NB BANCORP, INC._December 31, 2025
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
For the year ended December 31, 2025.
OR
For the transition period from _______________ to _______________.
Commission file number:001-41899
NB BANCORP, INC.
(Exact name of registrant as specified in its charter)
1063 Great Plain Avenue, Needham, Massachusetts 02492
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (781) 444-2100
Securities registered pursuant to Section 12(b) of the Act:
Common stock, par value $0.01 per share The Nasdaq Stock Market, LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐NO☒
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ☐NO☒
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES☒ NO ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☒
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, computed by reference to the last sale price on June 30, 2025, of $17.86, was approximately $603.1 million.
As of February 28, 2026, there were 45,604,774 issued and outstanding shares of the Registrant’s Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE:
1.Portions of the Proxy Statement for the 2026 Annual Meeting of Stockholders (Part III)
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TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS 3
ITEM 1A. RISK FACTORS 42
ITEM 1B. UNRESOLVED STAFF COMMENTS 66
ITEM 1C CYBERSECURITY 66
ITEM 2. PROPERTIES 70
ITEM 3. LEGAL PROCEEDINGS 70
ITEM 4. MINE SAFETY DISCLOSURES 70
PART II
ITEM 6. [RESERVED] 72
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 93
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 93
ITEM 9A. CONTROLS AND PROCEDURES 152
ITEM 9B. OTHER INFORMATION 153
ITEM 9C DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENT INSPECTIONS 153
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 153
ITEM 11. EXECUTIVE COMPENSATION 154
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 154
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 154
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PART I
ITEM 1. Business
FORWARD-LOOKING STATEMENTS
In this Annual Report on Form 10-K, the terms “we,” “our,” and “us” refer to NB Bancorp, Inc. and Needham Bank, unless the context indicates another meaning. In addition, we sometimes refer to NB Bancorp, Inc. as “NB Bancorp” or the “Company” and to Needham Bank as the “Bank.”
Certain statements contained in this Annual Report on form 10-K, that are not historical facts, may be considered forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “contemplate,” “continue,” “could,” “potential,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:
● statements of our goals, intentions and expectations;
● estimates of our risks and future costs and benefits.
These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this Annual Report on Form 10-K.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
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● our ability to access cost-effective funding timely;
● demand for loans and deposits in our market areas;
● our ability to implement and change our business strategies;
● competition among depository and other financial institutions;
● adverse changes in the securities or secondary mortgage markets;
● changes in the quality or composition of our loan or investment portfolios;
● technological changes that may be more difficult or expensive than expected;
● the inability of third-party providers to perform as expected;
● our ability to manage market risk, credit risk and operational risk;
● changes in consumer spending, borrowing and savings habits;
● our ability to attract and retain key employees;
● turbulence in the capital and debt markets and within the banking industry;
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● changes in assumptions used in making such forward-looking statements; and
Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.
BUSINESS OF NB BANCORP, INC.
NB Bancorp, Inc. (the “Company”) is a Maryland corporation that was incorporated in June 2023 for the purpose of becoming the registered bank holding company for Needham Bank (the “Bank”) upon the consummation of the mutual-to-stock conversion of NB Financial, MHC, the Bank’s former mutual holding company. The Company’s initial stock offering was completed on December 27, 2023. In connection with the conversion, the Company sold 40,997,500 shares of common stock, par value $0.01 per share, for gross offering proceeds (before deducting offering expenses) of approximately $410.0 million based on the offering price of $10.00 per share. The Company also contributed 1,708,229 shares of common stock and $2.0 million in cash to the Needham Bank Charitable Foundation. The shares of the Company’s common stock sold in the offering began trading on The Nasdaq Capital Market on December 28, 2023 under the symbol “NBBK.”
Since being incorporated, other than holding the common stock of the Bank and the Provident Aquisition, the Company has not engaged in any material business activities to date.
Our cash flow depends on earnings from the investment of the net proceeds we retained from our initial public stock offering that was consummated on December 27, 2023, and any dividends we receive from the Bank. We neither own nor lease any property. At the present time, we employ only persons who are officers of the Bank who also serve as officers of the Company. We use the employees of the Bank from time to time and pay a fee to the Bank for the time devoted to the Company by employees of the Bank. However, these persons are not separately compensated by the Company. The Company may hire additional employees, as appropriate, to the extent it expands its business in the future.
Our executive offices are located at 1063 Great Plain Avenue, Needham, Massachusetts 02492. Our telephone number at this address is (781) 444-2100. Our website address is www.needhambank.com. Information on our website is not incorporated into and should not be considered part of this Annual Report on Form 10-K.
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BUSINESS OF NEEDHAM BANK
General
The Bank is a Massachusetts-chartered cooperative bank headquartered in Needham, Massachusetts. The Bank was organized in 1892 and has operated continuously in Needham, Massachusetts, which is approximately 17 miles southwest of Boston’s financial district, since this time. Our headquarters are still located in Needham, and we have branch locations in Massachusetts, including Ashland, Boston (Mission Hill), Dedham, Dover, Medfield, Medford, Millis, Natick, Wellesley, Westwood. Upon completion of the Provident Acquisition in November 2025, our branch network expanded into Amesbury and Newburyport, Massachusetts and New Hampshire, including Bedford, Exeter, Portsmouth and Seabrook; as well as a warehouse lending center in Ponte Vedra Beach, Florida. Our branch network covers the metro-west area of Boston, southern New Hampshire and surrounding communities in Massachusetts, eastern Connecticut, southern New Hampshire and Rhode Island. As one of the largest community banks in the Greater Boston metropolitan area, and throughout New England, we believe that our reputation for providing personalized customer service is our strongest asset and our most effective business strategy to continue to grow and be a profitable bank.
Our business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, in commercial real estate and multifamily loans, one-to-four-family residential real estate loans, construction and land development loans, commercial and industrial loans, mortgage warehouse loans and consumer loans. To a lesser extent, we originate home equity loans and lines of credit. At December 31, 2025, our total loan portfolio was comprised of $2.44 billion, or 40.7%, of commercial real estate and multifamily loans, $1.33 billion, or 22.2%, of one-to-four-family residential real estate loans and home equity loans, $1.01 billion, or 16.8%, of commercial and industrial loans, and $730.6 million, or 12.2%, of construction and land development loans. We also invest in securities, consisting primarily of U.S. Treasury and federal agency securities, mortgage-backed securities and corporate bonds. We offer a variety of deposit accounts, including certificate of deposit accounts, IRAs, money market accounts, savings accounts, demand deposit accounts and interest-bearing and noninterest-bearing checking accounts.
Historically, we have utilized advances from the Federal Home Loan Bank of Boston (“FHLB”) as a funding source for our operations and we had $196.2 million of FHLB advances outstanding at December 31, 2025. Additionally, in recent years, we have also utilized brokered deposits as a non-retail funding source to fund our operations and at December 31, 2025, we had $535.7 million of brokered deposits.
Needham Bank is subject to regulation, supervision and examination by the Massachusetts Commissioner of Banks (the “Commissioner”) under Massachusetts law, and the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) as its primary federal regulator. It is also regulated by Federal Deposit Insurance Corporation (the “FDIC”) as its primary insurer of its deposits.
