What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-08 compared with 2023-03-10 · 2176 added, 1698 removed, 623 unchanged (86% of the section changed)

AND PROCEDURES.

of Disclosure Controls and Procedures

including our President and Chief Executive Officer and Executive Vice President and Chief Financial Officer has evaluated the

effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end

of the period covered by this report.

Based upon that evaluation, our Chief Executive Officer and Executive Vice President and

Chief Financial Officer concluded that the disclosure controls and procedures were effective to ensure that information required

to be disclosed in the reports we file and submit under the Exchange Act (i) is recorded, processed, summarized and reported as

and when required and (ii) accumulated and communicated to our management including the Chief Executive Officer and Executive

Vice President and Chief Financial Officer, as appropriate to allow timely discussion regarding required disclosure.

Annual Report on Internal Control over Financial Reporting

management of Western New England Bancorp, Inc.

and Subsidiaries (collectively, the “Company”), including our President

and Chief Executive Officer and Executive Vice President and Chief Financial Officer, is responsible for establishing and maintaining

adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act.

Our management assessed

the effectiveness of our internal control over financial reporting as of December 31, 2022 based on the criteria set forth by

the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013).

on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2022.

have been no changes in our internal control over financial reporting identified in connection with the evaluation that occurred

during our last fiscal quarter that has materially affected, or that is reasonably likely to materially affect, our internal control

CONTROLS AND PROCEDURES.

Evaluation of Disclosure

Controls and Procedures

Management, including

our President and Chief Executive Officer and Executive Vice President and Chief Financial Officer has evaluated the effectiveness

of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period

covered by this report.

Based upon that evaluation, our Chief Executive Officer and Executive Vice President and Chief Financial

Officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed

in the reports we file and submit under the Exchange Act (i) is recorded, processed, summarized and reported as and when required

and (ii) accumulated and communicated to our management including the Chief Executive Officer and Executive Vice President and

Chief Financial Officer, as appropriate to allow timely discussion regarding required disclosure.

Management’s Annual Report on Internal

Control over Financial Reporting

The management of Western New England Bancorp,

and subsidiaries (collectively, the “Company”), including our President and Chief Executive Officer and Executive

Vice President and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial

reporting, as defined in Rule 13a-15(f) of the Exchange Act.

Our management assessed the effectiveness of our internal control

over financial reporting as of December 31, 2023 based on the criteria set forth by the Committee of Sponsoring Organizations of

the Treadway Commission in Internal Control-Integrated Framework (2013).

Based on this assessment, management concluded

that our internal control over financial reporting was effective as of December 31, 2023.

There have been no changes in our internal

control over financial reporting identified in connection with the evaluation that occurred during our last fiscal quarter that

has materially affected, or that is reasonably likely to materially affect, our internal control over financial reporting.

Report of Independent Registered Public Accounting

To the Shareholders and Board of Directors of Western

New England Bancorp, Inc.

Opinion on Internal Control over Financial

We have audited Western New England Bancorp, Inc.

and subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2023, based on criteria

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

the Treadway Commission (“COSO”).

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

over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013)

issued by the COSO.

We have also audited, in accordance with the standards

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

and our report dated March 8, 2024 expressed an unqualified opinion.

Basis for Opinion

The Company’s management is responsible for

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

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

Our responsibility

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

We are a public accounting

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

federal securities

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

We conducted our audit in accordance with the standards

of the PCAOB.

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

control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control

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

of internal control based on the assessed risk.

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

the circumstances.

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

Definition and Limitations of Internal Control

over Financial Reporting

of Independent Registered Public Accounting Firm

Internal Control over Financial Reporting

the Shareholders and Board of Directors of Western New England Bancorp, Inc.

on Internal Control over Financial Reporting

have audited Western New England Bancorp, Inc.

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

reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013)

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

In our opinion, the Company

maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria

established in Internal Control — Integrated Framework (2013) issued by the COSO.

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

the consolidated financial statements of the Company and our report dated March 10, 2023 expressed an unqualified opinion.

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

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

on Internal Control over Financial Reporting .

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

control over financial reporting based on our audit.

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

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

federal securities laws and the applicable rules and regulations

of the Securities and Exchange Commission and the PCAOB.

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

Those standards require that we plan and perform the audit

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

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

a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the

assessed risk.

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

that our audit provides a reasonable basis for our opinion.

and Limitations of Internal Control over Financial Reporting

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

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

accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain

to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the

assets of the company;

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

statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are

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

and (3) provide reasonable assurance

regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have

a material effect on the financial statements.

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

Also, projections

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

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

Wolf & Company, P.C.

Massachusetts

REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

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

“Information About Our Board

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

COMPENSATION.

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

“Compensation Committee Interlocks

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

“Executive Compensation” and “Director Compensation.”

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

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

“Security Ownership of Certain

Beneficial Owners and Management” and “Securities Authorized For Issuance Under Equity Compensation Plans.”

RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

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

“Transactions with Related Persons”

and “Board of Directors Independence.”

ACCOUNTING FEES AND SERVICES.

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

“Independent Registered Public

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

Massachusetts , Auditor ID:

AND FINANCIAL STATEMENT SCHEDULES.

(a)(1) Financial

is made to our consolidated financial statements and accompanying notes included in Item 8 of Part II hereof.

(a)(2) Financial

Statement Schedules

financial statement schedules have been omitted because the required information is not present, or not present in amounts sufficient

to require submission of the schedules, or because the required information is provided in the consolidated financial statements

or notes thereto.

A company's internal control over financial reporting

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

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

A company's internal control over financial

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

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

(2) provide reasonable assurance that transactions

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

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

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

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

Because of its inherent limitations, internal control

over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods

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

policies or procedures may deteriorate.

/s/ Wolf & Company, P.C.

Boston, Massachusetts

March 8, 2024

OTHER INFORMATION.

During the quarter

ended December 31, 2023, no director or officer of the Company adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule

10b5-1 trading arrangements.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The following information

included in the Proxy Statement is incorporated herein by reference:

“Information About Our Board of Directors,” “Information

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

EXECUTIVE COMPENSATION.

The following information

included in the Proxy Statement is incorporated herein by reference:

“Compensation Committee Interlocks and Insider Participation,”

“Compensation Discussion and Analysis,” “Compensation Committee Report,” “Executive Compensation”

and “Director Compensation.”

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

The following information

included in the Proxy Statement is incorporated herein by reference:

“Security Ownership of Certain Beneficial Owners and

Management” and “Securities Authorized For Issuance Under Equity Compensation Plans.”

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The following information

included in the Proxy Statement is incorporated herein by reference:

“Transactions with Related Persons” and “Board

of Directors Independence.”

PRINCIPAL ACCOUNTING FEES AND SERVICES.

The following information

included in the Proxy Statement is incorporated herein by reference:

“Independent Registered Public Accounting Firm Fees

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

, Boston, Massachusetts , Auditor

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)(1) Financial Statements

Reference is made to

our consolidated financial statements and accompanying notes included in Item 8 of Part II hereof.

(a)(2) Financial Statement Schedules

Consolidated financial

statement schedules have been omitted because the required information is not present, or not present in amounts sufficient to

require submission of the schedules, or because the required information is provided in the consolidated financial statements or

notes thereto.

(a)(3) Exhibits

Articles of Organization of Western New England Bancorp, Inc.

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

with the SEC on October 26, 2016).

and Restated Bylaws of Western New England Bancorp, Inc.

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

the SEC on February 2, 2017).

of Stock Certificate of Western New England Bancorp, Inc.

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

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

EXHIBIT INDEX

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

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

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

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

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

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

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

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

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

on December 22, 2005).

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

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

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

and Restated Employment Agreement between James C.

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

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

and Restated Employment Agreement between James C.

Description of Securities Registered Under Section 12 of the

Securities Exchange Act of 1934.

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

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

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

Amended and Restated Employment Agreement between James C.

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

Amended and Restated Employment Agreement between James C.

Hagan and Western New England Bancorp, Inc.

(f/k/a Westfield Financial,

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

Agreement between Leo R.

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

the SEC on January 5, 2009).

Agreement between Leo R.

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

Employment Agreement between Leo R.

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

Employment Agreement between Leo R.

and Western New England Bancorp, Inc.

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

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

Agreement between Allen J.

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

with the SEC on January 5, 2009).

Agreement between Allen J.

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

Employment Agreement between Allen J.

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

Employment Agreement between Allen J.

Miles, III and Western New England Bancorp, Inc.

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

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

Agreement between Darlene M.

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

Employment Agreement between Darlene M.

Libiszewski and Western New England Bancorp, Inc.

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

by reference to Exhibit 10.4 of the Registration Statement on Form S-4 (No.

(f/k/a Westfield Financial, Inc.) (incorporated by reference to Exhibit 10.4 of the Registration Statement on Form S-4 (No.

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

Agreement between Darlene M.

Libiszewski and Westfield Bank (incorporated by reference to Exhibit 10.5 of the Registration

Statement on Form S-4 (No.

Employment Agreement between Darlene M.

Libiszewski and Westfield Bank (incorporated by reference to Exhibit 10.5 of the Registration Statement on Form S-4 (No.

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

Agreement between Guida R.

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

filed with the SEC on February 8, 2018).

Agreement between Guida R.

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

the SEC on February 8, 2018).

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

8-K filed with the SEC on March 23, 2018).

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

the SEC on March 23, 2018).

Agreement between Kevin C.

O’Connor and Westfield Bank dated February 17, 2017 (incorporated by reference to Exhibit

10.20 of the Form 10-K filed with the SEC on March 11, 2021).

Agreement between Kevin C.

Employment Agreement between Guida R.

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

Employment Agreement between Guida R.

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

Employment Agreement between Kevin C.

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

Employment Agreement between Kevin C.

O’Connor and Western New England Bancorp, Inc.

dated February 17, 2017 (incorporated by reference

to Exhibit 10.21 of the Form 10-K filed with the SEC on March 11, 2021).

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

dated as of January 1, 2021 (incorporated by

reference to Exhibit 10.22 of the Form 10-K filed with the SEC on March 11, 2021).

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

dated as of January 1, 2021(incorporated

by reference to Exhibit 10.23 of the Form 10-K filed with the SEC on March 11, 2021).

Agreement between Filipe B.

Goncalves and Western New England Bancorp dated as of January 1, 2021.

Agreement between Filipe B.

Goncalves and Westfield Bank dated as of January 1, 2021.

of Control Agreement between Daniel A.

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

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

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

Employment Agreement between John Bonini and Western New England Bancorp dated as of February 22, 2024.

Employment Agreement between John Bonini and Westfield Bank dated as of February 22, 2024.

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

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

Employment Agreement between Christine Phillips and Western New England Bancorp dated as of February 22, 2024.

Employment Agreement between Christine Phillips and Westfield Bank dated as of February 22, 2024.

Employment Agreement between Filipe B.

Goncalves and Western New England Bancorp dated as of January 1, 2021 (incorporated by reference to Exhibit 10.19 of the Form 10-K filed with the SEC on March 10, 2023).

Employment Agreement between Filipe B.

Goncalves and Westfield Bank dated as of January 1, 2021 (incorporated by reference to Exhibit 10.20 of the Form 10-K filed with the SEC on March 10, 2023).

Change of Control Agreement between Daniel A.

Marini, Westfield Bank and Western New England Bancorp, Inc.

dated as of January 1,

dated as of January 1, 2022 (incorporated by reference to Exhibit 10.21 of the Form 10-K filed with the SEC on March 10, 2023).

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

Bancorp, Inc.

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

Chicopee Bancorp, Inc.

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

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

New England Bancorp, Inc.

2021 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 of the Form S-8 filed with

the SEC on May 19, 2021).

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

2021 Omnibus Incentive Plan (incorporated

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

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

2021 Omnibus Incentive Plan (incorporated

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

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

2021 Omnibus Incentive Plan (incorporated

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

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

2021 Omnibus Incentive Plan (incorporated

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

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

2021 Omnibus Incentive

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

Western New England Bancorp, Inc.

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

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

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

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

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

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

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

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

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

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

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

Subsidiaries of Western New England Bancorp, Inc.

4 unchanged sentences

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

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

New England Bancorp, Inc.

for the year ended December 31, 2022, formatted in XBRL (eXtensible

Business Reporting Language):

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

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

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

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

contract or compensatory plan or arrangement.

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

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

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

10-K SUMMARY.

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

this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 10, 2023.

NEW ENGLAND BANCORP, INC.

Western New England Bancorp, Inc.

Incentive Compensation Recovery Policy as Adopted by the Board of Directors on November 20, 2023.

Financial statements from the annual report on Form 10-K of Western New England Bancorp, Inc.

for the year ended December 31, 2023, formatted in XBRL (eXtensible Business Reporting Language):

(i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Net Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements.

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

† Filed herewith.

* Management contract or compensatory plan or arrangement.

** Pursuant to Rule 406T of Regulation S-T, the Interactive

Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections

11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange

Act of 1934, as amended, and otherwise are not subject to liability under those sections.

FORM 10-K SUMMARY.

Pursuant to the requirements of Section

13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its

behalf by the undersigned, thereunto duly authorized, on March 8, 2024.

WESTERN NEW ENGLAND BANCORP, INC.

Chief Executive Officer and President

(Principal Executive Officer)

Chief Financial Officer and Executive

Vice President (Principal Financial Officer and Principal Accounting Officer)

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

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

POWER OF ATTORNEY

Each person whose individual

signature appears below hereby authorizes and appoints James C.

Hagan and Guida R.

Sajdak, and each of

them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful

attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person,

individually and in each capacity stated below, and to file any and all amendments to this report on Form 10-K, and to file

the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission,

granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act

and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes

may lawfully do or cause to be done by virtue thereof.

to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed by the

following persons on behalf of the registrant and in the capacities indicated on March 10, 2023.

Executive Officer, President and Director

Sajdak, and each of them, with full power of

substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent

to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity

stated below, and to file any and all amendments to this report on Form 10-K, and to file the same, with all exhibits thereto,

and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact

and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming

all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to

be done by virtue thereof.

Pursuant to the requirements

of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed by the following persons on

behalf of the registrant and in the capacities indicated on March 8, 2024.

Chief Executive Officer, President and Director

(Principal Executive Officer)

Financial Officer and Executive Vice President

Financial Officer and Principal Accounting Officer)

Chief Financial Officer and Executive

Vice President

(Principal Financial Officer and

Principal Accounting Officer)

Chairperson of the Board

/s/ Laura Benoit

/s/ William D.

/s/ Steven G.

/s/ Philip R.

of Independent Registered Public Accounting Firm

the Shareholders and Board of Directors of

New England Bancorp, Inc.

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of Western New England Bancorp, Inc.

and subsidiaries (the Company)

as of December 31, 2022 and 2021, the related consolidated statements of net income, comprehensive income, changes in shareholders’

equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred

to as the financial statements).

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

position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the

three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States

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

the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal

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

and our report dated March 10, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal controls

over financial reporting.

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

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

financial statements based on our audits.

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

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

federal securities laws and the applicable rules and regulations of the

Securities and Exchange Commission and the PCAOB.

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

Those standards require that we plan and perform the audit to

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

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

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

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

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

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

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

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

(1) relates to accounts or disclosures

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

The communication

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

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

or disclosures to which it relates.

Audit Matter Description

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

$19.9 million as of December 31, 2022, representing management’s estimate of the probable losses inherent in the loan portfolio

as of that date.

The allowance is established as losses are estimated to have occurred through a provision (credit)

for loan losses charged to earnings.

determination of the allowance for loan losses requires significant judgment by management including the determination of qualitative adjustments to historical loss experience.

the Critical Audit Matter was addressed in the Audit

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

● Management’s

determination of general reserves, including determination of historical loss experience

and qualitative adjustments to historical loss experience.

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

relevant internal controls.

have served as the Company’s auditor since 2004.

Wolf & Company, P.C.

Massachusetts

NEW ENGLAND BANCORP, INC., AND SUBSIDIARIES

BALANCE SHEETS

in thousands, except share data)

and due from banks

Interest-bearing

deposits and other short-term investments

and cash equivalents

Available-for-sale

securities, at fair value

Held-to-maturity

securities, at amortized cost (Fair value of $ 190,950 at December 31, 2022 and $ 219,748 at December 31, 2021)

equity securities, at fair value

Home Loan Bank stock and other restricted stock, at cost

net of allowance for loan losses of $ 19,931 and $ 19,787 at December 31, 2022 and 2021, respectively

and equipment, net

interest receivable

life insurance

tax asset, net

deposit intangible

AND SHAREHOLDERS’ EQUITY

To the Shareholders and Board of Directors of

Western New England Bancorp, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated

balance sheets of Western New England Bancorp, Inc.

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated

statements of net income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the

period ended December 31, 2023, and the related notes to the consolidated financial statements (collectively referred to as the “financial

statements”).

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

as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended

December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the

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

reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the

Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 8, 2024 expressed an unqualified opinion

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

Change in Accounting Principle

As discussed in the financial statements, the

Company changed its method of accounting for measurement and recognition of credit losses as of January 1, 2023 upon the adoption of Accounting

Standards Codification Topic 326, Financial Instruments - Credit Losses (“ASC 326”).

Basis for Opinion

These financial statements are the responsibility

of the Company's management.

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

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

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

We conducted our audits in accordance with the

standards of the PCAOB.

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

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

Our audits included performing procedures to assess the risks

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

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

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

presentation of the financial statements.

