# Western New England Bancorp (WNEB) 10-Q SEC filing - Q1 FY2026

- Filed: May 8, 2026, 4:17 PM EDT
- Fiscal quarter: Q1 FY2026
- Calendar quarter: Q1 2026
- Accession: 0001999371-26-010347
- OpenCapital page: https://www.opencapital.sh/filings/0001999371-26-010347
- Markdown URL: https://www.opencapital.sh/filings/0001999371-26-010347.md
- Official SEC filing index: https://www.sec.gov/Archives/edgar/data/1157647/000199937126010347/0001999371-26-010347-index.htm

## Filing documents

- [10-Q (wneb-10q_03312026.htm)](https://www.sec.gov/Archives/edgar/data/1157647/000199937126010347/wneb-10q_03312026.htm)

---

## 10-Q

SEC source: [wneb-10q_03312026.htm](https://www.sec.gov/Archives/edgar/data/1157647/000199937126010347/wneb-10q_03312026.htm)

**UNITED STATES**

**SECURITIES AND
EXCHANGE COMMISSION**

**Washington, D.C.
20549**

**FORM 10-Q**

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly
period ended March 31, 2026

or

**☐** TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________
to ___________

Commission File Number: 001-16767

**Western New England
Bancorp, Inc.**

(Exact name of registrant as specified in its charter)

**Massachusetts** **73-1627673**

(State or other jurisdiction of incorporation or **organization)** (IRS Employer Identification Number)

| 141 Elm Street, Westfield, Massachusetts | 01086 |
| --- | --- |
| (Address of principal executive offices) | (Zip Code) |

**(413) 568-1911**

(Registrant’s telephone number, including
area code)

(Former name, former address and former fiscal
year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

**Common Stock, $0.01 par value per share** **WNEB** **NASDAQ**

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, a 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ 

At May 3, 2026 the registrant had 20,125,203 shares of common stock, $0.01 par value, issued and outstanding.

**TABLE OF CONTENTS**

**Page**

| [FORWARD-LOOKING STATEMENTS](#wneb10qa001) |  | i |
| --- | --- | --- |
| [PART I – FINANCIAL INFORMATION](#wneb10qa002) |  |  |
| [Item 1.](#wneb10qa003) | [Financial Statements of Western New England Bancorp, Inc. and Subsidiaries (Unaudited)](#wneb10qa003) |  |
|  | [Consolidated Balance Sheets – March 31, 2026 and December 31, 2025](#wneb10qa004) | 1 |
|  | [Consolidated Statements of Net Income – Three Months Ended March 31, 2026 and 2025](#wneb10qa005) | 2 |
|  | [Consolidated Statements of Comprehensive Income (Loss) – Three Months Ended March 31, 2026 and 2025](#wneb10qa006) | 3 |
|  | [Consolidated Statements of Changes in Shareholders’ Equity – Three Months Ended March 31, 2026 and 2025](#wneb10qa007) | 4 |
|  | [Consolidated Statements of Cash Flows – Three Months Ended March 31, 2026 and 2025](#wneb10qa008) | 5 |
|  | [Notes to Consolidated Financial Statements](#wneb10qa009) | 6 |
| [Item 2.](#wneb10qa010) | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#wneb10qa010) | 39 |
| [Item 3.](#wneb10qa011) | [Quantitative and Qualitative Disclosures About Market Risk](#wneb10qa011) | 56 |
| [Item 4.](#wneb10qa012) | [Controls and Procedures](#wneb10qa012) | 57 |
| [PART II – OTHER INFORMATION](#wneb10qa013) |  |  |
| [Item 1.](#wneb10qa014) | [Legal Proceedings](#wneb10qa014) | 57 |
| [Item 1A.](#wneb10qa015) | [Risk Factors](#wneb10qa015) | 57 |
| [Item 2.](#wneb10qa016) | [Unregistered Sales of Equity Securities and Use of Proceeds](#wneb10qa016) | 57 |
| [Item 3.](#wneb10qa017) | [Defaults upon Senior Securities](#wneb10qa017) | 58 |
| [Item 4.](#wneb10qa018) | [Mine Safety Disclosures](#wneb10qa018) | 58 |
| [Item 5.](#wneb10qa019) | [Other Information](#wneb10qa019) | 58 |
| [Item 6.](#wneb10qa020) | [Exhibits](#wneb10qa020) | 58 |

**FORWARD–LOOKING
STATEMENTS**

We may, from time to time, make
written or oral “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with
respect to Western New England Bancorp, Inc.’s (the “Company”) financial condition, liquidity, results of operations,
future performance, and business. Forward-looking statements may be identified by the use of such words as “believe,”
“expect,” “anticipate,” “should,” “planned,” “estimated,” and “potential.”
Examples of forward-looking statements include, but are not limited to, estimates with respect to our financial condition, results of
operations and business that are subject to various factors which could cause actual results to differ materially from these estimates.
These factors include, but are not limited to:

- unpredictable changes in general economic or political conditions, financial markets, fiscal, monetary and regulatory policies, including actual or potential stress in the banking industry;
- the possibility that future credit losses, loan defaults and charge-off rates are higher than expected due to changes in economic assumptions or adverse economic developments;
- general business and economic conditions on a national basis and in the local markets in which we operate, including those impacting credit quality;
- unstable political and economic conditions, including changes in tariff policies, which could materially impact credit quality trends and the ability to generate loans and gather deposits;
- inflation and governmental responses to inflation, including potential future increases in interest rates that reduce net interest margins;
- the effect on our operations of governmental legislation and regulation, including changes in accounting regulation or standards, the nature and timing of the adoption and effectiveness of new requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Basel guidelines, capital requirements and other applicable laws and regulations;
- changes in regulation, regulatory policy, legislation, accounting standards and practices, and fiscal monetary policy, particularly in light of the shift in presidential administrations and the potential for related shifts in agency policy and leadership;
- operational risks or risk management failures by us or critical third parties, including without limitation with respect to data processing, information systems, cybersecurity incidents, technological integration, including AI, vendor issues, business interruption, and fraud risks;
- significant changes in accounting, tax or regulatory practices or requirements;
- new legal obligations or liabilities or unfavorable resolutions or litigation;
- disruptive technologies in payment systems and other services traditionally provided by financial institutions;
- severe weather, natural disasters, pandemics, acts of war, or terrorism and other external events which could significantly impact our business;
- declines in real estate values in the Company’s market area, which may adversely affect our loan production;
- decreases in the value of securities and other assets, or changes in the securities markets which affect investment management revenue;
- decreases in deposit levels necessitating increased borrowing to fund loans, investments and other needs;
- competitive pressures from other financial institutions;
- the soundness of other financial services institutions which may adversely affect our credit risk;
- failure or circumvention of our internal controls or procedures;
- the risk that goodwill and intangibles recorded in our financial statements will become impaired;
- the risk that we may not be successful in the implementation of our business strategy;
- increases in Federal Deposit Insurance Corporation deposit insurance premiums and assessments;
- introduction of new lines of business or new products and services, which may subject us to additional risks;
- changes in key management personnel which may adversely impact our operations; and
- other risks and uncertainties detailed in Part 1A “Risk Factors” of the Company’s 2025 Annual Report on Form 10-K.

Investors should consider these risks, uncertainties,
and other factors in addition to the factors under the heading “Risk Factors” included in this filing and our other filings
with the SEC.

Although
we believe that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from
the results discussed in these forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. We do not undertake any obligation to republish revised forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except to the extent required by law.

i

PART I – FINANCIAL
INFORMATION

## Item 1. Financial Statements of Western New England Bancorp, Inc. and Subsidiaries (Unaudited) ITEM 1: FINANCIAL STATEMENTS.

**WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS - UNAUDITED**

(Dollars in thousands, except per share data)

| Line item | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| ASSETS |  |  |
| Cash and due from banks | $22,158 | $19,890 |
| Federal funds sold | 3,853 | 2,236 |
| Interest-bearing deposits and other short-term investments | 30,126 | 18,255 |
| Total cash and cash equivalents | 56,137 | 40,381 |
| Securities available-for-sale, at fair value (Amortized cost of $196,228 at March 31, 2026 and $198,194 at December 31, 2025) | 173,215 | 175,800 |
| Securities held-to-maturity, at amortized cost (Fair value of $154,815 at March 31, 2026 and $158,504 at December 31, 2025) | 185,392 | 188,800 |
| Marketable equity securities, at fair value | 610 | 632 |
| Total investment securities | 359,217 | 365,232 |
| Federal Home Loan Bank stock and other restricted stock, at amortized cost | 5,736 | 5,359 |
| Total Loans | 2,200,956 | 2,183,592 |
| Less: Allowance for credit losses | (20,451) | (20,297) |
| Net loans | 2,180,505 | 2,163,295 |
| Premises and equipment, net | 23,583 | 23,345 |
| Accrued interest receivable | 8,931 | 8,783 |
| Bank-owned life insurance | 77,679 | 79,019 |
| Deferred tax asset, net | 12,877 | 12,716 |
| Goodwill | 12,487 | 12,487 |
| Core deposit intangible | 969 | 1,063 |
| Other assets | 26,416 | 24,800 |
| TOTAL ASSETS | $2,764,537 | $2,736,480 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |
| Deposits: |  |  |
| Non-interest-bearing deposits | $597,738 | $594,516 |
| Interest-bearing deposits | 1,784,054 | 1,766,392 |
| Total deposits | 2,381,792 | 2,360,908 |
| Borrowings: |  |  |
| Short-term borrowings | 23,810 | 13,270 |
| Long-term debt | 73,000 | 73,000 |
| Subordinated debt | 19,800 | 19,790 |
| Total borrowings | 116,610 | 106,060 |
| Securities pending settlement | — | 242 |
| Other liabilities | 18,039 | 21,633 |
| TOTAL LIABILITIES | 2,516,441 | 2,488,843 |
| SHAREHOLDERS’ EQUITY: |  |  |
| Preferred stock - $0.01 par value, 5,000,000 shares authorized, none outstanding at March 31, 2026 and December 31, 2025 | — | — |
| Common stock - $0.01 par value, 75,000,000 shares authorized, 20,240,872 shares issued and outstanding at March 31, 2026; 20,372,786 shares issued and outstanding at December 31, 2025 | 202 | 204 |
| Additional paid-in capital | 113,049 | 114,515 |
| Unearned compensation – Employee Stock Ownership Plan (“ESOP”) | (1,334) | (1,443) |
| Unearned compensation - Equity Incentive Plan | (2,352) | (1,224) |
| Retained earnings | 155,706 | 152,302 |
| Accumulated other comprehensive loss, net of tax | (17,175) | (16,717) |
| TOTAL SHAREHOLDERS’ EQUITY | 248,096 | 247,637 |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $2,764,537 | $2,736,480 |

 See accompanying notes to unaudited consolidated financial statements.

1

**WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES**

### CONSOLIDATED STATEMENTS OF NET INCOME – UNAUDITED

_(Dollars in thousands)_

| Line item | Three Months / Ended March 31, 2026 | Three Months / Ended March 31, 2025 |
| --- | --- | --- |
| Interest and dividend income: |  |  |
| Commercial real estate loans | $13,640 | $12,807 |
| Residential real estate loans | 10,407 | 8,910 |
| Commercial and industrial loans | 3,333 | 3,192 |
| Consumer loans | 60 | 75 |
| Total interest income from loans | 27,440 | 24,984 |
| Investment securities, taxable | 2,498 | 2,421 |
| Marketable equity securities | 7 | 1 |
| Total interest and dividend income from investment securities | 2,505 | 2,422 |
| Other investments | 147 | 191 |
| Short-term investments | 189 | 840 |
| Total interest income from cash and cash equivalents | 336 | 1,031 |
| Total interest and dividend income | 30,281 | 28,437 |
| Interest expense: |  |  |
| Deposits | 9,978 | 11,376 |
| Short-term borrowings | 322 | 54 |
| Long-term debt | 902 | 1,219 |
| Subordinated debt | 254 | 254 |
| Total interest expense | 11,456 | 12,903 |
| Net interest and dividend income | 18,825 | 15,534 |
| Provision for credit losses | 75 | 142 |
| Net interest and dividend income after provision for credit losses | 18,750 | 15,392 |
| Non-interest income: |  |  |
| Service charges and fees | 2,131 | 2,023 |
| Wealth management income | 390 | 261 |
| Income from bank-owned life insurance | 476 | 473 |
| Gain on bank-owned life insurance death benefits | 449 | — |
| Net unrealized loss on marketable equity securities | (13) | (5) |
| Gain on mortgage banking activities | — | 7 |
| Total non-interest income | 3,433 | 2,759 |
| Non-interest expense: |  |  |
| Salaries and employee benefits | 9,229 | 8,413 |
| Occupancy | 1,562 | 1,412 |
| Furniture and equipment | 433 | 487 |
| Data processing | 821 | 882 |
| Software | 689 | 659 |
| Debit card and ATM processing expense | 663 | 577 |
| Professional fees | 509 | 546 |
| FDIC insurance assessment | 392 | 431 |
| Advertising | 442 | 429 |
| Other expenses | 1,268 | 1,348 |
| Total non-interest expense | 16,008 | 15,184 |
| Income before income taxes | 6,175 | 2,967 |
| Income tax provision | 1,398 | 664 |
| Net income | $4,777 | $2,303 |
| Earnings per common share: |  |  |
| Basic earnings per share | $0.24 | $0.11 |
| Weighted average basic shares outstanding | 19,996,682 | 20,385,481 |
| Diluted earnings per share | $0.24 | $0.11 |
| Weighted average diluted shares outstanding | 20,065,067 | 20,514,098 |
| Dividends per share | $0.07 | $0.07 |

See accompanying notes to unaudited consolidated financial statements.

2

**WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES**

### CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) – UNAUDITED

_(Dollars in thousands)_

| Line item | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Net income | $4,777 | $2,303 |
| Other comprehensive income (loss): |  |  |
| Securities available-for-sale: |  |  |
| Unrealized holding (loss) gain | (619) | 3,484 |
| Tax effect | 161 | (899) |
| Net-of-tax amount | (458) | 2,585 |
| Other comprehensive (loss) income | (458) | 2,585 |
| Comprehensive income | $4,319 | $4,888 |

See accompanying notes to
unaudited consolidated financial statements.

3

**WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - UNAUDITED**

**THREE MONTHS ENDED MARCH 31, 2026 AND 2025**

(Dollars
in thousands, except share data)

| Line item | Common Stock / Shares | Common Stock / Par Value | Additional Paid-in Capital | Unearned Compensation- ESOP | Unearned / Compensation- Equity Incentive Plan | Retained Earnings | Accumulated / Other Comprehensive Income (Loss) | Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| BALANCE AT DECEMBER 31, 2024 | $20,875,713 | $209 | $119,326 | $(1,906) | $(1,190) | $142,745 | $(23,274) | 235,910 |
| Net income | — | — | — | — | — | 2,303 | — | 2,303 |
| Comprehensive income | — | — | — | — | — | — | 2,585 | 2,585 |
| Common stock held by ESOP committed to be released (67,377 shares) | — | — | 39 | 116 | — | — | — | 155 |
| Share-based compensation - equity incentive plan | — | — | — | — | 145 | — | — | 145 |
| Forfeited equity incentive plan shares (22,176 shares) | — | — | (202) | — | 202 | — | — | — |
| Forfeited equity incentive plan shares reissued (24,560 shares) | — | — | 228 | — | (228) | — | — | — |
| Common stock repurchased | (217,218) | (2) | (1,981) | — | — | — | — | (1,983) |
| Issuance of common stock in connection with equity incentive plan | 115,824 | 1 | 1,076 | — | (1,077) | — | — | — |
| Cash dividends declared and paid on common stock ($0.07 per share) | — | — | — | — | — | (1,439) | — | (1,439) |
| BALANCE AT MARCH 31, 2025 | $20,774,319 | $208 | $118,486 | $(1,790) | $(2,148) | $143,609 | $(20,689) | 237,676 |
| BALANCE AT DECEMBER 31, 2025 | $20,372,786 | $204 | $114,515 | $(1,443) | $(1,224) | $152,302 | $(16,717) | 247,637 |
| Net income | — | — | — | — | — | 4,777 | — | 4,777 |
| Comprehensive loss | — | — | — | — | — | — | (458) | (458) |
| Common stock held by ESOP committed to be released (63,224 shares) | — | — | 99 | 109 | — | — | — | 208 |
| Share-based compensation - equity incentive plan | — | — | — | — | (187) | — | — | (187) |
| Forfeited equity incentive plan shares (54,754 shares) | — | — | (542) | — | 542 | — | — | — |
| Forfeited equity incentive plan shares reissued (64,710 shares) | — | — | 808 | — | (808) | — | — | — |
| Common stock repurchased | (186,000) | (3) | (2,505) | — | — | — | — | (2,508) |
| Issuance of common stock in connection with equity incentive plan | 54,086 | 1 | 674 | — | (675) | — | — | — |
| Cash dividends declared and paid on common stock ($0.07 per share) | — | — | — | — | — | (1,373) | — | (1,373) |
| BALANCE AT MARCH 31, 2026 | $20,240,872 | $202 | $113,049 | $(1,334) | $(2,352) | $155,706 | $(17,175) | 248,096 |

See accompanying notes to
unaudited consolidated financial statements.