Recent Acquisition
Provident Bancorp and BankProv Acquisition (“Provident Acquisition”)
During the year ended December 31, 2025, the Company was able to expand its banking business through a combination of internal growth, complemented by an opportunistic strategic acquisition. On November 15, 2025, the Company acquired Provident Bancorp, Inc. and its wholly-owned subsidiary, BankProv, which operated seven banking offices and one mortgage warehouse lending facility, for $111.8 million in cash consideration and the issuance of 5,943,682 shares of common stock valued at $114.7 million. The Provident Acquisition extends Needham Bank’s presence in the northern Massachusetts market and establishes Needham Bank’s presence in the southern New Hampshire market with the addition of approximately $1.40 billion of total assets, $1.18 billion of total loans and $1.14 billion in total deposits, each at fair value. The Provident Acquisition was accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Under this method of accounting, the respective assets acquired and liabilities assumed were recorded at their estimated fair values. The excess of consideration paid over the estimated fair value of the net assets acquired, net of deferred taxes, totaled $18.5 million and was recorded on the Company’s balance sheet as goodwill. Results for 2025 reflect the inclusion of the Provident Acquisition since November 15, 2025.
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Business Strategy
In recent years and consistent with our growth strategy to increase our commercial relationships along all business lines, we have enhanced our online and mobile banking offerings, including fraud prevention and detection systems, and additionally, we have invested heavily in our cash management suite of products. Additional investments have been made to continually strengthen cybersecurity controls, such as with expanded vulnerability detection and patch management protocols. We believe our significant investment in our cash management products has allowed us to capture and service the full banking relationships for our Structured Finance, Cannabis-related and other commercial and industrial customer relationships. We have invested in systems to automate compliance with cannabis-related regulatory requirements and guidance, as well as, state-specific and federal regulatory requirements for cannabis banking and consumer lending activities. We also implemented a Marketing Customer Information File and Customer Relationship Management system to improve communication, collaboration and customer experience.
In recent years, we have focused on building an experienced management team and diversifying and enhancing our operating and business strategy. In January 2017, we hired Joseph Campanelli as our Chief Executive Officer. Mr. Campanelli has more than 40 years of banking experience at larger, more complex financial institutions and has executed similar strategies. In February 2024, we hired JP Lapointe, our Chief Financial Officer. Mr. Lapointe has more than 20 years of combined banking and bank audit experience. In January 2025, we hired Christine Roberts, our Chief Operating Officer. Ms. Roberts has more than 20 years of banking experience. Under their leadership, the Bank has implemented an intentional and structured growth plan to enable the Bank to prudently grow its balance sheet and diversify its operations and offer a personalized banking experience to individuals and businesses while seeking to address the risks inherent with such growth.
During the year ended December 31, 2025, the Bank added approximately 152 additional full-time employees, a majority of which the Company was able to retain from the Provident Acquisition.
Consistent with our strategy to continue to service individuals and small businesses in our market area, while also competing for larger business customers, the Bank has made significant investments in infrastructure, upgraded technology solutions and offerings, and compliance and risk management.
During each of the years ended December 31, 2025 and 2024, we added one new board member to the Company’s Board of Directors including one as a result of the Provident Acquisition during the year ended December 31, 2025. We believe that each of our Directors, individually, and together as a group, bring a level of business acumen and sophistication that matches our growth strategy.
We continue to execute on the following strategies to maximize sustainable profitability:
We intend to continue to compete for more of these types of relationships, primarily to experienced seasoned builders, developers and investors in our market area.
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Our Structured Finance division seeks to service the banking needs of larger business customers, typically with greater than $50 million in annual revenues, throughout a variety of industries, including manufacturers, service companies, renewable energy providers, commercial finance companies, and cannabis-related entities. We believe that our industry-specific knowledge about the banking needs of these industries gives us a competitive advantage to service these customers. We intend to continue to emphasize growth in each of these divisions of our commercial and industrial lending, with a measured approach to cannabis-related entities.
We believe that this loan diversification will allow us to continue to execute our business strategy of growing the Bank while addressing the inherent risks of community banking, including the risk of geographic concentrations in our loan portfolios. The diversification of our loan products allows us to address risk across a wider variety of borrowers and industries as well as the ongoing management of these portfolios to minimize our exposure to interest rate risk.
Reflecting our focus on our community, in connection with our mutual to stock conversion and initial public offering which closed in December 2023, we established a charitable foundation called Needham Bank Charitable Foundation (the “Foundation”) and funded it with $2.0 million in cash and 1,708,229 shares of our common stock, for a total contribution of $19.1 million based on the $10.00 per share offering price. The purpose of this foundation is to make contributions to support various charitable organizations operating in our community now and in the future.
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During the year ended December 31, 2025, the Foundation made $1.8 million in contributions to local non-profit charities and organizations.
Market Area
We consider our primary market area to be any counties, towns or municipalities within a 100-mile radius of Needham, which generally covers the Greater Boston metropolitan area as well as surrounding communities in Massachusetts, eastern Connecticut, southern New Hampshire and Rhode Island. We will consider commercial and residential real estate opportunities outside of this market area, but these are generally to customers with whom we have an existing relationship and who have a presence within our primary market area. We also have industry-specific warehouse lending and structured commercial and industrial relationships to cannabis and solar companies and bridge financing based on our underlying diligence and understanding of the specific operations outside of our primary market area.
The Greater Boston metropolitan area benefits from the presence of numerous institutions of higher learning, medical care and research centers and the corporate headquarters of several significant multinational corporations. Eastern Massachusetts also has many high technology companies employing personnel with specialized skills. These factors affect the demand for residential homes, multifamily apartments, office buildings, shopping centers, industrial warehouses and other commercial properties.
According to the United States Census Bureau (the “Census”), at July 2024, the Greater Boston metropolitan area is the tenth largest metropolitan area in the United States. Located adjacent to major transportation corridors, the Greater Boston metropolitan area provides a highly diversified economic base, with major employment sectors ranging from services, manufacturing and wholesale/retail trade, to finance, technology and medical care. According to the United States Department of Labor, in November 2025, the Boston-Cambridge-Newton, Massachusetts area had an estimated unemployment rate of 4.4%, compared to a Massachusetts state unemployment rate of 4.8% and the national unemployment rate of 4.4%.
Based on the Census’ estimates, from 2020 to 2024, the populations of Boston–Cambridge–Newton, MA–NH Metropolitan Statistical Area (“MSA”) increased 1.93%, compared to a 2.91% increase for the Commonwealth of Massachusetts.
At July 2024, the Census estimates that the Boston–Cambridge–Newton, MA–NH MSA’s median household incomes was $117,825, compared to median household income of $97,344 for the city of Boston, $104,828 for the Commonwealth of Massachusetts, and $81,604 for the United States.
Competition
We face significant competition within our market both in originating loans and attracting deposits. Our market area has a high concentration of financial institutions, including large money centers and regional banks, community banks, credit unions and other non-bank financial service providers, including financial technology companies. Some of our competitors offer products and services that we currently do not offer, such as trust or wealth management services.
Our competition for loans comes primarily from the competitors referenced above and from other financial service providers, such as mortgage companies and mortgage brokers. Competition for loans also comes from the increasing number of non-depository financial service companies participating in the mortgage market, such as insurance companies, securities firms, financial technology companies, and specialty finance firms.
We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend toward consolidation of the financial services industry. Technological advances, for example, have lowered barriers to entry, which have allowed banks to expand their geographic reach by providing services over the internet and made it possible for non-depository institutions, including financial technology companies, to offer products and services that traditionally have been provided by banks. Competition for deposits and the origination of loans could limit our growth in the future.
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We expect to continue to emphasize originations of larger structured finance credit facilities. In recent years, most of our larger, structured commercial and industrial loans have been to customers in the cannabis or solar industries and bridge financing. Our competition in this business sector is broad-based and not dominated by any specific larger or more well-established competitors. Changing legislation and government policy with respect to these industries could increase competition even further on a jurisdictional or industry-specific basis.