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

Critical Audit Matters

The critical audit matters communicated below

are matters arising from the current period audit of the financial statements that was communicated or required to be communicated to

the Company’s Audit Committee and that:

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

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

The communication of critical audit matters does not alter

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

providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for Credit Losses – Loans

Evaluated on a Pooled Basis

Critical Audit Matter Description

As described in Notes 1 and 3 to the financial

statements, the Company has recorded an allowance for credit losses (ACL) for its loan portfolio in the amount of $20.3 million as of

December 31, 2023, representing management’s estimate of credit losses over the remaining expected life of the Company’s loan

portfolio as of that date.

Upon adoption of ASC 326 on January 1, 2023, the Company recorded a cumulative effect adjustment to opening

retained earnings which increased the ACL and established a reserve for off-balance sheet credit exposures recorded in other liabilities.

Management determined the amounts, and corresponding provision for credit loss expense for the year, pursuant to the application of Accounting

Standards Codification Topic 326, Financial Instruments – Credit Losses .

The Company’s methodology to determine

its allowance for credit losses incorporates quantitative and qualitative assessments of its historical losses, current loan portfolio

and economic conditions, the application of forecasted economic conditions, and related modeling.

Management incorporates the use of third-party

software to arrive at an expected life-of-loan loss amount based on discounted cash flow estimate at the loan level.

The amount and timing

of cash flows is determined using assumptions for probability of default and loss given default (PD/LGD);

expected term;

and forecasted

economic factors.

The results of these calculations are then qualitatively adjusted by management based on pool-specific attributes.

determined that performing procedures relating to these components of the Company’s methodology is a critical audit matter.

The principal considerations for our determination

are (i) the application of significant judgment and estimation on the part of management, which in turn led to a high degree of auditor

judgment and subjectivity in performing procedures and evaluating audit evidence obtained, and (ii) significant audit effort was necessary

in evaluating management’s methodology, significant assumptions and calculations.

How the Critical Audit Matter was addressed

Following are some of the primary procedures

we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal

controls related to the Company’s measurement of the collectively evaluated ACL, including controls over the:

Segmentation of loans into pools with similar risk

characteristics

Validation of the third-party model and recalculation

of model results

Role of peer loss data and the appropriate peer group

Completeness and accuracy of loan data

Evaluation of modeling assumptions including the

economic factors indicative of expected losses, length of the forecast period, and expected term of loans

Development of qualitative adjustments to model results

Addressing the above matters involved performing

procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included, among others, reviewing the Company’s procedures to validate the model, testing assumptions used in the

calculation of discounted cash flows, testing management’s process for determining the qualitative reserve component, and testing

the completeness and accuracy of data used in the model.

Goodwill Impairment Analysis

Critical Audit Matter Description

As discussed in Note 5 to the consolidated financial

statements, goodwill is tested for impairment at least annually, or more frequently as events or circumstances change.

The evaluation

is performed on the basis that the consolidated company is the reporting unit.

The carrying value of the Company’s equity exceeded

its market capitalization for a period in 2023 due to recent events affecting the banking industry and declines in bank stock prices.

Management used relevant valuation multiples from recent comparable whole bank merger and acquisition transactions to determine the estimated

fair value of the Company.

Based on the results of this analysis management determined that the fair value of the Company exceeded the

carrying value of the reporting unit and as a result goodwill was not impaired.

We determined that performing procedures relating

to the Company’s impairment analysis of goodwill in 2023 is a critical audit matter.

The principal considerations for our determination

are (i) the application of significant judgment and estimation on the part of management, which in turn led to a high degree of auditor

judgment and subjectivity in performing procedures and evaluating audit evidence obtained, and (ii) significant audit effort was necessary

in evaluating management’s methodology and significant assumptions.

How the Critical Audit Matter was addressed

We obtained an understanding, evaluated the

design and tested the operating effectiveness of the controls over the Company's goodwill impairment process, including controls over

management's review of the significant assumptions.

To test management’s estimate of the fair

value of the Company's reporting unit we performed audit procedures that included, among others, assessing the reasonableness of the methodology

and testing the significant assumptions and the underlying data used by the Company in its analysis.

We compared the significant assumptions

used by management to current industry and economic trends.

In addition, we tested management's reconciliation of the fair value of the

reporting unit to the market capitalization of the Company.

We have served as the Company's auditor since

/s/ Wolf & Company, P.C.

Boston, Massachusetts

March 8, 2024

WESTERN NEW ENGLAND BANCORP, INC., AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

Cash and due from banks

Federal funds sold

Interest-bearing deposits and other short-term investments

Cash and cash equivalents

Available-for-sale securities, at fair value

Held-to-maturity securities, at amortized cost (Fair value of $ 187,692 at December 31, 2023 and $ 190,950 at December 31, 2022)

Marketable equity securities, at fair value

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

Loans, net of allowance for credit losses of $ 20,267 and $ 19,931 at December 31, 2023 and 2022, respectively

Premises and equipment, net

Accrued interest receivable

Bank-owned life insurance

Deferred tax asset, net

Core deposit intangible

LIABILITIES AND SHAREHOLDERS’ EQUITY

Non-interest-bearing

Interest-bearing

AND CONTINGENCIES (see Note 16)

SHAREHOLDERS’

stock - $ 0.01 par value, 5,000,000 shares authorized, none outstanding at December 31, 2022 and December 31, 2021

stock - $ 0.01 par value, 75,000,000 shares authorized, 22,216,789 shares issued and outstanding at December 31, 2022;

shares issued and outstanding at December 31, 2021

paid-in capital

compensation - ESOP

compensation - Equity Incentive Plan

other comprehensive loss

Total deposits

Short-term borrowings

Long-term debt

Subordinated debt

Other liabilities

Total liabilities

COMMITMENTS AND CONTINGENCIES (see Note 16)

SHAREHOLDERS’ EQUITY:

LIABILITIES AND SHAREHOLDERS’ EQUITY

accompanying notes to consolidated financial statements.

NEW ENGLAND BANCORP, INC.

Preferred stock - $ 0.01 par value, 5,000,000 shares authorized, none outstanding at December 31, 2023 and December 31, 2022

Common stock - $ 0.01 par value, 75,000,000 shares authorized, 21,666,807 shares issued and outstanding at December 31, 2023;

22,216,789 shares issued and outstanding at December 31, 2022

Additional paid-in capital

Unearned compensation - ESOP

Unearned compensation - Equity Incentive Plan

Retained earnings

Accumulated other comprehensive loss

TOTAL SHAREHOLDERS’ EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

See accompanying notes to consolidated financial statements.

WESTERN NEW ENGLAND BANCORP, INC.

AND SUBSIDIARIES

STATEMENTS OF NET INCOME

in thousands, except per share data)

Ended December 31,

and dividend income:

and commercial real estate loans

and industrial loans

securities, taxable

securities, tax-exempt

equity securities

CONSOLIDATED STATEMENTS OF NET INCOME

(Dollars in thousands, except per share data)

Years Ended December 31,

Interest and dividend income:

Residential and commercial real estate loans

Commercial and industrial loans

Consumer loans

Debt securities, taxable

Debt securities, tax-exempt

Marketable equity securities

Other investments

Short-term investments

Total interest and dividend income

Interest expense:

interest and dividend income

(credit) for loan losses

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

charges and fees

from bank-owned life insurance

life insurance death benefit

gain on available-for-sale securities, net

on sale of mortgages

(losses) gains on marketable equity securities

on non-marketable equity investments

on defined benefit plan curtailment

on interest rate swap termination

Short-term borrowings

Long-term debt

Subordinated debt

Total interest expense

Net interest and dividend income

Provision for (reversal of) credit losses

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

Non-interest income:

and employees benefits

and equipment

insurance assessment

on prepayment of borrowings

Service charges and fees

Income from bank-owned life insurance

Bank-owned life insurance death benefit

Loss on disposal of premises and equipment

Loss on available-for-sale securities, net

Gain on sale of mortgages

Net loss on marketable equity securities

Gain on non-marketable equity investments

(Loss) gain on defined benefit plan curtailment

Loss on interest rate swap termination

Total non-interest income

Non-interest expense:

before income taxes

tax provision

per common share:

Basic earnings

average shares outstanding

earnings per share

average diluted shares outstanding

accompanying notes to consolidated financial statements.

Salaries and employee benefits

Furniture and equipment

Data processing

Professional fees

FDIC insurance assessment

Loss on prepayment of borrowings

Other expenses

Total non-interest expense

Income before income taxes

Income tax provision

Earnings per common share:

Basic earnings per share

Weighted average basic shares outstanding

Diluted earnings per share

Weighted average diluted shares outstanding

Dividends per share

See accompanying notes to consolidated financial statements.

WESTERN NEW ENGLAND BANCORP, INC.

2 unchanged sentences

(Dollars in thousands)

Ended December 31,

comprehensive income (loss):

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

holding (losses) gains

Reclassification

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

(losses) gains

in fair value of derivatives used for cash flow hedges

Reclassification

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

Years Ended December 31,

Other comprehensive income (loss):

Unrealized losses on available-for-sale securities:

Unrealized holding gain (losses)

Reclassification adjustment for amounts realized in income (1)

Net-of-tax amount

Cash flow hedges:

Reclassification

adjustment for loss realized in interest expense (3)

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

Reclassification

adjustment for termination fee realized in interest expense (4)

gains on cash flow hedges

benefit pension plan:

(losses) arising during the period

adjustment for amounts realized in interest expense (3)

Net-of-tax amount

Defined benefit pension plan:

Gains arising during the period

Reclassification

adjustment for gain realized in income for defined benefit plan curtailment (5)

of defined benefit plan actuarial loss (6)

actuarial gains (losses) on defined benefit plan

comprehensive loss

Comprehensive

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

income in the consolidated statements of net income.

The tax effects associated

with the reclassification adjustments were $ ( 1,000 ) , $ ( 15,000 ) and $ 502,000 for the years

ended December 31, 2022, 2021 and 2020, respectively.

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

non-interest income.

Income tax effects associated with the reclassification

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

realized in interest expense on derivative instruments is recognized as a component of

interest expense on long-term debt in the consolidated statements of net income.

tax effects associated with the reclassification adjustment was $ 189,000 for the year

ended December 31, 2020.

(4) Termination

fee realized in interest expense on derivative instruments is recognized as a component

of interest expense on long-term debt in the consolidated statements of net income.

tax effects associated with the reclassification adjustments were $ 79,000 and $ 237,000

for the years ended December 31, 2021 and 2020, respectively.

gains on defined benefit plan curtailment are recognized as a component of non-interest

income in the consolidated statements of net income.

The tax effects associated

with the reclassification adjustment were $ 789,000 for the year ended December 31, 2022.

represent the reclassification of defined benefit plan amortization and have been recognized

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

tax effects associated with the reclassification adjustments were $ 149,000 , $ 256,000

and $ 118,000 for the years ended December 31, 2022, 2021 and 2020, respectively.

adjustment for amounts realized in income for defined benefit plan termination (4)

Amortization of defined benefit plan actuarial loss (5)

Net-of-tax amount

Other comprehensive income (loss)

Comprehensive income

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

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

The tax effects applicable to net realized gains

and $ 15,000 for the years ended December 31, 2022 and 2021.

There were no tax effects applicable to net realized gains for the year ended

December 31, 2023.

(2) Loss realized in income on interest rate swap termination

is recognized as a component of non-interest income.

Income tax effects associated with the reclassification adjustments

were $ 113,000 for the year ended December 31, 2021.

(3) Termination fee realized in interest expense on derivative

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

tax effects associated with the reclassification adjustments were $ 79,000 for the year ended December 31, 2021.

(4) Amounts represent the reclassification of defined benefit

plan termination realized in income and have been recognized as a component of non-interest income.

Income tax effects

associated with the reclassification adjustments were $ 321,000 and $ 789,000 for the years ended December 31, 2023 and December

31, 2022, respectively.

(5) Amounts represent the

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

Income tax effects associated with the reclassification adjustments were $ 149,000

and $ 256,000 for the years ended December 31, 2022 and 2021.

There were no tax effects applicable to reclassification adjustments

for the year ended 2023.

See accompanying notes to consolidated financial statements.

NEW ENGLAND BANCORP, INC.

WESTERN NEW ENGLAND BANCORP, INC.

AND SUBSIDIARIES

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

ENDED DECEMBER 31, 2022, 2021 AND 2020

in thousands, except share data)

Paid-in Capital

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021

(Dollars in thousands, except share data)

Compensation- ESOP

Compensation- Equity Incentive Plan

Other Comprehensive Loss

Compensation-

Equity Incentive Plan

Comprehensive

AT DECEMBER 31, 2020

8 unchanged sentences

of common stock in connection with equity incentive plan

equity incentive plan shares reissued ( 32,544 shares)

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

5 unchanged sentences

stock repurchased

( 2,775,134 )

compensation - equity incentive plan

4 unchanged sentences

AT DECEMBER 31, 2022

effect accounting adjustment (1)

Comprehensive

income (loss)

stock held by ESOP committed to be released ( 74,993 shares)

equity incentive plan shares ( 4,219 shares)

equity incentive plan shares reissued ( 22,503 shares)

stock repurchased

compensation - equity incentive plan

of common stock in connection with stock option exercises

of common stock in connection with equity incentive plan

equity incentive plan shares reissued ( 7,289 shares)

dividends declared and paid on common stock ($ 0.28 per share)

AT DECEMBER 31, 2023

accompanying notes to consolidated financial statements.

NEW ENGLAND BANCORP, INC.

See accompanying notes to consolidated financial statements.

(1) Represents

gross transition adjustment amount of $ 13,000 , net of taxes of $ 4,000 , to reflect the

cumulative impact on retained earnings pursuant to the Company’s adoption of Accounting

Standards Update (“ASU”) 2016-13 Financial Instruments-Credit Losses on

Financial Instruments and relevant amendments.

Refer to Note 3, “ Loans ”

within the accompanying notes to the consolidated financial statements.

WESTERN NEW ENGLAND BANCORP, INC.

AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

Ended December 31,

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Years Ended December 31,

OPERATING ACTIVITIES:

Adjustments to

reconcile net income to net cash provided by operating activities:

Provision (credit)

for loan losses

Depreciation and

amortization of premises and equipment

Net (accretion)

amortization of purchase accounting adjustments

Amortization of

core deposit intangible

Net amortization

of premiums and discounts on securities and mortgage loans

Amortization of

subordinated debt issuance costs

Share-based compensation

Gain on sale of

portfolio mortgages

Principal balance

of loans originated for sale

Principal balance

of loans sold

Net loss (gain)

on marketable equity securities

Net loss (gain)

on sales of available-for-sale securities

Loss on prepayment

of borrowings

Gain on bank-owned

life insurance death benefit

Deferred income

tax provision (benefit)

Income from bank-owned

life insurance

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

Provision for (reversal of) credit losses

Depreciation and amortization of premises and equipment

Net amortization (accretion) of purchase accounting adjustments

Amortization of core deposit intangible

Net amortization of premiums and discounts on securities and mortgage loans

Net amortization of deferred costs on loans

Net amortization of premiums on subordinated debt

Share-based compensation expense

Gain on sale of portfolio mortgages

Principal balance of loans originated for sale

Principal balance of loans sold

Net loss on marketable equity securities

Net loss on sales of available-for-sale securities

Loss on disposal of premises and equipment

Loss on prepayment of borrowings

Gain on bank-owned life insurance death benefit

Deferred income tax provision

Income from bank-owned life insurance

Net change in:

Accrued interest

Accrued interest receivable

Other liabilities

cash provided by operating activities

Net cash provided by operating activities

INVESTING ACTIVITIES:

held-to-maturity securities

Proceeds from

calls, maturities, and principal collections of held-to-maturity securities

available-for-sale securities

Proceeds from

redemption and sales of available-for-sale securities

Proceeds from

calls, maturities, and principal collections of available-for-sale securities

Proceeds from

redemption of marketable equity securities

Loan originations

and principal payments, net

Redemption of

Federal Home Loan Bank of Boston stock, net

Proceeds from

sale of portfolio mortgages

premises and equipment

Proceeds from

sale of premises and equipment

Proceeds from

payout on Bank owned life insurance

cash used in investing activities

Purchases of held-to-maturity securities

Proceeds from calls, maturities, and principal collections of held-to-maturity securities

Purchases of available-for-sale securities

Proceeds from redemption and sales of available-for-sale securities

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

Proceeds from redemption of marketable equity securities

Loan originations and principal payments, net

(Purchase) redemption of Federal Home Loan Bank of Boston stock, net

Proceeds from sale of portfolio mortgages

Purchases of premises and equipment

Proceeds from sale of premises and equipment

Proceeds from payout on bank-owned life insurance

Net cash used in investing activities

FINANCING ACTIVITIES:

Net (decrease)

increase in deposits

(decrease) in short-term borrowings

long-term debt

Proceeds from

subordinated debt issuance

Payment of subordinated

debt issuance costs

Proceeds from

long-term debt

Cash dividends

Issuance of common

stock in connection with stock option exercises

cash provided by financing activities

NET CHANGE IN CASH

AND CASH EQUIVALENTS:

Net (decrease) increase in deposits

Net (decrease) increase in short-term borrowings

Repayment of long-term debt

Proceeds from subordinated debt issuance

Payment of subordinated debt issuance costs

Proceeds from long-term debt

Cash dividends paid

Common stock repurchased

Issuance of common stock in connection with stock option exercises

Net cash (used in) provided by financing activities

NET CHANGE IN CASH AND CASH EQUIVALENTS:

Beginning of year

Supplemental cash

flow information:

Net change in

due to broker for common stock repurchased

the accompanying notes to consolidated financial statements.