4

**WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES**

### CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

_(Dollars in thousands)_

| Line item | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 |
| --- | --- | --- |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |
| Net income | $4,777 | $2,303 |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |
| Provision for credit losses | 75 | 142 |
| Depreciation and amortization of premises and equipment | 486 | 546 |
| Net (accretion) amortization of purchase accounting adjustments | (7) | 1 |
| Amortization of core deposit intangible | 94 | 94 |
| Net amortization of premiums and discounts on securities and mortgage loans | 255 | 263 |
| Net amortization of deferred costs on mortgage loans | 110 | 104 |
| Net amortization of premiums on subordinated debt | 10 | 10 |
| Share-based compensation (benefit) expense | (187) | 145 |
| ESOP expense | 208 | 155 |
| Gain on mortgage banking activities | — | (7) |
| Net change in unrealized loss on marketable equity securities | 13 | 5 |
| Gain on bank-owned life insurance death benefit | (449) | — |
| Income from bank-owned life insurance | (476) | (473) |
| Net change in: |  |  |
| Accrued interest receivable | (148) | (221) |
| Other assets | (1,119) | 74 |
| Other liabilities | (3,296) | (3,970) |
| Net cash provided by (used in) operating activities | 346 | (829) |
| CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |
| Proceeds from calls, maturities, and principal collections of securities held-to-maturity | 3,311 | 3,390 |
| Purchases of securities available-for-sale | (2,972) | (13,516) |
| Proceeds from calls, maturities, and principal collections of securities available-for-sale | 4,790 | 3,327 |
| Proceeds from redemption and sales of marketable equity securities | 44 | — |
| Purchases of marketable equity securities | (35) | (22) |
| Net loan originations and principal payments | (17,388) | (9,465) |
| Purchase of Federal Home Loan Bank of Boston stock | (377) | — |
| Purchases of premises and equipment | (734) | (287) |
| Proceeds from payout on bank-owned life insurance | 1,470 | — |
| Net cash used in investing activities | (11,891) | (16,573) |
| CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |
| Net increase in deposits | 20,884 | 65,946 |
| Net increase (decrease) in short-term borrowings | 10,540 | (870) |
| Cash dividends paid on common stock | (1,373) | (1,439) |
| Repurchase of common stock | (2,750) | (2,106) |
| Net cash provided by financing activities | 27,301 | 61,531 |
| NET CHANGE IN CASH AND CASH EQUIVALENTS: | 15,756 | 44,129 |
| Beginning of period | 40,381 | 66,450 |
| End of period | $56,137 | $110,579 |
| Supplemental cash flow information: |  |  |
| Net change in cash due for available-for-sale securities purchases pending settlement | — | $(6,406) |
| Net change in due to broker for common stock repurchased | (242) | (123) |
| Interest paid | 11,392 | 12,926 |
| Taxes paid | 2,436 | 530 |

See the accompanying notes to unaudited consolidated financial statements.

5

**WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES**

### **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**MARCH 31, 2026**

**1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Nature of Operations and Basis of Presentation**.
Western New England Bancorp, Inc. (“WNEB,” “Company,” “we,” or “us”) is a Massachusetts-chartered
stock holding company for Westfield Bank, a federally-chartered savings bank (“Bank”).

The Bank operates 25 banking offices in Hampden
County and Hampshire County in western Massachusetts and the Capital Region in Connecticut, and its primary sources of revenue are interest
income from loans as well as interest income from investment securities. The West Hartford Financial Services Center serves as the Company’s
Connecticut hub, housing Commercial Lending, Cash Management and a Mortgage Loan Officer. The Bank’s deposits are insured up to
the maximum Federal Deposit Insurance Corporation (“FDIC”) coverage limits.

**Wholly-owned Subsidiaries**. 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. WB Real Estate Holdings, LLC is a Massachusetts-chartered limited liability company that holds real property
acquired as security for debts previously contracted by the Bank.

**Principles of Consolidation**. The consolidated
financial statements include the accounts of Western New England Bancorp, Inc., the Bank, CSB Colts, Inc., Elm Street Securities Corporation,
WB Real Estate Holdings, LLC and WFD Securities, Inc. All material intercompany balances and transactions have been eliminated in consolidation.

**Estimates**. The preparation of consolidated
financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses for each.
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 credit losses.

**Basis of Presentation.** In the opinion of
management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of our financial condition as of March 31, 2026, and the results of operations, changes
in shareholders’ equity and cash flows for the interim periods presented. The results of operations for the three months ended March
31, 2026 are not necessarily indicative of the results of operations for the year ending December 31, 2026. Certain information and disclosures
normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of
the Securities and Exchange Commission.

These unaudited consolidated financial statements
should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2025, included
in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”).

**Reclassifications.** Amounts in the prior
period financial statements are reclassified when necessary to conform to the current year presentation.

**2. EARNINGS PER SHARE**

Basic earnings per share represents income
available to common shareholders divided by the weighted-average number of common shares outstanding during the period. If rights to
dividends on unvested awards are non-forfeitable, these unvested awards are considered outstanding in the computation of basic
earnings per share. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive
potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential
common shares that may be issued by us relate to stock options and certain performance-based restricted stock awards and are
determined using the treasury stock method. Unallocated ESOP shares are not deemed outstanding for earnings per share calculations.
There were no anti-dilutive shares outstanding during the three months ended March 31, 2026 and the three months ended March 31,
2025.

6

Earnings per common share for the three months
ended March 31, 2026 and the three months ended March 31, 2025 have been computed based on the following:

_(Dollars and shares in thousands)_

| Line item | Three Months Ended / March 31, 2026 | Three Months Ended / March 31, 2025 |
| --- | --- | --- |
| Net income applicable to common stock | $4,777 | $2,303 |
| Average number of common shares issued | 20,314 | 20,795 |
| Less: Average unallocated ESOP shares | (152) | (220) |
| Less: Average unvested performance-based equity incentive plan shares | (165) | (190) |
| Average number of common shares outstanding used to calculate basic earnings per common share | 19,997 | 20,385 |
| Effect of dilutive performance-based equity incentive plan shares | 68 | 129 |
| Average number of common shares outstanding used to calculate diluted earnings per common share | 20,065 | 20,514 |
| Net income per common share: |  |  |
| Basic earnings per share | $0.24 | $0.11 |
| Diluted earnings per share | $0.24 | $0.11 |

**3. COMPREHENSIVE INCOME (LOSS)**

Accounting principles generally require that recognized
revenue, expenses, gains, and losses be included in net income. Although certain changes in assets and liabilities are reported as a separate
component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income (loss).

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

_(Dollars in thousands)_

| Line item | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Net unrealized losses on securities available-for-sale | $(23,013) | $(22,394) |
| Tax effect | 5,838 | 5,677 |
| Net-of-tax amount | (17,175) | (16,717) |
| Accumulated other comprehensive loss, net of tax | $(17,175) | $(16,717) |

7

**4. INVESTMENT SECURITIES**

The following tables summarize the amortized cost
and fair value of securities available-for-sale and held-to-maturity at March 31, 2026 and December 31, 2025, and the corresponding amounts
of gross unrealized gains and losses recognized in accumulated other comprehensive loss on securities available-for-sale. The Company
did not record an allowance for credit losses on its securities held-to-maturity portfolio as of March 31, 2026 and December 31, 2025.

_March 31, 2026 · (Dollars in thousands)_

| Line item | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value |
| --- | --- | --- | --- | --- |
| Securities available-for-sale: |  |  |  |  |
| Debt securities: |  |  |  |  |
| Government-sponsored enterprise obligations | $18,507 | — | $(2,159) | $16,348 |
| Corporate bonds | 11,000 | 195 | (214) | 10,981 |
| Total debt securities | 29,507 | 195 | (2,373) | 27,329 |
| Mortgage-backed securities: |  |  |  |  |
| Government-sponsored mortgage-backed securities | 158,175 | 486 | (20,120) | 138,541 |
| U.S. government guaranteed mortgage-backed securities | 8,546 | — | (1,201) | 7,345 |
| Total mortgage-backed securities | 166,721 | 486 | (21,321) | 145,886 |
| Total securities available-for-sale | 196,228 | 681 | (23,694) | 173,215 |
| Securities held-to-maturity: |  |  |  |  |
| Debt securities: |  |  |  |  |
| U.S. Treasury securities | 5,001 | — | (83) | 4,918 |
| U.S. government guaranteed obligations | 991 | 3 | — | 994 |
| Total debt securities | 5,992 | 3 | (83) | 5,912 |
| Mortgage-backed securities: |  |  |  |  |
| Government-sponsored mortgage-backed securities | 179,400 | 150 | (30,647) | 148,903 |
| Total mortgage-backed securities | 179,400 | 150 | (30,647) | 148,903 |
| Total securities held-to-maturity | 185,392 | 153 | (30,730) | 154,815 |
| Total | $381,620 | $834 | $(54,424) | $328,030 |

8

_December 31, 2025 · (Dollars in thousands)_

| Line item | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value |
| --- | --- | --- | --- | --- |
| Securities available-for-sale: |  |  |  |  |
| Debt securities: |  |  |  |  |
| Government-sponsored enterprise obligations | $18,596 | — | $(2,103) | $16,493 |
| Corporate bonds | 11,000 | 155 | (207) | 10,948 |
| Total debt securities | 29,596 | 155 | (2,310) | 27,441 |
| Mortgage-backed securities: |  |  |  |  |
| Government-sponsored mortgage-backed securities | 162,831 | 806 | (19,936) | 143,701 |
| U.S. government guaranteed mortgage-backed securities | 5,767 | — | (1,109) | 4,658 |
| Total mortgage-backed securities | 168,598 | 806 | (21,045) | 148,359 |
| Total securities available-for-sale | 198,194 | 961 | (23,355) | 175,800 |
| Securities held-to-maturity: |  |  |  |  |
| Debt securities: |  |  |  |  |
| U.S. Treasury securities | 5,001 | — | (103) | 4,898 |
| U.S. government guaranteed obligations | 1,005 | 2 | — | 1,007 |
| Total debt securities | 6,006 | 2 | (103) | 5,905 |
| Mortgage-backed securities: |  |  |  |  |
| Government-sponsored mortgage-backed securities | 182,794 | 219 | (30,414) | 152,599 |
| Total mortgage-backed securities | 182,794 | 219 | (30,414) | 152,599 |
| Total securities held-to-maturity | 188,800 | 221 | (30,517) | 158,504 |
| Total | $386,994 | $1,182 | $(53,872) | $334,304 |

The following table presents the unrealized gains
recognized on marketable equity securities for the periods indicated:

_(Dollars in thousands)_

| Line item | Three Months Ended March 31 / 2026 | Three Months Ended March 31 / 2025 |
| --- | --- | --- |
| Net losses recognized during the period on marketable equity securities | $(13) | $(5) |
| Net losses recognized during the period on equity securities sold during the period | — | — |
| Unrealized losses recognized during the period on marketable equity securities still held at end of period | $(13) | $(5) |

At March 31, 2026, U.S. Treasury securities with
a fair value of $4.9 million, government-sponsored enterprise obligations with a fair value of $8.4 million and mortgage-backed securities
with a fair value of $146.8 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.

The amortized cost and fair value of securities
available-for-sale and held-to-maturity at March 31, 2026, by final maturity, are shown below. Actual maturities may differ from contractual
maturities because certain issuers have the right to call or prepay obligations.

_(Dollars in thousands)_

| Line item | Available-for-Sale / Amortized Cost | Available-for-Sale / Fair Value | Held-to-Maturity / Amortized Cost | Held-to-Maturity / Fair Value |
| --- | --- | --- | --- | --- |
| Debt securities: |  |  |  |  |
| Due in one year or less | — | — | $5,001 | $4,918 |
| Due after one year through five years | 9,949 | 8,815 | — | — |
| Due after five years through ten years | 17,899 | 16,858 | — | — |
| Due after ten years | 1,659 | 1,656 | 991 | 994 |
| Total debt securities | $29,507 | $27,329 | $5,992 | $5,912 |

9

_(Dollars in thousands)_

| Line item | Available-for-Sale / Amortized Cost | Available-for-Sale / Fair Value | Held-to-Maturity / Amortized Cost | Held-to-Maturity / Fair Value |
| --- | --- | --- | --- | --- |
| Mortgage-backed securities: |  |  |  |  |
| Due after one year through five years | $2,664 | $2,641 | — | — |
| Due after five years through ten years | 3,480 | 3,352 | 1,646 | 1,591 |
| Due after ten years | 160,577 | 139,893 | 177,754 | 147,312 |
| Total mortgage-backed securities | 166,721 | 145,886 | 179,400 | 148,903 |
| Total securities | $196,228 | $173,215 | $185,392 | $154,815 |

There were no gross realized gains or losses on
sales of securities available-for-sale for the three months ended March 31, 2026 and the three months ended March 31, 2025. There were
no sales of available-for-sale securities for the three months ended March 31, 2026 and the three months ended March 31, 2025.

Allowance for Credit
Losses – Securities Available-for-Sale

The Company measures
expected credit losses on debt securities available-for-sale based upon the gain or loss position of the security. For debt securities
available-for-sale 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. Securities available-for-sale
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. 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; 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. government’s
implicit guarantee on such securities. Accrued interest receivable on securities available-for-sale guaranteed by government agencies
totaled $497,000 at March 31, 2026 and $513,000 at December 31, 2025, 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. 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. Accrued interest receivable on debt securities available-for-sale not guaranteed by government
agencies totaled $209,000 at March 31, 2026 and $244,000 at December 31, 2025, and is excluded from the estimate of credit losses. There
were no allowances for credit losses established on debt securities available-for-sale during the three months ended March 31, 2026 and
the three months ended March 31, 2025.

10

Allowance for Credit
Losses – Securities Held-to-Maturity

The Company
measures expected credit losses on debt securities held-to-maturity 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 U.S. 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. government’s implicit guarantee on such securities. Any expected credit losses on securities held-to-maturity would
be presented as an allowance for credit loss. Accrued interest receivable on securities held-to-maturity totaled $401,000 at March
31, 2026 and $393,000 at December 31, 2025, and is excluded from the estimate of credit losses. There were no allowances for credit
losses established on securities held-to-maturity securities during the three months ended March 31, 2026 and the three months ended
March 31, 2025.

At March 31, 2026 and
December 31, 2025, there was one available-for-sale corporate bond that was rated below investment grade by one or more ratings agencies.
The Company reviewed the financial strength of the corporate bond rated below investment grade at March 31, 2026 and has concluded that
the amortized cost remains supported by the expected future cash flows of the securities.

The following tables summarize the gross unrealized
losses and fair value of the Company’s securities available-for-sale and held-to-maturity, segregated by the duration of their continuous
unrealized loss positions at March 31, 2026 and December 31, 2025:

_March 31, 2026 · (Dollars in thousands)_

| Line item | Less Than Twelve Months / Number of Securities | Less Than Twelve Months / Fair Value | Less Than Twelve Months / Gross Unrealized Loss | Less Than Twelve Months / Depreciation from Amortized Cost Basis (%) | Over Twelve Months / Number of Securities | Over Twelve Months / Fair Value | Over Twelve Months / Gross Unrealized Loss | Over Twelve Months / Depreciation from Amortized Cost Basis (%) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Securities available-for-sale: |  |  |  |  |  |  |  |  |
| Government-sponsored mortgage-backed securities | 4 | $9,717 | $76 | 0.8% | 72 | $95,446 | $20,044 | 17.4% |
| U.S. government guaranteed mortgage-backed securities | 1 | 2,858 | 112 | 3.8 | 9 | 4,487 | 1,089 | 19.5 |
| Government-sponsored enterprise obligations | — | — | — | — | 6 | 16,348 | 2,159 | 11.7 |
| Corporate bonds | — | — | — | — | 2 | 4,786 | 214 | 4.3 |
| Total securities available-for-sale | 5 | 12,575 | 188 |  | 89 | 121,067 | 23,506 |  |
| Securities held-to-maturity: |  |  |  |  |  |  |  |  |
| U.S. Treasury securities | — | — | — | — | 1 | 4,919 | 83 | 1.7% |
| Government-sponsored mortgage-backed securities | 1 | 1,066 | 3 | 0.3 | 36 | 138,004 | 30,644 | 18.2 |
| Total securities held-to-maturity | 1 | 1,066 | 3 |  | 37 | 142,923 | 30,727 |  |
| Total securities | 6 | $13,641 | $191 |  | 126 | $263,990 | $54,233 |  |

11

_December 31, 2025 · (Dollars in thousands)_

| Line item | Less Than Twelve Months / Number of Securities | Less Than Twelve Months / Fair Value | Less Than Twelve Months / Gross Unrealized Loss | Less Than Twelve Months / Depreciation from Amortized Cost Basis (%) | Over Twelve Months / Number of Securities | Over Twelve Months / Fair Value | Over Twelve Months / Gross Unrealized Loss | Over Twelve Months / Depreciation from Amortized Cost Basis (%) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Securities available-for-sale: |  |  |  |  |  |  |  |  |
| Government-sponsored mortgage-backed securities | 1 | $1,819 | $7 | 0.4% | 73 | $100,750 | $19,929 | 16.5% |
| U.S. government guaranteed mortgage-backed securities | — | — | — | — | 9 | 4,658 | 1,109 | 19.2 |
| Government-sponsored enterprise obligations | 1 | 1,662 | 6 | 0.4 | 5 | 14,831 | 2,097 | 12.4 |
| Corporate bonds | — | — | — | — | 2 | 4,793 | 207 | 4.1 |
| Total securities available-for-sale | 2 | 3,481 | 13 |  | 89 | 125,032 | 23,342 |  |
| Securities held-to-maturity: |  |  |  |  |  |  |  |  |
| U.S. Treasury securities | — | — | — | — | 1 | 4,898 | 103 | 2.1% |
| Government-sponsored mortgage-backed securities | — | — | — | — | 36 | 141,556 | 30,414 | 17.7 |
| Total securities held-to-maturity | — | — | — |  | 37 | 146,454 | 30,517 |  |
| Total securities | 2 | $3,481 | $13 |  | 126 | $271,486 | $53,859 |  |

The Company expects to recover its amortized cost
basis on all securities in its available-for-sale and held-to-maturity portfolios. Furthermore, the Company does not intend to sell, nor
does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of March 31, 2026, prior to
this anticipated recovery. The decline in fair value on its available-for-sale and held-to-maturity portfolios is largely due to changes
in interest rates and other market conditions and not due to credit quality issues. The issuers continue to make timely principal and
interest payments on the securities and the fair value is expected to recover as the securities approach maturity. The Company’s
ability and intent to hold these securities until recovery is supported by the Company’s stable capital and liquidity positions
as well as its historically low portfolio turnover. The following description provides the number of investment positions in an unrealized
loss position:

At March 31, 2026, the Company reported gross
unrealized losses on the securities available-for-sale portfolio of $23.7 million, or 12.1% of the amortized cost basis of the securities
available-for-sale, compared to gross unrealized losses on the securities available-for-sale portfolio of $23.4 million, or 11.8% of
the amortized cost basis of the securities available-for-sale at December 31, 2025. At March 31, 2026, there were 94 securities available-for-sale
in which the fair value was less than the amortized cost, compared to 91 securities available-for-sale at December 31, 2025.