We do not believe that our ability to compete is dependent on our existing relationships in these areas, but we believe our experience could provide a competitive advantage versus lenders who enter these business lines in the future. We intend to continue to compete effectively in these areas by utilizing our knowledge of the operating and cash flow structures of these industries, as well as the applicable regulatory considerations.
Lending Activities
Our principal lending activity is originating commercial real estate and multifamily loans, one-to-four-family residential real estate loans, construction and land development loans, commercial and industrial loans, mortgage warehouse loans and consumer loans. To a lesser extent, we also originate home equity loans and lines of credit. Subject to market conditions and our asset-liability management, we expect to continue to grow each of our loan portfolios with the most significant emphasis on growth in commercial real estate and multifamily loans and commercial and industrial loans. From time to time and subject to market conditions, we have also originated for sale and sold a portion of our long-term, fixed-rate, one-to-four-family residential real estate loans, on a servicing-retained, limited or no recourse basis, while retaining shorter-term fixed-rate and adjustable-rate one-to four family residential real estate loans in order to manage the interest rate risk and duration of our loan portfolio.
Historically, we have also engaged in loan participation sales, with the Bank as the lead, for certain larger commercial real estate and commercial and industrial loans and have purchased participation loans from well-established financial institutions in our market area. Participation loans and counterparty exposure is periodically reported to the Board of Directors. At December 31, 2025, our highest combined participation loans sold with one bank was approximately 14.7% of our total capital and was comprised of four commercial real estate loans, two construction and land development loans, one multifamily loan and one commercial and industrial loan. At December 31, 2024, our highest combined participation loans purchased with one bank was approximately 7.0% of our total capital and was comprised of one commercial real estate loan and one multi-family residential loan.
Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated.
Provident
(In thousands)
(1) Loans acquired at fair value
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Contractual Maturities. The following tables set forth the contractual maturities of our loan portfolio at December 31, 2025. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. The tables present contractual maturities and do not reflect repricing or the effect of prepayments. Actual maturities may differ.
Amounts due in: (in thousands)
The following table sets forth our fixed- and adjustable-rate loans at December 31, 2025 that are contractually due after December 31, 2026:
Fixed Adjustable Total
(in thousands)
Warehouse — — —
One-to-Four-Family Residential Real Estate Lending. One of the primary focuses of our lending has long been the origination of long-term loans secured by mortgages on primarily owner-occupied, one-to-four-family residences. At December 31, 2025, $1.18 billion, or 19.6%, of our total loan portfolio, consisted of one-to-four-family residential real estate loans. The vast majority of the one-to-four-family residential real estate loans that we originate are secured by properties located in our primary market area. See “Originations, Sales and Purchases of Loans.”
Our one-to-four-family residential real estate loans are generally underwritten according to Fannie Mae guidelines, and we refer to loans that conform to such guidelines as “conforming loans.” We generally originate both fixed- and adjustable-rate one-to-four-family residential real estate loans in amounts up to the maximum conforming loan limits as established by the Federal Housing Finance Agency (“FHFA”), which was $806,500 as of December 31, 2025. We also originate loans above the FHFA limit, which are referred to as “jumbo loans.” We generally underwrite jumbo loans in a manner similar to conforming loans and at December 31, 2025, approximately $568.8 million, or 48.3%, of our one-to-four-family residential real estate loans were jumbo loans with an average balance of $1.5 million.
Our fixed-rate one-to-four-family residential real estate loans are originated with terms of up to 30 years and our adjustable-rate one-to-four-family residential real estate loans are originated with terms of up to 40 years. At December 31, 2025, $566.0 million, or 48.1%, of our one-to-four-family residential real estate loans were fixed-rate loans.
We originate our adjustable-rate one-to-four-family residential real estate loans with initial interest rate adjustment periods of three, five and seven years, based on changes in a designated market index. Generally, these loans are limited to a 200-basis point initial increase in their interest rate and a 200-basis point increase annually after the initial adjustment and a maximum upward adjustment of 600 basis points over the life of the loan. We determine whether a borrower qualifies for an adjustable-rate mortgage loan based on our lending policy.
We originate conventional one-to-four-family residential real estate loans with loan-to-value ratios of up to 95% without private mortgage insurance.
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We also originate one-to-four-family residential real estate loans with loan-to-value ratios of up to 97% for loans that are sold and serviced by MassHousing, an independent, quasi-public Massachusetts agency charged with providing financing for affordable housing in Massachusetts or under our First-Time Homebuyer Program.
From time to time and subject to market conditions, we sell a portion of the fixed-rate one-to-four-family residential real estate loans that we originate with terms of greater than 20 years. We base the amount of fixed-rate one-to-four-family residential real estate loans that we sell on our liquidity needs, asset/liability mix, loan volume, portfolio size and other factors. In recent years, most of the one-to-four-family residential real estate loans that we originated and sold to the secondary market were sold with servicing retained.
We generally do not offer “interest-only” loans on one-to-four-family residential real estate loans nor do we offer loans that provide for negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed on their loan, resulting in an increased principal balance during the life of the loan. Additionally, we do not offer “subprime loans” (loans that are made with low down-payments to borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios).
We evaluate both the borrower’s ability to make principal, interest and escrow payments and the value of the property that will secure the loan. Our one-to-four-family residential real estate loans do not currently include prepayment penalties, are non-assumable and do not produce negative amortization. Our one-to-four-family residential real estate loans customarily include “due-on-sale” clauses giving us the right to declare the loan immediately due and payable in the event that, among other things, the borrower sells the property subject to the mortgage. All borrowers are required to obtain title insurance, homeowner’s insurance and fire and casualty insurance and, where circumstances warrant, flood insurance on properties securing one-to-four-family residential real estate loans.
We offer one-to-four-family residential real estate loans secured by non-owner-occupied properties. Generally, we will not make loans in excess of 80.0% loan-to-value on non-owner-occupied one-to-four-family residential real estate properties or in excess of 80.0% on single family non-owner-occupied one-to-four-family residential real estate properties.
Home Equity Loans and Lines of Credit. In addition to one-to-four-family residential real estate loans, we offer home equity loans and lines of credit that are secured by the borrower’s primary or secondary residence. At December 31, 2025, we had $152.6 million, or 2.6%, of our total loan portfolio in home equity loans and lines of credit.
Home equity loans and lines of credit are generally underwritten using the same criteria that we use to underwrite one-to-four-family residential real estate loans. Home equity loans and lines of credit may be underwritten with a loan-to-value ratio of up to 80% when combined with the principal balance of the existing first mortgage loan.
Home equity loans and lines of credit are generally secured by junior mortgages and have greater risk than one-to-four-family residential real estate loans secured by first mortgages. We face the risk that the collateral will be insufficient to compensate us for loan losses and costs of foreclosure, after repayment of the senior mortgages, if applicable. When customers default on their loans, we attempt to foreclose on the property and resell the property as soon as possible to minimize foreclosure and carrying costs. However, the value of the collateral may not be sufficient to compensate us for the amount of the unpaid loan and we may be unsuccessful in recovering the remaining balance from those borrowers. Particularly with respect to our home equity loans and lines of credit, decreases in real estate values could adversely affect our ability to fully recover the loan balance in the event of a default.
Commercial Real Estate and Multifamily Lending. Our commercial real estate and multifamily loans are secured primarily by multifamily apartment buildings, retail and mixed-use properties, light industrial properties, manufacturing facilities and office buildings, almost all of which are located in our primary lending market area. We will also make these loans out of our primary lending market area to customers of the Bank with whom we have an existing lending relationship. Our multifamily loans are secured primarily by five or more-unit residential buildings.