Supplemental cash flow information:

Net change in due to broker for common stock repurchased

See the accompanying notes to consolidated financial statements.

NEW ENGLAND BANCORP, INC.

17 unchanged sentences

Elm Street Securities Corporation, WFD Securities, Inc.

and CSB Colts, Inc., are Massachusetts chartered

securities corporations, formed for the primary purpose of holding qualified securities.

and CSB Colts, Inc., are Massachusetts chartered securities

corporations, formed for the primary purpose of holding qualified securities.

WB Real Estate Holdings, LLC, is a Massachusetts-chartered

11 unchanged sentences

Actual results could differ from those estimates.

An estimate that is

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

Estimates that are

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

and goodwill impairment.

Reclassifications .

21 unchanged sentences

are included in non-interest income on the trade date.

The amortization of premiums and accretion of discounts are determined by

using the level yield method to the maturity date, except that premiums are amortized to the earliest call date or maturity.

The amortization of premiums and accretion of discounts are determined

by using the level yield method to the maturity date, except that premiums are amortized to the earliest call date or maturity.

January 1, 2023, the Company adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326):

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 held-to-maturity debt securities.

In addition, ASC

326 made changes to the accounting for available-for-sale debt securities.

for Credit Losses – Available-for-Sale Securities

Company measures expected credit losses on available-for-sale debt securities based upon the gain or loss position of the security.

For available-for-sale debt securities in an unrealized loss position which the Company does not intend to sell, and it is not

more likely than not that the Company will be required to sell the security before recovery of the Company’s amortized cost,

the Company evaluates qualitative criteria to determine any expected loss.

This includes among other items the financial health

of, and specific prospects for the issuer, including whether the issuer is in compliance with the terms and covenants of the security.

The Company also evaluates quantitative criteria including determining whether there has been an adverse change in expected future

cash flows of the security.

Available-for-sale securities which are guaranteed by government agencies do not currently have an

allowance for credit loss as the Company determined these securities are either backed by the full faith and credit of the U.S.

government and/or there is an unconditional commitment to make interest payments and to return the principal investment in full

to investors when a debt security reaches maturity.

In assessing the Company’s investments in government-sponsored and U.S.

guaranteed mortgage-backed securities and government-sponsored enterprise obligations, the contractual cash flows of these investments

are guaranteed by the respective government-sponsored enterprise;

Federal Home Loan Mortgage Corporation (“FHLMC”),

Federal National Mortgage Association (“FNMA”), Federal Farm Credit Bank (“FFCB”), or Federal Home Loan

Bank (“FHLB”).

Accordingly, it is expected that the securities would not be settled at a price less than the par value

of the Company’s investments.

The Company will evaluate this position no less than annually, however, certain items which may

cause the Company to change this methodology include legislative changes that remove a government-sponsored enterprise’s

ability to draw funds from the U.S.

government, or legislative changes to housing policy that reduce or eliminate the U.S.

implicit guarantee on such securities.

Accrued interest receivable on available-for-sale securities guaranteed by government agencies

totaled $ 333,000 at December 31, 2023 and is excluded from the estimate of credit losses.

If the Company does not expect to recover

the entire amortized cost basis of the 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 security or

it is more likely than not that the Company will be required to sell the 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 earnings.

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

for Credit Losses – Held-to-Maturity Securities

Company measures expected credit losses on held-to-maturity debt securities on a collective basis by security type and risk rating

where available.

The reserve for each pool is calculated based on a Probability of Default/Loss Given Default basis taking into

consideration the expected life of each security.

Held-to-maturity securities which are issued by the United States Treasury or

are guaranteed by government agencies do not currently have an allowance for credit loss as the Company determined these securities

are either backed by the full faith and credit of the U.S.

government and/or there is an unconditional commitment to make interest

payments and to return the principal investment in full to investors when a debt security reaches maturity.

In assessing the Company’s

investments in government-sponsored and U.S.

government guaranteed mortgage-backed securities and government-sponsored enterprise

obligations, the contractual cash flows of these investments are guaranteed by the respective government-sponsored enterprise;

FHLMC, FNMA, FFCB, or FHLB.

Accordingly, it is expected that the securities would not be settled at a price less than the par

value of the Company’s investments.

The Company will evaluate this position no less than annually, however, certain items which

may cause the Company to change this methodology include legislative changes that remove a government-sponsored enterprise’s

ability to draw funds from the U.S.

government, or legislative changes to housing policy that reduce or eliminate the U.S.

implicit guarantee on such securities.

Any expected credit losses on held-to-maturity securities would be presented as an allowance

for credit loss.

Non-marketable

14 unchanged sentences

and subsequently reclassified into earnings when the forecasted transaction affects earnings.

Other-than-Temporary

Impairment of Securities .

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.

Value Hierarchy .

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on the trade date and reported within non-interest income on the accompanying consolidated statements of net income.

Loans are recorded at the principal amount outstanding, adjusted for charge-offs, the allowance for loan losses,

Loans are recorded at the principal amount outstanding, adjusted for charge-offs, the allowance for credit losses,

unearned premiums, discounts and deferred loan fees and costs.

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over the estimated average lives of the related loans.

for Loan Losses .

The allowance for loan losses is established through provisions for loan losses charged to expense.

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

recoveries, if any, are credited to the allowance.

allowance for loan losses is evaluated on a regular basis by management.

This evaluation is inherently subjective as it requires

estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of general,

allocated and unallocated components, as further described below.

general component of the allowance for loan losses is based on historical loss experience adjusted for qualitative factors stratified

by the following loan segments:

residential real estate (includes one-to-four family and home equity), commercial real estate,

commercial and industrial, and consumer.

Management uses a rolling average of historical losses based on a time frame appropriate

to capture relevant loss data for each loan segment.

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

trends in delinquencies and nonperforming loans;

trends in volume and terms of loans;

effects of changes in risk selection and

underwriting standards and other changes in lending policies, procedures and practices;

and national and local economic trends

and industry conditions.

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.

There were no changes to

the Company’s policies and procedures surrounding the allowance for loan losses during the year ended December 31, 2022.

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

Risk characteristics relevant

to each loan portfolio segment are as follows:

for Credit Losses .

The allowance for credit losses (“ACL”) is an estimate of expected losses inherent within the

Company’s existing loans held for investment portfolio.

The ACL 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.

Accrued interest receivable on loans held for investment was $ 7.5 million at December 31, 2023 and is excluded

from the estimate of credit losses.

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

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.

real estate loans .

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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.

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 Westfield Bank’s policy.

The overall health of the economy, including unemployment rates and

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

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 Westfield Bank’s policy.

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

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

and industrial loans .

4 unchanged sentences

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

allocated component relates to loans that are classified as impaired.

Impaired loans are identified by analysis of loan performance,

internal credit ratings and watch list loans that management believes are subject to a higher risk of loss.

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.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment.

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

such loans are subject to a troubled debt restructuring agreement.

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

scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.

Factors considered

by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled

principal and interest payments when due.

Loans that experience insignificant payment delays and payment shortfalls generally

are not classified as impaired.

We determine the significance of payment delays and payment shortfalls on a case-by-case basis,

taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the

reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal

and interest owed.

may periodically agree to modify the contractual terms of loans.

When a loan is modified and a concession is made to a borrower

experiencing financial difficulty, the modification is considered a troubled debt restructuring (“TDR”).

are classified as impaired.

we use our best judgment and information available, the ultimate appropriateness of the allowance is dependent upon a variety

of factors beyond our control, including the performance of our loan portfolio, the economy, changes in interest rates and the

view of the regulatory authorities toward loan classifications.

unallocated component may be maintained to cover uncertainties that could affect management’s estimate of probable losses.

The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the

methodologies for estimating allocated and general reserves in the portfolio.

Acquired with Deteriorated Credit Quality .

Loans 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.

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 nonaccretable difference.

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.

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 the Current

Expected Credit Losses (“CECL”) methodology, 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.

Life Insurance .

24 unchanged sentences

selling costs, establishing a new cost basis.

Initial write-downs are charged to the allowance for loan losses at the time the

Initial write-downs are charged to the allowance for credit losses at the time the

loan is transferred to OREO.

39 unchanged sentences

is less than its carrying amount, then performing an impairment test is unnecessary.

For the year ended December 31, 2022, management

determined that it was not more likely than not the fair value of the reporting unit (the consolidated Company, in our case) was

less than its carrying amount.

If management had determined otherwise, a fair value analysis would have been completed to determine

the impairment and necessary write-down of goodwill.

Plans and Employee Benefits .

We provide the Westfield Bank Defined Benefit Pension Plan (the “DB Plan”) for eligible

employees in conjunction with a third-party provider.

The DB Plan was soft frozen on September 30, 2016, and therefore, no new

participants were included in the DB Plan after such effective date.

On July 26, 2022, the Board of Directors approved the termination

of the DB Plan, which became effective as of October 31, 2022, subject to regulatory approvals.

Once the Company has received

regulatory approval to terminate the DB Plan, which is expected in the first quarter of 2023, the Company will make an additional

cash contribution during the second quarter of 2023, if necessary, in order to fully fund the DB Plan on a plan termination basis,

followed by the purchase of annuity contracts to transfer its remaining liabilities under the DB Plan, for those participants

who do not opt for a one-time lump sum payment.

Employees are also eligible to participate in a 401(k) plan through a third-party

We make matching contributions to this plan at 50 % of up to 6 % of the employees’ eligible compensation.

The Board of Directors previously announced the termination of the Westfield Bank Defined Benefit

Pension Plan (the “DB Plan”) on October 31, 2022.

Information pertaining to the DB Plan and its termination can be

found in Note 10, Retirement Plans and Employee Benefits , within the accompanying notes to the financial statements.

Company also maintains a tax-qualified defined contribution plan through a third party provider (the “401(k) Plan”)

that provides for deferral of federal and state income taxes on employee contributions allowed under Section 401(k) of the Internal

Revenue Code of 1986, as amended (the “Internal Revenue Code”).

Participants may make pre-tax salary deferrals to

the plan not to exceed the annual IRS limits.

Effective January 1, 2023, the Company converted to a Safe Harbor 401(k) Plan.

addition to salary deferrals, in 2023, the Company will match up to 100 % of the first 4 % of the participant’s eligible compensation

(for a total maximum employer matching contribution of 4 % of a participant’s eligible compensation).

In addition, on an

annual basis, the Company may make a discretionary profit share contribution to each participant.

Compensation Plans .

39 unchanged sentences

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

No interest or penalties were recorded during the years ended

December 31, 2022, 2021, or 2020.

Basic earnings per share represents income available to common shareholders divided by the weighted-average number

12 unchanged sentences

per common share have been computed based on the following:

Ended December 31,

(In thousands, except

per share data)

income applicable to common stock

Average number

of common shares issued

unallocated ESOP Shares

Years Ended December 31,

(In thousands, except per share data)

Net income applicable to common stock

Average number of common shares issued

Average unallocated ESOP Shares

Average unvested equity incentive plan shares

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

of dilutive equity incentive plan

of dilutive stock options

number of common shares outstanding used to calculate diluted earnings per common share

Basic earnings

earnings per share

Anti-dilutive

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

to the earnings per share calculation for the period presented.

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

Effect of dilutive equity incentive plan

Effect of dilutive stock options

Average number of common shares outstanding used to calculate diluted

earnings per common share

Basic earnings per share

Diluted earnings per share

Comprehensive

5 unchanged sentences

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

December 31, 2023

December 31, 2022

(In thousands)

Net unrealized losses on

available-for-sale securities

Unrecognized actuarial loss on the defined

Accumulated other

comprehensive loss

Net unrealized losses on available-for-sale securities

Net-of-tax amount

Unrecognized actuarial loss on the defined benefit plan

Net-of-tax amount

Accumulated other comprehensive loss

Accounting Pronouncements .

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

2016-13 , Financial Instruments—Credit Losses (Topic 326), which requires entities to measure all expected credit

losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and

supportable forecasts.

The ASU also requires enhanced disclosures to help financial statement users better understand significant

estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s

These disclosures include qualitative and quantitative requirements that provide additional information about the amounts

recorded in the financial statements.

This ASU, as amended, is effective for the Company in fiscal years beginning after December

adoption of the Current Expected Credit (“CECL”) methodology to calculate loan losses became effective for the Company

on January 1, 2023 .

The Company applied the standards’ provisions as a cumulative effect adjustment to retained earnings

as of the first reporting period in which the guidance is effective.

The Company has implemented a third-party software to model

the allowance for loan losses in conformance with this ASU.

The Company completed its allowance for credit losses (“ACL”)

methodology as of the effectiveness date of January 1, 2023 .

To estimate the ACL for loans and off-balance sheet credit exposures,

such as unfunded loan commitments, the Company utilizes a discounted cash flow model that contains additional assumptions to calculate

credit losses over the estimated life of financial assets and off-balance sheet credit exposures and will include the impact of

forecasted economic conditions.

The estimate includes a one-year reasonable and supportable forecast period and thereafter a one-year

reversion period to the historical mean of its macro-economic assumption.

The estimate will also include qualitative factors that

may not be reflected in quantitatively derived results to ensure that the ACL reflects a reasonable estimate of current expected

credit losses.

Upon implementation, the Company’s CECL transitional amount recorded to retained earnings was $ 9,000 , net

In addition, the estimated ACL and allowance for unfunded commitments under both the incurred loss method and CECL will

be affected by various factors, which include but are not limited to, changes in the composition and balance of the Company’s

loan portfolio and unfunded commitments, changes to internal risk ratings of borrowers, changes to the risk-profile of the loan

portfolio, changes in various macro-economic indicators, the impact of COVID-19 and geo-political events on the business environment,

and other factors.

December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2023-09, Income Taxes—Improvements to Income Tax Disclosures (Topic 740), which requires entities to disclose specific

categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

On an annual basis, entities must disclose:

(1) the amount of income taxes paid, net of refunds, disaggregated by federal, state,

and (2) the amount of income taxes paid, net of refunds, disaggregated by individual jurisdictions in which income

taxes paid, net of refunds received, for amounts equal to or greater than 5% of total income taxes paid.

Further, the amendments

also require entities to disclose:

(1) income or loss from continued operations before income tax expense (or benefit) disaggregated

between domestic and foreign sources;

and (2) income or loss from continued operations disaggregated by federal, state, and foreign

This ASU, as amended, is effective for the Company in fiscal years beginning after December 15, 2024 and is not expected

to have a material impact on the Company’s consolidated financial statements.

Available-for-sale

and held-to-maturity investment securities at December 31, 2023 and 2022 are summarized as follows:

Unrealized Gains

Unrealized Losses

December 31, 2023

(In thousands)

Available-for-sale

Available-for-sale securities:

Debt securities:

Government-sponsored

enterprise obligations

State and municipal

Government-sponsored enterprise obligations

State and municipal bonds

Corporate bonds

debt securities

Mortgage-backed securities:

Government-sponsored

mortgage-backed securities

guaranteed mortgage-backed securities

Total debt securities

Mortgage-backed securities:

available-for-sale

Held-to-maturity

Debt securities:

Government-sponsored mortgage-backed securities

government guaranteed mortgage-backed securities

Total mortgage-backed securities

Total available-for-sale

Held-to-maturity securities:

Debt securities:

Mortgage-backed securities:

Government-sponsored

mortgage-backed securities

Treasury securities

Total debt securities

Mortgage-backed securities:

held-to-maturity

following table presents the unrealized gains (losses) recognized on marketable equity securities for the periods indicated:

Ended December 31,

(In thousands)

Net (losses) gains recognized

during the year on marketable equity securities

Net losses recognized during the year

on equity securities sold during the year

Unrealized gain (loss)

recognized during the year on marketable equity securities still held at year end

Unrealized Gains

Unrealized Losses

Government-sponsored mortgage-backed securities

Total mortgage-backed securities

Total held-to-maturity

December 31, 2022

(In thousands)

Available-for-sale

Available-for-sale securities:

Debt securities:

Government-sponsored

enterprise obligations

State and municipal

Government-sponsored enterprise obligations

State and municipal bonds

Corporate bonds

debt securities

Mortgage-backed securities:

Government-sponsored

mortgage-backed securities

guaranteed mortgage-backed securities

Total debt securities

Mortgage-backed securities:

available-for-sale

Held-to-maturity

Debt securities:

Government-sponsored mortgage-backed securities

government guaranteed mortgage-backed securities

Total mortgage-backed securities

Total available-for-sale

Held-to-maturity securities:

Debt securities:

Mortgage-backed securities:

Government-sponsored

mortgage-backed securities

Treasury securities

Total debt securities

Mortgage-backed securities:

held-to-maturity

Government-sponsored mortgage-backed securities

Total mortgage-backed securities

Total held-to-maturity

following table presents the unrealized gains (losses) recognized on marketable equity securities for the periods indicated:

Years Ended December 31,

(In thousands)

Net losses recognized during the year on marketable equity securities

Net losses recognized during the year on equity securities sold during the year

Unrealized (loss) gain recognized during the year on marketable equity securities still held at year end

the second quarter of 2023, $ 6.3 million in marketable equity securities was redeemed.

As the marketable equity securities portfolio

was marked to market through income monthly, the fund liquidation resulted in no gain or loss to the income statement.

31, 2023, the balance of marketable equity securities was $ 196,000 .