At March 31, 2026, the Company reported gross
unrealized losses on the securities held-to-maturity portfolio of $30.7 million, or 16.6%, of the amortized cost basis of the securities
held-to-maturity portfolio, compared to $30.5 million, or 16.2%, of the amortized cost basis of the securities held-to-maturity portfolio
at December 31, 2025. At March 31, 2026, there 38 securities held-to-maturity in which the fair value was less than the amortized cost,
compared to 37 securities held-to-maturity at December 31, 2025.

12

**5. LOANS AND ALLOWANCE
FOR CREDIT LOSSES**

The following table presents the summary of the loan portfolio by the
major classification of the loan at the periods indicated:

_(Dollars in thousands)_

| Line item | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Commercial real estate: |  |  |
| Non-owner occupied | $918,219 | $910,239 |
| Owner occupied | 182,909 | 188,824 |
| Total commercial real estate | 1,101,128 | 1,099,063 |
| Residential real estate: |  |  |
| Residential one-to-four family | 727,882 | 719,070 |
| Home equity | 138,565 | 137,801 |
| Total residential real estate | 866,447 | 856,871 |
| Commercial and industrial | 227,765 | 221,790 |
| Consumer | 2,550 | 2,929 |
| Total gross loans | 2,197,890 | 2,180,653 |
| Plus: Unearned premiums and deferred loan fees and costs, net | 3,066 | 2,939 |
| Less: Allowance for credit losses | (20,451) | (20,297) |
| Net loans | $2,180,505 | $2,163,295 |

Lending activities primarily consist of commercial
real estate loans, commercial and industrial loans, residential real estate loans, and to a lesser degree, consumer loans.

**Loans Pledged as Collateral.**

At March 31, 2026 and December 31, 2025, the carrying
value of eligible loans pledged as collateral to support borrowing capacity at the FHLB was $932.5 million and $932.3 million, respectively.
The outstanding balance of FHLB advances was $93.0 million and $83.0 million at March 31, 2026 and at December 31, 2024, respectively.

At March 31, 2026 and December 31, 2025, the carrying
value of eligible loans pledged as collateral to support borrowing capacity with the Federal Reserve Bank (“FRB”) was $295.4 million and $307.3 million, respectively, with no outstanding borrowings at March 31, 2026 and at December 31, 2025.

**Loans Serviced for Others.**

The Company has transferred a portion of its originated
commercial loans to participating lenders. The amounts transferred have been accounted for as sales and are therefore not included in
our accompanying consolidated balance sheets. We continue to service the loans on behalf of the participating lenders. We share with participating
lenders, on a pro-rata basis, any gains or losses that may result from a borrower’s lack of compliance with contractual terms of
the loan. At March 31, 2026 and December 31, 2025, the Company was servicing commercial loans participated out to various other institutions
totaling $66.3 million and $66.9 million, respectively.

13

Residential real estate mortgages are
originated by the Company both for its portfolio and for sale into the secondary market. The Company 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 impairment. The
significant assumptions used by a third party to estimate the fair value of capitalized servicing rights at March 31, 2026, include
weighted average prepayment speed for the portfolio using the Public Securities Association Standard Prepayment Model (176 PSA),
average internal rate of return (9.01%), weighted average servicing fee (0.25%), and average cost to service loans ($83.41 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. There were no sales of residential real
estate mortgages to the secondary market during the three months ended March 31, 2026 and the three months ended March 31, 2025.

At March 31, 2026 and December 31, 2025, the Company
was servicing residential mortgage loans owned by investors totaling $75.3 million and $77.1 million, respectively. Servicing fee income
of $48,000 and $52,000 was recorded for the three months ended March 31, 2026 and the three months ended March 31, 2025, respectively,
and is included in service charges and fees on the consolidated statements of net income.

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

_(Dollars in thousands)_

| Line item | Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 |
| --- | --- | --- |
| Balance at the beginning of period: | $318 | $436 |
| Amortization | (30) | (29) |
| Balance at the end of period | $288 | $407 |
| Fair value at the end of period | $774 | $779 |

Loans 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.

**Allowance for Credit Losses (“ACL”).**

The allowance for credit losses is an estimate
of expected losses inherent within the Company’s existing loans held for investment portfolio. 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. Accrued interest receivable on loans held for investment was $7.8 million
at March 31, 2026 and $7.6 million at December 31, 2025 and is excluded from the estimate of credit losses.

The loan 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. For commercial real estate loans, residential real estate loans, and commercial and industrial loans, the
Company uses a discounted cash flow method, incorporating probability of default and loss given default forecasted based on
statistically derived economic variable loss drivers, to estimate expected credit losses. This process includes estimates which
involve modeling loss projections attributable to existing loan balances, and considering historical experience, current conditions,
and future expectations for pools of loans over a reasonable and supportable forecast 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. The expected loss estimates for the consumer loan segment are
based on historical loss rates using the weighted average remaining maturity (“WARM”) method.

14

**Commercial real estate loans**. Loans in
this segment include owner occupied and non-owner occupied commercial real estate, multi-family dwellings, and income producing investment
properties, as well as commercial construction loans for commercial development projects throughout New England. Typically, commercial
real estate loans are secured by office buildings, apartment buildings, industrial properties, warehouses, retail facilities, hotels,
assisted living facilities, self-storage facilities, and educational facilities. Collateral values are established by independent third-party
appraisals and evaluations. Primary repayment sources for commercial real estate loans include operating income and cash flow generated
by the real estate, sale of the real estate and, funds from any liquidation of the collateral. Under its lending guidelines, the Company
generally requires a corporate or personal guarantee from individuals that hold material ownership in the borrowing entity. The underlying
cash flows generated by the properties or operations can be adversely impacted by a downturn in the economy due to increased vacancy rates
or diminished cash flows, which in turn, would have an effect on the credit quality in this segment. The Company’s management obtains
financial information annually and continually monitors the cash flows of these loans.

**Residential real estate loans**. This portfolio
segment consists of first mortgages secured by one-to-four family residential properties and home equity loans and home equity lines of
credit secured by first or second mortgage on one-to-four family owner occupied properties. First mortgages may be underwritten to a maximum
loan-to-value of 97% for owner-occupied homes, 90% for second homes and 85% for investment properties. Mortgages with loan-to-values greater
than 80% require private mortgage insurance. We do not grant subprime loans. Home equity loans and lines of credit are underwritten to
a maximum combined loan-to-value of 85% of the appraised value of the property. Underwriting approval is dependent on review of the borrower’s
ability to repay principal and interest on a monthly basis, credit history, financial resources and the value of the collateral. Residential
real estate loans are originated either for sale to investors or retained in the Company’s loan portfolio. Decisions about whether
to sell or retain residential real estate loans are made based on the interest rate, pricing for loans in the secondary market, and the
Company’s liquidity and capital needs. The overall health of the economy, including unemployment rates and housing pricing, will
have an effect on the credit quality in this segment.

**Commercial and industrial loans**. The primary
risk associated with commercial and industrial loans is the ability of borrowers to achieve business results and cash flows consistent
with those projected at loan origination. Collateral frequently consists of a first lien position on business assets including, but not
limited to, accounts receivable, inventory, and equipment. The primary repayment source is operating cash flow, followed by liquidation
of assets. Under its lending guidelines, the Company generally requires a corporate or personal guarantee from individuals that hold material
ownership in the borrowing entity. A weakened economy and resultant decreased consumer spending will have an effect on the credit quality
in this segment.

**Consumer loans**. Loans in this segment are
both secured and unsecured and repayment is dependent on the credit quality of the individual borrower.

Allowance for Credit Losses Methodology

In 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.

15

The discounted cash flow (“DCF”)
model calculates an expected loss percentage for each loan class by considering the probability of default, using life-of-loan
analysis periods for the commercial and industrial, commercial real estate, residential real estate loan segments, and the
historical severity of loss, based on the aggregate net lifetime losses incurred per loan class. The expected loss estimates for the
consumer loan segment are based on historical loss rates using the remaining life method. The default and severity factors used to
calculate the allowance for credit losses for loans that share similar risk characteristics with other loans are adjusted for
differences between the historical period used to calculate historical default and loss severity rates and expected conditions over
the remaining lives of the loans in the portfolio related to: (1) lending policies and procedures; (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 forecast. 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.

For 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.

The Company uses a WARM method to estimate the
ACL for the consumer loan segment. Under this method, the historical average annual charge-off rate is applied to the weighted average
remaining maturity of the loan portfolio, currently calculated at 2.5 years. This calculation is adjusted based on additional factors
that include (1) lending policies and procedures; (2) international, national, regional and local economic business conditions and developments
that affect the collectability of the portfolio; (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.

Individually evaluated financial assets

For 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.

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

The 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 outstanding off-balance-sheet credit exposures that are unconditionally cancellable by the Company. The
allowance for credit losses on off-balance sheet credit exposures is adjusted as credit loss expense. Categories of off-balance sheet
credit exposures correspond to the loan portfolio segments described above. Management evaluates the need for a reserve on unfunded loan
commitments in a manner consistent with loans held for investment.

16

An analysis of changes in the allowance for credit
losses by segment for the three months ended March 31, 2026 and March 31, 2025 is as follows:

_(Dollars in thousands)_

| Line item | Commercial Real Estate | Residential Real Estate | Commercial and Industrial | Consumer | Unallocated | Total |
| --- | --- | --- | --- | --- | --- | --- |
| Allowance for credit losses for loans |  |  |  |  |  |  |
| Balance at December 31, 2025 | $13,718 | $4,186 | $2,245 | $148 | — | $20,297 |
| Provision for (reversal of) credit losses | (207) | 109 | 298 | 9 | — | 209 |
| Charge-offs | — | (34) | (2) | (58) | — | (94) |
| Recoveries | — | 4 | 6 | 29 | — | 39 |
| Balance at March 31, 2026 | $13,511 | $4,265 | $2,547 | $128 | — | $20,451 |
| Balance at December 31, 2024 | $13,677 | $3,156 | $2,477 | $219 | — | $19,529 |
| Provision for credit losses | 48 | 56 | 55 | 10 | — | 169 |
| Charge-offs | — | — | — | (61) | — | (61) |
| Recoveries | — | 5 | 1 | 26 | — | 32 |
| Balance at March 31, 2025 | $13,725 | $3,217 | $2,533 | $194 | — | $19,669 |

_(Dollars in thousands)_

| Line item | Commercial Real Estate | Residential Real Estate | Commercial and Industrial | Consumer | Unallocated | Total |
| --- | --- | --- | --- | --- | --- | --- |
| Allowance for credit losses for off-balance sheet exposures |  |  |  |  |  |  |
| Balance at December 31, 2025 | $461 | $295 | $40 | — | — | $796 |
| Reversal of credit losses | (93) | (36) | (5) | — | — | (134) |
| Balance at March 31, 2026 | $368 | $259 | $35 | — | — | $662 |
| Balance at December 31, 2024 | $456 | $256 | $45 | — | — | $757 |
| Provision for (reversal of) credit losses | (43) | 17 | (1) | — | — | (27) |
| Balance at March 31, 2025 | $413 | $273 | $44 | — | — | $730 |

During the three months ended March 31, 2026,
the Company recorded a provision for credit losses of $75,000, a decrease of $67,000, or 47.2%, from $142,000 for the three months ended
March 31, 2025. The decrease was primarily due to a decrease in unfunded commitments.

The provision for credit losses was determined
by a number of factors: the continued strong credit performance of the Company’s loan portfolio, changes in the loan portfolio mix
and management’s consideration of existing economic conditions. Management will continue to monitor macroeconomic variables related
to the interest rate environment, the continued discussion on tariffs and the concerns of an economic downturn. Management believes it
is appropriately reserved for the current economic environment and supportable forecast period.

17

**Past Due Loans.**

The following tables present an age analysis of
past due loans as of the dates indicated:

_(Dollars in thousands)_

| Line item | 30 – 59 Days Past Due | 60 – 89 Days Past Due | 90 Days or More Past Due | Total Past Due Loans | Total Current Loans | Total Loans | Nonaccrual Loans |
| --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2026 |  |  |  |  |  |  |  |
| Commercial real estate: |  |  |  |  |  |  |  |
| Non-owner occupied | $129 | — | — | $129 | $918,090 | $918,219 | $129 |
| Owner occupied | 36 | — | — | 36 | 182,873 | 182,909 | 278 |
| Total | 165 | — | — | 165 | 1,100,963 | 1,101,128 | 407 |
| Residential real estate: |  |  |  |  |  |  |  |
| Residential one-to-four family | 1,291 | 563 | 697 | 2,551 | 725,331 | 727,882 | 3,654 |
| Home equity | 134 | 75 | 143 | 352 | 138,213 | 138,565 | 229 |
| Total | 1,425 | 638 | 840 | 2,903 | 863,544 | 866,447 | 3,883 |
| Commercial and industrial | 48 | 6 | — | 54 | 227,711 | 227,765 | 391 |
| Consumer | 35 | — | — | 35 | 2,515 | 2,550 | — |
| Total loans | $1,673 | $644 | $840 | $3,157 | $2,194,733 | $2,197,890 | $4,681 |

_(Dollars in thousands)_

| Line item | 30 – 59 Days Past Due | 60 – 89 Days Past Due | 90 Days or More Past Due | Total Past Due Loans | Total Current Loans | Total Loans | Nonaccrual Loans |
| --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, 2025 |  |  |  |  |  |  |  |
| Commercial real estate: |  |  |  |  |  |  |  |
| Non-owner occupied | — | — | — | — | $900,513 | $900,513 | $135 |
| Owner occupied | 304 | — | — | 304 | 198,246 | 198,550 | 289 |
| Total | 304 | — | — | 304 | 1,098,759 | 1,099,063 | 424 |
| Residential real estate: |  |  |  |  |  |  |  |
| Residential one-to-four family | 1,127 | 503 | 546 | 2,176 | 716,894 | 719,070 | 3,779 |
| Home equity | 113 | — | 500 | 613 | 137,188 | 137,801 | 511 |
| Total | 1,240 | 503 | 1,046 | 2,789 | 854,082 | 856,871 | 4,290 |
| Commercial and industrial | 48 | — | 1 | 49 | 221,741 | 221,790 | 448 |
| Consumer | 3 | — | — | 3 | 2,926 | 2,929 | — |
| Total loans | $1,595 | $503 | $1,047 | $3,145 | $2,177,508 | $2,180,653 | $5,162 |

At March 31, 2026 and December 31, 2025, total
past due loans totaled $3.2 million, or 0.14% of total loans, and $3.1 million, or 0.14% of total loans, respectively.

**Nonaccrual Loans.**

Accrual 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 income. 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.