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At December 31, 2025, we had $2.44 billion in commercial real estate and multifamily loans, representing 40.7% of our total loan portfolio.
We generally originate adjustable-rate commercial real estate and multifamily loans with maximum terms of up to 30 years. From time to time, we will also originate fixed-rate loans in these portfolios. We generally limit loan-to-value ratios to 80% of the appraised value or purchase price, whichever is lower. All of our commercial real estate and multifamily real estate loans are subject to our underwriting procedures and guidelines. Although our commercial real estate and multifamily loans are made to a diversified pool of unrelated borrowers across numerous businesses, adverse developments in our market area could have an adverse impact on this portfolio of loans and the Company’s income and financial position.
The federal banking agencies (the “Agencies”) issued guidance in 2006 (the “Guidance”) which addresses institutions with increased concentrations of commercial real estate (“CRE”) loans. The Guidance does not establish specific CRE lending limits; but rather, it promotes sound risk management practices and appropriate levels of capital that will enable institutions to continue to pursue CRE lending in a safe and sound manner. In developing the Guidance, the Agencies recognized that different types of CRE lending present different levels of risk, and that consideration should be given to the lower risk profiles and historically superior performance of certain types of CRE, such as well-structured multifamily housing finance, when compared to others, such as speculative office space construction. As discussed under “CRE Concentration Assessments,” institutions are encouraged to segment their CRE portfolios to acknowledge these distinctions for risk management purposes. The guidance focuses on those CRE loans for which the cash flow from real estate is the primary source of repayment rather than loans to a borrower for which real estate collateral is taken as a secondary source of repayment or through an abundance of caution. Thus, for the purposes of the Guidance, CRE loans include those loans with risk profiles sensitive to the condition of the general CRE market (for example, market demand, changes in capitalization rates, vacancy rates, or rents). CRE loans are land development and construction loans (including one-to-four-family residential and commercial construction loans) and other land loans.
CRE loans also include loans secured by multifamily property, and nonfarm nonresidential property where the primary source of repayment is derived from rental income associated with the property (that is, loans for which 50 percent or more of the source of repayment comes from third party, nonaffiliated, rental income) or the proceeds of the sale, refinancing, or permanent financing of the property. Excluded from the scope of the Guidance are loans secured by non-farm non-residential properties where the primary source of repayment is the cash flow from the ongoing operations and activities conducted by the party, or affiliate of the party, who owns the property.
As part of their ongoing supervisory monitoring processes, the Agencies use certain criteria to identify institutions that are potentially exposed to significant CRE concentration risk. An institution that has experienced rapid growth in CRE lending, has notable exposure to a specific type of CRE, or is approaching or exceeds the supervisory criteria may be identified for further supervisory analysis of the level and nature of its CRE concentration risk.
The Agencies use the criteria as a preliminary step to identify institutions that may have CRE concentration risk. Because regulatory reports capture a broad range of CRE loans with varying risk characteristics, the supervisory monitoring criteria do not constitute limits on an institution’s lending activity but rather serve as high-level indicators to identify institutions potentially exposed to CRE concentration risk.
The Company holds a concentration in commercial real estate loans. As of December 31, 2025, construction, land development and other land loans, as defined by the Guidance, represented 91.6% of consolidated risk-based capital. Total commercial real estate loans, as defined by the Agency Guidance, represented 314.1% of consolidated risk-based capital.During the prior 36 months, the Company has experienced an increase in its commercial real estate portfolio as defined by the Agency Guidance, by 37.0%.
The management team has extensive experience in underwriting CRE loans and has implemented and continues to maintain heightened risk management procedures and strong underwriting criteria with respect to its CRE portfolio. The Board of Directors has established maximum internal limits on CRE to better manage and control the exposure to property classes during periods of changing economic conditions. The Board of Directors also has minimum targets for regulatory capital ratios that are in excess of well capitalized ratios.
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Our risk management process begins with a robust underwriting program. The underwriting and risk rating of all loans is completed by an underwriting team that is independent of the originating lender(s). The underwriting analysis of CRE loans includes pre-origination sensitivity analysis utilizing portfolio stress testing methods to fully understand the potential exposure before we originate the credit. Once originated, each loan receives ongoing quarterly stress tests to evaluate the risk profile over the life of the credit. At December 31, 2025, our 25 largest commercial real estate lending relationships had an average balance of approximately $42.2 million, or approximately $1.06 billion in the aggregate, representing 43.2% of our total CRE loans at such date. Consistent with our internal policies, any borrowing relationship with aggregate exposure of greater than $90.0 million requires approval by the Board of Directors and at December 31, 2025 we had four such relationships in excess of $90.0 million, three of which were comprised of CRE loans.
At December 31, 2025, each of the CRE loans underlying our 25 largest commercial real estate relationships was performing in accordance with its repayment terms.
We consider a number of factors in originating CRE and multifamily loans. We evaluate the qualifications and financial condition of the borrower (including credit history), profitability and expertise, as well as the value and condition of the mortgaged property securing the loan. When evaluating the qualifications of the borrower, we consider the financial resources of the borrower, the borrower’s experience in owning or managing similar property and the borrower’s payment history with us and other financial institutions. In evaluating the property securing the loan, among other factors, we consider the net operating income of the mortgaged property before debt service and depreciation, the debt service coverage ratio (the ratio of net operating income to debt service) to ensure that, subject to certain exceptions, it is at least 1.20x for multifamily loans and 1.25x for CRE loans, and the ratio of the loan amount to the appraised value of the mortgaged property. Our CRE and multifamily loans are appraised by outside independent and qualified appraisers that are duly approved in accordance with Bank policy. Personal guarantees are often obtained from CRE borrowers. Each borrower’s financial information on such loans is monitored on an ongoing basis by requiring periodic financial statement updates.
We believe that our CRE and multifamily loan portfolio composition is relatively diversified in terms of industry sectors, property types and various lending specialties. As of December 31, 2025, the amortized cost balances of concentrations in our CRE loan portfolio, including multi-family loans, were as follows:
Owner-Occupied Non-Owner-Occupied Balance Percentage
(Dollars in thousands)
Self Storage Facilities — 64,315 64,315 3%
Construction and Land Development Loans. At December 31, 2025, we had $730.6 million in construction and land development loans, or 12.2% of total loans. We make construction loans on raw land, land which has received permits for construction and commercial and residential properties which are being re-constructed, primarily to developers, contractors and builders of apartment buildings, single-family homes and condominiums and individuals for the construction of their primary residences. We also make a limited amount of land loans that will be used for residential or commercial development. Land loans also include loans secured by land purchased for investment purposes.
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While we may originate loans to builders, whether or not the collateral property underlying the loan is under contract for sale, we consider each project carefully in light of current residential real estate market conditions.
Historically, most of our construction loans for residential properties are to well-known builders in our market area for which there is no contract for sale for the underlying completed home at the time of origination. We refer to these loans as speculative construction loans, and we expect this concentration of speculative residential construction lending to continue to be an important component of our construction and land development loans in the future. We actively monitor the number of unsold homes in our construction loan portfolio and local housing markets to attempt to maintain an appropriate balance between home sales and new loan originations. We generally will limit the maximum number of speculative units (units that are not pre-sold) approved for each builder, typically starting with five speculative loans per builder until we develop a relationship and track record with the builder.
Our construction loans are fixed- and adjustable-rate, interest-only loans that provide for the payment of interest during the construction phase, which is usually up to 24 months. At the end of the construction phase, the loan may convert to a permanent mortgage loan or may be paid in full. Depending on the complexity of the construction project, including potential supply chain issues, longer permitting and approval times, the term of an “interest-only” construction loan may be extended if circumstances warrant.