December 31, 2023, U.S.

Treasury securities with a fair value of $ 9.5 million, government-sponsored enterprise obligations with

a fair value of $ 7.6 million and mortgage-backed securities with a fair value of $ 44.7 million were pledged to secure public deposits

and for other purposes as required or permitted by law.

The securities collateralizing public deposits are subject to fluctuations

in fair value.

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

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

amortized cost and fair value of available-for-sale and held-to-maturity securities at December 31, 2022, by final maturity, are

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

a fair value of $ 7.9 million and mortgage-backed securities with a fair value of $ 176.6 million were pledged to secure public

deposits, the Bank Term Funding Program (“BTFP”) and for other purposes as required or permitted by law.

The securities

collateralizing public deposits are subject to fluctuations in fair value.

We monitor the fair value of the collateral on a periodic

basis, and pledge additional collateral if necessary based on changes in fair value of collateral or the balances of such deposits.

amortized cost and fair value of available-for-sale and held-to-maturity investment securities at December 31, 2023, by final

maturity, are shown below.

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

call or prepay obligations.

Available-for-Sale

Held-to-Maturity

Amortized Cost

(In thousands)

Debt securities:

after one year through five years

Due after five

years through ten years

Due after ten

debt securities

Due in one year or less

Due after one year through five years

Due after five years through ten years

Total debt securities

Available-for-Sale

Held-to-Maturity

Amortized Cost

(In thousands)

Mortgage-backed securities:

after one year through five years

Due after five

years through ten years

Due after ten

mortgage-backed securities

Due after one year through five years

Due after five years through ten years

Due after ten years

Total mortgage-backed securities

Total securities

realized gains and losses on sales of available-for-sale securities for the years ended December 31, 2023, 2022 and 2021 are as

Ended December 31,

Years Ended December 31,

(In thousands)

2 unchanged sentences

Net (loss) gain realized

from the redemption and sales of available-for-sale securities totaled $ 20,000 , $ 9.6 million and $ 96.3 million for the years ended

December 31, 2022, 2021 and 2020, respectively.

pertaining to securities with gross unrealized losses at December 31, 2022 and December 31, 2021, aggregated by investment category

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

Than Twelve Months

Twelve Months

of Securities

Unrealized Loss

from Amortized Cost Basis (%)

of Securities

Unrealized Loss

from Amortized Cost Basis (%)

in thousands)

from the redemption and sales of available-for-sale securities totaled $ 20,000 and $9.6 million for the years ended December 31,

2022 and 2021, respectively.

There were no sales of securities for the year ended December 31, 2023.

interest receivable on available-for-sale debt securities not guaranteed by government agencies totaled $ 178,000 at December 31,

2023 and is excluded from the estimate of credit losses.

There were no allowance for credit losses established on available-for-sale

debt securities during the years ended December 31, 2023 and 2022.

At December 31, 2023 and December 31, 2022, there were two

available-for-sale corporate bonds that were rated below investment grade by one or more ratings agencies.

The Company reviewed

the financial strength of these bonds and has concluded that the amortized cost remains supported by the expected future cash

flows of the securities.

interest receivable on held-to-maturity securities totaled $ 454,000 at December 31, 2023 and is excluded from the estimate of

credit losses.

There were no allowance for credit losses established on held-to-maturity securities during the years ended December

31, 2023 and 2022.

pertaining to investment securities with gross unrealized losses as of December 31, 2023 for which the Company did not recognize

a provision for credit losses under CECL, and as of December 31, 2022, for which the Company did not deem to be impaired under

its prior methodology, aggregated by investment category and length of time that individual securities have been in a continuous

loss position, follows:

December 31, 2023

Less Than Twelve Months

Over Twelve Months

Number of Securities

Gross Unrealized Loss

Depreciation from Amortized Cost Basis (%)

Number of Securities

Gross Unrealized Loss

Depreciation from Amortized Cost Basis (%)

(Dollars in thousands)

Available-for-sale:

Government-sponsored

mortgage-backed securities

Government-sponsored mortgage-backed securities

government guaranteed mortgage-backed securities

Government-sponsored

enterprise obligations

available-for-sale

Government-sponsored enterprise obligations

Corporate bonds

Total available-for-sale

Held-to-maturity:

Treasury securities

Government-sponsored

mortgage-backed securities

held-to-maturity

Than Twelve Months

Twelve Months

of Securities

Unrealized Loss

from Amortized Cost Basis (%)

of Securities

Unrealized Loss

from Amortized Cost Basis (%)

in thousands)

Government-sponsored mortgage-backed securities

Total held-to-maturity

December 31, 2022

Less Than Twelve Months

Over Twelve Months

Number of Securities

Gross Unrealized Loss

Depreciation from Amortized Cost Basis (%)

Number of Securities

Gross Unrealized Loss

Depreciation from Amortized Cost Basis (%)

(Dollars in thousands)

Available-for-sale:

Government-sponsored

mortgage-backed securities

Government-sponsored mortgage-backed securities

government guaranteed mortgage-backed securities

Government-sponsored

enterprise obligations

available-for-sale

Government-sponsored enterprise obligations

Corporate bonds

Total available-for-sale

Held-to-maturity:

Treasury securities

Government-sponsored

mortgage-backed securities

held-to-maturity

the years ended December 31, 2022 and 2021, the Company did not record any other-than-temporary impairment (“OTTI”)

charges on its investments.

Management regularly reviews the portfolio for securities with unrealized losses.

At December 31,

2022, management attributes the unrealized losses to increases in current market yields compared to the yields at the time the

investments were purchased by the Company and not due to credit quality.

process for assessing investments for OTTI may vary depending on the type of security.

In assessing the Company’s investments

in government-sponsored and U.S.

government guaranteed mortgage-backed securities and government-sponsored enterprise obligations,

the contractual cash flows of these investments are guaranteed by the respective government-sponsored enterprise;

Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”), Federal Farm Credit

Bank (“FFCB”), or Federal Home Loan Bank (“FHLB”).

Accordingly, it is expected that the securities would

not be settled at a price less than the par value of the Company’s investments.

Management’s assessment of other debt securities

within the portfolio includes reviews of market pricing, ongoing credit quality evaluations, assessment of the investments’ materiality,

and duration of the investments’ unrealized loss position.

At December 31, 2022, there was one corporate bond that was below investment

The Company reviewed the financial strength of this bond and has concluded that the amortized cost remains supported by

the expected future cash flows of the security.

Government-sponsored mortgage-backed securities

Total held-to-maturity

December 31, 2023 and December 31, 2022, management attributed the unrealized losses to increases in current market yields compared

to the yields at the time the investments were purchased by the Company and not due to credit quality.

There was no credit loss

during years ended December 31, 2023 or 2022.

classifications of loans as of the dates indicated were as follows:

(In thousands)

Residential real

Residential one-to-four

Total residential

Commercial real estate

Residential one-to-four family

Total residential real estate

Commercial and industrial:

Paycheck protection

program (“PPP”) loans

Commercial and

Total commercial

and industrial

Paycheck Protection Program (“PPP”) loans

Commercial and industrial

Total commercial and industrial

Total gross loans

Unamortized PPP loan fees

Unearned premiums and deferred loan

fees and costs, net

Allowance for loan losses

Unearned premiums and deferred loan fees and costs, net

Total loans, net

Allowance for credit losses (1)

________________________________

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 .”

Serviced for Others.

9 unchanged sentences

$ 70.5 million, respectively.

real estate mortgages are originated by the Bank both for its portfolio and for sale into the secondary market.

The Bank may sell

its loans to institutional investors such as the FHLMC.

Under loan sale and servicing agreements with the investor, the Bank generally

continues to service the residential real estate mortgages.

The Bank pays the investor an agreed upon rate on the loan, which

is less than the interest rate received from the borrower.

The Bank retains the difference as a fee for servicing the residential

real estate mortgages.

The Bank capitalizes mortgage servicing rights at their fair value upon sale of the related loans, amortizes

the asset over the estimated life of the serviced loan, and periodically assesses the asset for impairment.

The significant assumptions

used by a third party to estimate the fair value of capitalized servicing rights at December 31, 2022, include weighted average

prepayment speed for the portfolio using the Public Securities Association Standard Prepayment Model ( 105 PSA), weighted average

internal rate of return ( 10.01 %), weighted average servicing fee ( 0.25 %), and average cost to service loans ($ 83.71 per loan).

The estimated fair value of capitalized servicing rights may vary significantly in subsequent periods primarily due to changing

market interest rates, and their effect on prepayment speeds and discount rates.

For the years ended December 31, 2022 and 2021,

the Company sold $ 277,000 and $ 59.7 million in residential real estate mortgages with servicing retained and recorded gains on

the sale of mortgages of $ 2,000 and $ 1.4 million, respectively, within non-interest income.

December 31, 2022 and December 31, 2021, the Company was servicing residential mortgage loans owned by investors totaling $ 79.3

million and $ 88.2 million, respectively.

real estate mortgages are originated by the Company both for its portfolio and for sale into the secondary market.

may sell its loans to institutional investors such as the FHLMC.

Under loan sale and servicing agreements with the investor, the

Company generally continues to service the residential real estate mortgages.

The Company pays the investor an agreed upon rate

on the loan, which is less than the interest rate received from the borrower.

The Company retains the difference as a fee for

servicing the residential real estate mortgages.

The Company capitalizes mortgage servicing rights at their fair value upon sale

of the related loans, amortizes the asset over the estimated life of the serviced loan, and periodically assesses the asset for

The significant assumptions used by a third party to estimate the fair value of capitalized servicing rights at December

31, 2023, include weighted average prepayment speed for the portfolio using the Public Securities Association Standard Prepayment

Model ( 101 PSA), weighted average internal rate of return ( 10.01 %), weighted average servicing fee ( 0.25 %), and average cost to

service loans ($ 83.57 per loan).

The estimated fair value of capitalized servicing rights may vary significantly in subsequent

periods primarily due to changing market interest rates, and their effect on prepayment speeds and discount rates.

ended December 31, 2022, the Company sold $ 277,000 in residential real estate mortgages with servicing retained and recorded gains

on the sale of mortgages of $ 2,000 within non-interest income.

There were no sales of residential real estate mortgages to the

secondary market during the year ended December 31, 2023.

December 31, 2023 and 2022, the Company was servicing residential mortgage loans owned by investors totaling $ 72.3 million and

$ 79.3 million, respectively.

Servicing fee income of $ 191,000 and $ 208,000 was recorded for the years ended December 31, 2023

1 unchanged sentence

summary of the activity in the balances of mortgage servicing rights follows:

Ended December 31,

Years Ended December 31,

(In thousands)

at the beginning of year:

Capitalized mortgage

servicing rights

Write-down of

mortgage servicing asset to fair value

at the end of year

value at the end of year

for Loan Losses.

analysis of changes in the allowance for loan losses by segment for the years ended December 31, 2022, 2021 and 2020 is as follows:

and Industrial

Balance at the beginning of year:

Capitalized mortgage servicing rights

Write-down of mortgage servicing asset to fair value

Balance at the end of year

Fair value at the end of year

are recorded at the principal amount outstanding, adjusted for charge-offs, unearned premiums and deferred loan fees and costs.

Interest on loans is calculated using the effective yield method on daily balances of the principal amount outstanding and is

credited to income on the accrual basis to the extent it is deemed collectable.

Our general policy is to discontinue the accrual

of interest when principal or interest payments are delinquent 90 days or more based on the contractual terms of the loan, or

earlier if there are concerns regarding the collectability of the loan.

Any unpaid amounts previously accrued on these loans are

reversed from income.

Subsequent cash receipts are applied to the outstanding principal balance or to interest income if, in the

judgment of management, collection of the principal balance is not in question.

Loans are returned to accrual status when they

become current as to both principal and interest and perform in accordance with contractual terms for a period of at least six

months, reducing the concern as to the collectability of principal and interest.

Loan fees and certain direct loan origination

costs are deferred, and the net fee or cost is recognized as an adjustment to interest income over the estimated average lives

of the related loans.

of New Financial Accounting Standards.

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 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.

ASC 326 made changes to the accounting for available-for-sale debt securities.

One such change is to require credit losses to

be presented as an allowance rather than as a write-down on available-for-sale 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.

following table illustrates the impact of ASC 326:

Reported Under ASC 326

of ASC 326 Adoption

for credit losses on loans (2)

Allowance for credit

losses on off-balance sheet exposures

Shareholders’

Retained earnings,

$ ( 127,982 )

$ ( 127,991 )

_____________________________

credit deteriorated (“PCD loans”) gross up of cost basis of loans totaled

$ 422,000 for commercial real estate loans and $ 1,691,000 for commercial and industrial

to allowance for credit losses on loans of $ 2,113,000 for PCD loans gross up and a decrease

of $931,000 for pooled loans through retained earnings.

for Credit Losses.

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

analysis of changes in the allowance for credit losses by segment for the year ended December 31, 2023 and the allowance for credit

losses for the years ended December 31, 2022 and 2021 is as follows:

Commercial Real Estate

Residential Real Estate

Commercial and Industrial

(In thousands)

Balance at December 31, 2022

Cumulative effect of change in accounting principle

Adjusted Beginning Balance

Provision (reversal) for credit losses

Balance at December 31, 2023 (1)

Commercial Real Estate

Residential Real Estate

Commercial and Industrial

(In thousands)

Allowance for credit losses for off-balance sheet exposures

Balance at December 31, 2022

Cumulative effect of change in accounting principle

Reversal of credit losses

Balance at December 31, 2023

____________________________________

balance of $ 7.5 million in accrued interest receivable is excluded from amortized cost and the calculation of the allowance for

credit losses at December 31, 2023.

$ 872,000 provision for credit losses during the year ended December 31, 2023 was comprised of a $ 1.2 million provision for loan

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.

The $ 321,000 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.

following table presents information pertaining to the allowance for credit losses by segment Pre-ASC 326 CECL adoption for the

dates indicated:

Commercial Real Estate

Residential Real Estate

Commercial and Industrial

(In thousands)

Balance at December 31, 2020

Provision (credit)

2 unchanged sentences

Balance at December 31, 2022

following table presents information pertaining to the allowance for loan losses by segment as of the dates indicated:

and Industrial

Commercial Real Estate

Residential Real Estate

Commercial and Industrial

(In thousands)

1 unchanged sentence

Amount of allowance for impaired loans

Amount of allowance for

non-impaired loans

allowance for loan losses

Amount of allowance for non-impaired loans

Total allowance for credit losses

Impaired loans

Non-impaired loans

Impaired loans acquired with deteriorated

credit quality

and Industrial

of allowance for impaired loans (1)

of allowance for non-impaired loans (1)

allowance for loan losses (1)

loans acquired with deteriorated credit quality (1)

31, 2021 non-impaired loan balances exclude PPP loans.

Impaired loans acquired with deteriorated credit quality

Due and Nonaccrual Loans.

3 unchanged sentences

90 Days or More Past Due

Nonaccrual Loans

(In thousands)

2 unchanged sentences

Residential real estate:

Residential one-to-four

Residential one-to-four family

Commercial and industrial

December 31, 2022

Commercial real estate

Residential real estate:

Residential one-to-four

Residential one-to-four family

Commercial and industrial

31, 2021 balances exclude PPP loans.

December 31, 2022 and December 31, 2021, all loans past due 90 days or more were carried as nonaccrual.

The ratio of nonaccrual

loans to total loans was 0.29 % and 0.27 % at December 31, 2022 and December 31, 2021, respectively.

following is a summary of impaired loans by class:

December 31, 2022

Principal Balance

December 31, 2023 and 2022, total past due loans totaled $ 6.0 million, or 0.30 % of total loans, and $ 4.5 million, or 0.22 % of

total loans, respectively.

of interest on loans is generally discontinued when contractual payment of principal or interest becomes past due 90 days or,

if in management’s judgment, reasonable doubt exists as to the full timely collection of interest.

Exceptions may be made

if the loan has matured and is in the process of renewal or is well-secured and in the process of collection.

When a loan is placed

on nonaccrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current interest

Interest payments on nonaccrual loans are generally applied to principal.

If collection of the principal is reasonably

assured, interest payments are recognized as income on the cash basis.

Loans are generally returned to accrual status when principal

and interest payments are current, full collectability of principal and interest is reasonably assured and a consistent record

of at least six consecutive months of performance has been achieved.

following table presents information regarding nonaccrual loans as of the date indicated:

As of December 31, 2023 (1)

For the Year Ended December 31, 2023

Nonaccrual Loans with Allowance for Credit Loss

Nonaccrual Loans Without Allowance for Credit Loss

Amortized Cost of Loans Greater than 90 Days Past Due and Still Accruing

Accrued Interest Receivable Reversed from Income

(In thousands)

Commercial real estate (1)

Residential real estate:

Residential (1)

Home equity (1)

Commercial and industrial (1)

Total loans (1)

__________________________________

Company adopted ASU 2016-13 as of January 1, 2023.

December 31, 2023 and December 31, 2022, nonaccrual loans totaled $ 6.4 million, or 0.32 % of total loans, and $ 5.7 million, or

0.29 %, of total loans, respectively.

The Company did not recognize any interest income on nonaccrual loans for the years ended

December 31, 2023 and 2022.

At December 31, 2023 and 2022, there were no commitments to lend additional funds to any borrower

on nonaccrual status.

Evaluated Loans.

connection with the adoption of ASU-2016-13, the Company no longer provides information on impaired loans.

Loans that do not share

similar risk characteristics with loans that are pooled into portfolio segments are individually evaluated.