18

The following table is a summary of the Company’s
nonaccrual loans by major categories at March 31, 2026 and December 31, 2025:

_(Dollars in thousands)_

| Line item | As of March 31, 2026 / Nonaccrual Loans with Allowance for Credit Loss | As of March 31, 2026 / Nonaccrual Loans Without Allowance for Credit Loss | As of March 31, 2026 / Total Nonaccrual Loans | For the Three Months Ended March 31, 2026 / Accrued Interest Receivable Reversed from Income |
| --- | --- | --- | --- | --- |
| Commercial real estate: |  |  |  |  |
| Non-owner occupied | — | $129 | $129 | $1 |
| Owner occupied | — | 278 | 278 | 5 |
| Total | — | 407 | 407 | 6 |
| Residential real estate: |  |  |  |  |
| Residential one-to-four family | — | 3,654 | 3,654 | 47 |
| Home equity | — | 229 | 229 | 7 |
| Total |  | 3,883 | 3,883 | 54 |
| Commercial and industrial | — | 391 | 391 | 12 |
| Consumer | — | — | — | — |
| Total loans | — | $4,681 | $4,681 | $72 |

_(Dollars in thousands)_

| Line item | As of December 31, 2025 / Nonaccrual Loans with Allowance for Credit Loss | As of December 31, 2025 / Nonaccrual Loans Without Allowance for Credit Loss | As of December 31, 2025 / Total Nonaccrual Loans | For the Year Ended December 31, 2025 / Accrued Interest Receivable Reversed from Income |
| --- | --- | --- | --- | --- |
| Commercial real estate: |  |  |  |  |
| Non-owner occupied | — | $135 | $135 | $8 |
| Owner occupied | — | 289 | 289 | 18 |
| Total | — | 424 | 424 | 26 |
| Residential real estate: |  |  |  |  |
| Residential one-to-four family | — | 3,779 | 3,779 | 161 |
| Home equity | — | 511 | 511 | 41 |
| Total |  | 4,290 | 4,290 | 202 |
| Commercial and industrial | — | 448 | 448 | 56 |
| Consumer | — | — | — | — |
| Total loans | — | $5,162 | $5,162 | $284 |

At March 31, 2026 and December 31, 2025, nonaccrual
loans totaled $4.7 million, or 0.21% of total loans and $5.2 million, or 0.24% of total loans, respectively. The Company did not recognize
any interest income on nonaccrual loans for the three months ended March 31, 2026 and the three months ended March 31, 2025. At March
31, 2026 and December 31, 2025, there were no commitments to lend additional funds to any borrower on nonaccrual status. At March 31,
2026 and December 31, 2025, there were no loans 90 or more days past due and still accruing interest. There was no other real estate
owned at March 31, 2026 or December 31, 2025.

19

**Individually Evaluated Collateral Dependent Loans.**

Loans that do not share similar risk characteristics
with loans that are pooled into portfolio segments are individually evaluated. A loan is considered collateral dependent 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. Loans that are rated Substandard, have a loan-to-value above85% or have demonstrated a specific weakness (e.g., 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. At March 31, 2026, the Company had $895,000 in individually evaluated
commercial loans, collateralized by business assets, and $4.5 million in individually evaluated real estate loans, collateralized by real
estate property.

The following table summarizes the Company’s
individually evaluated collateral dependent loans by class as of the dates indicated:

_As of March 31, 2026 · (Dollars in thousands)_

| Line item | Recorded Investment | Related Allowance |
| --- | --- | --- |
| With no related allowance recorded: |  |  |
| Commercial real estate: |  |  |
| Non-owner occupied | $298 | — |
| Owner occupied | 314 | — |
| Total | 612 | — |
| Residential real estate: |  |  |
| Residential one-to-four family | 3,654 | — |
| Home equity | 229 | — |
| Total | 3,883 |  |
| Commercial and industrial | 439 | — |
| Consumer | — | — |
| Loans with no related allowance recorded | $4,934 | — |
| With an allowance recorded: |  |  |
| Commercial real estate: |  |  |
| Non-owner occupied | — | — |
| Owner occupied | — | — |
| Total | — | — |
| Residential real estate: |  |  |
| Residential one-to-four family | — | — |
| Home equity | — | — |
| Total | — | — |
| Commercial and industrial | 456 | 117 |
| Consumer | — | — |
| Loans with an allowance recorded | $456 | $117 |
| Total individually evaluated loans | $5,390 | $117 |

20

_As of December 31, 2025 · (Dollars in thousands)_

| Line item | Recorded Investment | Related Allowance |
| --- | --- | --- |
| With no related allowance recorded: |  |  |
| Commercial real estate: |  |  |
| Non-owner occupied | $307 | — |
| Owner occupied | 331 | — |
| Total | 638 | — |
| Residential real estate: |  |  |
| Residential one-to-four family | 3,778 | — |
| Home equity | 511 | — |
| Total | 4,289 |  |
| Commercial and industrial | 497 | — |
| Consumer | — | — |
| Loans with no related allowance recorded | $5,424 | — |
| With an allowance recorded: |  |  |
| Commercial real estate: |  |  |
| Non-owner occupied | — | — |
| Owner occupied | — | — |
| Total | — | — |
| Residential real estate: |  |  |
| Residential one-to-four family | — | — |
| Home equity | — | — |
| Total | — | — |
| Commercial and industrial | 464 | 122 |
| Consumer | — | — |
| Loans with an allowance recorded | $464 | $122 |
| Total individually evaluated loans | $5,888 | $122 |

**Modified Loans to Borrowers Experiencing Financial Difficulty.**

The Company will modify the contractual terms
of loans to a borrower experiencing financial difficulties as a way to mitigate loss and comply with regulations regarding bankruptcy
and discharge situations. Loans 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 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.

There were no loan modifications granted based
on borrower financial difficulty during the three months ended March 31, 2026 or for the year ended December 31, 2025. During the three
months ended March 31, 2026 and the three months ended March 31, 2025, 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 three months ended March 31, 2026 or the three
months ended March 31, 2025.

21

**Credit Quality Information.**

The Company monitors the credit quality of its
loan portfolio by using internal risk ratings that are based on regulatory guidance. The Company categorizes loans into risk categories
based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical
payment experience, credit documentation, public information, and current economic trends, among other factors. The Company utilizes an
eight-grade internal loan rating system for commercial real estate and commercial and industrial loans.

The grades assigned and definitions are as follows:
loans graded excellent, above average, good are classified as “Pass” for grading purposes (risk ratings 1-4). 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 borrower. 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. Nonaccrual residential real
estate, home equity, and consumer loans are risk rated as “Substandard” and individually evaluated.

**Loans rated 1 – 4**: Loans rated 1-4
are classified as “Pass” and have quality metrics to support that the loan will be repaid according to the terms established
and are not subject to adverse criticism as defined in regulatory guidance. Pass loans exhibit characteristics that represent acceptable
risk and are not considered problem loans.

**Loans rated 5**: Loans rated 5 are classified
as “Special Mention” and have potential weaknesses that deserve management’s close attention. Special mention loans
are currently performing but with potential weaknesses including adverse trends in borrower’s operations, credit quality, financial
strength, or possible collateral deficiency. Loans in this category are currently protected based on collateral and repayment capacity
and do not constitute undesirable credit risk, but have potential weakness that may result in deterioration of the repayment process at
some future date. Special Mention loans do not sufficiently expose the Company to warrant adverse classification.

**Loans rated 6**: Loans rated 6 are classified
as “Substandard” and have an identified definitive weakness which may make full collection of contractual cash flows questionable
and/or jeopardize the liquidation of the debt.

**Loans rated 7**: Loans rated 7 are classified
as “Doubtful” and have all the weaknesses inherent in those classified Substandard with the added characteristic that the
weaknesses make collection or liquidation of the loan highly questionable and improbable. The possibility of some loss is extremely high,
but because of specific pending factors that may work to the advantage and strengthening of the asset, its classification as an estimated
loss is deferred until its more exact status may be determined.

**Loans rated 8**: Loans rated 8 are classified
a “Loss” and are considered uncollectible and are charged to the allowance for credit losses. The loss classification does
not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing
off the asset because recovery and collection time may be affected in the future.

On an annual basis, or more often if needed, the
Company formally reviews the ratings on all commercial real estate loans over $3 million and commercial and industrial loans over $1 million.
On an ongoing basis, management utilizes delinquency reports, interim customer financials, the criticized loan report and other loan reports
to monitor credit quality and adjust risk ratings accordingly. In addition, at least on an annual basis, the Company contracts with an
independent third-party 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.

The following tables summarize the amortized cost basis by aggregate
Pass and criticized categories of Special Mention and Substandard within the Company’s internal risk rating system by year of origination
as of March 31, 2026 and December 31, 2025. The tables also summarize gross charge-offs by year of origination for the three months ended
March 31, 2026 and for the year ended December 31, 2025.

22

_As of and three-months ended March 31, 2026 · (Dollars in thousands)_

| Line item | Term Loan Origination by Year / March 31, 2026 | Term Loan Origination by Year / 2025 | Term Loan Origination by Year / 2024 | Term Loan Origination by Year / 2023 | Term Loan Origination by Year / 2022 | Term Loan Origination by Year / Prior | Revolving Loans | Revolving Loans / Revolving Loans Converted to Term Loans | Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Commercial Real Estate: |  |  |  |  |  |  |  |  |  |
| Pass (Rated 1- 4) | $7,847 | $74,264 | $54,497 | $52,456 | $188,978 | $616,311 | $72,824 | $1,613 | $1,068,790 |
| Special Mention (Rated 5) | — | 11,736 | — | — | — | 11,134 | — | — | 22,870 |
| Substandard (Rated 6) | — | — | — | — | — | 9,468 | — | — | 9,468 |
| Total commercial real estate loans | $7,847 | $86,000 | $54,497 | $52,456 | $188,978 | $636,913 | $72,824 | $1,613 | $1,101,128 |
| Current period gross charge-offs | — | — | — | — | — | — | — | — | — |
| Payment Performance: |  |  |  |  |  |  |  |  |  |
| Performing | $7,847 | $86,000 | $54,497 | $52,456 | $188,978 | $636,506 | $72,824 | $1,613 | $1,100,721 |
| Nonaccrual | — | — | — | — | — | 407 | — | — | 407 |
| Residential One-to-Four Family: |  |  |  |  |  |  |  |  |  |
| Pass | $17,214 | $104,029 | $86,773 | $54,951 | $82,268 | $367,593 | $10,879 | — | $723,707 |
| Substandard | — | — | — | 345 | — | 3,830 | — | — | 4,175 |
| Total residential one-to-four family | $17,214 | $104,029 | $86,773 | $55,296 | $82,268 | $371,423 | $10,879 | — | $727,882 |
| Current period gross charge-offs | — | — | — | — | — | — | — | — | — |
| Payment Performance: |  |  |  |  |  |  |  |  |  |
| Performing | $17,214 | $104,029 | $86,773 | $54,951 | $82,268 | $368,114 | $10,879 | — | $724,228 |
| Nonaccrual | — | — | — | 345 | — | 3,309 | — | — | 3,654 |
| Home Equity: |  |  |  |  |  |  |  |  |  |
| Pass | $1,668 | $7,439 | $7,059 | $5,897 | $6,637 | $17,076 | $89,431 | $3,129 | $138,336 |
| Substandard | — | — | 35 | 75 | — | — | 31 | 88 | 229 |
| Total home equity loans | $1,668 | $7,439 | $7,094 | $5,972 | $6,637 | $17,076 | $89,462 | $3,217 | $138,565 |
| Current period gross charge-offs | — | — | — | — | — | — | — | $34 | $34 |
| Payment Performance: |  |  |  |  |  |  |  |  |  |
| Performing | $1,668 | $7,439 | $7,059 | $5,897 | $6,637 | $17,076 | $89,431 | $3,129 | $138,336 |
| Nonaccrual | — | — | 35 | 75 | — | — | 31 | 88 | 229 |

23

_As of and three-months ended March 31, 2026 · (Dollars in thousands)_

| Line item | Term Loans Originated by Year / March 31, 2026 | Term Loans Originated by Year / 2025 | Term Loans Originated by Year / 2024 | Term Loans Originated by Year / 2023 | Term Loans Originated by Year / 2022 | Term Loans Originated by Year / Prior | Revolving Loans | Revolving Loans / Revolving Loans Converted to Term Loans | Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Commercial and Industrial: |  |  |  |  |  |  |  |  |  |
| Pass (Rated 1- 4) | $2,240 | $18,982 | $23,766 | $9,016 | $22,103 | $45,568 | $84,078 | $56 | $205,809 |
| Special Mention (Rated 5) | — | — | 7,778 | 2,051 | — | 39 | 4,820 | — | 14,688 |
| Substandard (Rated 6) | — | — | — | 5,098 | 509 | 310 | 1,351 | — | 7,268 |
| Total commercial and industrial loans | $2,240 | $18,982 | $31,544 | $16,165 | $22,612 | $45,917 | $90,249 | $56 | $227,765 |
| Current period gross charge-offs | — | — | — | — | — | — | — | $2 | $2 |
| Payment Performance: |  |  |  |  |  |  |  |  |  |
| Performing | $2,240 | $18,982 | $31,544 | $16,165 | $22,612 | $45,613 | $90,162 | $56 | $227,374 |
| Nonaccrual | — | — | — | — | — | 304 | 87 | — | 391 |
| Consumer: |  |  |  |  |  |  |  |  |  |
| Pass | $117 | $234 | $469 | $580 | $254 | $106 | $790 | — | $2,550 |
| Substandard | — | — | — | — | — | — | — | — | — |
| Total consumer loans | $117 | $234 | $469 | $580 | $254 | $106 | $790 | — | $2,550 |
| Current period gross charge-offs | $13 | — | — | — | — | — | — | $45 | $58 |
| Payment Performance: |  |  |  |  |  |  |  |  |  |
| Performing | 117 | 234 | 469 | 580 | 254 | 106 | 790 | — | $2,550 |
| Nonaccrual | — | — | — | — | — | — | — | — | — |

24

_As of and Year Ended December 31, 2025 · (Dollars in thousands)_

| Line item | Term Loan Origination by Year / 2025 | Term Loan Origination by Year / 2024 | Term Loan Origination by Year / 2023 | Term Loan Origination by Year / 2022 | Term Loan Origination by Year / 2021 | Term Loan Origination by Year / Prior | Revolving Loans | Revolving Loans / Revolving Loans Converted to Term Loans | Revolving Loans / Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Commercial Real Estate: |  |  |  |  |  |  |  |  |  |
| Pass (Rated 1- 4) | $83,434 | $48,533 | $50,248 | $190,369 | $224,149 | $404,143 | $75,646 | $1,620 | $1,078,142 |
| Special Mention (Rated 5) | — | — | — | — | — | 11,397 | — | — | 11,397 |
| Substandard (Rated 6) | — | — | — | — | — | 9,524 | — | — | 9,524 |
| Total commercial real estate loans | $83,434 | $48,533 | $50,248 | $190,369 | $224,149 | $425,064 | $75,646 | $1,620 | $1,099,063 |
| Current period gross charge-offs | — | — | — | — | — | $4 | — | — | $4 |
| Payment Performance: |  |  |  |  |  |  |  |  |  |
| Performing | $83,434 | $48,533 | $50,248 | $190,369 | $224,149 | $424,640 | $75,646 | $1,620 | $1,098,639 |
| Nonaccrual | — | — | — | — | — | 424 | — | — | 424 |
| Residential One-to-Four Family: |  |  |  |  |  |  |  |  |  |
| Pass | $103,977 | $87,661 | $55,385 | $83,428 | $81,480 | $294,238 | $8,608 | — | $714,777 |
| Substandard | — | — | 348 | — | 660 | 3,285 | — | — | 4,293 |
| Total residential one-to-four family | $103,977 | $87,661 | $55,733 | $83,428 | $82,140 | $297,523 | $8,608 | — | $719,070 |
| Current period gross charge-offs | — | — | — | — | — | $20 | — | — | $20 |
| Payment Performance: |  |  |  |  |  |  |  |  |  |
| Performing | $103,977 | $87,661 | $55,385 | $83,428 | $81,480 | $294,752 | $8,608 | — | $715,291 |
| Nonaccrual | — | — | 348 | — | 660 | 2,771 | — | — | 3,779 |
| Home Equity: |  |  |  |  |  |  |  |  |  |
| Pass | $7,816 | $7,316 | $6,491 | $6,910 | $4,571 | $13,210 | $87,770 | $3,206 | $137,290 |
| Substandard | — | 11 | 79 | — | — | — | 333 | 88 | 511 |
| Total home equity loans | $7,816 | $7,327 | $6,570 | $6,910 | $4,571 | $13,210 | $88,103 | $3,294 | $137,801 |
| Current period gross charge-offs | — | — | — | — | — | — | $24 | $11 | $35 |
| Payment Performance: |  |  |  |  |  |  |  |  |  |
| Performing | $7,816 | $7,316 | $6,491 | $6,910 | $4,571 | $13,210 | $87,770 | $3,206 | $137,290 |
| Nonaccrual | — | 11 | 79 | — | — | — | 333 | 88 | 511 |

25

_As of and Year Ended December 31, 2025 · (Dollars in thousands)_

| Line item | Term Loans Originated by Year / 2025 | Term Loans Originated by Year / 2024 | Term Loans Originated by Year / 2023 | Term Loans Originated by Year / 2022 | Term Loans Originated by Year / 2021 | Term Loans Originated by Year / Prior | Revolving Loans | Revolving Loans / Revolving Loans Converted to Term Loans | Revolving Loans / Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Commercial and Industrial: |  |  |  |  |  |  |  |  |  |
| Pass (Rated 1- 4) | $17,603 | $33,394 | $11,776 | $23,117 | $22,220 | $25,673 | $74,015 | $58 | $207,856 |
| Special Mention (Rated 5) | — | — | 19 | — | 72 | — | 5,648 | — | 5,739 |
| Substandard (Rated 6) | — | — | 5,259 | 526 | — | 975 | 1,435 | — | 8,195 |
| Total commercial and industrial loans | $17,603 | $33,394 | $17,054 | $23,643 | $22,292 | $26,648 | $81,098 | $58 | $221,790 |
| Current period gross charge-offs | — | — | — | — | — | — | — | $9 | $9 |
| Payment Performance: |  |  |  |  |  |  |  |  |  |
| Performing | $17,603 | $33,394 | $17,054 | $23,643 | $22,292 | $26,299 | $80,999 | $58 | $221,342 |
| Nonaccrual | — | — | — | — | — | 349 | 99 | — | 448 |
| Consumer: |  |  |  |  |  |  |  |  |  |
| Pass | $405 | $514 | $698 | $313 | $63 | $85 | $851 | — | $2,929 |
| Substandard | — | — | — | — | — | — | — | — | — |
| Total consumer loans | $405 | $514 | $698 | $313 | $63 | $85 | $851 | — | $2,929 |
| Current period gross charge-offs | $152 | — | — | — | — | $6 | — | $70 | $228 |
| Payment Performance: |  |  |  |  |  |  |  |  |  |
| Performing | $405 | $514 | $698 | $313 | $63 | $85 | $851 | — | $2,929 |
| Nonaccrual | — | — | — | — | — | — | — | — | — |

26

The following table summarizes information about
total loans rated Special Mention, Substandard, Doubtful, or Loss for the periods noted.