Construction loans are generally limited to 80% (75% for investment properties) loan-to-completed-appraised-value ratio upon completion of the project. Land development loans which are approved for development are limited to 75%, and not yet approved for development land loans, are limited to 65% as-is appraised value. Before making a commitment to fund a construction loan, we require an appraisal of the property by an independent licensed appraiser. We also generally require inspections of the property before disbursements of funds during the term of the construction loan.
At December 31, 2025, our 25 largest construction and land development loan relationships had an average balance of approximately $19.8 million, or approximately $494.7 million in the aggregate, representing 67.7% of our total construction and land development loans. Consistent with our internal policies, any borrowing relationship with aggregate exposure of greater than $90.0 million requires approval by the Board of Directors and at December 31, 2025 we had four such relationships in excess of $90.0 million, two of which included construction and land development loans. At December 31, 2025, each of the construction and land development loans underlying our 25 largest loan relationships was performing in accordance with its repayment terms.
Commercial and Industrial Loans. We offer a broad range of commercial and industrial loans, including lines of credit and terms loans, to a variety of commercial businesses and industrial borrowers. The loans are used to support working capital and general corporate needs.
Our commercial and industrial banking division is segmented into three core units: Small Business, Middle Market and Structured Finance. The Small Business division generally focuses on loans under Small Business Administration (“SBA”) programs of up to $5 million and non-SBA commercial business relationships with businesses who have annual revenues up to $10 million. SBA product offerings include SBA 7(a) Loans, SBA Express Lines of Credit, 504 Loans, and Massachusetts Capital Access Program.
Our Middle Market division generally focuses on relationships with businesses with revenues from $10 million to $50 million for a variety of operating businesses. We serve operating companies such as manufacturers, distributors, importers, exporters, medical practices, CPA firms, and law firms. The Middle Market division offers loans and lines of credit to fund general operations, expansion, sales growth, new product development, and working capital. Nearly all of these loans are to borrowers in our primary market area.
Our Structured Finance division generally focuses on relationships with businesses with greater than $50 million in annual revenues and which may contain unique attributes to certain industries. In recent years, most of these larger, structured commercial and industrial loans have been to customers in the cannabis or solar industries and bridge financing.
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These industries may be subject to heightened regulatory or business risks, and we believe our knowledge of the operating and cash flow structures of these industries, as well as the applicable regulatory considerations, enable us to offer competitive credit facility solutions to these customers while maintaining our prudent underwriting standards consistent with our Small Business and Middle Market lending divisions. Generally, our Structured Finance loans are collateralized by the borrower’s real estate or business assets.
We seek to partner with company owners, management teams, and private equity sponsors to provide customized debt facility and cash management solutions for business owners.
The Structured Finance division’s practices include sponsored and direct-to-company transactions, family-owned and privately held businesses, and, to a limited extent, publicly traded companies. We believe our Structured Finance division’s portfolio is well diversified with 115 commercial relationships at December 31, 2025.
Our Small Business and Middle Market commercial and industrial loans are generally secured by all business assets of the borrower, including but not limited to equipment, accounts receivable, inventory, specific project assets and contracts, and real estate. Across all three segments, loans are priced either by floating rate benchmarks plus applicable spreads, fixed-interest rates or floating rate fixed synthetically through interest rate swap derivative products. Terms generally range from three to 10 years.
We also offer lines of credit in amounts of up to 80% of the value of the eligible collateral securing the loan.
When making commercial and industrial loans, we consider the financial statements of the borrower, lending history with the borrower, the debt service capabilities and global cash flows of the borrower and other guarantors, the historical and projected cash flows of the business and the value of the business assets. Where applicable, we engage third-party specialists to assist in conducting diligence on any prospective borrower, and they may include, as warranted, industry-specific consultants, engineers, appraisers, and accountants.
The primary risk associated with commercial and industrial loans is the ability of borrowers to achieve business results consistent with those projected at origination. The vast majority of the loans are extended on a secured basis, with a limited number of unsecured lines of credit with additional covenants.
At December 31, 2025, we had commitments to fund $36.4 million of unsecured lines of credit with $428,000 outstanding. The security of any underlying loan is determined according to the credit profile of the customer on a case-by-case basis.
In managing our commercial and industrial loan portfolio, we focus on the size of the customer’s lending relationship, which we view as the aggregate amount of all loans and loan commitments outstanding to a commercial borrower and any related borrowers or guarantors.
At December 31, 2025, approximately 96.4% of our Small Business and 91.3% of our Middle Market commercial and industrial loan exposure was to customers headquartered within our primary market area, which is the Greater Boston metropolitan area and surrounding communities, including eastern Connecticut, southern New Hampshire and Rhode Island. On occasion, we will make these types of loans outside of the primary market but generally only to customers with whom we have a pre-existing relationship.
As part of the Provident Acquisition, the Company obtained an enterprise value loan portfolio that is included in commercial and industrial loans. As of December 31, 2025, enterprise value loans, which we also refer to as business acquisition, search fund lending, merger and acquisition, re-capitalization, and shareholder/partner buyout loans, totaled $184.9 million, or 3.1% of our total loan portfolio, with relationships spanning 20 states. We originate these loans to small- and medium-size businesses in a senior secured position, relying largely on the enterprise value of the business and ongoing cash flow to support operational and debt service requirements. These are generally fully amortizing term loans (up to seven years) with material levels of equity and/or combination of seller financing behind our senior secured lending. All of these loans are secured by the enterprise value of the respective businesses, including all related business assets.
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Enterprise value loans may expose us to a greater risk of non-payment and loss than traditional commercial business loans because: (1) repayment of such loans may be dependent upon the successful execution of the borrower’s business plan, which may include new management and be based on projected cash flows that may include business synergies, cost savings, and revenue growth that have yet to be realized; (2) they may require additional financing from their private equity sponsors or others, a successful sale to a third party, a public offering, or some other form of liquidity event; or (3) in the event of default and liquidation, there may be reliance on the sale of intangible assets that may have insufficient value to repay the debt in full.
Because of the unique business characteristics of the cannabis and solar industries and bridge financing, which comprise most of our Structured Finance loans, many of these loans are to customers which have operations both within and outside of our primary market area.
The vast majority of the relationships in the commercial and industrial segment also have cash management and treasury service product offerings tied to the relationships. These products include specific online banking tools, ACH products, wire capabilities, fraud prevention tools and other customized set-up that help the underlying business securely manage the business’ cash. Generally, these products provide for additional fee income, along with enhanced risk management, to the Company and are managed within the commercial and industrial business unit of the Bank.
Consistent with our internal policies, any borrowing relationship with aggregate exposure of greater than $90.0 million requires approval by the Board of Directors and at December 31, 2025 we had four such relationships in excess of $90.0 million, two of which included commercial and industrial loans. At December 31, 2024, each of the commercial and industrial loans underlying our 25 largest loan relationships was performing in accordance with its repayment terms. At December 31, 2025, each of the commercial and industrial loans underlying our 25 largest relationships was performing in accordance with its repayment terms excluding one commercial and industrial loan that was 30 days past due and has a remaining outstanding loan balance of $70.0 million as of December 31, 2025. The total relationship balance was $70.6 million, or 7.0%, of total commercial and industrial loans as of December 31, 2025.