A loan is considered

individually evaluated when, based on current information and events, the borrower is experiencing financial difficulty and repayment,

both principal and interest, is expected to be provided substantially through the operation or sale of the collateral.

are rated substandard, have an LTV above 85% or have demonstrated a specific weakness (i.e.

slow payment history, industry weakness,

or other clear credit deterioration) may be considered for individual evaluation if they are determined not to share similar risk

characteristics within the segment.

Individually evaluated assets will be measured primarily using the collateral dependent financial

asset practical expedient, although the discounted cash flow method may be used when management deems it more appropriate or collateral

values cannot be supported.

For individually evaluated assets, an ACL is determined separately for each financial asset.

must measure the expected credit losses based on an appropriate method per ASC Subtopic 326-20, similar to collectively evaluated

financial assets.

At December 31, 2023, the Company had $ 13.8 million in individually evaluated commercial loans, collateralized

by business assets, $ 15.9 million in individually evaluated real estate loans, collateralized by real estate property and $ 8,000

in individually evaluated consumer loans.

following table summarizes the Company’s individually evaluated loans by class as of December 31, 2023:

Recorded Investment

Income Recognized

Impaired Loans

Related Allowance

(In thousands)

With no related allowance recorded:

Commercial real estate

Residential real estate:

Residential one-to-four

Residential one-to-four family

Commercial and industrial

impaired loans

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

Loans with no related allowance recorded

With an allowance recorded:

Commercial real estate

Residential real estate:

Residential one-to-four family

Commercial and industrial

Loans with an allowance recorded

Total individually evaluated loans

326 CECL adoption impaired loan information as of December 31, 2022 is as follows:

At December 31, 2022

December 31, 2022

Principal Balance

Recorded Investment

Income Recognized

Unpaid Principal Balance

Related Allowance

Average Recorded Investment

Interest Income Recognized

Impaired Loans (1)

2 unchanged sentences

Residential real estate:

Residential one-to-four

Residential one-to-four family

Commercial and industrial

impaired loans

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

majority of impaired loans are included within the nonaccrual balances;

however, not every loan on nonaccrual status has been

designated as impaired.

Impaired loans include loans that have been modified in a TDR.

loans are individually evaluated and exclude large groups of smaller-balance homogeneous loans, such as residential mortgage loans

and consumer loans, which are collectively evaluated for impairment, and loans that are measured at fair value, unless the loan

is amended in a TDR.

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

There was no interest income recognized on

nonaccrual impaired loans during the years ended December 31, 2022 and December 31, 2021.

The Company’s obligation to fulfill

the additional funding commitments on impaired loans is generally contingent on the borrower’s compliance with the terms of the

credit agreement.

If the borrower is not in compliance, additional funding commitments may or may not be made at the Company’s

As of December 31, 2022, we have not committed to lend any additional funds for loans that are classified as impaired.

Payments received on impaired loans in accrual status are recorded in accordance with the contractual terms of the loan.

Debt Restructurings.

are designated as a TDR when, as part of an agreement to modify the original contractual terms of the loan as a result of financial

difficulties of the borrower, the Bank grants the borrower a concession on the terms, that would not otherwise be considered.

Total impaired loans

(1) Includes loans

acquired with deteriorated credit quality and performing troubled debt restructurings.

are designated as modified when, as part of an agreement to modify the original contractual terms of the loan as a result of financial

difficulties of the borrower, the Company grants the borrower a concession on the terms that would not otherwise be considered.

Typically, such concessions may consist of a reduction in interest rate to a below market rate, taking into account the credit

quality of the note, extension of additional credit based on receipt of adequate collateral, or a deferment or reduction of payments

(principal or interest) which materially alters the Bank’s position or significantly extends the note’s maturity date, such that

the present value of cash flows to be received is materially less than those contractually established at the loan’s origination.

All loans that are modified are reviewed by the Company to identify if a TDR has occurred.

All TDR loans are classified as impaired.

we modify loans in a TDR, we measure impairment similar to other impaired loans based on the present value of expected future

cash flows, discounted at the contractual interest rate of the original loan agreement, or use the current fair value of the collateral,

less selling costs for collateral dependent loans.

If we determine that the value of the modified loan is less than the recorded

investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment

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

Nonperforming TDRs are included in nonperforming

were no charge-offs on TDRs during the years ended December 31, 2022 and 2021.

(principal or interest) which materially alters the Company’s position or significantly extends the note’s maturity

date, such that the present value of cash flows to be received is materially less than those contractually established at the

loan’s origination.

were no loan modifications for the years ended December 31, 2023 and 2022.

During the years ended December 31, 2023 and 2022,

no TDRs defaulted (defined as 30 days or more past due) within 12 months of restructuring.

Acquired with Deteriorated Credit Quality.

following is a summary of loans acquired with evidence of credit deterioration from Chicopee as of December 31, 2022.

Required Payments Receivable

Expected To Be Collected

Non-Accretable Discount

(In thousands)

at December 31, 2021

at December 31, 2022

no modified loans defaulted (defined as 30 days or more past due) within 12 months of restructuring.

There were no charge-offs

on modified loans during the years ended December 31, 2023 or 2022.

Quality Information.

Company utilizes an eight-grade internal loan rating system for commercial real estate and commercial and industrial loans.

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

Nonperforming residential

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

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.

Performing residential real estate,

home equity and consumer loans are grouped with “Pass” rated loans.

Nonperforming residential real estate, home equity

and consumer loans are risk rated as “substandard” and individually evaluated.

rated 1 – 4 :

23 unchanged sentences

an annual basis, or more often if needed, we formally review the ratings on all commercial real estate and commercial and industrial

In addition, management utilizes delinquency reports, the criticized report and other loan reports to monitor credit quality.

In addition, at least on an annual basis, 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,

In addition, management utilizes delinquency reports, the criticized loan report and other loan reports to monitor credit

In addition, at least on an annual basis, 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 its review, the third party examines a sample of loans, including new loans,

existing relationships over certain dollar amounts and classified assets.

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

One-to-Four Family

and Industrial

following table details the amortized cost balances of the Company’s loan portfolio presented by risk rating and origination

year as of the periods presented.

In addition, payment activity has been included as an additional credit quality indicator:

Term Loan Origination by Year

Revolving Loans

Revolving Loans Converted to Term Loans

(Dollars in thousands)

Commercial Real Estate:

Pass (Rated 1- 4)

Special Mention (Rated 5)

Substandard (Rated 6)

Total commercial real estate loans

Current period gross charge-offs

Payment Performance:

Nonperforming

Residential One-to-Four Family:

Total residential one-to-four family

Current period gross charge-offs

Payment Performance:

Nonperforming

Total home equity loans

Current period gross charge-offs

Payment Performance:

Nonperforming

Term Loans Originated by Year

Revolving Loans

Revolving Loans Converted to Term Loans

(Dollars in thousands)

Commercial and Industrial:

Pass (Rated 1- 4)

Special Mention (Rated 5)

Substandard (Rated 6)

Total commercial and industrial loans

Current period gross charge-offs

Payment Performance:

Nonperforming

Total consumer loans

Current period gross charge-offs

Payment Performance:

Nonperforming

The following table presents our loans

by risk rating as of December 31, 2022 Pre-ASC 326 CECL adoption:

Commercial Real Estate

Residential 1-4 Family

Commercial and Industrial

(In thousands)

December 31, 2022

(Rated 1 – 4)

Special Mention

Substandard (Rated

One-to-Four Family

and Industrial

Pass (Rated 1 - 4)

Special Mention

Special Mention (Rated 5)

Substandard (Rated 6)

AND EQUIPMENT

and equipment are summarized as follows:

PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows:

(In thousands)

1 unchanged sentence

Furniture and equipment

depreciation and amortization

and equipment, net

and amortization expense for the years ended December 31, 2022, 2021 and 2020 amounted to $ 2.3 million, $ 2.3 million and $ 2.1

million, respectively.

AND OTHER INTANGIBLES

December 31, 2022 and December 31, 2021, the Company’s goodwill was related to the acquisition of Chicopee Savings Bank

in October 2016.

There was no goodwill impairment recorded during the years ended December 31, 2022 and 2021.

Annually, or more

frequently if events or changes in circumstances warrant such evaluation, the Company evaluates its goodwill for impairment.

Deposit Intangibles

connection with the acquisition of Chicopee, the Bank recorded a core deposit intangible of $ 4.5 million, which is amortized over

twelve years using the straight-line method.

Amortization expense was $ 375,000 , $ 374,000 and $ 375,000 for the years ended December

31, 2022, 2021 and 2020, respectively.

At December 31, 2022, future amortization of the core deposit intangible totaled $ 375,000

for each of the next five years and $ 313,000 thereafter.

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

accumulated depreciation and amortization

Premises and equipment, net

Depreciation and amortization expense for the years ended December

31, 2023, 2022 and 2021 amounted to $ 2.2 million, $ 2.3 million and $ 2.3 million, respectively.

GOODWILL AND OTHER INTANGIBLES

Goodwill is measured as the excess of the

cost of a business combination over the sum of the amounts assigned to identifiable intangible assets acquired less liabilities

Goodwill is not amortized but rather assessed for impairment annually or more frequently if circumstances warrant.

has the option of first assessing qualitative factors, such as events and circumstances, to determine whether it is more likely

than not, meaning a likelihood of more than 50%, the value of a reporting unit is less than its carrying amount.

If, after considering

all relevant events and circumstances, management determines it is not more likely than not the fair value of a reporting unit

is less than its carrying amount, then performing an impairment test is unnecessary.

At December 31, 2023 and December 31, 2022,

the Company’s goodwill was related to the acquisition of Chicopee Savings Bank in October 2016.

For the year ended December

31, 2023, the carrying value of the Company’s equity exceeded its market capitalization for a period in 2023 due to recent

events affecting the banking industry and declines in bank stock prices, and therefore, the Company completed a fair value analysis

to assess potential impairment and any necessary write-down of the carrying value of goodwill.

Management used valuation multiples

from recent comparable whole bank merger and acquisition transactions to determine the estimated fair value of the Company.

on the results of this analysis, management determined that the fair value of the Company exceeded the carrying value of the reporting

unit, and as a result, goodwill was not impaired at December 31, 2023.

For the year ended December 31, 2022, management determined

that it was not more likely than not the fair value of the reporting unit was less than its carrying amount.

If management had

determined otherwise, a fair value analysis would have been completed to determine the impairment and necessary write-down of goodwill.

Core Deposit Intangibles

In connection with the acquisition of Chicopee,

the Bank recorded a core deposit intangible of $ 4.5 million, which is amortized over twelve years using the straight-line method.

Amortization expense was $ 375,000 , $ 375,000 and $ 374,000 for the years ended December 31, 2023, 2022 and 2021, respectively.

December 31, 2023, future amortization of the core deposit intangible totaled $ 375,000 for each of the next four years and $ 313,000

Deposit accounts, by type, are summarized as follows for the

periods indicated :

At December 31,

(In thousands)

Demand and interest-bearing

Interest-bearing

checking accounts

Demand and interest-bearing checking:

Interest-bearing checking accounts

Demand deposits

Regular savings

Regular savings accounts

Money market accounts

Time deposits

were no brokered deposits at December 31, 2022 and December 31, 2021.

deposits of $250,000 or more totaled $ 131.7 million at December 31, 2022.

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

totaled $ 358,000 and $ 412,000 for the years ended December 31, 2022 and 2021, respectively.

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

Total deposits

There were $ 1.7 million in brokered deposits

reported within time deposits at December 31, 2023.

There were no brokered deposits at December 31, 2022.

Time deposits of $250,000 or more totaled

$ 198.6 million at December 31, 2023.

Interest expense on time deposits of $250,000 or more totaled $ 5.6 million and $ 358,000 for

the years ended December 31, 2023 and 2022, respectively.

The scheduled maturities of time deposits

for the periods indicated are as follows:

At December 31,

(In thousands)

time deposits

expense on deposits for the years ended December 31, 2022, 2021 and 2020 is summarized as follows:

Ended December 31,

Total time deposits

Interest expense on deposits for the years ended December 31,

2023, 2022 and 2021 is summarized as follows:

Years Ended December 31,

(In thousands)

Regular accounts

Money market accounts

Regular savings

Time deposits

Interest-bearing checking accounts

paid for interest on deposits totaled $ 5.3 million, $ 5.5 million and $ 13.6 million for years ended December 31, 2022, 2021 and

2020, respectively.

utilize short-term borrowings and long-term debt as additional sources of funds to finance our lending and investing activities

and to provide liquidity for daily operations.

Total borrowing capacity includes borrowing arrangements at the FHLB, the Federal

Reserve Bank (“FRB”), and borrowing arrangements with correspondent banks.

borrowings can consist of FHLB advances with an original maturity of less than one year, overnight Ideal Way line of credit advances

and other borrowings held as collateral for customer swap arrangements.

Other borrowings totaled $ 6.4 million with a weighted

Interest-bearing checking

Cash paid for interest on deposits totaled

$ 26.4 million, $ 5.3 million and $ 5.5 million for years ended December 31, 2023, 2022 and 2021, respectively.

SHORT-TERM BORROWINGS

We utilize short-term borrowings and long-term

debt as additional sources of funds to finance our lending and investing activities and to provide liquidity for daily operations.

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

arrangements with correspondent banks.

Short-term borrowings can consist of FHLB

advances with an original maturity of less than one year, overnight Ideal Way line of credit advances and other borrowings held

as collateral for customer swap arrangements.

Other borrowings totaled $ 6.1 million with a weighted average rate of 5.33 % at December

31, 2023, compared to $ 6.4 million with a weighted average rate of 4.33 % at December 31, 2022.

Short-term borrowings issued by

the FHLB were $ 10 .0 million with a weighted average rate of 5.56 % at December 31, 2023, compared to $ 35 .0 million with a weighted

average rate of 4.38 % at December 31, 2022.

There were no other borrowings outstanding at December 31, 2021.

In addition, short-term

borrowings issued by the FHLB were $ 35 .0 million with a weighted average rate of 4.38 % at December 31, 2022, compared to none

at December 31, 2021.

advances provide more pricing and option alternatives for particular asset/liability needs.

The FHLB provides a central credit

facility primarily for member institutions.

As an FHLB 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.

31, 2022, the Bank had $ 407.4 million in additional borrowing capacity from the FHLB.

Company also has an available overnight Ideal Way line of credit with the FHLB of $ 9.5 million as of December 31, 2022.

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.

As of December 31, 2022 and December 31, 2021, there were no advances

outstanding under this line.

Company has an available line of credit of $ 4.4 million with the FRB Discount Window at an interest rate determined and reset

FHLB advances provide more pricing and

option alternatives for particular asset/liability needs.

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

As an FHLB 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.

The 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.

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

portfolio not otherwise pledged.

As of December 31, 2022 and December 31, 2021, there were no advances outstanding under this

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 a $ 15 .0 million line

of credit with a correspondent bank and a $ 50 .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, 2022 and December 31, 2021, there were no advances outstanding under

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

commercial real estate loans.

The outstanding principal is due daily but the portion not repaid will be automatically renewed.

31, 2023, the Bank had $ 535.6 million in additional borrowing capacity from the FHLB.

The Company also 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.

The 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 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.

Cash paid for interest on short-term borrowings

totaled $ 1.6 million for the year ended December 31, 2023 and $ 327,000 for the year ended December 31, 2022.

LONG-TERM DEBT

FHLB Advances.

The following advances

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

Weighted Average Rate

(In thousands)

Fixed-rate advances

long-term advances

paid for interest on long-term FHLB advances totaled $ 513,000 , and $ 3.6 million for the years ended December 31, 2021, and 2020,

respectively.

There was no cash paid for interest on long-term FHLB advances for the year ended December 31, 2022.

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

rate subordinated notes (the “Notes”) to certain qualified institutional buyers in a private placement transaction.

At December 31, 2022, $19.7 million aggregate principle amount of the Notes was outstanding.

earlier redeemed, the Notes mature on May 1, 2031 .

The Notes will bear interest from the initial issue date to, but excluding,

May 1, 2026, or the earlier redemption date, at a fixed rate of 4.875 % per annum, payable quarterly in arrears on May 1, August

1, November 1 and February 1 of each year, beginning August 1, 2021, and from and including May 1, 2026, but excluding the maturity

date or earlier redemption date, equal to the benchmark rate, which is the 90-day average secured overnight financing rate , plus

412 basis points, determined on the determination date of the applicable interest period, payable quarterly in arrears on May

1, August 1, November 1 and February 1 of each year.

The Company may also redeem the Notes, in whole or in part, on or after May

1, 2026 , and at any time upon the occurrence of certain events, subject in each case to the approval of the Board of Governors

of the Federal Reserve System (the “Federal Reserve”).

The Notes were designed to qualify as Tier 2 capital under

the Federal Reserve’s capital adequacy regulations.

Notes are presented net of issuance costs of $ 327,000 as of December 31, 2022, which are being amortized into interest expense

over the life of the Notes.

Amortization of issuance costs into interest expense was $ 40,000 and $ 27,000 for the years ended December

31, 2022 and 2021, respectively.

PLANS AND EMPLOYEE STOCK OWNERSHIP PLAN

A summary of the status of our stock options at December 31, 2022 is presented below:

at December 31, 2021

Fixed-rate advances maturing:

Total long-term advances

Cash paid for interest on long-term FHLB

advances totaled $ 1.1 million for the year ended December 31, 2023.