_(Dollar in thousands)_

| Line item | March 31, 2026 | December 31, 2025 |
| --- | --- | --- |
| Criticized loans: |  |  |
| Special Mention: |  |  |
| Commercial real estate loans | $22,870 | $11,397 |
| Commercial and industrial loans | 14,688 | 5,739 |
| Total | 37,558 | 17,136 |
| Substandard: |  |  |
| Commercial real estate loans | 9,468 | 9,524 |
| Commercial and industrial loans | 7,268 | 8,195 |
| Residential real estate loans | 4,404 | 4,804 |
| Total | 21,140 | 22,523 |
| Total criticized loans | $58,698 | $39,659 |
| Total criticized loans as a percentage of total loans | 2.7% | 1.8% |

At March 31, 2026 and December 31, 2025,
the Company did not have any loans rated Doubtful or Loss.

At March 31, 2026, total criticized loans, defined
as special mention and substandard loans, totaled $58.7 million, or 2.7% of total loans, compared to $39.7 million, or 1.8% of total
loans, at December 31, 2025. Loans designated special mention, which are not considered classified, increased $20.5 million, from $17.1 million, or 0.8% of total loans, at December 31, 2025 to $37.6 million, or 1.7% of total loans, at March 31, 2026. During the same period,
substandard loans decreased $1.4 million, or 6.1%, to $21.1 million, or 1.0% of total loans.

Of the $37.6 million in loans designated special
mention at March 31, 2026, $14.7 million, or 39.1%, are commercial and industrial loans, and $22.9 million, or 60.9%, are commercial
real estate loans. Of the $21.1 million in loans categorized substandard at March 31, 2026, $7.3 million, or 34.4%, are commercial and
industrial loans, $9.5 million, or 44.8%, are commercial real estate loans, and $4.4 million, or 20.8%, are residential real estate loans.
Of the total $58.7 million in criticized loans at March 31, 2026, 96.1% are current and paying as agreed.

The increase in special mention loans from December
31, 2025 to March 31, 2026 resulted from the downgrade of two commercial relationships totaling $21.5 million, from “pass”
risk ratings to special mention. The two relationships are paying as agreed and are being monitored closely by Management.

**6. GOODWILL AND OTHER INTANGIBLES**

Goodwill

At March 31, 2026 and December 31, 2025, the carrying
value of the Company’s goodwill was $12.5 million. Goodwill is measured as the excess of the cost of a business combination over
the sum of the amounts assigned to identifiable assets acquired less liabilities assumed. Goodwill is not amortized but rather assessed
for impairment annually or more frequently if circumstances warrant. Management 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 March 31, 2026 and December 31, 2025, the Company’s goodwill was related to the acquisition of Chicopee Bancorp,
Inc. in October 2016. For the three months ended March 31, 2026, 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.

27

Core Deposit Intangibles

In connection with the acquisition of Chicopee
Bancorp, Inc., the Company recorded a core deposit intangible of $4.5 million, which is being amortized over twelve years using the straight-line
method. Amortization expense was $94,000 for the three months ended March 31, 2026 and the three months ended March 31, 2025, respectively.
At March 31, 2026, future amortization of the core deposit intangible totaled $375,000 for each of the next two years and $219,000 thereafter.

**7. SHARE-BASED COMPENSATION**

**Restricted Stock Awards.**

On January 28, 2025, the Company’s Board
of Director’s approved the Amended and Restated 2021 Omnibus Incentive Plan (the “Amended and Restated Plan”) to increase
the total number of shares of common stock available for issuance by 1,000,000 shares, subject to shareholder approval. On May 14, 2025,
the Company held its Annual Meeting of Shareholders at which time the Company’s shareholders approved the Amended and Restated Plan,
as presented, to increase the total number of shares of common stock available for issuance by 1,000,000 shares. The Amended and Restated
Plan became effective with such shareholder approval on May 14, 2025. Any shares that are not issued because vesting requirements are
not met will be available for future issuance under the Amended and Restated Plan.

On an annual basis, the Compensation Committee
(the “Committee”) approves long-term incentive awards out of the Amended and Restated Plan, whereby shares are 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 employee’s responsibilities, reward performance and leadership and as a retention
tool. The objective of the award is to align compensation for the eligible participants of the Company and directors over a multi-year
period directly with the interests of the Company’s shareholders by motivating and rewarding creation and preservation of long-term
financial strength, shareholder value, and relative shareholder return.

**2023 Long-Term Incentive Plan.**

In March 2023, the Committee granted 120,998 shares
under the 2023 Long-Term Incentive Plan (the “2023 LTI Plan”). Of the 120,998 shares granted, 60,499 shares, or 50% of the
shares granted, were time-based restricted shares and vested ratably over a three-year period. The remaining 60,499 shares, or 50% of
the shares granted, were performance-based restricted shares that were subject to the achievement of the 2023 LTI Plan performance metrics.

The Committee selected Return on Average Equity
(“ROAE”) and Three-Year Cumulative Diluted Earnings Per Share (“EPS”) as the long-term performance goal. Each
of these two measures were independently assigned a 50% weight for determining future performance against goals. The actual number of
performance shares that vest will be determined at the end of the three-year period, depending upon the Company’s performance against
the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based shares and 50% time-based
shares.

For each performance-based goal, achieving threshold
performance pays at 50% of target value, and achieving stretch performance pays at 150% of target value. The 2023 LTI Plan included a
“catch-up” provision which allowed unearned performance-based restricted shares from the first and second performance periods
to be earned at the end of the three-year period based on final year performance. To the extent earned at the end of the performance period,
performance shares would be paid in the form of vested shares of common stock at a date determined by the Committee within seventy-five
(75) days following the end of the performance period.

28

The Threshold, Target and Stretch metrics under
the 2023 LTI Plan are as follows:

| Performance Period Ending | ROAE Metrics – 50% Weighted / Threshold | ROAE Metrics – 50% Weighted / Target | ROAE Metrics – 50% Weighted / Stretch | ROAE Metrics – 50% Weighted / Actual |
| --- | --- | --- | --- | --- |
| December 31, 2023 | 8.00% | 8.45% | 8.85% | 6.47% |
| December 31, 2024 | 8.75% | 9.25% | 9.75% | 4.93% |
| December 31, 2025 | 9.00% | 9.50% | 10.00% | 6.35% |

| Performance Period Ending | EPS Metrics – 50% Weighted / Threshold | EPS Metrics – 50% Weighted / Target | EPS Metrics – 50% Weighted / Stretch | EPS Metrics – 50% Weighted / Actual |
| --- | --- | --- | --- | --- |
| Three-Year Cumulative Diluted EPS | $2.39 | $2.65 | $2.89 | $2.01 |

As of December 31, 2025, the three-year performance
period for the 2023 LTI Plan ended and all performance-based shares granted were forfeited by the Committee on January 21, 2026. A total
of 54,754 performance-based shares were forfeited during the first quarter of 2026.

**2023 Annual Equity Retainer.**

In March 2023, under the Company’s 2021
Omnibus Plan, each non-employee director received an annual equity retainer of 2,022 time-based restricted shares of WNEB common stock.
In total, 18,198 shares were granted and fully vested on December 31, 2023.

**2024 Long-Term Incentive Plan.**

In March 2024, the Committee granted 146,422 shares
under the 2024 Long-Term Incentive Plan (the “2024 LTI Plan”). Of the 146,422 shares granted, 73,211 shares, or 50% of the
shares granted, were time-based restricted shares that are scheduled to vest ratably over a three-year period. The remaining 73,211 shares,
or 50% of the share granted, were performance-based restricted shares that are subject to the achievement of the 2024 LTI Plan performance
metrics.

The Committee selected ROAE and EPS as the long-term
performance goals. Each of these two measures were independently assigned a 50% weight for determining future performance against goals.
The actual number of performance shares that vest will be determined at the end of the three-year period, depending upon the Company’s
performance against the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based
shares and 50% time-based shares.

For each performance-based goal, achieving threshold
performance pays at 50% of target value, and achieving stretch performance pays at 150% of target value. The 2024 LTI Plan includes a
“catch-up” provision which allows unearned performance-based restricted shares from the first and second performance periods
to be earned at the end of the three-year period based on final year performance. To the extent earned at the end of the performance period,
performance shares will be paid in the form of vested shares of common stock at a date determined by the Committee within seventy-five
(75) days following the end of the performance period.

The Threshold, Target and Stretch metrics under
the 2024 LTI Plan are as follows:

| Performance Period Ending | ROAE Metrics – 50% Weight / Threshold | ROAE Metrics – 50% Weight / Target | ROAE Metrics – 50% Weight / Stretch |
| --- | --- | --- | --- |
| December 31, 2024 | 5.05% | 5.61% | 6.17% |
| December 31, 2025 | 6.18% | 6.86% | 7.55% |
| December 31, 2026 | 7.30% | 8.11% | 8.92% |

29

| Performance Period Ending | EPS Metrics – 50% Weight / Threshold | EPS Metrics – 50% Weight / Target | EPS Metrics – 50% Weight / Stretch |
| --- | --- | --- | --- |
| Three-Year Cumulative Diluted EPS | $2.25 | $2.50 | $2.75 |

**2024 Annual Equity Retainer.**

In March 2024, under the Company’s 2021
Omnibus Plan, each non-employee director received an annual equity retainer of 2,384 time-based restricted shares of WNEB common stock.
In total, 21,456 shares were granted and there were 19,072 shares that fully vested on December 31, 2024.

**2025 Long-Term Incentive Plan.**

In March 2025, the Committee granted 140,384 shares
under the 2025 Long-Term Incentive Plan (the “2025 LTI Plan”). Of the 140,384 shares granted, 70,192 shares, or 50% of the
shares granted, were time-based restricted shares that are scheduled to vest ratably over a three-year period. The remaining 70,192 shares,
or 50% of the shares granted, were performance-based restricted shares that are subject to the achievement of the 2025 LTI Plan performance
metrics.

The Committee selected ROAE and EPS as the long-term
performance goals. Each of these two measures were independently assigned a 50% weight for determining future performance against goals.
The actual number of performance shares that vest will be determined at the end of the three-year period, depending upon the Company’s
performance against the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based
shares and 50% time-based shares.

For each performance-based goal, achieving threshold
performance pays at 50% of target value, and achieving stretch performance pays at 150% of target value. The 2025 LTI Plan includes a
“catch-up” provision which allows unearned performance-based restricted shares from the first and second performance periods
to be earned at the end of the three-year period based on final year performance. To the extent earned at the end of the performance period,
performance shares will be paid in the form of vested shares of common stock at a date determined by the Committee within seventy-five
(75) days following the end of the performance period.

The Threshold, Target and Stretch metrics under
the 2025 LTI Plan are as follows:

| Performance Period Ending | ROAE Metrics – 50% Weight / Threshold | ROAE Metrics – 50% Weight / Target | ROAE Metrics – 50% Weight / Stretch |
| --- | --- | --- | --- |
| December 31, 2025 | 5.12% | 6.10% | 7.32% |
| December 31, 2026 | 6.10% | 7.24% | 8.69% |
| December 31, 2027 | 6.52% | 7.76% | 9.31% |

| Performance Period Ending | EPS Metrics – 50% Weight / Threshold | EPS Metrics – 50% Weight / Target | EPS Metrics – 50% Weight / Stretch |
| --- | --- | --- | --- |
| Three-Year Cumulative Diluted EPS | $2.10 | $2.50 | $3.00 |

**2025 Annual Equity Retainer.**

In May 2025, under the Company’s Amended
and Restated Plan, each non-employee director received an annual equity retainer of 2,116 time-based restricted shares of WNEB common
stock. In total, 16,928 shares were granted and became fully vested on December 31, 2025.

30

**2026 Long-Term Incentive Plan.**

In March 2026, the Committee granted 105,972 shares
under the 2026 Long-Term Incentive Plan (the “2026 LTI Plan”). Of the 105,972 shares granted, 52,986 shares, or 50% of the
shares granted, were time-based restricted shares that are scheduled to vest ratably over a three-year period. The remaining 52,986 shares,
or 50% of the shares granted, were performance-based restricted shares that are subject to the achievement of the 2026 LTI Plan performance
metrics.

The Committee selected ROAE and EPS as the long-term
performance goals. Each of these two measures were independently assigned a 50% weight for determining future performance against goals.
The actual number of performance shares that vest will be determined at the end of the three-year period, depending upon the Company’s
performance against the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based
shares and 50% time-based shares.

For each performance-based goal, achieving threshold
performance pays at 50% of target value, and achieving stretch performance pays at 150% of target value. The 2026 LTI Plan includes a
“catch-up” provision which allows unearned performance-based restricted shares from the first and second performance periods
to be earned at the end of the three-year period based on final year performance. To the extent earned at the end of the performance period,
performance shares will be paid in the form of vested shares of common stock at a date determined by the Committee within seventy-five
(75) days following the end of the performance period.

The Threshold, Target and Stretch metrics under
the 2026 LTI Plan are as follows:

| Performance Period Ending | ROAE Metrics – 50% Weight / Threshold | ROAE Metrics – 50% Weight / Target | ROAE Metrics – 50% Weight / Stretch |
| --- | --- | --- | --- |
| December 31, 2026 | 6.21% | 7.31% | 8.77% |
| December 31, 2027 | 7.01% | 8.25% | 9.90% |
| December 31, 2028 | 7.65% | 9.00% | 10.80% |

| Performance Period Ending | EPS Metrics – 50% Weight / Threshold | EPS Metrics – 50% Weight / Target | EPS Metrics – 50% Weight / Stretch |
| --- | --- | --- | --- |
| Three-Year Cumulative Diluted EPS | $2.82 | $3.32 | $3.98 |

**2026 Annual Equity Retainer.**

In March 2026, under the Company’s Amended
and Restated Plan, each non-employee director received an annual equity retainer of 1,603 time-based restricted shares of WNEB common
stock. In total, 12,824 shares were granted and will become fully vested on December 31, 2026.

At March 31, 2026, there were 940,502 remaining
shares available to grant under the Amended and Restated Plan.

A summary of the status of unvested restricted stock awards at March
31, 2026 and March 31, 2025 is presented below:

| Line item | Shares | Weighted Average Grant Date Fair Value ($) |
| --- | --- | --- |
| Balance at December 31, 2025 | 261,000 | 9.11 |
| Shares granted | 54,086 | 12.48 |
| Shares reissued | 64,710 | 12.48 |
| Shares forfeited | (54,754) | 9.89 |
| Balance at March 31, 2026 | 325,042 | 10.21 |

31

| Line item | Shares | Weighted Average Grant Date Fair Value ($) |
| --- | --- | --- |
| Balance at December 31, 2024 | 254,732 | 9.01 |
| Shares granted | 115,824 | 9.30 |
| Forfeited shares reissued | 24,560 | 9.30 |
| Shares forfeited | (22,176) | 9.12 |
| Shares vested | (31,460) | 9.12 |
| Balance at March 31, 2025 | 341,480 | 9.11 |

The Company recorded a total
(benefit) expense for restricted stock awards of $(187,000) and $145,000 for the three months ended March 31, 2026 and the three months
ended March 31, 2025, respectively.

**8. SHORT-TERM BORROWINGS AND LONG-TERM DEBT**

On a long-term basis, the Company intends to continue
to increase its core deposits to fund loan growth. The Company also utilizes FHLB borrowings as part of the Company’s overall strategy
to manage interest rate risk and liquidity risk. FHLB advances are secured by a blanket security agreement which requires the Company
to maintain certain qualifying assets as collateral, principally certain residential real estate loans, commercial real estate loans,
and securities, not otherwise pledged. The maximum amount that the FHLB will advance to member institutions, including the Company, fluctuates
from time to time in accordance with the policies of the FHLB. 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. Advances are made under several different credit
programs with different lending standards, interest rates, and range of maturities. The Company’s relationship with the FHLB is
an integral component of the Company’s asset-liability management program. At March 31, 2026, the Company pledged $932.5 million
of eligible collateral to support its borrowing capacity at the FHLB.

At March 31, 2026 and December 31, 2025, short-term
FHLB advances totaled $10.0 million with a weighted average rate of 3.99%. The Company also has a standing available Overnight Ideal Way
Line of Credit (“Ideal Way Line of Credit”) with the FHLB of $9.5 million. Interest on the Ideal Way Line of Credit is payable
at a rate determined and reset by the FHLB on a daily basis. The outstanding principal is due daily but the portion not repaid will be
automatically renewed. At March 31, 2026 and December 31, 2025, the Company did not have an outstanding balance under the Ideal Way Line
of Credit. At March 31, 2026, the Company had an immediate availability to borrow an additional $485.1 million from the FHLB, including
the Ideal Way Line of Credit, based on qualified collateral pledged.