Mortgage Warehouse Loans. Our mortgage warehouse lending business has a national platform with relationship managers across the United States that offers Facilities to independent non-bank mortgage origination companies, which allow them to fund the closing of residential mortgage loans. Each Facility advance is fully collateralized by a security interest in one-to-four-family residential mortgage loans and is further enhanced by deposit balances. The primary source of repayment of the Facilities is the sale of the underlying mortgage loans to outside investors, which typically occurs within 15 days, with the exception of construction loans which generally take longer to pay off due to the nature of the loan. These investors can include Federal National Mortgage Association/Federal Home Loan Mortgage Corporation and Government National Mortgage Association, as well as other large financial institutions.
We approve Facilities to non-bank mortgage origination borrowers by conducting a thorough due diligence review of the company and its ownership to assess their financial liquidity and regulatory risk profiles. We use a proprietary risk-based scoring model to underwrite the companies which correlates to our internal regulatory loan risk grading system and continually monitor companies’ performance through both internal and external financial management and quality reviews. At December 31, 2025, mortgage warehouse loans were $280.9 million, or 4.7% of our total loan portfolio.
Consumer Lending. We offer a variety of consumer loans primarily to individuals who reside or work in our primary lending area, including loans that are secured by deposit accounts, as well as a limited number of unsecured loans, including student loans, home improvement loans and credit cards loans. In recent years we have purchased a variety of consumer loan portfolios from third-party originators subject to our underwriting procedures. Consumer loans decreased $41.1 million, or 16.8% to $203.5 million, or 3.4%, of totals loans at December 31, 2025 from $244.6 million, or 5.6%, of total loans at December 31, 2024, as a result of a $67.0 million transfer of loans to held for sale, which is set to close in the first quarter of 2026. When excluding the transfer, consumer loans would have increased $25.4 million, or 10.4% from December 31, 2024 to December 31, 2025 due to the purchase of portfolios of auto, recreational vehicle and boat loans.
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Subject to market conditions, we intend to continue to modestly grow our consumer loan portfolio through purchases and originations. The growth in this portfolio has come largely through partnerships with established third-party originators.
Consumer loans generally have shorter terms to maturity, which reduces our exposure to changes in interest rates. In addition, management believes that offering consumer loan products helps to expand and create stronger ties to our existing customer base by increasing the number of customer relationships and providing cross-marketing opportunities.
Originations, Sales and Purchases of Loans
Our loan originations are generated by our banking personnel operating at our banking offices and mortgage brokers.
Additionally, in recent years, we have purchased a variety of consumer loans. We also obtain referrals from existing and former customers and from accountants, real estate brokers, builders and attorneys. All loans we originate are underwritten pursuant to our policies and procedures which incorporate Fannie Mae underwriting guidelines, to the extent applicable, for residential loans.
While we originate both fixed-rate and adjustable-rate loans, our ability to generate each type of loan depends upon relative borrower demand and the pricing levels as set in the local marketplace by competing banks, thrifts, credit unions, financial technology companies and mortgage banking companies. Our volume of real estate loan originations is influenced significantly by market interest rates, and, accordingly, the volume of our real estate loan originations can vary from period to period.
Consistent with our interest rate risk strategy, we originate and sell a portion of the long-term, fixed-rate, one- to-four-family residential real estate loans on a servicing-retained, limited or no recourse basis, while generally retaining shorter-term fixed-rate and all adjustable-rate one-to-four-family residential real estate loans in order to manage the duration and repricing of our loan portfolio. We consider our balance sheet as well as market conditions on an ongoing basis in making decisions as to whether to hold loans we originate for investment or to sell such loans to investors, choosing the strategy that is most advantageous to us from a profitability and risk management standpoint.
Historically, we have also engaged in loan participations sales, with the Bank as the lead, for certain larger CRE and commercial and industrial loans and have, on a limited basis, purchased participation loans from well-established financial institutions in our market area. Participation loans are periodically reported to the Board of Directors. In recent years we have also purchased a variety of consumer loan portfolios and expect to continue to purchase consumer loans from several established third-party originators. At December 31, 2025, our highest combined participation loans with one bank was approximately 14.7% of total capital and was comprised of four CRE loans, two construction and land development loans, one multifamily loan and one commercial and industrial loan.
Loan Approval Procedures, Loans to One Borrower Limit and Lending Authority
The maximum amount that we may lend to one borrower and the borrower’s related entities is generally limited, by statute, to 20% of the Bank’s capital, which is defined under Massachusetts law as the sum of our surplus account, undivided profits and capital stock. Loans secured by a first mortgage on residential property occupied by the borrower are excluded from this limit. At December 31, 2025, our regulatory limit on loans-to-one borrower was $158.3 million.
At December 31, 2025, our general internal limit on an aggregate loan relationship-to-one borrower (and related entities) was $90.0 million. Most of our largest loan relationships are to borrowers who have multiple loans with the Bank and are CRE, commercial and industrial and construction and land development loans. Aggregate exposure limits can be increased above our internal limit up to the legal lending limit on an exception basis with the approval of the Credit Committee and the Board of Directors, and at December 31, 2025, we had four relationships in excess of $90.0 million which were secured by CRE, commercial and industrial and construction and land development loans.
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Each of these relationships was approved by the Board of Directors and at December 31, 2025 each of the loans underlying these relationships was performing in accordance with their prepayment terms.
Our lending is subject to written underwriting standards and origination procedures. Decisions on loans are made consistent with our loan policies and procedures, and the underwriting and review of a loan decision is designed primarily to determine the borrower’s ability to repay the requested loan. The Board of Directors has overall responsibility for our lending policy and reviews this policy at least annually.
The Board of Directors has delegated loan approval authority to certain officers up to prescribed limits, depending on the officer’s experience, the type of loan and whether the loan is secured or unsecured. Loans for residential real estate of greater than $2.5 million require approval by the Credit Committee, which consists of the Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), Chief Operating Officer (“COO”), Chief Credit Officer (“CCO”), SVP – Managed Assets Group Leader and managers of the Bank’s lending departments. Commercial loan relationships with total loan exposure of greater than $3.0 million up to our internal loans-to-one relationship limitation require approval by the Credit Committee. All commercial loan relationships under $5.0 million are approved by the CCO (or designated signer), and all commercial loan relationships with total loan exposure of greater than $5.0 million are approved by the Credit Committee. Loan policy exceptions are fully disclosed to the approving authority, either an individual officer or the appropriate management or Credit Committee prior to approval. Reporting on Policy exceptions are included within the Board of Directors reporting package.
Generally, we require title insurance on our mortgage loans as well as fire and extended coverage casualty insurance in amounts at least equal to the principal amount of the loan or the value of improvements on the property, depending on the type of loan. We also require flood insurance if the improved property is determined to be in a flood zone.
Delinquencies and Non-Performing Assets
Delinquency Procedures. When a borrower fails to make required payments on a loan, we take a number of steps to induce the borrower to cure the delinquency and restore the loan to current status. We generally send a written notice of non-payment to the borrower 15, 30, 60 and 90 days after a loan is first past due. Additionally, we will try to contact the borrower by telephone after the 15th day after the due date.
All loans past due 90 days are put on non-accrual and reported to the Board of Directors monthly. Generally, when a loan becomes 90 days past due, the loan is transferred to our Managed Asset division, which attempts to determine underlying issues and develop a repayment plan with the borrower. If workout efforts are unsuccessful, the loan may be turned over to our attorneys to ensure that further collection activities are conducted in accordance with applicable laws and regulations. If our attorneys do not receive a response from the borrower, or if the terms of any payment plan established are not followed, then foreclosure proceedings may be initiated on loans secured by real estate. Management submits a delinquent loan report detailing loans 30 days or more past due to the Board of Directors on a monthly basis.
When we acquire real estate as a result of foreclosure or by deed in lieu of foreclosure, the real estate is classified as other real estate owned (“OREO”) until it is sold.
