House credit and debit origination, check payment fraud prevention,

international and domestic wire transfers and corporate credit cards.

addition to the deposit products discussed above, commercial and municipal customers may take advantage of cash management services

including remote deposit capture, Automated Clearing House credit and debit origination, check payment fraud prevention, international

and domestic wire transfers and corporate credit cards.

IntraFi/CDARS .

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.

Distribution and Weighted Average Rates.

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

the Years Ended December 31,

Average Rates

in thousands)

Interest-bearing

checking accounts

savings accounts

market accounts

core deposit accounts

deposit accounts

For the Years Ended December 31,

Weighted Average Rates

(Dollars in thousands)

Demand deposits

Interest-bearing checking

Regular savings

Total core deposits

Time deposits

Total deposits

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

Average Rates

At December 31,

Weighted Average Rates

(Dollars in thousands)

Over 1 year through

certificated accounts

Due within the year

Over 1 year through 3 years

Total time deposits

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

1 unchanged sentence

(Dollars in thousands)

Core deposit accounts:

Core deposits:

Demand deposits

Interest-bearing checking accounts

Regular savings accounts

Money market accounts

Total core deposit accounts

Interest-bearing checking

Regular savings

Total core deposits

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

1 unchanged sentence

(Dollars in thousands)

Time deposit accounts:

Time deposits:

3 months or less

2 unchanged sentences

Over 12 months

Total time deposit accounts

Total time deposits

_______________

(1) Uninsured

13 unchanged sentences

Sources of Funds.

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

Asset growth in excess of deposits

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

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

arrangements with correspondent banks.

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

and investing activities and to provide liquidity for daily operations.

FHLB advances also provide more pricing and option alternatives

for particular asset/liability needs.

The FHLB provides a central credit facility primarily for member institutions.

member, the Company is required to own capital stock of the FHLB, calculated periodically based primarily on its level of borrowings

from the FHLB.

FHLB borrowings are secured by certain securities from the Company’s investment portfolio not otherwise pledged

as well as certain residential real estate and commercial real estate loans.

Advances are made under several different credit

programs with different lending standards, interest rates and range of maturities.

This relationship is an integral component

of the Company’s asset-liability management program.

At December 31, 2022, the Bank had $407.4 million in additional borrowing

capacity from the FHLB.

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

Interest on this line of credit is payable

at a rate determined and reset by the FHLB on a daily basis.

The outstanding principal is due daily but the portion not repaid

will be automatically renewed.

There were no advances outstanding under this line at December 31, 2022 and December 31, 2021,

respectively.

Company has an available line of credit of $4.4 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.

At December 31, 2022 and December 31, 2021, there were no advances outstanding under this line.

addition to deposits, other sources of funds include loan repayments, loan sales on the secondary market, interest and dividend

income from investments, matured investments, borrowings from the FHLB and from correspondent banks, and issuance of securities.

Home Loan Bank, Federal Reserve Bank of Boston and Other Borrowings.

Company utilizes advances from the FHLB and the Federal Reserve Bank of Boston (“FRB”), as well as other funding sources,

as part of our overall funding strategy, to meet short-term liquidity needs and to manage interest rate risk arising from the

difference in asset and liability maturities.

Bank is a member of the FHLB, which is part of the Federal Home Loan Bank System.

Members are required to own capital stock of

the FHLB, and borrowings are collateralized by qualifying assets not otherwise pledged.

The maximum amount of credit that the

FHLB will extend varies from time to time, depending on its policies and the amount of qualifying collateral the member can pledge.

The Bank had satisfied its collateral requirement at December 31, 2023.

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.

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

December 31, 2023

December 31, 2022

Balance Outstanding

(In millions)

Weighted Average Rate

Balance Outstanding

(In millions)

Weighted Average Rate

Short-term borrowings

Long-term debt

Bank has additional borrowing capacity at the FHLB up to a certain percentage of the value of qualified collateral.

In accordance

with agreements with the FHLB, the qualified collateral must be free and clear of liens, pledges and encumbrances.

31, 2023, the Bank had pledged $601.2 million of eligible collateral to support borrowing capacity at the FHLB of Boston.

relationship is an integral component of the Company’s asset-liability management program.

At December 31, 2023, the Bank

had immediate availability at the FHLB, including its overnight Ideal Way Line of Credit, to borrow an additional $535.6 million

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.

Interest on this line of credit

is payable at a rate determined and reset by the FHLB on a daily basis.

The outstanding principal is due daily but the portion

not repaid will be automatically renewed.

At December 31, 2023 and 2022, the Company did not have any outstanding advances under

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.

following table lists FHLB and FRB liquidity information as of December 31, 2023:

At December 31, 2023

Total Available Borrowing Capacity

Required Collateral on Balance Outstanding

Net Available Borrowing Capacity

(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.

The Company has $65.0 million in available

lines of credit with correspondent banks at interest rates determined and reset on a daily basis.