Other borrowings, held as collateral for customer
swap arrangements, totaled $3.8 million at March 31, 2026, with a weighted average rate of 3.64%, and $3.3 million at December 31, 2025,
with a weighted average rate of 3.64%.

As a member of the FRB, the Company may also borrow
from the Federal Reserve Bank Discount Window (the “FRB Discount Window”). At March 31, 2026 and December 31, 2025, the Company
had an available line of credit of $337.3 million and $349.0 million, respectively, with the FRB Discount Window at an interest rate determined
and reset on a daily basis. Borrowings from the FRB Discount Window are secured by eligible loan collateral and certain securities from
the Company’s investment portfolio, not otherwise pledged. At March 31, 2026 and December 31, 2025, the Company did not have an
outstanding balance under the FRB Discount Window.

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 March 31, 2026 and December
31, 2025, there were no advances outstanding under these lines.

Long-term debt consists of FHLB and FRB advances
with an original maturity of one year or more. At both March 31, 2026 and December 31, 2025, long-term debt consisted of $73.0 million
in outstanding FHLB advances with a weighted average fixed rate of 4.94%.

32

**9. SUBORDINATED DEBT**

On 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 March 31, 2026, $19.8 million aggregate principal 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 $200,000 as of March 31, 2026, which are being amortized into interest expense over the life of the Notes. Amortization of issuance
costs into interest expense was $10,000 for both the three months ended March 31, 2026 and the three months ended March 31, 2025, respectively.

**10. 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 rate. 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**.**

At March 31, 2026 and December 31, 2025, there
were no outstanding fair value hedges on the balance sheet.

**Non-Hedging Derivatives.**

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. 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.

33

**Fair Values of Derivative Instruments on the
Balance Sheet.**

The tables below present the fair value of our
derivative financial instruments designated as non-hedging instruments as well as our classification on the balance sheet as of March
31, 2026 and December 31, 2025.

_(Dollars in thousands)_

| March 31, 2026 | Asset Derivatives / Balance Sheet Location | Asset Derivatives / Fair Value | Liability Derivatives / Balance Sheet Location | Liability Derivatives / Fair Value |
| --- | --- | --- | --- | --- |
| Derivatives not designated as hedging instruments: |  |  |  |  |
| Interest rate swap – with customer counterparties |  | $551 |  | $4,166 |
| Interest rate swap – with dealer counterparties |  | 4,166 |  | 551 |
| Total derivatives | Other Assets | $4,717 | Other Liabilities | $4,717 |

_(Dollars in thousands)_

| December 31, 2025 | Asset Derivatives / Balance Sheet Location | Asset Derivatives / Fair Value | Liability Derivatives / Balance Sheet Location | Liability Derivatives / Fair Value |
| --- | --- | --- | --- | --- |
| Derivatives not designated as hedging instruments: |  |  |  |  |
| Interest rate swap – with customer counterparties |  | $821 |  | $4,142 |
| Interest rate swap – with dealer counterparties |  | 4,142 |  | 821 |
| Total derivatives | Other Assets | $4,963 | Other Liabilities | $4,963 |

**Effect of Derivative Instruments in the Consolidated
Statements of Net Income.**

There were no gains or losses on fair value hedging
relationships recorded through interest income for the three months ended March 31, 2026 and the three months ended March 31, 2025, respectively.

There were no gains or losses recognized in accumulated
other comprehensive income related to derivative financial instruments during the three months ended March 31, 2026 and the three months
ended March 31, 2025, respectively.

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 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.

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.

34

At March 31, 2026, the Company had minimum collateral
posting thresholds with certain derivative counterparties. At March 31, 2026, the Company did not have any derivatives in a net liability
position with its counterparties and was not required to post collateral under these agreements.

**11. FAIR VALUE OF ASSETS AND LIABILITIES**

**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.

**Securities.** 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 sponsored by the
U.S. government or an agency thereof. Fair value measurements are obtained from a third-party pricing service and are not adjusted by
management.

**Interest rate swaps.** The valuation of our
interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected
cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including
the period to maturity and interest rate curves. We have determined that the majority of the inputs used to value our interest rate derivatives
fall within Level 2 of the fair value hierarchy.

**Assets and Liabilities Measured at Fair Value
on a Recurring Basis.**

Assets and liabilities measured at fair value
on a recurring basis are summarized below:

_March 31, 2026 · (Dollars in thousands)_

| Line item | Level 1 | Level 2 | Level 3 | Total |
| --- | --- | --- | --- | --- |
| Assets: |  |  |  |  |
| Securities available-for-sale | — | $173,215 | — | $173,215 |
| Marketable equity securities | 610 | — | — | 610 |
| Interest rate swaps | — | 4,717 | — | 4,717 |
| Total assets | $610 | $177,932 | — | $178,542 |
| Liabilities: |  |  |  |  |
| Interest rate swaps | — | $4,717 | — | $4,717 |

35

_December 31, 2025 · (Dollars in thousands)_

| Line item | Level 1 | Level 2 | Level 3 | Total |
| --- | --- | --- | --- | --- |
| Assets: |  |  |  |  |
| Securities available-for-sale | — | $175,800 | — | $175,800 |
| Marketable equity securities | 632 | — | — | 632 |
| Interest rate swaps | — | 4,963 | — | 4,963 |
| Total assets | $632 | $180,763 | — | $181,395 |
| Liabilities: |  |  |  |  |
| Interest rate swaps | — | $4,963 | — | $4,963 |

There were no transfers to or from Level 3 for
assets measured at fair value on a recurring basis during the three months ended March 31, 2026 or for the year ended December 31, 2025.

**Assets Measured at Fair Value on a Non-recurring
Basis.**

The Company may also be required, from time to
time, to measure certain other financial assets at fair value on a nonrecurring basis in accordance with generally accepted accounting
principles. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual
assets. The following table summarizes the fair value hierarchy used to determine the carrying values of the related assets as of December
31, 2025. There were no collateral dependent loans measured at fair value on a nonrecurring basis as of March 31, 2026.

_(Dollars in thousands) · (Dollars in thousands)_

| Line item | At December 31, 2025 / Level 1 | At December 31, 2025 / Level 2 | At December 31, 2025 / Level 3 | Three Months Ended / March 31, 2025 / Total / Losses |
| --- | --- | --- | --- | --- |
| Collateral dependent loans | — | — | $1 | — |

The amount of individually evaluated collateral
dependent loans represents the carrying value, net of the related write-down or valuation allowance of collateral dependent loans for
which adjustments are based on the estimated fair value of the underlying collateral. The fair value of collateral dependent
loans with specific allocations of the allowance for credit losses on loans is generally based on real estate appraisals performed by
independent licensed or certified appraisers. These appraisals may utilize a single valuation approach or a combination of approaches
including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to
adjust for differences between the comparable sales and income data available. Management will discount appraisals as deemed necessary
based on the date of the appraisal and new information deemed relevant to the valuation. Such adjustments are typically significant
and result in a Level 3 classification of the inputs for determining fair value.

36

**Summary of Fair Values of Financial Instruments.**

The estimated fair values of our financial instruments
are as follows:

_March 31, 2026 · (Dollars in thousands)_

| Line item | Fair Value / Level 1 | Fair Value / Level 2 | Fair Value / Level 3 | Fair Value / Total |
| --- | --- | --- | --- | --- |
| Assets: |  |  |  |  |
| Cash and cash equivalents | $$56,137 | — | — | $56,137 |
| Securities held-to-maturity | 4,918 | 149,897 | — | 154,815 |
| Securities available-for-sale | — | 173,215 | — | 173,215 |
| Marketable equity securities | 610 | — | — | 610 |
| FHLB and other restricted stock | — | — | 5,736 | 5,736 |
| Loans - net | — | — | 2,075,030 | 2,075,030 |
| Accrued interest receivable | — | — | 8,931 | 8,931 |
| Mortgage servicing rights | — | 774 | — | 774 |
| Derivative asset | — | 4,717 | — | 4,717 |
| Liabilities: |  |  |  |  |
| Deposits | — | — | 2,380,425 | 2,380,425 |
| Short-term borrowings | — | 23,830 | — | 23,830 |
| Long-term debt | — | 73,300 | — | 73,300 |
| Subordinated debt | — | 17,381 | — | 17,381 |
| Accrued interest payable | — | — | 816 | 816 |
| Derivative liabilities | — | 4,717 | — | 4,717 |

_December 31, 2025 · (Dollars in thousands)_

| Line item | Fair Value / Level 1 | Fair Value / Level 2 | Fair Value / Level 3 | Fair Value / Total |
| --- | --- | --- | --- | --- |
| Assets: |  |  |  |  |
| Cash and cash equivalents | $$40,381 | — | — | $40,381 |
| Securities held-to-maturity | 4,898 | 153,606 | — | 158,504 |
| Securities available-for-sale | — | 175,800 | — | 175,800 |
| Marketable equity securities | 632 | — | — | 632 |
| FHLB and other restricted stock | — | — | 5,359 | 5,359 |
| Loans - net | — | — | 2,061,147 | 2,061,147 |
| Accrued interest receivable | — | — | 8,783 | 8,783 |
| Mortgage servicing rights | — | 673 | — | 673 |
| Derivative asset | — | 4,963 | — | 4,963 |
| Liabilities: |  |  |  |  |
| Deposits | — | — | 2,359,790 | 2,359,790 |
| Short-term borrowings | — | 13,286 | — | 13,286 |
| Long-term debt | — | 73,601 | — | 73,601 |
| Subordinated debt | — | 15,796 | — | 15,796 |
| Accrued interest payable | — | — | 752 | 752 |
| Derivative liabilities | — | 4,963 | — | 4,963 |

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**12. RECENT ACCOUNTING PRONOUNCEMENTS**

In November 2024, the Financial Accounting
Standards Board issued Accounting Standards Update (“ASU”) 2024-03, *Income Statement – Reporting Comprehensive
Income – Expense Disaggregation Disclosures – Disaggregation of Income Statement Expenses* (Subtopic 220-40). ASU
2024-03 requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03 requires new
financial statement disclosures in tabular form, disaggregating information about prescribed categories underlying any relevant
income statement expense caption. The prescribed categories include, among other things, employee compensation, depreciation, and
intangible asset amortization. Additionally, entities must disclose the total amount of selling expenses and, in annual reporting
periods, an entity’s definition of selling expenses. This ASU is effective for the Company, on a prospective basis, for annual
reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after
December 15, 2027 and is not expected to have a material impact on the Company’s consolidated financial statements.

**13. SEGMENT**

The Company operates as a single reportable segment under ASC 280, as the Chief Operating Decision Maker (“CODM”) reviews financial performance and
allocates resources based on the consolidated results of the Company as a whole. The Company, through its bank subsidiary,
provides banking services to individuals and companies primarily in Hampden County and Hampshire County in western
Massachusetts and the Capital Region in Connecticut. These services include commercial lending, residential lending and consumer
lending, checking, savings, time deposits, cash management, and wealth management. The CODM primarily evaluates performance
using net interest income and net income as reported in the consolidated statement of income. The Company’s primary measure of
profitability is net interest and dividend income. Net interest and dividend income is the difference between the interest income
earned on interest-earning assets and the interest paid on interest-bearing liabilities. Interest-earning assets consist primarily
of commercial real estate loans, commercial and industrial loans, residential real estate loans, and securities. Interest-bearing
liabilities consist primarily of time deposits and money market accounts, demand deposits, savings accounts and borrowings from the
FHLB. The consolidated results of operations also depend on the provision for credit losses, non-interest income, and non-interest
expense. In addition, the CODM considers net income as a key measure of overall financial performance. The Company’s CODM
consists of members of the Senior Management team, including the Chief Executive Officer, the Chief Financial Officer, the Chief
Banking Officer, and the Chief Lending Officer.

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## ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.**

**Overview.**

We strive to remain a leader in meeting the financial
service needs of the local community and to provide quality service to the individuals and businesses in the market areas that we have
served since 1853. Historically, we have been a community-oriented provider of traditional banking products and services to business organizations
and individuals, including products such as residential and commercial real estate loans, commercial and industrial loans, consumer loans,
and a variety of deposit products. We meet the needs of our local community through a community-based and service-oriented approach to
banking.

The Company has adopted a growth-oriented strategy
that continues to focus on increasing commercial lending and residential lending. Our strategy also calls for increasing deposit relationships,
specifically core deposits, which the Company defines as all deposits except for time deposits, and broadening our product lines and services.
We believe that this business strategy is best for our long-term success and viability and complements our existing commitment to high-quality
customer service.

In connection with our overall growth strategy,
we seek to:

- Increase market share and achieve scale to improve the Company’s profitability, efficiency and return value to shareholders;
- Grow the Company’s commercial loan portfolio and related commercial deposits by targeting businesses in our primary market area of Hampden and Hampshire Counties in western Massachusetts and the Capital Region in Connecticut;
- Grow the Company’s residential real estate portfolio to diversify the Company’s loan portfolio and deepen customer relationships;
- Focus on expanding our retail banking deposit franchise and increase the number of households served within our designated market area;
- Invest in people, systems, and technology to grow revenue, improve efficiency and enhance the overall customer experience;
- Grow revenues, increase book value per share and tangible book value per share (a non-GAAP financial measure), pay competitive dividends to shareholders, and utilize the Company’s stock repurchase plan to leverage our capital and enhance franchise value; and
- Consider growth through mergers and acquisitions. We may pursue expansion opportunities in existing or adjacent strategic locations with companies that add complementary products to our existing business and at terms that add value to our existing shareholders.

You should read the following financial results
for the three months ended March 31, 2026 in the context of this strategy.

- The Company reported an increase in net income of $2.5 million, or 107.4%, from $2.3 million, or $0.11 per diluted share, for the three months ended March 31, 2025, to $4.8 million, or $0.24 per diluted share, for the three months ended March 31, 2026. Net interest income increased $3.3 million, or 21.2%, provision for credit losses decreased $67,000, or 47.2%, non-interest income increased $674,000, or 24.4%, and non-interest expense increased $824,000, or 5.4%, during the same period.

39

- During the three months ended March 31, 2026, the Company recorded a provision for credit losses of $75,000, a decrease of $67,000, or 47.2%, from $142,000 for the three months ended March 31, 2025. The decrease was primarily due to a decrease in unfunded commitments.
- Net interest income increased $3.3 million, or 21.2%, to $18.8 million, for the three months ended March 31, 2026, from $15.5 million for the three months ended March 31, 2025. The increase in net interest income was due to an increase in interest and dividend income of $1.8 million, or 6.5%, and a decrease in interest expense of $1.4 million, or 11.2%. The decrease in interest expense was primarily due to a decrease in the average cost of interest-bearing liabilities of 36 basis points, from 2.82% for the three months ended March 31, 2025 to 2.46% for the three months ended March 31, 2026.

**CRITICAL ACCOUNTING POLICIES.**

Our consolidated financial statements are prepared
in accordance with GAAP and practices within the banking industry. Application of these principles requires management to make estimates,
assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions,
and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes,
the financial statements could reflect different estimates, assumptions, and judgments. Actual results could differ from those estimates.

Critical accounting estimates are necessary in
the application of certain accounting policies and procedures, and are particularly susceptible to significant change. Critical accounting
policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially
different results under different assumptions and conditions.

There have been no material changes to our critical
accounting policies during the three months ended March 31, 2026. For additional information on our critical accounting policies, please
refer to the information contained in Note 1 of the accompanying unaudited consolidated financial statements and Note 1 of the consolidated
financial statements included in our 2025 Annual Report.

**COMPARISON OF FINANCIAL CONDITION AT MARCH
31, 2026 AND DECEMBER 31, 2025**

At March 31, 2026, total assets were $2.8 billion,
an increase of $28.0 million, or 1.0%, from December 31, 2025. The increase in total assets was primarily due to an increase in total
loans of $17.2 million, or 0.8%, and an increase in cash and cash equivalents of $15.8 million, or 39.0%.

At March 31, 2026, the investment securities portfolio
totaled $359.2 million, or 13.0% of total assets, compared to $365.2 million, or 13.3% of total assets, at December 31, 2025. At March
31, 2026, the Company’s available-for-sale securities portfolio, recorded at fair market value, was $173.2 million, a decrease of
$2.6 million, or 1.5%, from $175.8 million at December 31, 2025. The held-to-maturity securities portfolio, recorded at amortized cost,
decreased $3.4 million, or 1.8%, from $188.8 million at December 31, 2025 to $185.4 million at March 31, 2026.

At March 31, 2026, the Company reported net unrealized
losses on the available-for-sale securities portfolio of $23.0 million, or 11.7% of the amortized cost basis of the available-for-sale
securities portfolio, compared to net unrealized losses of $22.4 million, or 11.3% of the amortized cost basis of the available-for-sale
securities at December 31, 2025. At March 31, 2026, the Company reported net unrealized losses on the held-to-maturity securities portfolio
of $30.6 million, or 16.5% of the amortized cost basis of the held-to-maturity securities portfolio, compared to $30.3 million, or 16.1%
of the amortized cost basis of the held-to-maturity securities portfolio at December 31, 2025.