The OREO is recorded at estimated fair value at the date of acquisition less estimated costs to sell, and any write-down resulting from the acquisition is charged to the ACL on loans. Estimated fair value is based on an appraisal typically obtained before the foreclosure process is completed. Subsequent decreases in the value of the OREO property are charged to operations. After acquisition, all costs incurred in maintaining the OREO property are expensed. Costs relating to the development and improvement of the OREO property, however, are capitalized to the extent of estimated fair value less estimated costs to sell.
In the course of resolving delinquent loans, we may choose to restructure the contractual terms of certain loans. We attempt to work-out alternative payment schedules with the borrowers in order to avoid foreclosure actions.
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We adopted FASB Accounting Standards Update (“ASU”) 2022-02 on January 1, 2023, which eliminated troubled-debt restructuring accounting.
Subsequent to our adoption of ASU 2022-02, we apply the loan refinancing and restructuring guidance codified in paragraphs 310-20-35-9 through 35-11 of the Accounting Standards Codification (“ASC”) to determine whether a modification results in a new loan or a continuation of an existing loan.ASU 2022-02 requires disclosure of loan modifications to borrowers experiencing financial difficulty.
The following tables present the period end amortized cost basis of loans modified to borrowers experiencing financial difficulty during the periods indicated, disaggregated by class of financing receivable, type of modification granted and the financial effect of the modifications:
For the Year Ended December 31, 2025
Amortized % of Total Class of
Cost Basis Financing Receivable Financial Effect
(In thousands)
Interest rate reduction
Total $ 36,765
For the Year Ended December 31, 2024
Amortized % of Total Class of
Cost Basis Financing Receivable Financial Effect
(In thousands)
Term extension and interest rate increase
Total $ 6,200
If a loan is on non-accrual at the time of restructuring, interest income is accrued after the borrower demonstrates the ability to pay under the restructured terms through a sustained period of repayment performance, which is generally six consecutive months.
Delinquent Loans. The following table sets forth our loan delinquencies by type and amount at the dates indicated.
Days Days More Past Due Days Days More Past Due
Past Due Past Due Still Accruing Past Due Past Due Still Accruing
(in thousands)
Real estate loans:
One-to-four-family residential $ 7,232 $ 481 $ — $ 2,363 $ 736 $ —
Commercial real estate 80 — — 5,325 — —
Multi-family residential — — — 307 — —
Construction and land development — — — 364 — —
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Non-Performing Assets. The following table sets forth information regarding our non-performing assets as of December 31, 2025 and 2024. We had no loans 90 days or more delinquent and still accruing interest as of the dates presented.
(Dollars in thousands)
Real estate loans:
One to four-family residential $ 2,712 $ 2,930
Commercial real estate 855 3,005
Construction and land development 10 10
Commercial and industrial 36,251 4,558
Total non-accrual loans to total loans 0.72% 0.32%
Total non-performing loans to total loans 0.72% 0.32%
Total non-performing assets to total assets 0.62% 0.27%
Classified Assets. Federal regulations provide that each insured depository institution classify its assets on a regular basis. In addition, in connection with examination of insured depository institutions, federal and Massachusetts banking regulators have authority to identify problem assets and, if appropriate, classify them.
There are three classifications for problem assets: “substandard,” “doubtful” or “loss.”
An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific allowance is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as “special mention” by our management. When an insured depository institution classifies problem assets as either substandard or doubtful, it may establish specific or general allowances in an amount deemed prudent by management to cover probable losses. General allowances represent loss allowances which have been established to cover probable losses associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When an insured depository institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. An institution’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory agencies, which may require the establishment of additional general or specific allowances.
In connection with the filing of our quarterly reports with the Federal Reserve Board and in accordance with our classification of assets policy, we regularly review the problem loans in our portfolio to determine whether any loans require classification in accordance with applicable regulations.
On the basis of this review of our assets, our classified and special mention assets at December 31 were as follows:
(in thousands)
Doubtful loans 115 10
Loss loans — —
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Other Loans of Concern. There were no other loans at December 31, 2025 that are not already disclosed where there is information about possible credit problems of borrowers that caused management to have serious doubts about the ability of the borrowers to comply with present loan repayment terms and that may result in disclosure of such loans in the future.
Allowance for Credit Losses. The ACL represents management’s best estimate of credit losses over the remaining life of the loan portfolio. Loans are charged-off against the ACL when management believes the loan balance is no longer collectible. This determination is based on management's review of specific facts and circumstances of an individual loan, including the expected cash flows to repay the loan, the value of the collateral and the ability and willingness of any guarantors to perform. Subsequent recoveries of previously charged-off amounts are recorded as increases to the ACL.
The provision for credit losses on loans is an amount sufficient to bring the ACL to an estimated balance that management considers adequate to absorb lifetime expected losses in the Company’s held-for-investment loan portfolio. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.
Management’s determination of the adequacy of the ACL under FASB ASC 326 – Financial Instruments – Credit Losses is based on an evaluation of the composition of the loan portfolio, current economic conditions, historical loan loss experience, reasonable and supportable forecasts, and other risk factors.
The Company uses a third-party Current Expected Credit Loss (“CECL”) model as part of its estimation of the ACL on a quarterly basis. Loans with similar risk characteristics are collectively assessed within pools (or segments). Loss estimates within the collectively assessed population are based on a combination of pooled assumptions and loan-level characteristics. The Company has determined that using federal call codes is an appropriate loan segmentation methodology, as it is generally based on risk characteristics of a loan’s underlying collateral. Using federal call codes also allows the Company to utilize and assess publicly available external information when developing its estimate of the ACL.
The weighted average remaining maturity (“WARM”) method is the primary credit loss estimation methodology used by the Company and involves estimating future cash flows and expected credit losses for pools of loans using their expected remaining weighted average life. In applying future economic forecasts, the Company utilizes a forecast period of up to two years. Historical loss rates used in the quantitative model are primarily derived using both the Bank’s data, supplemented with peer bank data obtained from publicly available sources. Management also considers qualitative adjustments when estimating credit losses in consideration of the model’s quantitative limitations.
Qualitative adjustments to quantitative loss factors, either negative or positive, may include considerations of economic conditions, volume and severity of past due loans, value of underlying collateral, experience, depth, and ability of management, and concentrations of credit.
During the year ended December 31, 2025, as part of management’s annual analysis of prepayment speeds, the historical prepayment speed analysis of the purchased consumer loans portfolio used in the ACL calculation was enhanced, transitioning from a lifetime analysis to a month-over-month analysis. The resulting Other Consumer loans prepayment speed forecast dropped from 16.8% to 10.1% and resulted in a $1.3 million increase in the quantitative value of the Other Consumer Loans ACL.
For those loans that do not share similar risk characteristics, the Company estimates the ACL on an individual (or loan-by-loan) basis. This population of individually evaluated loans (or loan relationships with the same primary source of repayment) is determined on a quarterly basis and consists of: loans with a risk rating of substandard or worse and a balance exceeding $500,000, or loan terms differing significantly from other pooled loans. In accordance with the Company’s policy, non-accrual residential real estate loans that are below $500,000 and well secured (loan-to-value <60%) are excluded from being individually evaluated.
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Measurement of credit loss is based on the expected future cash flows of an individually evaluated loan, discounted at the loan’s effective interest rate or measured on an observable market value, if one exists, or the estimated market value of the collateral underlying the loan, discounted to consider estimated costs to sell the collateral for collateral-dependent loans. If the net value is less than the loan’s amortized cost, a specific reserve in the ACL is recorded, which is charged-off in the period when management believes the loan balance is no longer collectible.