There was no cash paid for interest on long-term FHLB advances

for the year ended December 31, 2022.

BTFP Advances.

On March 12, 2023,

the FRB made available the 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.

Interest expense on BTFP advances is payable at maturity.

At December 31, 2023, long-term debt included

$ 90 .0 million in outstanding advances under the BTFP with a weighted average fixed rate of 4.71 %.

The $ 90 .0 million in BTFP advances

outstanding mature in May of 2024.

There were no advances outstanding with the FRB under the BTFP at December 31, 2022.

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

Interest expense accrued on BTFP advances

was $ 2.8 million as of December 31, 2023.

Subordinated Debt.

2021, the Company completed an offering of $ 20 .0 million in aggregate principal amount of its 4.875 % fixed-to-floating rate subordinated

notes (the “Notes”) to certain qualified institutional buyers in a private placement transaction.

At December 31, 2023,

received for options exercised during the years ended December 31, 2022, 2021 and 2020 was $ 1.2 million, $ 193,000 and $ 43,000 ,

respectively.

Stock Awards.

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

Under the 2014 RSA Plan, up to 516,000 shares of the Company’s common stock were reserved for grants of

stock awards, including stock options and restricted stock, which may be granted to any officer, key employee or non-employee

director of WNEB.

Any shares that were not issued because vesting requirements were not met were available for future issuance

under the 2014 RSA Plan.

an annual basis, the Compensation Committee (the “Committee”) approves long-term incentive awards out of the 2014

RSA Plan, whereby shares will be granted to eligible participants of the Company that are nominated by the Chief Executive Officer

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

Annual employee

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

responsibilities, reward performance and leadership and as a retention tool.

The objective of the award is to align compensation

for the named executive officers and directors over a multi-year period directly with the interests of our shareholders by motivating

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

February 2020, 120,053 shares were granted.

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

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

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

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

performance metric.

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

Performance-based

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

$ 19.7 million aggregate principle amount of the Notes was outstanding.

Unless earlier redeemed, the Notes mature

on May 1, 2031 .

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

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

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

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

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

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

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

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

The Notes are presented net of issuance

costs of $ 288,000 as of December 31, 2023, which are being amortized into interest expense over the life of the Notes.

of issuance costs into interest expense was $ 39,000 and $ 40,000 for the years ended December 31, 2023 and 2022, respectively.

paid for interest on the Notes totaled $ 1 .0 million for the years ended December 31, 2023 and 2022, respectively.

STOCK PLANS AND EMPLOYEE STOCK OWNERSHIP PLAN

Restricted Stock Awards.

In May 2014, the Company’s shareholders

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

Under the 2014

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

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

Any shares that

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

On an annual basis, the Compensation Committee

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

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

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

Annual employee grants provide for a periodic award that

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

leadership and as a retention tool.

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

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

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

In February 2020, 120,053 shares were granted

under the 2020 Long-Term Incentive Plan (the “2020 Incentive Plan”).

Of the 120,053 shares, 69,898 shares were time-based,

with 19,760 vesting in one year and 50,138 vesting ratably over a three-year period.

The remaining 50,155 shares granted are performance-based

and are subject to the achievement of the 2020 Incentive Plan performance metrics, with 50 % of the performance-based shares vesting

for each performance metric.

The primary performance metrics for the 2020 Incentive Plan grants are return on equity and earnings

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

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

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

The threshold, target and stretch metrics

under the 2020 Incentive Plan are as follows:

Return on Equity Metrics

Performance Period Ending

December 31, 2020

December 31, 2021

December 31, 2022

Earnings Per Share Metrics

Performance Period Ending

Three-year Cumulative Diluted Earnings Per Share

Eligible participants will be able to earn

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

As of December 31, 2022, the three-year performance period for the 2020 Incentive Plan grants ended.

The 2020 Incentive Plan included

a “catch-up” provision allowing for any unearned performance-based shares from the 2020 and 2021 performance periods

to be earned at the end of the three-year period based on the final year performance.

Of the original 50,155 performance-based

shares granted in 2020 based on achieving target, 59,268 performance-based shares were eligible for vesting during the first quarter

of 2023 based on achieving stretch.

The fair market value of shares awarded

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

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

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

In May 2021, the Company’s shareholders

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

Under the 2021

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

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

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

In May 2021, 122,362 shares were granted

under the 2021 Long-Term Incentive Plan (the “2021 Incentive Plan”).

Of the 122,362 shares, 61,181 shares were time-based,

vesting ratably over a three-year period.

The remaining 61,181 shares granted are performance-based and are subject to the achievement

of the 2021 Incentive Plan performance metrics, with 50 % of the performance-based shares vesting for each performance metric.

primary performance metrics for the 2021 Incentive Plan grants are return on equity and earnings per share.

Performance-based shares

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

Company-specific,

1 unchanged sentence

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

threshold, target and stretch metrics under the 2020 grants are as follows:

on Equity Metrics

Period Ending

The threshold, target and stretch metrics

under the 2021 Incentive Plan are as follows:

Return on Equity Metrics

Performance Period Ending

December 31, 2021

1 unchanged sentence

December 31, 2023

Per Share Metrics

Period Ending

Three-year Cumulative Diluted Earnings

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

150 % (“maximum” performance).

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

over the applicable vesting period.

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

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

compensation.

February 2021, 19,827 shares were granted to our directors, with a one-year vesting period.

At December 31, 2021, there were no

remaining shares available to grant under the 2014 RSA Plan.

May 2021, the Company’s shareholders approved the 2021 Omnibus Incentive Plan, a stock-based compensation plan (the “2021

Under the 2021 RSA Plan, up to 700,000 shares of the Company’s common stock were reserved for grants of

stock awards, including stock options and restricted stock, which may be granted to any officer, key employee or non-employee

director of the Company.

Any shares that are not issued because vesting requirements are not met will be available for future

issuance under the 2021 RSA Plan.

May 2021, 122,362 shares were granted.

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

The remaining 61,181 shares granted are performance-based and are subject to the achievement of the 2021 long-term incentive

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

The primary performance metrics

for the 2021 grants are return on equity and earnings per share.

Performance-based shares will be earned based upon how the Company

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

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

annual performance period for return on equity metrics and for a three-year cumulative performance period for earnings per share,

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

threshold, target and stretch metrics under the 2021 grants are as follows:

on Equity Metrics

Period Ending

Earnings Per Share Metrics

Performance Period Ending

Three-year Cumulative Diluted Earnings Per Share

As of December 31, 2023, the three-year

performance period for the 2021 LTI Plan ended.

The 2021 LTI Plan included a “catch-up” provision allowing unearned

performance-based shares from the 2021 and 2022 performance periods to be earned at the end of the three-year period based on the

final year performance.

Of the 50,205 performance-based shares granted in 2021 based on achieving target, 69,376 performance-based

shares were eligible for vesting during the first quarter of 2024 based on achieving stretch.

In March 2022, 137,151 shares were granted

under the 2022 Long-Term Incentive Plan (the “2022 Incentive Plan”).

Of the 137,151 shares, 77,463 shares were time-based,

with 17,775 vesting in one year and 59,688 vesting ratably over a three-year period.

The remaining 59,688 shares granted are performance-based

and are subject to the achievement of the 2022 Incentive Plan performance metrics, with 50 % of the performance-based shares vesting

for each performance metric.

The primary performance metrics for the 2022 Incentive Plan grants are return on equity and earnings

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

absolute goals (i.e.

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

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

period as earned.

The threshold, target and stretch metrics

under the 2022 Incentive Plan are as follows:

Return on Equity Metrics

Performance Period Ending

December 31, 2022

1 unchanged sentence

December 31, 2024

Per Share Metrics

Period Ending

Three-year Cumulative Diluted Earnings

March 2022, 137,151 shares were granted.

Of the 137,151 shares, 77,463 shares were time-based, with 17,775 vesting in one year

and 59,688 vesting ratably over a three-year period.

The remaining 59,688 shares granted are performance-based and are subject

to the achievement of the 2022 long-term incentive performance metrics, with 50 % of the performance-based shares vesting for each

performance metric.

The primary performance metrics for the 2022 grants are return on equity and earnings per share.

Performance-based

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

Company-specific,

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

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

threshold, target and stretch metrics under the 2022 grants are as follows:

on Equity Metrics

Period Ending

Earnings Per Share Metrics

Performance Period Ending

Three-year Cumulative Diluted Earnings Per Share

In March 2023, 139,196 shares were granted

under the 2023 Long-Term Incentive Plan (the “2023 Incentive Plan”).

Of the 139,196 shares, 78,697 shares were time-based,

with 18,198 vesting in one year and 60,499 vesting ratably over a three-year period.

The remaining 60,499 shares granted are performance-based

and are subject to the achievement of the 2023 Incentive Plan performance metrics, with 50 % of the performance-based shares vesting

for each performance metric.

The primary performance metrics for the 2023 Incentive Plan grants are return on equity and earnings

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

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

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

The threshold, target and stretch metrics

under the 2023 Incentive Plan are as follows:

Return on Equity Metrics

Performance Period Ending

December 31, 2023

1 unchanged sentence

December 31, 2025

Per Share Metrics

Period Ending

Three-year Cumulative Diluted Earnings

December 31, 2022, there were 459,508 remaining shares available to grant under the 2021 RSA Plan.

summary of the status of restricted stock awards at December 31, 2022 and 2021 is presented below:

Grant Date Fair

at December 31, 2021

at December 31, 2022

Grant Date Fair

Earnings Per Share Metrics

Performance Period Ending

Three-year Cumulative Diluted Earnings Per Share

At December 31, 2023, there were 308,252 remaining shares available

to grant under the 2021 Incentive Plan.

A summary of the status of restricted stock awards at December

31, 2023 and 2022 is presented below:

Weighted Average Grant Date Fair Value

Balance at December 31, 2022

at December 31, 2021

recorded total expense for restricted stock awards of $ 1.1 million, $ 1.3 million and $ 834,000 for the years ended December 31,

Shares granted

Balance at December 31, 2023

Weighted Average Grant Date Fair Value

Balance at December 31, 2021

Shares granted

Shares forfeited

Shares vested

Balance at December 31, 2022

Weighted Average Grant Date Fair Value

Balance at December 31, 2020

Shares granted

Shares forfeited

Shares vested

Balance at December 31, 2021

We recorded total

expense for restricted stock awards of $ 1.4 million, $ 1.1 million and $ 1.3 million for the years ended December 31, 2023, 2022

and 2021, respectively.

The aggregate fair value of restricted stock vested during 2023 was $ 1.3 million.

(shortfall) related to equity incentive plan expense were $ 16,000 , $ ( 5,000 ) and $ ( 23,000 ) for the years ended December 31, 2022,

2021 and 2020, respectively.

Unrecognized compensation cost for stock awards was $ 1.2 million at December 31, 2022 with a remaining

term of 1.5 years.

Stock Ownership Plan (“ESOP”).

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

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

In January 2002, as part of the initial

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

sold in the initial public offering.

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

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

The 2002 and 2007 loans bear

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

December 31, 2022, the remaining principal balances are payable as follows:

Tax benefits (shortfall)

related to equity incentive plan expense were $ 29,000 , $ 16,000 and $ ( 5,000 ) for the years ended December 31, 2023, 2022 and 2021,

respectively.

Unrecognized compensation cost for stock awards was $ 573,000 at December 31, 2023 with a remaining term of 1.7 years.

Employee Stock

Ownership Plan (“ESOP”).

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

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

In January 2002, as part of the initial stock

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

the initial public offering.

In January 2007, as

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

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

The 2002 and 2007 loans bear an interest rate of

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

At December 31, 2023,

the remaining principal balances are payable as follows:

(In thousands)

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

The loans are secured by

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

compensation expense applicable to the ESOP amounted to $ 683,000 , $ 682,000 and $ 551,000 for the years ended December 31, 2022,

2021 and 2020, respectively.

held by the ESOP include the following at December 31, 2022 and 2021:

We have committed to make contributions

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

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

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

Total compensation expense applicable to the

ESOP amounted to $ 562,000 , $ 683,000 and $ 682,000 for the years ended December 31, 2023, 2022 and 2021, respectively.

Shares held by the ESOP include the following

at December 31, 2023 and 2022:

Committed to be allocated

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

Cash dividends

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

fair value of unallocated shares was $ 3.5 million and $ 3.9 million at December 31, 2022 and 2021, respectively.

ESOP shares are

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

Unallocated ESOP shares are

excluded from earnings per share calculations.

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

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

PLANS AND EMPLOYEE BENEFITS

We provide a DB Plan for eligible employees.

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

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

In August 2022, the DB Plan’s

assets were reallocated into fixed income pooled separate investment accounts offered by Principal Life Insurance Company, a division

of Principal Financial Group, serving as Custodian of the DB Plan (the “Custodian”).

The DB Plan is administered by

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

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

DB Plan and therefore no new participants were included in the DB Plan after such effective date.

July 26, 2022, the Board of Directors approved the termination of the DB Plan, which became effective as of October 31, 2022,

subject to regulatory approvals.

Once the Company has received regulatory approval to terminate the DB Plan, which is expected

in the first quarter of 2023, the Company will make an additional cash contribution during the second quarter of 2023, if necessary,

in order to fully fund the DB Plan on a plan termination basis, followed by the purchase of annuity contracts to transfer its

remaining liabilities under the DB Plan, for those participants who do not opt for a one-time lump sum payment.

At December 31,

2022, the Company reversed $ 7.3 million in net unrealized losses recorded in accumulated other comprehensive income attributed

to both the DB Plan curtailment resulting from the termination of the DB Plan as well as changes in discount rates.

the Company recorded a gain on curtailment of $ 2.8 million through non-interest income.

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

Ended December 31,

Cash dividends declared

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

Cash dividends declared and received

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

The fair value of unallocated

shares was $ 2.6 million and $ 3.5 million at December 31, 2023 and 2022, respectively.

ESOP shares are considered outstanding for

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

Unallocated ESOP shares are excluded from earnings per

share calculations.

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

as a reduction of shareholders’ equity.

RETIREMENT PLANS AND EMPLOYEE BENEFITS

Pension Plan .

The Board of Directors

previously announced the termination of the Westfield Bank Defined Benefit Plan (the “DB Plan”) on October 31, 2022.

At December 31, 2022, the Company reversed $ 7.3 million in net unrealized losses recorded in accumulated other comprehensive income

attributed to both the DB Plan curtailment resulting from the termination of the DB Plan as well as changes in discount rates.

In addition, during the three months ended December 31, 2022, the Company recorded a gain on curtailment of $ 2.8 million through

non-interest income.

During the twelve months ended December 31, 2023, the Company made an additional cash contribution of $ 1.3

million in order to fully fund the DB Plan on a plan termination basis.

In addition, for those participants who did not opt for

a one-time lump sum payment, the Company funded $ 6.3 million to purchase a group annuity contract to transfer its remaining liabilities

under the DB Plan.

During the twelve months ended December 31, 2023, the Company recognized the final termination expense of $ 1.1

million related to the DB Plan termination, which was recorded through non-interest income.

The following table provides information

related to the DB Plan for the years ended December 31, 2023 and 2022:

For the Year Ended December 31,

(In thousands)

Change in benefit

Benefit obligation at beginning

Actuarial (gain) loss

Effect of curtailment

Change in benefit obligation:

Benefit obligation at beginning of year

Actuarial gain

Effect of settlement/curtailment

Benefits paid

Benefit obligation

at end of year

Benefit obligation at end of year

Change in plan assets:

Fair value of plan assets at beginning

Fair value of plan assets at beginning of year

Actual return on plan assets

1 unchanged sentence

Benefits paid

Fair value of plan assets at end of

Funded status and

accrued benefit at end of year

Accumulated benefit

obligation at end of year

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

Effect of settlement

Fair value of plan assets at end of year

Funded status and accrued benefit at end of year

Accumulated benefit obligation at end of year

For the year ended December 31, 2023,

the discount rate assumptions reflected the IRS 417 Segment Rates ( 4.48 % / 5.26 % / 5.07 % ) for lump sums and for annuities in the Insurance

Company annuity contract.

For the year ended December, 31, 2022, the following actuarial assumptions were used in determining

the pension benefit obligation:

Discount rate

Rate of compensation increase

discount rate used to determine the pension benefit obligation increased from 2.85 % at December 31, 2021 to 5.05 % at December

31, 2022, resulting in a decrease in the DB Plan’s pension benefit obligation for the year ended December 31, 2022.

the DB Plan was terminated effective October 31, 2022, subject to regulatory approvals expected in the first quarter of 2023.

The DB Plan termination resulted in $ 5.1 million in curtailment of future salary recognition, which also decreased the DB Plan’s

pension benefit obligation for the year ended December 31, 2022.

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

The DB Plan was terminated effective October

The DB Plan termination resulted in a $ 5.1 million curtailment of future salary recognition, which also decreased the

DB Plan’s pension benefit obligation for the year ended December 31, 2022.

The assets of the DB Plan were liquidated as of

June 2, 2023.

Net pension cost includes the following

components for the years ended December 31, 2023 and 2022:

For the Years Ended December 31,

(In thousands)

2 unchanged sentences

Amortization of actuarial loss

periodic pension cost

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

Net periodic pension cost

The following actuarial assumptions were

used in determining the net periodic pension cost for the years ended December 31, 2023 and 2022:

Year Ended December 31,

Discount rate

1 unchanged sentence

Rate of compensation increase

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

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

as of December 31, 2022:

December 31, 2022

(In thousands)

Pooled separate investment accounts:

International

Small/mid U.S.