The securities in which the Company may
invest are limited by regulation. Federally chartered savings banks have authority to invest in various types of assets, including
U.S. Treasury obligations, securities of various government-sponsored enterprises, mortgage-backed securities, certain certificates
of deposit of insured financial institutions, repurchase agreements, overnight and short-term loans to other banks, corporate debt
instruments, and marketable equity securities. The securities, with the exception of $11.0 million in corporate bonds, are issued by
the United States government or government-sponsored enterprises and are therefore either explicitly or implicitly guaranteed as to
the timely payment of contractual principal and interest. These positions are deemed to have no credit impairment, therefore, the
disclosed unrealized losses with the securities portfolio relate primarily to changes in prevailing interest rates. In all cases,
price improvement in future periods will be realized as the issuances approach maturity.

40

Management regularly reviews the portfolio for
securities in an unrealized loss position. At March 31, 2026 and December 31, 2025, the Company did not record any credit impairment
charges on its securities portfolio and attributed the unrealized losses primarily due to fluctuations in general interest rates or changes
in expected prepayments and not due to credit quality. The primary objective of the Company’s investment portfolio is to provide
liquidity and to secure municipal deposit accounts while preserving the safety of principal. The available-for-sale and held-to-maturity
portfolios are both eligible for pledging to the Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”)
as collateral for borrowings. The portfolios are comprised of high-credit quality investments and both portfolios generated cash flows
monthly from interest, principal amortization, and payoffs, which supports the Bank’s objective to provide liquidity.

Total loans increased $17.2 million, or 0.8%,
from $2.2 billion, or 79.7% of total assets, at December 31, 2025 to $2.2 billion, or 79.5% of total assets, at March 31, 2026. The increase
in total loans was primarily driven by an increase in residential real estate loans, including home equity loans, of $9.6 million, or
1.1%, an increase in commercial and industrial loans of $6.0 million, or 2.7%, and an increase in commercial real estate loans of $2.1
million, or 0.2%.

Total delinquency was $3.2 million, or 0.14%
of total loans, at March 31, 2026, compared to $3.1 million, or 0.14% of total loans, at December 31, 2025. At March 31, 2026, nonaccrual
loans totaled $4.7 million, or 0.21% of total loans, compared to $5.2 million, or 0.24% of total loans, at December 31, 2025. At March
31, 2026 and December 31, 2025, there were no loans 90 or more days past-due and still accruing interest. Total nonperforming assets,
defined as nonaccrual loans and other real estate owned, totaled $4.7 million, or 0.17% of total assets, at March 31, 2026, compared
to $5.2 million, or 0.19% of total assets, at December 31, 2025. At March 31, 2026 and December 31, 2025, the Company did not have any
other real estate owned.

At March 31, 2026, the allowance for credit losses
was $20.5 million, or 0.93% of total loans and 436.9% of nonaccrual loans, compared to $20.3 million, or 0.93% of total loans and 393.2%
of nonaccrual loans, at December 31, 2025.

At March 31, 2026, total criticized loans, defined
as special mention and substandard loans, totaled $58.7 million, or 2.7% of total loans, compared to $39.7 million, or 1.8% of total loans,
at December 31, 2025. Loans designated special mention, which are not considered classified, increased $20.5 million, from $17.1 million,
or 0.8% of total loans, at December 31, 2025 to $37.6 million, or 1.7% of total loans, at March 31, 2026. During the same period, substandard
loans decreased $1.4 million, or 6.1%, to $21.1 million, or 1.0% of total loans.

Of the $37.6 million in loans designated special
mention at March 31, 2026, $14.7 million, or 39.1%, are commercial and industrial loans, and $22.9 million, or 60.9%, are commercial real
estate loans. Of the $21.1 million in loans categorized substandard at March 31, 2026, $7.3 million, or 34.4%, are commercial and industrial
loans, $9.5 million, or 44.8%, are commercial real estate loans, and $4.4 million, or 20.8%, are residential real estate loans. Of the
total $58.7 million in criticized loans at March 31, 2026, 96.1% are current and paying as agreed.

The increase in special mention loans from December
31, 2025 to March 31, 2026 resulted from the downgrade of two commercial relationships totaling $21.5 million, from “pass”
risk ratings to special mention. The two relationships are paying as agreed and are being monitored closely by management.

Our commercial real estate portfolio consists
of diversified property types that are primarily within our geographic footprint. At March 31, 2026, the commercial real estate portfolio
totaled $1.1 billion and represented 50.1% of total loans. Of the $1.1 billion, $918.2 million, or 83.4%, was categorized as non-owner
occupied commercial real estate and represented 329.8% of the Bank’s total risk-based capital.

**CRE Concentrations.**

The
OCC, the FRB, and the FDIC (“Agencies”) issued guidance in 2006 which addresses institutions with increased
concentrations of commercial real estate (“CRE”) loans. The guidance does not establish specific CRE lending limits;
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 this 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.

41

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 the 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 1- to 4-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 this guidance are loans secured by nonfarm nonresidential properties
where the primary source of repayment is the cashflow 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 following supervisory criteria may be identified for further supervisory analysis
of the level and nature of its CRE concentration risk:

1. Total reported loans for construction, land development, and other land represent 100 percent or more of the institution’s total risk-based capital; or

2. Total commercial real estate loans, as defined in this guidance, represent 300 percent or more of the institution’s total risk-based capital, and the outstanding balance of the institution’s commercial real estate loan portfolio has increased by 50 percent or more during the prior 36 months.

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 March 31, 2026, commercial real estate loans represented 395.5% of
consolidated bank risk-based capital. Non-owner occupied commercial real estate loans totaled $918.2 million, or 329.8% of consolidated
bank risk-based capital, and owner-occupied commercial real estate loans totaled $182.9 million, or 65.7% of consolidated bank risk-based
capital. As of March 31, 2026, construction, land development, and other land loans represented 39.6% of consolidated bank risk-based
capital. During the prior 36 months, the Company has experienced an increase in its commercial real estate portfolio of 7.6%.

The
management team has extensive experience in underwriting commercial real estate loans and has implemented and continues to maintain heightened
risk management procedures and strong underwriting criteria with respect to its commercial real estate portfolio. The Company’s
Board of Directors (the “Board”) has established internal maximum limits on CRE as an asset class overall as well as sub limits
within CRE by property class, to better manage and control the exposure to property classes during periods of changing economic conditions.
The Board also has minimum targets for regulatory capital ratios that are in excess of well capitalized ratios.

Our
risk management process begins with a robust underwriting program. The underwriting and risk rating of all loans is completed by the Company’s
Credit Department that is independent of the originating lender(s).

42

The table below breaks down the commercial real
estate portfolio outstanding balance by non-owner and owner occupied and by concentration as of March 31, 2026:

| Property Type | Non-Owner Occupied | Owner Occupied | Total | % of CRE Portfolio | % of Total Loans | % of Total Bank Risk-Based Capital(1) |
| --- | --- | --- | --- | --- | --- | --- |
|  | (Dollars in thousands) |  |  |  |  |  |
| Office Portfolio | $172,989 | $21,481 | $194,470 | 17.7% | 8.8% | 69.9% |
| Apartment | 171,854 | — | 171,854 | 15.6% | 7.8% | 61.7% |
| Industrial | 128,745 | 38,783 | 167,528 | 15.2% | 7.6% | 60.2% |
| Retail | 112,367 | 5,036 | 117,403 | 10.7% | 5.3% | 42.2% |
| Mixed Use | 77,378 | 5,646 | 83,024 | 7.5% | 3.8% | 29.8% |
| Other | 44,571 | 24,369 | 68,940 | 6.3% | 3.2% | 24.8% |
| Self-Storage | 45,994 | 66 | 46,060 | 4.2% | 2.1% | 16.5% |
| Hotel/Hospitality | 41,169 | — | 41,169 | 3.7% | 1.9% | 14.8% |
| Shopping Center | 28,556 | 6,257 | 34,813 | 3.2% | 1.6% | 12.5% |
| Warehouse | 23,391 | 10,416 | 33,807 | 3.1% | 1.5% | 12.1% |
| Automotive Sales | 688 | 45,054 | 45,742 | 4.1% | 2.1% | 16.4% |
| Adult Care/Assisted Living | 28,718 | — | 28,718 | 2.6% | 1.3% | 10.3% |
| School/Higher Education | 10,175 | 15,737 | 25,912 | 2.3% | 1.2% | 9.3% |
| Student Housing | 24,515 | — | 24,515 | 2.2% | 1.1% | 8.8% |
| Auto Service and Repair | 7,109 | 10,064 | 17,173 | 1.6% | 0.8% | 6.2% |
| Total commercial real estate | $918,219 | $182,909 | $1,101,128 | 100.0% | 50.1% | 395.5% |
| % of Total Bank Risk-Based Capital(1) | 329.8% | 65.7% | 395.5% |  |  |  |
| % of Total CRE loans | 83.4% | 16.6% |  |  |  |  |

(1) Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.

At March 31, 2026, of the $1.1 billion in commercial
real estate loans, $918.2 million, or 83.4% of total commercial real estate loans, were categorized as non-owner occupied and represented
329.8% of total bank risk-based capital.

The table below breaks down the commercial real
estate portfolio outstanding balance by non-owner and owner occupied and by concentration as of December 31, 2025:

| Property Type | Non-Owner Occupied | Owner Occupied | Total | % of CRE Portfolio | % of Total Loans | % of Total Bank Risk-Based Capital(1) |
| --- | --- | --- | --- | --- | --- | --- |
|  | (Dollars in thousands) |  |  |  |  |  |
| Office Portfolio | $174,196 | $20,961 | $195,157 | 17.8% | 8.9% | 70.5% |
| Apartment | 174,330 | — | 174,330 | 15.9% | 8.0% | 62.9% |
| Industrial | 124,601 | 44,382 | 168,983 | 15.4% | 7.7% | 61.0% |
| Retail | 110,356 | 5,102 | 115,458 | 10.5% | 5.3% | 41.7% |
| Mixed Use | 75,593 | 5,741 | 81,334 | 7.4% | 3.7% | 29.4% |
| Other | 45,445 | 25,376 | 70,821 | 6.4% | 3.3% | 25.5% |
| Self-Storage | 46,106 | 67 | 46,173 | 4.2% | 2.1% | 16.7% |
| Automotive Sales | 697 | 45,631 | 46,328 | 4.2% | 2.1% | 16.7% |
| Hotel/Hospitality | 41,582 | — | 41,582 | 3.8% | 1.9% | 15.0% |
| Shopping Center | 28,854 | 6,292 | 35,146 | 3.2% | 1.6% | 12.7% |
| Warehouse | 23,560 | 10,339 | 33,899 | 3.1% | 1.6% | 12.2% |
| Adult Care/Assisted Living | 26,783 | — | 26,783 | 2.4% | 1.2% | 9.7% |
| School/Higher Education | 10,420 | 14,959 | 25,379 | 2.3% | 1.2% | 9.2% |
| Student Housing | 21,563 | — | 21,563 | 2.0% | 1.0% | 7.8% |
| Auto Service and Repair | 6,153 | 9,974 | 16,127 | 1.4% | 0.8% | 5.8% |
| Total commercial real estate | $910,239 | $188,824 | $1,099,063 | 100.0% | 50.4% | 396.8% |
| % of Total Bank Risk-Based Capital(1) | 328.6% | 68.2% | 396.8% |  |  |  |
| % of Total CRE loans | 82.8% | 17.2% |  |  |  |  |

(1) Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.

43

At December 31, 2025, of the $1.1 billion in commercial
real estate loans, $910.2 million, or 82.8% of total commercial real estate loans, were categorized as non-owner occupied and represented
328.6% of total bank risk-based capital.

The following table further breaks down the non-owner
occupied commercial real estate portfolio balances by concentration, collateral location and weighted average loan-to-value (“LTV”)
as of March 31, 2026:

| Property Type | MA | CT | NH | RI | ME | Other | Total | % of Total Bank Risk-Based Capital(1) | Weighted Average LTV(2) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | (Dollars in thousands) |  |  |  |  |  |  |  |
| Office | $63,580 | $59,975 | $38,285 | — | $11,149 | — | $172,989 | 62.1% | 62.2% |
| Apartment | 106,152 | 43,389 | — | 22,313 | — | — | 171,854 | 61.7% | 52.1% |
| Industrial | 78,601 | 34,493 | — | 11,217 | — | 4,434 | 128,745 | 46.2% | 56.6% |
| Retail | 53,427 | 25,732 | 13,759 | 6,032 | 13,417 | — | 112,367 | 40.4% | 49.6% |
| Mixed Use | 37,651 | 22,366 | — | 12,741 | — | 4,620 | 77,378 | 27.8% | 55.6% |
| Self-Storage | 36,047 | 9,180 | 767 | — | — | — | 45,994 | 16.5% | 55.2% |
| Other | 39,845 | 3,940 | 669 | — | 117 | — | 44,571 | 16.0% | 51.2% |
| Hotel/Hospitality | 19,884 | 21,285 | — | — | — | — | 41,169 | 14.8% | 50.6% |
| Adult Care/Assisted Living | 8,462 | 8,473 | 11,783 | — | — | — | 28,718 | 10.3% | 57.8% |
| Shopping Center | 9,103 | 19,453 | — | — | — | — | 28,556 | 10.3% | 48.0% |
| Student Housing | 6,684 | 14,831 | 2,660 | — | — | 340 | 24,515 | 8.8% | 57.8% |
| Warehouse | 16,920 | 4,859 | — | — | — | 1,612 | 23,391 | 8.4% | 41.1% |
| School/Higher Education | 10,175 | — | — | — | — | — | 10,175 | 3.7% | 42.9% |
| Automotive Service and Repair | 4,958 | 2,151 | — | — | — | — | 7,109 | 2.6% | 65.8% |
| Automotive Sales | 688 | — | — | — | — | — | 688 | 0.2% | 56.3% |
| Total Non-Owner CRE | $492,177 | $270,127 | $67,923 | $52,303 | $24,683 | $11,006 | $918,219 | 329.8% | 54.6% |

(1) Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.

(2) Weighted average LTV is based on the original appraisal and the current loan exposure.

The following table further breaks down the non-owner
occupied commercial real estate portfolio balances by concentration, collateral location, and weighted average LTV as of December 31,
2025:

| Property Type | MA | CT | NH | RI | ME | Other | Total | % of Total Bank Risk-Based Capital(1) | Weighted Average LTV(2) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | (Dollars in thousands) |  |  |  |  |  |  |  |
| Apartment | $107,299 | $43,612 | — | $23,419 | — | — | $174,330 | 62.9% | 52.2% |
| Office | 63,973 | 60,433 | 38,586 | — | 11,204 | — | 174,196 | 62.9% | 62.6% |
| Industrial | 74,031 | 34,887 | — | 11,229 | — | 4,454 | 124,601 | 45.0% | 56.4% |
| Retail | 53,291 | 25,964 | 13,865 | 6,070 | 11,166 | — | 110,356 | 39.8% | 50.8% |
| Mixed Use | 35,641 | 22,503 | — | 12,809 | — | 4,640 | 75,593 | 27.3% | 55.7% |
| Self-Storage | 36,155 | 9,180 | 771 | — | — | — | 46,106 | 16.6% | 55.4% |
| Other | 40,666 | 3,984 | 677 | — | 118 | — | 45,445 | 16.4% | 51.5% |
| Hotel/Hospitality | 20,074 | 21,508 | — | — | — | — | 41,582 | 15.0% | 51.1% |
| Shopping Center | 9,227 | 19,627 | — | — | — | — | 28,854 | 10.4% | 48.4% |
| Adult Care/Assisted Living | 8,543 | 8,514 | 9,726 | — | — | — | 26,783 | 9.7% | 58.1% |
| Warehouse | 17,034 | 4,889 | — | — | — | 1,637 | 23,560 | 8.5% | 41.4% |
| Student Housing | 3,628 | 14,934 | 2,660 | — | — | 341 | 21,563 | 7.8% | 60.7% |
| School/Higher Education | 10,420 | — | — | — | — | — | 10,420 | 3.8% | 43.3% |
| Automotive Service and Repair | 4,982 | 1,171 | — | — | — | — | 6,153 | 2.2% | 65.8% |
| Automotive Sales | 697 | — | — | — | — | — | 697 | 0.3% | 57.0% |
| Total Non-Owner CRE | $485,661 | $271,206 | $66,285 | $53,527 | $22,488 | $11,072 | $910,239 | 328.6% | 54.9% |

44

(1) Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.

(2) Weighted average LTV is based on the original appraisal and the current loan exposure.

The Company also underwrites and originates owner
occupied commercial real estate loans. These loans are typically term loans made to support properties that rely upon the operations
of the business occupying the property for repayment. The Agencies specifically excluded owner occupied commercial real estate from their
concentration guidance, as 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.