At December 31, 2022 and December

31, 2021, we had no advances outstanding under these lines.

debt consists of FHLB advances with an original maturity of one year or more.

At December 31, 2022, we had $1.2 million in long-term

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

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.

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

outstanding under these lines.

April 20, 2021, the Company completed an offering of $20 million in aggregate principal amount of its 4.875% fixed-to-floating

64 unchanged sentences

for compliance with state consumer protection laws.

The Bank’s deposits are insured by the FDIC up to the applicable deposit insurance

limits in accordance with FDIC laws and regulations.

The Bank is a member of the FHLB, and is subject to the rules and requirements

The subsidiaries of Western New England Bancorp and the Bank are subject to federal and state laws and regulations,

including regulations of the FRB and the OCC, respectively.

The Bank’s deposits are insured by the FDIC up to the applicable deposit

insurance limits in accordance with FDIC laws and regulations.

The Bank is a member of the FHLB, and is subject to the rules and

requirements of the FHLB.

The subsidiaries of Western New England Bancorp and the Bank are subject to federal and state laws and

regulations, including regulations of the FRB and the OCC, respectively.

forth below is a description of the significant elements of the laws and regulations applicable to Western New England Bancorp

114 unchanged sentences

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

items included in shareholders’ equity (for example, marks-to-market of securities held in the available-for-sale portfolio)

under generally accepted accounting principles in the United States of America (“GAAP”) are reversed for the purposes

of determining regulatory capital ratios.

items included in shareholders’ equity (for example, marks-to-market of securities held in the AFS portfolio) under generally

accepted accounting principles in the United States of America (“GAAP”) are reversed for the purposes of determining

regulatory capital ratios.

Under the Capital Rules, the effects of certain AOCI items are not excluded;

banking organizations not using advanced approaches, were permitted to make a one-time permanent election to continue to exclude

these items in January 2015.

however, banking organizations

not using advanced approaches, were permitted to make a one-time permanent election to continue to exclude these items in January

The Company and the Bank made this election.

9 unchanged sentences

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

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

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.

7 unchanged sentences

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

The Company and

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

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

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

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

Corrective Action.

27 unchanged sentences

As of December 31, 2023, the

most recent notification from the OCC categorized the Bank as “well-capitalized” under the PCA framework.

Bank was “well-capitalized” under the PCA framework.

Bank derives its lending and investment powers from the HOLA and its implementing regulations promulgated by the OCC.

8 unchanged sentences

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,

2022, we were in compliance with these limitations on loans to one borrower.

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.

Commercial Real Estate Lending Regulations.

10 unchanged sentences

level of commercial real estate lending.

On December 18, 2015, the federal banking agencies jointly issued a “Statement on

Prudent Risk Management for Commercial Real Estate Lending” reminding banks of the need to engage in risk management practices

for commercial real estate lending.

On December 18, 2015, the federal banking agencies jointly issued a “Statement

on Prudent Risk Management for Commercial Real Estate Lending” reminding banks of the need to engage in risk management

practices for commercial real estate lending.

Thrift Lender Test.

8 unchanged sentences

thrift investments” include certain assets that are includable without limit, such as residential and manufactured housing

loans, home equity loans, education loans, small business loans, credit card loans, mortgage backed securities, Federal Home Loan

Bank stock and certain U.S.

loans, home equity loans, education loans, small business loans, credit card loans, mortgage backed securities, FHLB stock and

government obligations.

29 unchanged sentences

Under the Dodd-Frank Act, state attorneys

general are empowered to enforce rules issued by the CFPB.

general are also empowered to enforce rules issued by the CFPB.

Company and the Bank are subject to a number of federal and state laws designed to protect borrowers and promote fair lending.

57 unchanged sentences

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

Depositor Preference.

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

11 unchanged sentences

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.

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.

Requirements.

4 unchanged sentences

If vault cash does not fully satisfy the required reserves, they may be satisfied in the form

of a balance maintained with the Federal Reserve Bank of Boston.

Currently, there is no reserve requirement because the Federal

Reserve Board reduced the reserve requirement to zero percent.

of a balance maintained with the FRB.

Currently, there is no reserve requirement because the Federal Reserve Board reduced the

reserve requirement to zero percent.

Privacy and Data Security.

25 unchanged sentences

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

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

conducting ongoing customer due diligence.

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

for conducting ongoing customer due diligence.

Financial institutions also are required to establish internal anti-money laundering

18 unchanged sentences

Generally, the sanctions contain one or more of the following elements:

(i) restrictions on trade

with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned

(i) restrictions on trade with

or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned

country and prohibitions on “U.S.

10 unchanged sentences

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 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.

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.

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

22 unchanged sentences

The federal banking agencies and the SEC most recently proposed such

regulations in 2016, but the regulations have not yet been finalized.

If the regulations are adopted in the form initially proposed,

they will restrict the manner in which executive compensation is structured.

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.

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

33 unchanged sentences

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