In the ordinary course of business, the Company enters into commitments to extend credit. Such financial instruments are recorded in the consolidated financial statements when they are funded. The credit risk associated with these commitments is evaluated in a manner similar to the ACL on loans. The reserve for unfunded commitments is included in accrued expenses and other liabilities on the consolidated balance sheets.
For the years ended December 31, 2025 and 2024, we recorded a provision for credit losses of $4.7 million and $14.9 million and a release of credit losses of $24,000 and $2.8 million for off-balance sheet commitments, respectively, both of which are included in the provision for credit losses in the consolidated statements of income.
Our ACL on loans was $87.4 million as of December 31, 2025 compared to $38.7 million at December 31, 2024.
The ratio of our ACL on loans to total loans was 1.46% at December 31, 2025 and 0.89% at December 31, 2024, while the ACL on loans to non-performing loans was 201% at December 31, 2025 compared to 280% at December 31, 2024. The Company had net charge-offs of $6.3 million, $8.4 million and $3.6 million during the years ended December 31, 2025, 2024 and 2023, respectively. The decrease in net charge offs during the year ended December 31, 2025 was primarily driven by a $1.6 million increase in recoveries.
Additions to the ACL on loans are provided by charges against income based on various factors, which, in our judgment, deserve current recognition in estimating probable losses. Credit losses are charged-off in the period the loans, or portion thereof, are deemed uncollectible. Generally, the Company will record a loan charge-off (including a partial charge-off) to reduce a loan to the estimated fair value of the underlying collateral, less cost to sell, for collateral dependent loans. We regularly review the loan portfolio in order to maintain the ACL in accordance with U.S. GAAP.
Purchased credit deteriorated (“PCD”) loans are loans that we acquired that have shown evidence of deterioration of credit quality since origination and, therefore, it was deemed unlikely that all contractually required payments would be collected upon the merger date. We consider factors such as payment history, collateral values and accrual status when determining whether there was evidence of deterioration at the merger date. As of December 31, 2025,the carrying amount of PCD loans was $81.1 million, all of which were part of the Provident Acquisition.
In November 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-08, Financial Instruments – Credit Losses (Topic 326): Purchased Loans, which amended the presentation requirements for loans acquired in a business combination that are accounted for under the credit loss standard in ASC 326. Loans acquired in a business combination that are accounted for as PCD assets are presented on the consolidated balance sheet at their amortized cost basis gross of the related allowance for credit losses (“ACL”).The ACL established at acquisition is presented separately as a valuation allowance.The same gross presentation model applies to certain Purchased Seasoned Loans (“PSL”), where applicable.
As an integral part of their examination process, the Commissioner and the Federal Reserve Board will periodically review our ACL on loans, and as a result of such reviews, we may determine to adjust our ACL on loans. However, regulatory agencies are not directly involved in the process for establishing the ACL on loans as the process is our responsibility and any increase or decrease in the ACL on loans is the responsibility of management. The Troubled Asset Resolution Committee reviews and approves the CECL calculation quarterly, including management’s support for qualitative factors used in developing the Company’s ACL on loans.
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The following table sets forth activity in our ACL on loans for the periods indicated:
For the year ended December 31,
(Dollars in thousands)
Adjustment to allowance for adoption of ASU 2016-13 — — 1,159
Adjustment to allowance for Provident acquisition 50,271 — —
Charge-offs:
One-to-Four-Family Residential — — (379)
Commercial real estate (18) (4,000) —
Commercial and Industrial (3,762) (391) (679)
Recoveries of loans previously charged off:
Commercial real estate 922 — —
Commercial and Industrial 598 262 48
Allowance to non-performing loans 201% 280% 298%
The following table sets forth additional information with respect to charge-offs by category for the periods indicated:
For the year ended December 31,
One-to Four-Family Residential 0.00% 0.00% (0.04%)
Commercial Real Estate (0.00%) (0.23%) 0.00%
Commercial and Industrial (0.56%) (0.07%) (0.16%)
Allocation of ACL on Loans. The following table sets forth the ACL on loans allocated by loan category and the percent of the ACL on loans in each category to the total allocated ACL on loans at the dates indicated.
The ACL on loans allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the ACL on loans to absorb losses in other categories.
At December 31,
ACL in Loans in Each ACL in Loans in Each
(Dollars in thousands)
Mortgage Warehouse 225 0.26 % 4.69 % — — % — %
Unallocated allowance for credit losses — —
Total allowance for credit losses $ 87,411 $ 38,744
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Investment Activities
General. Our investment policy is established by the Board of Directors. The objectives of the investment policy are to: (i) provide and maintain liquidity within the guidelines of the Massachusetts banking laws and regulations for loan demand and deposit fluctuations, and to allow us to alter our liquidity position to meet both day-to-day and long-term changes in assets and liabilities; (ii) manage interest rate risk in accordance with our interest rate risk policy; (iii) provide collateral for pledging requirements; (iv) maximize return on our investments; and (v) maintain a balance of high-quality, diversified investments to minimize risk.
Our investment policy is reviewed annually by the Board of Directors and all policy changes recommended by management must be approved by the Board of Directors. Authority to make investments under the approved guidelines are delegated to appropriate officers. The execution of specific actions with respect to securities held by the Company rests with management within the scope of the established investment policy.
We have legal authority to invest in various types of liquid assets, including U.S. Treasury obligations, securities of various government-sponsored enterprises and municipal governments, deposits at the FHLB, certificates of deposit of federally insured institutions, investment grade corporate bonds and investment grade marketable equity securities. We also are required to maintain an investment in FHLB and FRB stock. While we have the authority under applicable law to invest in derivative securities, we have not purchased derivative securities as an investment strategy.
At December 31, 2025 we had $269.0 million of securities, representing 3.8% of total assets, compared to $228.2 million and 4.4% of total assets, at December 31, 2024. Our securities portfolio consisted primarily of U.S. Treasury and federal agency securities, government-sponsored residential mortgage-backed securities (which includes collateralized mortgage obligations) corporate bonds, SBA securities and municipal bonds.
At the time of purchase, we designate a security as held-to-maturity, AFS, or trading, depending on our intent. Securities available-for-sale or trading are reported at fair value, while securities held-to-maturity are reported at amortized cost. Consistent with our overall business and asset/liability management plan, which focuses on sustaining adequate levels of core earnings, the base premise of our investment portfolio is that all securities purchased will be suitable to be held-to-maturity. However, at December 31, 2025 and 2024, we had no securities which we designated as held-to-maturity.
Some of our securities are callable by the issuer. Although these securities may have a yield somewhat higher than the yield of similar securities without such features, these securities are subject to the risk that they may be redeemed by the issuer prior to maturing in the event general interest rates decline. The Company measures expected credit losses on AFS securities based upon the unrealized gain or loss position of the security.
For AFS debt securities in an unrealized loss position, the Company evaluates qualitative criteria to determine any expected loss unless the Company intends to sell, or it is more likely than not that the Company will be required to sell before recovery of the amortized cost. In the latter two circumstances, the Company recognizes the entire difference between the security’s amortized cost basis and its fair value as a write-down of the investment balance with a charge to earnings. Otherwise, management’s analysis considers various factors, which include the extent to which fair value is less than amortized cost, performance on any underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specifically related to the security.
At December 31, 2025, our corporate bond portfolio consisted of investment grade securities with maturities generally shorter than 10 years. Our investment policy provides that we may invest within the three highest investment-grade ratings from Standard & Poor’s or Moody’s. The maturity of these bonds generally may not exceed 10 years unless approved by the Board of Directors. Bonds that subsequently experience a decline in credit rating below investment grade are monitored at least quarterly.