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

The NAV is used

as a practical expedient to estimate fair value.

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

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

Participant transactions (purchases

and sales) may occur daily.

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

net realizable value or reflective of future fair values.

Furthermore, although the DB Plan administrators believes the valuation

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

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

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

years ended December 31, 2022 and 2021.

Pooled separate accounts are valued at

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

The NAV is used as a practical expedient to estimate

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

investments for an amount different from the reported NAV.

Participant transactions (purchases and sales) may occur daily.

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

of future fair values.

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

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

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

Due to the DB Plan termination and settlement

on June 2, 2023, there were no assets remaining in the DB Plan for the year ended December 31, 2023.

The following table summarizes

the investments for which fair value is measured using NAV per share as a practical expedient for the year ended December 31, 2022.

There are no pertinent redemption restrictions for these investments;

the redemption notice

period is applicable only to the DB Plan.

Frequency (if Currently Eligible)

Notice Period

December 31, 2021

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

structure for the pension plan.

In August 2022, the DB Plan’s assets were reallocated into short-and-long duration fixed

income pooled separate investment accounts offered by the Custodian.

In anticipation of DB Plan settlement during the second quarter

of 2023, the overall investment objective is to preserve principal and protect DB Plan assets from market volatility.

the DB Plan termination, the target allocation mix for the pension plan for 2022 was an equity-based investment deployment of

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

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

Trustees of the DB Plan select

investment managers for the portfolio and a second investment advisory firm is retained to provide allocation analysis.

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

Benefit Payments to

In aggregate for

Defined Contribution Plan.

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

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

of their earnings to the plan.

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

of Directors, is matched by the Company.

In 2022, 2021 and 2020, the Company’s percentage match was 50 % up to the first

6 % contributed by the employee.

Company’s expense for the 401(k) plan match was $ 470,000 , $ 476,000 and $ 468,000 for the years ended December 31, 2022, 2021

and 2020, respectively.

AND HEDGING ACTIVITIES

Management Objective of Using Derivatives.

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

We principally manage our

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

We manage economic

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

and liabilities and the use of derivative financial instruments.

Specifically, we entered into derivative financial instruments

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

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

Our derivative financial instruments are used to manage differences

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

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

following table presents information about interest rate swaps at December 31, 2022 and December 31, 2021:

December 31, 2022

(In thousands)

the redemption notice period is applicable only to the DB

Frequency (if

Currently Eligible)

Redemption Notice

(In thousands)

Non-hedging derivatives:

swaps – dealer

Loan-level swaps

December 31, 2022

(In thousands)

Prior to its termination, the DB Plan offered

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

In August 2022, the DB Plan’s assets were reallocated into short-and-long duration fixed income pooled separate investment

accounts offered by the Custodian.

In anticipation of DB Plan settlement during the second quarter of 2023, the overall investment

objective was to preserve principal and protect DB Plan assets from market volatility.

401(k) Defined Contribution Plan.

The Company also maintains a tax-qualified

defined contribution plan through a third party provider (the “401(k) Plan”) that provides for deferral of federal

and state income taxes on employee contributions allowed under Section 401(k) of the Internal Revenue Code of 1986, as amended

(the “Internal Revenue Code”).

Participants may make pre-tax salary deferrals to the plan not to exceed the annual

Effective January 1, 2023, the Company converted to a Safe Harbor 401(k) Plan.

In addition to salary deferrals, in

2023, the Company will match up to 100 % of the first 4 % of the participant’s eligible compensation (for a total maximum employer

matching contribution of 4 % of a participant’s eligible compensation).

In addition, on an annual basis, the Company may make

a discretionary profit share contribution to each participant.

The Company’s expense for the 401(k)

plan match was $ 736,000 , $ 470,000 and $ 476,000 for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company’s

expense for the 401(k) discretionary profit share contribution was $ 675,000 for the year ended December 31, 2023.

The discretionary

profit share contribution is expected to be made during the first quarter of 2024.

DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives.

The Company is exposed to certain risks

arising from both our business operations and economic conditions.

We principally manage our exposures to a wide variety of business

and operational risks through management of our core business activities.

We manage economic risks, including interest rate, liquidity,

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

financial instruments.

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

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

by interest rates.

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

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

and variable rate borrowings.

Fair Value Hedges of Interest Rate Risk.

The Company is exposed to changes in the

fair value of certain pools of fixed-rate assets due to changes in benchmark interest rates.

The Company uses interest rate swaps

to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest

The Company's interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty

in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying

notional amount.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as

the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income .

As of December 31, 2023, the following

amounts were recorded on the balance sheet related to cumulative basis adjustment of fair value hedges:

Item in the Balance Sheet in which

the Hedged Item is Included

Carrying Amount of Hedged

Assets/(Liabilities)

Cumulative Amount of Fair Value

Hedging Adjustments Included in the

Carrying Amount of Hedged

Assets/(Liabilities)

(In thousands)

These amounts include the amortized cost

basis of closed portfolios of fixed rate residential loans used to designate hedging relationships in which the hedged item is

the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period.

31, 2023, the amortized cost basis of the closed portfolios used in these hedging relationships was $ 461.2 million;

the cumulative

basis adjustments associated with these hedging relationships was approximately $ 607,000 ;

and the notional amount of the designated

hedged items were $ 200 million.

The Company had no fair value hedges at December 31, 2022.

The notional amounts of these agreements

do not represent amounts exchanged by the parties and, thus, are not a measure of the potential loss exposure.

At December 31,

2023, the Company’s fair value hedges had a remaining maturity of 0.8 years, and an average fixed rate of 4.43 % .

Non-hedging Derivatives.

swaps – dealer

Loan-level swaps

Forward starting

loan-level swaps - dealer

Forward starting

loan-level swaps - borrower

December 31, 2022, the Company had $ 75.5 million in derivatives designated as non-hedging instruments and no derivatives

designated as hedging instruments, compared to $ 76.8 million in derivatives designated as non-hedging instruments and no derivatives

designated as hedging instruments at December 31, 2021.

Flow Hedges of Interest Rate Risk.

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

its exposure to interest rate movements.

To accomplish these objectives, we entered into interest rate swaps as part of our interest

rate risk management strategy.

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

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

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

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

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

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

There were no cash flow hedges on the balance

sheet as of December 31, 2022 or 2021.

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

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

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

The Company concurrently

enters into offsetting swaps with a third-party financial institution, effectively minimizing the Company’s net risk exposure

resulting from such transactions.

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

floating-rate loan payments.

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

changes in the fair value are recognized directly in earnings.

Values of Derivative Instruments on the Balance Sheet.

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

classification on the balance sheet as of December 31, 2022 and December 31, 2021.

Derivatives not designated as hedges are

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

The Company executes loan-level derivative

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

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

The Company concurrently enters into offsetting swaps with

a third-party financial institution, effectively minimizing the Company’s net risk exposure resulting from such transactions.

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

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

are recognized directly in earnings.

Fair Values of Derivative Instruments

on the Balance Sheet.

The table below presents the fair value

of our derivative financial instruments designated as hedging and non-hedging instruments as well as our classification on the

balance sheet as of December 31, 2023 and December 31, 2022.

December 31, 2023

Asset Derivatives

Liability Derivatives

Balance Sheet

(In thousands)

not designated as hedging instruments:

rate swap – with customer counterparties

rate swap – with dealer counterparties

Hedging Derivatives

Interest rate swaps - fair value hedges

Derivatives not designated as hedging instruments:

Interest rate swap – with customer counterparties

Interest rate swap – with dealer counterparties

Total derivatives

Other Liabilities

December 31, 2022

Asset Derivatives

Liability Derivatives

Balance Sheet

(In thousands)

not designated as hedging instruments:

rate swap – with customer counterparties

rate swap – with dealer counterparties

Derivatives not designated as hedging instruments:

Interest rate swap – with customer counterparties

Interest rate swap – with dealer counterparties

Total derivatives not designated as hedging instruments

Other Liabilities

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

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

of Gain (Loss) Recognized in OCI on Derivative

Months Ended December 31,

Interest rate swaps

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

payments are made on our designated rate sensitive liabilities.

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

and termination fees:

of Gain Reclassified from OCI into Expense (Effective Portion)

Months Ended December 31,

Interest rate swaps

December 31, 2022 and 2021, the Company did not have any outstanding cash flow hedges.

Credit-risk-related

Contingent Features

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

Credit risk is the risk of failure by the counterparty

to perform under the terms of the derivative contract.

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

owes us, which creates credit risk for us.

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

it does not possess credit risk.

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

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

have agreements with our derivative counterparties that contain a provision where if we default on any of our indebtedness, including default

where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default

on our derivative obligations.

We also have agreements with certain of our derivative counterparties that contain a provision

where if we fail to maintain our status as well capitalized, then the counterparty could terminate the derivative positions and

we would be required to settle our obligations under the agreements.

Certain of our agreements with our derivative counterparties

contain provisions where if a formal administrative action by a federal or state regulatory agency occurs that materially changes

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

December 31, 2022, we had minimum collateral posting thresholds with certain of our derivative counterparties.

As of December

31, 2022, we were not required to post collateral under these agreements because we did not have any derivatives in a liability

position with those counterparties.

Company has lease agreements with lease and non-lease components, which are generally accounted for separately.

We have not elected

the practical expedient to account for lease and non-lease components as one lease component.

The Company has operating leases

for certain of our banking offices and ATMs.

Our leases have remaining lease terms of less than one year to sixteen years , some

of which include options to extend the leases for additional five-year terms up to ten years .

Operating lease costs were $ 1.5

million and $ 1.6 million for the years ended December 31, 2022 and 2021.

cash flow information related to leases was as follows:

Ended December 31,

Effect of Derivative Instruments in

the Consolidated Statements of Net Income.

The table below presents the effect of

the Company’s fair value hedge derivative on the statements of net income as of December 31, 2023, December 31, 2022 and

December 31, 2021.

Location and Amount of Gain (Loss) Recognized in Income

on Fair Value Hedging Relationships

Twelve Months Ended

Interest Income

(In thousands)

Cash paid for amounts included in the

measurement of lease liabilities:

cash flows from operating leases

ROU assets obtained in exchange for

lease obligations:

Total amounts of income line items presented in the statements of net income in which the effects of fair value hedges are recorded

Gain (loss) on fair value hedging relationships

Interest rate contracts:

Derivatives designated as hedging instruments

There were no gains or losses recognized

in accumulated other comprehensive income during the years ended December 31, 2023 or 2022.

Credit-risk-related Contingent Features

By using derivative financial instruments,

we expose ourselves to credit risk.

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

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

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

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

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

We have agreements with our derivative

counterparties that contain a provision where if we default on any of our indebtedness, including default where repayment of

the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations.

We also have agreements with certain of our derivative counterparties that contain a provision where if we fail to maintain our

status as well capitalized, then the counterparty could terminate the derivative positions and we would be required to settle our

obligations under the agreements.

Certain of our agreements with our derivative counterparties contain provisions where if a formal

administrative action by a federal or state regulatory agency occurs that materially changes our creditworthiness in an adverse

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

At December 31, 2023, we had minimum collateral posting thresholds

with certain of our derivative counterparties.

As of December 31, 2023, we were not required to post collateral under these agreements

because we did not have any derivatives in a liability position with those counterparties.

The Company has lease agreements with lease

and non-lease components, which are generally accounted for separately.

We have not elected the practical expedient to account

for lease and non-lease components as one lease component.

The Company has operating leases for certain of our banking offices

Our leases have remaining lease terms of less than one year to fifteen years , some of which include options to extend

the leases for additional five-year terms up to ten years .

Operating lease costs were $ 1.6 million, $ 1.5 million, and $ 1.6 million

for the years ended December 31, 2023, 2022 and 2021.

Supplemental cash flow information related to leases was as

Year Ended December 31,

(In thousands)

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

ROU assets obtained in exchange for lease obligations:

Operating leases

balance sheet information related to leases was as follows:

Supplemental balance sheet information related to leases was

December 31, 2023

December 31, 2022

(In thousands)

1 unchanged sentence

Operating lease liabilities

weighted average remaining lease term for our operating leases was 9.8 years with a weighted average discount rate of 3.22 % at

December 31, 2022.

Future undiscounted lease payments for the Company’s operating lease liabilities were as follows (in

The weighted average remaining lease term for our operating

leases was 9.1 years with a weighted average discount rate of 3.26 % at December 31, 2023.

Future undiscounted lease payments for

the Company’s operating lease liabilities were as follows (in thousands):

Years Ending December 31,

lease payments

Total lease payments

Less imputed interest

Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies.

to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary, actions by regulators

that, if undertaken, could have a direct material effect on our consolidated financial statements.

Under capital adequacy guidelines

and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative

measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices.

capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings,

and other factors.

Prompt corrective action provisions are not applicable to savings and loan holding companies.

banking regulations require the Company and the Bank to maintain minimum amounts and ratios of total, common equity Tier 1, Tier

1 and total capital to risk-weighted assets and Tier 1 capital to average assets, as set forth in the table below.

Additionally,

community banking institutions must maintain a capital conservation buffer of common equity Tier 1 capital in an amount greater

than 2.5 % of total risk-weighted assets to avoid being subject to limitations on capital distributions and discretionary bonuses.

December 31, 2022, we exceeded each of the applicable regulatory capital requirements including the capital conservation buffer.

As of December 31, 2022, the most recent notification from the Office of Comptroller of the Currency categorized the Bank as “well-capitalized”

under the regulatory framework for prompt corrective action.

To be categorized as “well-capitalized,” the Bank must

maintain minimum total risk-based, Tier 1 risk-based, Common Equity Tier 1 risk-based, and Tier 1 leverage ratios as set forth

in the following table.

REGULATORY CAPITAL

The Company and the Bank are subject to

various regulatory capital requirements administered by the federal banking agencies.

Failure to meet minimum capital requirements

can initiate certain mandatory and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct

material effect on our consolidated financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt

corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and

certain off-balance sheet items as calculated under regulatory accounting practices.

The capital amounts and classification are

also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Prompt corrective

action provisions are not applicable to savings and loan holding companies.

Federal banking regulations require the

Company and the Bank to maintain minimum amounts and ratios of total, common equity Tier 1, Tier 1 and total capital to risk-weighted

assets and Tier 1 capital to average assets, as set forth in the table below.

Additionally, community banking institutions must

maintain a capital conservation buffer of common equity Tier 1 capital in an amount greater than 2.5 % of total risk-weighted assets

to avoid being subject to limitations on capital distributions and discretionary bonuses.

At December 31, 2023, we exceeded each

of the applicable regulatory capital requirements including the capital conservation buffer.

As of December 31, 2023, the most

recent notification from the Office of Comptroller of the Currency categorized the Bank as “well-capitalized” under

the regulatory framework for prompt corrective action.

To be categorized as “well-capitalized,” the Bank must maintain

minimum total risk-based, Tier 1 risk-based, Common Equity Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the following

There are no conditions or events since that notification that management believes would change our category.

actual capital ratios of December 31, 2022 and December 31, 2021 are also presented in the following table.

For Capital Adequacy Purpose

To Be Well Capitalized Under Prompt Corrective Action Provisions

Our actual capital ratios of December 31,

2023 and December 31, 2022 are also presented in the following table.

Minimum For Capital

Adequacy Purpose

Minimum To Be Well

Capitalized Under Prompt

Corrective Action Provisions

(Dollars in thousands)

Capital (to Risk Weighted Assets):

1 Capital (to Risk Weighted Assets):

Equity Tier 1 Capital (to Risk Weighted Assets):

1 Leverage Ratio (to Adjusted Average Assets):

For Capital Adequacy Purpose

To Be Well Capitalized Under Prompt Corrective Action Provisions

December 31, 2023

Total Capital (to Risk Weighted Assets):

Tier 1 Capital (to Risk Weighted Assets):

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

Tier 1 Leverage Ratio (to Adjusted Average Assets):

Minimum For Capital

Adequacy Purpose

Minimum To Be Well

Capitalized Under Prompt

Corrective Action Provisions

(Dollars in thousands)

Capital (to Risk Weighted Assets):

1 Capital (to Risk Weighted Assets):

Equity Tier 1 Capital (to Risk Weighted Assets):

1 Leverage Ratio (to Adjusted Average Assets):

following is a reconciliation of our GAAP capital to regulatory Tier 1, Common Equity Tier 1 and total capital:

December 31, 2022

Total Capital (to Risk Weighted Assets):

Tier 1 Capital (to Risk Weighted Assets):

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

Tier 1 Leverage Ratio (to Adjusted Average Assets):

The following is a reconciliation of our GAAP capital to regulatory

Tier 1, Common Equity Tier 1 and total capital:

(In thousands)

Consolidated GAAP capital

Net unrealized losses on available-for-sale

securities, net of tax

Unrealized loss on defined benefit pension

plan, net of tax

Intangible assets, net of associated

deferred tax liabilities

1 and Common Equity Tier 1 capital

Allowance for

loan losses for regulatory capital

regulatory capital

October 13, 2022, the Company announced the completion of its previously authorized stock repurchase plan (the “2021 Plan”)

pursuant to which the Company was authorized to repurchase up to 2.4 million shares, or 10 % of its outstanding common stock, as

of the date the 2021 Plan was adopted.

On July 26, 2022, the Board of Directors authorized a new stock repurchase plan (the “2022

Plan”), pursuant to which the Company is authorized to repurchase up to 1.1 million shares, which is approximately 5 .0%

of the Company’s outstanding common stock as of the date the 2022 Plan was adopted.

During the three months ended December

31, 2022, the Company repurchased 78,826 shares of common stock under the 2022 Plan and during the twelve months ended December

31, 2022, the Company repurchased 720,975 shares of common stock under both the 2021 and 2022 Plans.

As of December 31, 2022,

there were 1,056,344 shares of common stock available for repurchase under the 2022 Plan.

are subject to dividend restrictions imposed by various regulators, including a limitation on the total of all dividends that

the Bank may pay to the Company in any calendar year, to an amount that shall not exceed the Bank’s net income for the current

year, plus its net income retained for the two previous years, without regulatory approval.

At December 31, 2022, the Bank had

$ 33.6 million in retained earnings available for payment of dividends without prior regulatory approval.

In addition, the Bank

may not declare or pay dividends on, and we may not repurchase, any of our shares of common stock if the effect thereof would

cause shareholders’ equity to be reduced below applicable regulatory capital maintenance requirements or if such declaration,

payment or repurchase would otherwise violate regulatory requirements.

The Bank will be prohibited from paying cash dividends

to the Company to the extent that any such payment would reduce the Bank’s capital below required capital levels.

$ 156.9 million and $ 146.1 million of our equity in the net assets of the Bank was restricted at December 31, 2022 and 2021, respectively.

taxes consist of the following:

Ended December 31,

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

Intangible assets, net of associated deferred tax liabilities

Unrealized loss on defined benefit pension plan, net of tax

Tier 1 and Common Equity Tier 1 capital

Allowance for credit losses for regulatory capital

Subordinated debt

Total regulatory capital

On July 26, 2022, the Board of Directors

authorized a stock repurchase plan (the “2022 Plan”), pursuant to which the Company is authorized to repurchase up

to 1.1 million shares, which is approximately 5 .0% of the Company’s outstanding common stock as of the date the 2022 Plan

During the three months ended December 31, 2023, the Company repurchased 244,839 shares of common stock under the

2022 Plan and during the twelve months ended December 31, 2023, the Company repurchased 649,744 shares of common stock under the

As of December 31, 2023, there were 406,600 shares of common stock available for repurchase under the 2022 Plan.

We are subject to dividend restrictions

imposed by various regulators, including a limitation on the total of all dividends that the Bank may pay to the Company in any

calendar year, to an amount that shall not exceed the Bank’s net income for the current year, plus its net income retained

for the two previous years, without regulatory approval.

At December 31, 2023, the Bank had $ 26.2 million in retained earnings

available for payment of dividends without prior regulatory approval.

In addition, the Bank may not declare or pay dividends on,

and we may not repurchase, any of our shares of common stock if the effect thereof would cause shareholders’ equity to be

reduced below applicable regulatory capital maintenance requirements or if such declaration, payment or repurchase would otherwise

violate regulatory requirements.

The Bank will be prohibited from paying cash dividends to the Company to the extent that any such

payment would reduce the Bank’s capital below required capital levels.

Accordingly, $ 157 .0 million and $ 156.9 million of

our equity in the net assets of the Bank was restricted at December 31, 2023 and 2022, respectively.

Income taxes consist of the following:

Years Ended December 31,

(In thousands)

Current tax provision:

Deferred tax provision (benefit):

Deferred tax provision:

Total tax provision

differences between the statutory federal income tax at a rate of 21% and the effective tax are summarized below:

Ended December 31,

The differences between the statutory federal income tax at

a rate of 21% and the effective tax are summarized below:

Years Ended December 31,

(In thousands)

Statutory federal income

Statutory federal income tax

Increase (decrease) resulting from:

taxes, net of federal tax benefit

life insurance (BOLI)

exercise tax (benefit) shortfall

paid for income taxes for the years ended December 31, 2022, 2021 and 2020 was $ 7.4 million, $ 6.9 million and $ 5.8 million, respectively.

tax effects of each item that gives rise to deferred taxes are as follows:

State taxes, net of federal tax benefit

Tax exempt income

Bank-owned life insurance (BOLI)

BOLI death benefit

Option exercise tax (benefit) shortfall

Effective tax

Cash paid for income taxes for the years ended December 31,

2023, 2022 and 2021 was $ 4.6 million, $ 7.4 million and $ 6.9 million, respectively.

The tax effects of each item that gives rise to deferred taxes

are as follows:

(In thousands)

Deferred tax assets:

unrealized loss on available-for-sale securities

Allowance for

Net unrealized loss on available-for-sale securities

Allowance for loan losses

Lease liability

Employee benefit

and share-based compensation plans

Employee benefit and share-based compensation plans

Accrued expenses

Defined benefit

Net unrealized

loss on marketable equity securities

Nonaccrual interest

Purchased mortgage

servicing rights

deferred tax assets

FDIC assessment

Interest payable

Purchased mortgage servicing rights

Defined benefit plan

Net unrealized loss on marketable equity securities

Gross deferred tax assets

Deferred tax liabilities:

Lease right-of-use

Deferred loan

Lease right-of-use asset

Purchase accounting adjustments, net

Deferred loan fees

Fixed asset depreciation

Purchase accounting

adjustments, net

deferred tax liabilities

Net deferred tax

federal income tax reserve for loan losses at the Bank’s base year is $ 9.4 million.

If any portion of the reserve is used

for purposes other than to absorb loan losses, approximately 150 % of the amount actually used, limited to the amount of the reserve,

would be subject to taxation in the fiscal year in which used.

As the Bank intends to use the reserve solely to absorb loan losses,

a deferred tax liability of $ 2.6 million has not been provided.

do not have any uncertain tax positions at December 31, 2022 or 2021 which require accrual or disclosure.

We record interest and

penalties as part of income tax expense.

No interest or penalties were recorded for the years ended December 31, 2022, 2021 and

income tax returns are subject to review and examination by federal and state tax authorities.

We are currently open to audit

under the applicable statutes of limitations by the Internal Revenue Service for the years ended December 31, 2019 through 2022.

The years open to examination by state taxing authorities vary by jurisdiction;

Gross deferred tax liabilities

Net deferred tax asset

The federal income tax reserve for loan

losses at the Bank’s base year is $ 9.4 million.

If any portion of the reserve is used for purposes other than to absorb loan

losses, approximately 150 % of the amount actually used, limited to the amount of the reserve, would be subject to taxation in the

fiscal year in which used.

As the Bank intends to use the reserve solely to absorb loan losses, a deferred tax liability of $ 2.6

million has not been provided.

We do not have any uncertain tax positions

at December 31, 2023 or 2022 which require accrual or disclosure.

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

We recorded $ 6,400 in interest and penalties for the year ended December 31, 2023.

There were no interest or penalties were recorded

for the years ended December 31, 2022 and 2021.

Our income tax returns

are subject to review and examination by federal and state tax authorities.

We are currently open to audit under the applicable

statutes of limitations by the Internal Revenue Service for the years ended December 31, 2020 through 2023.

The years open to examination

by state taxing authorities vary by jurisdiction;

however, no years prior to 2020 are open.

WITH DIRECTORS AND EXECUTIVE OFFICERS

have had, and expect to have in the future, loans with our directors and executive officers including their affiliates.

in our opinion, do not include more than the normal risk of collectability or other unfavorable features.

Following is a summary

of activity for such loans:

Ended December 31,

TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS

We have had, and expect

to have in the future, loans with our directors and executive officers including their affiliates.

Such loans, in our opinion,

do not include more than the normal risk of collectability or other unfavorable features.

Following is a summary of activity for

Years Ended December 31,

(In thousands)

Balance at beginning of

Balance at beginning of year

Principal distributions

1 unchanged sentence

Change in related party status

at end of year

AND CONTINGENCIES

the normal course of business, various commitments and contingent liabilities are outstanding, such as standby letters of credit

and commitments to extend credit with off-balance-sheet risk that are not reflected in the consolidated financial statements.

Financial instruments with off-balance-sheet risk involve elements of credit, interest rate, liquidity and market risk.

do not anticipate any significant losses as a result of these transactions.

The following summarizes these financial instruments

and other commitments and contingent liabilities at their contract amounts:

Balance at end of year

COMMITMENTS AND CONTINGENCIES

Loan Commitments.

In the normal course of business, various

commitments and contingent liabilities are outstanding, such as standby letters of credit and commitments to extend credit with

off-balance-sheet risk that are not reflected in the consolidated financial statements.

Financial instruments with off-balance-sheet

risk involve elements of credit, interest rate, liquidity and market risk.

We do not anticipate any significant losses

as a result of these transactions.

The following summarizes these financial instruments and other commitments and contingent liabilities

at their contract amounts:

(In thousands)

Commitments to extend credit:

lines of credit

Unused lines of credit

Loan commitments

Existing construction

loan agreements

Standby letters

use the same credit policies in making commitments and conditional obligations as for on balance sheet instruments.

to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.

Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.

Since some commitments

expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

each customer’s creditworthiness on a case-by-case basis.

The amount of collateral obtained, if deemed necessary by us upon

extension of credit, is based on management’s credit evaluation of the counterparty.

Collateral held varies but may include

accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.

letters of credit are written conditional commitments that guarantee the performance of a customer to a third party.

Those guarantees

are primarily issued to support public and private borrowing arrangements.

The credit risk involved in issuing letters of credit

is essentially the same as that involved in extending loan facilities to customers.

At December 31, 2022 and 2021, outstanding

standby letter of credit commitments totaled $ 22.0 million and $ 30.2 million, respectively, with standby letters of credit issued

by the FHLB on our behalf totaling $ 16.4 million and $ 23.4 million, respectively.

December 31, 2022, outstanding commitments to extend credit totaled $ 505.5 million, with $ 107.1 million in fixed rate commitments

with interest rates ranging from 1.99 % to 18.00 % and $ 398.4 million in variable rate commitments.

At December 31, 2021, outstanding

commitments to extend credit totaled $ 543.2 million, with $ 101.5 million in fixed rate commitments with interest rates ranging

from 1.99 % to 18.00 % and $ 441.7 million in variable rate commitments.

also have risk participation agreements (“RPAs”) with another financial institution.

The RPAs are a guarantee to share

credit risk associated with an interest rate swap on participation loans in the event of counterparty default.

As such, we accept

a portion of the credit risk in order to participate in the loans and we receive a one-time fee.

The interest rate swap is collateralized

(generally by real estate or business assets) by us and the third party, which limits the credit risk associated with the RPAs.

Per the terms of the RPAs, we must pledge collateral equal to our exposure for the interest rate swap.

We monitor overall collateral

as part of our off-balance sheet liability analysis, and at December 31, 2022, believe sufficient collateral is available to cover

potential swap losses.

the ordinary course of business, we are party to various legal proceedings, none of which, in our opinion, will have a material

effect on our consolidated financial position or results of operations.

Company entered into a long-term contractual obligation with a vendor for use of its core provider and ancillary services beginning

Total remaining contractual obligations outstanding with this vendor as of December 31, 2022 were estimated to be $ 10.7

million, with $ 4.9 million expected to be paid within one year and the remaining $ 5.8 million to be paid within the next three

Bank is a limited partner in a Small Business Investment Company (“SBIC”) and committed to contribute capital of $ 3 .0

million to the partnership.

At December 31, 2022, the SBIC currently has a book value of $ 2.7 million and is included in other

The unfunded commitment to the partnership was $ 300,000 at December 31, 2022.

and change of control agreements.

have entered into employment and change of control agreements with certain senior officers.

The initial term of the employment

agreements is for three years subject to separate one-year extensions as approved by the Board of Directors at the end of each

applicable fiscal year.

Each employment agreement provides for minimum annual salaries, discretionary cash bonuses and other fringe

benefits as well as severance benefits upon certain terminations of employment that are not for cause.

The change of control agreements

expire one year following a notice of non-extension and only provide for severance benefits upon certain terminations of employment

that are not for cause and that are related to a change of control of the Company or the Bank.

VALUE OF ASSETS AND LIABLITIES

Determination

of Fair Value.

use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.

The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability

in an orderly transaction between market participants at the measurement date.

Fair value is best determined based upon quoted

market prices.

However, in many instances, there are no quoted market prices for our various financial instruments.

In cases where

quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.

Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash

Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

and assumptions for valuing our financial instruments are set forth below.

Estimated fair values are calculated based on the value

without regard to any premium or discount that may result from concentrations of ownership of a financial instrument, possible

tax ramifications or estimated transaction cost.

The securities measured at fair value in Level 1 are based on quoted market prices in an active exchange market.

securities are measured at fair value in Level 2 and are based on pricing models that consider standard input factors such as

observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data.

These securities include government-sponsored enterprise obligations, state and municipal obligations, corporate bonds, residential

mortgage-backed securities guaranteed and sponsored by the U.S.

Existing construction loan agreements

Standby letters of credit

We use the same credit policies in making

commitments and conditional obligations as for on balance sheet instruments.

Commitments to extend credit are agreements

to lend to a customer as long as there is no violation of any condition established in the contract.

Commitments generally have

fixed expiration dates or other termination clauses and may require payment of a fee.

Since some commitments expire without being

drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

We evaluate each customer’s

creditworthiness on a case-by-case basis.

The amount of collateral obtained, if deemed necessary by us upon extension of credit,

is based on management’s credit evaluation of the counterparty.

Collateral held varies but may include accounts receivable,

inventory, property, plant and equipment, and income-producing commercial properties.

Standby letters of credit are written conditional

commitments that guarantee the performance of a customer to a third party.

Those guarantees are primarily issued to support public

and private borrowing arrangements.

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

in extending loan facilities to customers.

At December 31, 2023 and 2022, outstanding standby letter of credit commitments totaled

$22.4 million and $ 22 .0 million, respectively, with standby letters of credit issued by the FHLB on our behalf totaling $ 15.3 million

and $ 16.4 million, respectively.

At December 31, 2023, outstanding commitments

to extend credit totaled $ 444.5 million, with $ 52.8 million in fixed rate commitments with interest rates ranging from 1.99 % to

18.00 % and $ 391.7 million in variable rate commitments.

At December 31, 2022, outstanding commitments to extend credit totaled

$ 505.5 million, with $ 107.1 million in fixed rate commitments with interest rates ranging from 1.99 % to 18.00 % and $ 398.4 million

in variable rate commitments.

We also have risk participation agreements

(“RPAs”) with another financial institution.

The RPAs are a guarantee to share credit risk associated with an interest

rate swap on participation loans in the event of counterparty default.

As such, we accept a portion of the credit risk in order

to participate in the loans and we receive a one-time fee.

The interest rate swap is collateralized (generally by real estate or

business assets) by us and the third party, which limits the credit risk associated with the RPAs.

Per the terms of the RPAs, we

must pledge collateral equal to our exposure for the interest rate swap.

We monitor overall collateral as part of our off-balance

sheet liability analysis, and at December 31, 2023, believe sufficient collateral is available to cover potential swap losses.

In the ordinary course of business, we

are party to various legal proceedings, none of which, in our opinion, will have a material effect on our consolidated financial

position or results of operations.

Vendor Contract.

The Company entered into a long-term contractual

obligation with a vendor for use of its core provider and ancillary services beginning in 2016.

Total remaining contractual obligations

outstanding with this vendor as of December 31, 2023 were estimated to be $ 11.6 million, with $ 5.4 million expected to be paid

within one year and the remaining $ 6.2 million to be paid within the next three years.

Investment Commitments.

The Bank is a limited partner in a Small

Business Investment Company (“SBIC”) and committed to contribute capital of $ 7.5 million to the partnership.

31, 2023, the SBIC currently has a book value of $ 3.7 million and is included in other assets.

The unfunded commitment to the partnership

was $ 3.8 million at December 31, 2023.

Employment and change of control agreements.

We have entered into employment and change

of control agreements with certain senior officers.

The initial term of the employment agreements is for three years subject to

separate one-year extensions as approved by the Board of Directors at the end of each applicable fiscal year.

Each employment agreement

provides for minimum annual salaries, discretionary cash bonuses and other fringe benefits as well as severance benefits upon certain

terminations of employment that are not for cause.

The change of control agreements expire one year following a notice of non-extension

and only provide for severance benefits upon certain terminations of employment that are not for cause and that are related to

a change of control of the Company or the Bank.

FAIR VALUE OF ASSETS AND LIABLITIES

Determination of Fair Value.

We use fair value measurements to record

fair value adjustments to certain assets and liabilities and to determine fair value disclosures.

The fair value of a financial

instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date.

Fair value is best determined based upon quoted market prices.

However, in many instances,

there are no quoted market prices for our various financial instruments.

In cases where quoted market prices are not available,

fair values are based on estimates using present value or other valuation techniques.

Those techniques are significantly affected

by the assumptions used, including the discount rate and estimates of future cash flows.

Accordingly, the fair value estimates

may not be realized in an immediate settlement of the instrument.

Methods and assumptions

for valuing our financial instruments are set forth below.

Estimated fair values are calculated based on the value without regard

to any premium or discount that may result from concentrations of ownership of a financial instrument, possible tax ramifications

or estimated transaction cost.

The securities measured

at fair value in Level 1 are based on quoted market prices in an active exchange market.

All other securities are measured at fair

value in Level 2 and are based on pricing models that consider standard input factors such as observable market data, benchmark

yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data.

These securities include government-sponsored

enterprise obligations, state and municipal obligations, corporate bonds, residential mortgage-backed securities guaranteed and

What changed 10-K

Item 9A. Controls and Procedures