The table below depicts a well-diversified portfolio
of owner occupied commercial real estate portfolio as of March 31, 2026:

| Property Type | MA | CT | NH | Other | Total | % of Total Bank Risk-Based Capital(1) | Weighted Average LTV(2) |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | (Dollars in thousands) |  |  |  |  |  |  |
| Owner Occupied CRE |  |  |  |  |  |  |  |
| Automotive Sales | $26,974 | $18,080 | — | — | $45,054 | 16.2% | 59.9% |
| Automotive Service and Repair | 4,740 | 5,324 | — | — | 10,064 | 3.6% | 53.9% |
| School/Higher Education | 14,759 | 978 | — | — | 15,737 | 5.7% | 60.5% |
| Industrial | 32,439 | 6,150 | — | 194 | 38,783 | 13.9% | 49.5% |
| Mixed Use | 4,877 | 769 | — | — | 5,646 | 2.0% | 55.8% |
| Office | 18,700 | 2,781 | — | — | 21,481 | 7.7% | 55.9% |
| Retail | 5,036 | — | — | — | 5,036 | 1.8% | 50.0% |
| Shopping Center | 4,119 | 2,138 | — | — | 6,257 | 2.2% | 55.7% |
| Self-Storage | 66 | — | — | — | 66 | - | 50.7% |
| Warehouse | 10,077 | 339 | — | — | 10,416 | 3.7% | 63.6% |
| Other | 15,222 | 8,527 | 620 | — | 24,369 | 8.9% | 40.7% |
| Total Owner Occupied CRE | $137,009 | $45,086 | $620 | $194 | $182,909 | 65.7% | 54.0% |

(1) Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.

(2) Weighted average LTV is based on the original appraisal and the current loan exposure.

The table below depicts a well-diversified portfolio
of owner occupied commercial real estate portfolio as of December 31, 2025:

| Property Type | MA | CT | NH | Other | Total | % of Total Bank Risk-Based Capital(1) | Weighted Average LTV(2) |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | (Dollars in thousands) |  |  |  |  |  |  |
| Owner Occupied CRE |  |  |  |  |  |  |  |
| Automotive Sales | $27,404 | $18,227 | — | — | $45,631 | 16.5% | 60.4% |
| Automotive Service and Repair | 4,626 | 5,348 | — | — | 9,974 | 3.6% | 53.7% |
| School/Higher Education | 14,959 | — | — | — | 14,959 | 5.4% | 63.9% |
| Industrial | 37,852 | 6,331 | — | 199 | 44,382 | 16.0% | 50.9% |
| Mixed Use | 4,964 | 777 | — | — | 5,741 | 2.1% | 56.3% |
| Office | 18,550 | 2,411 | — | — | 20,961 | 7.6% | 56.1% |
| Retail | 5,102 | — | — | — | 5,102 | 2.1% | 50.4% |
| Shopping Center | 4,201 | 2,091 | — | — | 6,292 | 2.2% | 55.6% |
| Self-Storage | 67 | — | — | — | 67 | - | 51.3% |
| Warehouse | 9,992 | 347 | — | — | 10,339 | 3.7% | 63.9% |
| Other | 15,903 | 8,600 | 873 | — | 25,376 | 9.0% | 40.6% |
| Total Owner Occupied CRE | $143,620 | $44,132 | $873 | $199 | $188,824 | 68.2% | 54.6% |

(1) Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.

(2) Weighted average LTV is based on the original appraisal and the current loan exposure.

45

**Commercial Real Estate Office Exposure.**

Our total office related commercial real estate
loans (which is comprised of loans within our commercial real estate portfolio that are secured by office space, medical office space,
and mixed-use where rental income is primarily from office space) totaled $194.5 million, or 69.9% of total bank risk-based capital, and
$195.2 million, or 70.5% of total bank risk-based capital, as of March 31, 2026 and December 31, 2025, respectively.

The table below breaks the office-related commercial
real estate loans by collateral type for the periods noted:

| March 31, 2026 | Non-Owner Occupied | Owner Occupied | Total | % of Office Portfolio | % of Total Bank Risk-Based Capital(1) |
| --- | --- | --- | --- | --- | --- |
|  | (Dollars in thousands) |  |  |  |  |
| Collateral Type: |  |  |  |  |  |
| Office/Medical | $107,256 | $10,616 | $117,872 | 60.6% | 42.3% |
| Office/Professional Metro | 3,547 | 7,690 | 11,237 | 5.8% | 4.0% |
| Office/Professional Suburban | 35,195 | 2,964 | 38,159 | 19.6% | 13.7% |
| Office/Professional Urban | 26,991 | 211 | 27,202 | 14.0% | 9.8% |
| Total Office Portfolio | $172,989 | $21,481 | $194,470 | 100.0% | 69.9% |

| December 31, 2025 | Non-Owner Occupied | Owner Occupied | Total | % of Office Portfolio | % of Total Bank Risk-Based Capital(1) |
| --- | --- | --- | --- | --- | --- |
|  | (Dollars in thousands) |  |  |  |  |
| Collateral Type: |  |  |  |  |  |
| Office/Medical | $108,113 | $9,941 | $118,054 | 60.5% | 42.6% |
| Office/Professional Metro | 3,577 | 7,796 | 11,373 | 5.8% | 4.1% |
| Office/Professional Suburban | 35,686 | 3,011 | 38,697 | 19.8% | 14.0% |
| Office/Professional Urban | 26,820 | 213 | 27,033 | 13.9% | 9.8% |
| Total Office Portfolio | $174,196 | $20,961 | $195,157 | 100.0% | 70.5% |

(1) Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.

CRE office loans are primarily concentrated in
Massachusetts, where approximately 42.3% of the total balance of CRE office loans were located at both March 31, 2026 and December 31,
2025, respectively. The Company does not have CRE loans secured by office real estate in greater Boston or New York.

| March 31, 2026 | Non-Owner Occupied | Owner Occupied | Total | % of Office Portfolio | % of Total Bank Risk-Based Capital(1) |
| --- | --- | --- | --- | --- | --- |
|  | (Dollars in thousands) |  |  |  |  |
| By State: |  |  |  |  |  |
| Massachusetts | $63,580 | $18,700 | $82,280 | 42.3% | 29.6% |
| Connecticut | 59,975 | 2,781 | 62,756 | 32.3% | 22.5% |
| New Hampshire | 38,285 | — | 38,285 | 19.7% | 13.8% |
| Other | 11,149 | — | 11,149 | 5.7% | 4.0% |
| Total Office Portfolio | $172,989 | $21,481 | $194,470 | 100.0% | 69.9% |

46

| December 31, 2025 | Non-Owner Occupied | Owner Occupied | Total | % of Office Portfolio | % of Total Bank Risk-Based Capital(1) |
| --- | --- | --- | --- | --- | --- |
|  | (Dollars in thousands) |  |  |  |  |
| By State: |  |  |  |  |  |
| Massachusetts | $63,973 | $18,550 | $82,523 | 42.3% | 29.8% |
| Connecticut | 60,433 | 2,411 | 62,844 | 32.2% | 22.7% |
| New Hampshire | 38,586 | — | 38,586 | 19.8% | 14.0% |
| Other | 11,204 | — | 11,204 | 5.7% | 4.0% |
| Total Office Portfolio | $174,196 | $20,961 | $195,157 | 100.0% | 70.5% |

(1) Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.

The following table sets forth the CRE office
loans for non-owner occupied and owner occupied CRE and their credit quality indicators as of the dates indicated:

| March 31, 2026 | Non-Owner Occupied | Owner Occupied | Total | % of Office Portfolio | % of Total Bank Risk-Based Capital(1) |
| --- | --- | --- | --- | --- | --- |
|  | (Dollars in thousands) |  |  |  |  |
| By Risk Rating: |  |  |  |  |  |
| Pass | $165,070 | $21,212 | $186,282 | 95.8% | 66.9% |
| Special Mention | 70 | — | 70 | - | - |
| Substandard | 7,849 | 269 | 8,118 | 4.2% | 3.0% |
| Total Office Portfolio | $172,989 | $21,481 | $194,470 | 100.0% | 69.9% |

| December 31, 2025 | Non-Owner Occupied | Owner Occupied | Total | % of Office Portfolio | % of Total Bank Risk-Based Capital(1) |
| --- | --- | --- | --- | --- | --- |
|  | (Dollars in thousands) |  |  |  |  |
| By Risk Rating: |  |  |  |  |  |
| Pass | $166,275 | $20,683 | $186,958 | 95.8% | 67.5% |
| Special Mention | 72 | — | 72 | - | - |
| Substandard | 7,849 | 278 | 8,127 | 4.2% | 3.0% |
| Total Office Portfolio | $174,196 | $20,961 | $195,157 | 100.0% | 70.5% |

(1) Due to loan classifications, the percentage of Total Bank Risk-Based Capital may differ from the call report.

Given prevailing market conditions such as recent
sustained increases in interest rates, reduced occupancy as a result of the increase in hybrid work arrangements post-COVID, and lower
commercial real estate valuations, we carefully monitor these loans for signs of deterioration in credit quality and other risks. Such
heightened monitoring includes incremental risk management strategies undertaken by management, including more frequent portfolio reviews,
ongoing monitoring of market conditions, and additional portfolio analysis, which may include monitoring concentration limitations, including
concentrations by loan type, property type, geographic area, and with participants, where applicable, and risk diversification, tracking
aggregated policy and underwriting exceptions and stress testing the loan portfolios.

**Deposits.**

At March 31, 2026, total deposits were $2.4
billion, an increase of $20.9 million, or 0.9%, from December 31, 2025. Core deposits, which the Company defines as all deposits
except time deposits, increased $1.0 million, or 0.1%, from $1.7 billion, or 70.8% of total deposits, at December 31, 2025, to $1.7
billion, or 70.2% of total deposits, at March 31, 2026. Non-interest-bearing deposits increased $3.2 million, or 0.5%, to $597.7
million, and represented 25.1% of total deposits; money market accounts increased $18.1 million, or 2.5%, to $733.7 million; and
savings accounts increased $10.5 million, or 5.6%, to $197.1 million. These increases were partially offset by a decrease in
interest-bearing checking accounts of $30.8 million, or 17.7%, to $143.5 million.

47

Time deposits increased $19.9 million, or 2.9%,
from $689.9 million at December 31, 2025 to $709.8 million at March 31, 2026. The Company did not have brokered time deposits at March
31, 2026 and December 31, 2025. We continue our disciplined and focused approach to core relationship management and customer outreach
to meet funding requirements and liquidity needs, with an emphasis on retaining a long-term core customer relationship base by competing
for and retaining deposits in our local market. At March 31, 2026, the Bank’s uninsured deposits totaled $706.2 million, or 29.6%
of total deposits, compared to $697.6 million, or 29.5% of total deposits, at December 31, 2025. At March 31, 2026, there was one deposit
relationship, which is our largest deposit relationship, with a household concentration comprising 5.7% of total deposits, compared to
5.0% of total deposits at December 31, 2025. The next largest deposit relationship is to a local municipality with a concentration of
1.5% of total deposits at March 31, 2026 and 1.9% at December 31, 2025.

The table below is a summary of our deposit balances
for the periods noted:

_(Dollars in thousands)_

| Line item | At March 31, 2026 / Balance | At March 31, 2026 / % of Total Deposits | At December 31, 2025 / Balance | At December 31, 2025 / % of Total Deposits |
| --- | --- | --- | --- | --- |
| Demand and interest-bearing checking: |  |  |  |  |
| Demand deposit accounts | $597,738 | 25.1% | $594,516 | 25.2% |
| Interest-bearing checking accounts | 143,459 | 6.0% | 174,227 | 7.4% |
| Savings: |  |  |  |  |
| Regular savings accounts | 197,100 | 8.3% | 186,597 | 7.9% |
| Money market accounts | 733,696 | 30.8% | 715,620 | 30.3% |
| Total core deposits | 1,671,993 | 70.2% | 1,670,960 | 70.8% |
| Time deposits | 709,799 | 29.8% | 689,948 | 29.2% |
| Total deposits | $2,381,792 | 100.0% | $2,360,908 | 100.0% |

At March 31, 2026, total borrowings were $116.6
million, an increase of $10.5 million, or 9.9%, from $106.1 million at December 31, 2025. At March 31, 2026, short-term borrowings increased
$10.5 million, or 79.4%, to $23.8 million, compared to $13.3 million at December 31, 2025. At March 31, 2026 and December 31, 2025, long-term
borrowings totaled $73.0 million. At March 31, 2026 and December 31, 2025, borrowings also consisted of $19.8 million in fixed-to-floating
rate subordinated notes.

As of March 31, 2026, the Company had $485.1 million
of additional borrowing capacity at the FHLB, $337.3 million of additional borrowing capacity under the FRB Discount Window and $25.0 million
of other unsecured lines of credit with two correspondent banks.

At March 31, 2026, shareholders’ equity
was $248.1 million, or 9.0% of total assets, compared to $247.6 million, or 9.1% of total assets, at December 31, 2025. The change was
primarily attributable to net income of $4.8 million, partially offset by an increase in accumulated other comprehensive loss of $458,000,
cash dividends paid of $1.4 million and the repurchase of 186,000 shares at a cost of $2.5 million. At March 31, 2026, total shares outstanding
were 20,240,872. The Company’s regulatory capital ratios continue to be strong and in excess of regulatory minimum requirements
to be considered well-capitalized as defined by regulators and internal Company targets.

48

**COMPARISON OF OPERATING RESULTS FOR THE THREE
MONTHS ENDED MARCH 31, 2026 AND MARCH 31, 2025**

**General.**

The Company reported an increase in net income
of $2.5 million, or 107.4%, from $2.3 million, or $0.11 per diluted share, for the three months ended March 31, 2025, to $4.8 million,
or $0.24 per diluted share, for the three months ended March 31, 2026. Net interest income increased $3.3 million, or 21.2%, to $18.8
million, for the three months ended March 31, 2026, from $15.5 million for the three months ended March 31, 2025.

**Net Interest and Dividend Income.**

The following tables set forth the information
relating to our average balance and net interest income for the three months ended March 31, 2026 and the three months ended March 31,
2025, and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.
Yields and costs are derived by dividing annualized interest income by the average balance of interest-earning assets and annualized interest
expense by the average balance of interest-bearing liabilities for the periods shown. The interest rate spread is the difference between
the total average yield on interest-earning assets and the cost of interest-bearing liabilities. Net interest margin represents tax-equivalent
net interest and dividend income as a percentage of average interest-earning assets. Average balances are derived from actual daily balances
over the periods indicated. Interest income includes fees earned when the real estate loans are prepaid or refinanced. For analytical
purposes, the interest earned on tax-exempt assets is adjusted to a tax-equivalent basis to recognize the income tax savings which facilitates
comparison between taxable and tax-exempt assets.

49

_(Dollars in thousands)_

| Line item | Three Months Ended March 31, 2026 / Average / Balance | Three Months Ended March 31, 2026 / Interest | Three Months Ended March 31, 2026 / Average Yield/ / Cost(8) | Three Months Ended March 31, 2025 / Average / Balance | Three Months Ended March 31, 2025 / Interest | Three Months Ended March 31, 2025 / Average Yield/ / Cost(8) |
| --- | --- | --- | --- | --- | --- | --- |
| ASSETS: |  |  |  |  |  |  |
| Interest-earning assets |  |  |  |  |  |  |
| Loans(1)(2) | $2,186,529 | $27,559 | 5.11% | $2,073,486 | $25,105 | 4.91% |
| Securities(2) | 363,983 | 2,505 | 2.79 | 365,371 | 2,422 | 2.69 |
| Other investments - at cost | 15,585 | 147 | 3.83 | 14,819 | 191 | 5.23 |
| Short-term investments(3) | 24,831 | 189 | 3.09 | 76,039 | 840 | 4.48 |
| Total interest-earning assets | 2,590,928 | 30,400 | 4.76 | 2,529,715 | 28,558 | 4.58 |
| Total non-interest-earning assets | 153,783 |  |  | 156,733 |  |  |
| Total assets | $2,744,711 |  |  | $2,686,448 |  |  |
| LIABILITIES AND EQUITY: |  |  |  |  |  |  |
| Interest-bearing liabilities |  |  |  |  |  |  |
| Interest-bearing checking accounts | $148,869 | $300 | 0.82% | $140,960 | $250 | 0.72% |
| Savings accounts | 190,080 | 43 | 0.09 | 183,869 | 40 | 0.09 |
| Money market accounts | 728,590 | 3,822 | 2.13 | 704,215 | 3,968 | 2.29 |
| Time deposits | 691,612 | 5,813 | 3.41 | 702,748 | 7,118 | 4.11 |
| Total interest-bearing deposits | 1,759,151 | 9,978 | 2.30 | 1,731,792 | 11,376 | 2.66 |
| Short-term borrowings and long-term debt | 126,193 | 1,478 | 4.75 | 122,786 | 1,527 | 5.04 |
| Interest-bearing liabilities | 1,885,344 | 11,456 | 2.46 | 1,854,578 | 12,903 | 2.82 |
| Non-interest-bearing deposits | 588,503 |  |  | 569,638 |  |  |
| Other non-interest-bearing liabilities | 21,413 |  |  | 25,464 |  |  |
| Total non-interest-bearing liabilities | 609,916 |  |  | 595,102 |  |  |
| Total liabilities | 2,495,260 |  |  | 2,449,680 |  |  |
| Total equity | 249,451 |  |  | 236,768 |  |  |
| Total liabilities and equity | $2,744,711 |  |  | $2,686,448 |  |  |
| Less: Tax-equivalent adjustment(2) |  | (119) |  |  | (121) |  |
| Net interest and dividend income |  | $18,825 |  |  | $15,534 |  |
| Net interest rate spread(4) |  |  | 2.28% |  |  | 1.74% |
| Net interest rate spread, on a tax equivalent basis(5) |  |  | 2.30% |  |  | 1.76% |
| Net interest margin(6) |  |  | 2.95% |  |  | 2.49% |
| Net interest margin, on a tax equivalent basis(7) |  |  | 2.97% |  |  | 2.51% |
| Ratio of average interest-earning assets to average interest-bearing liabilities |  |  | 137.42% |  |  | 136.40% |

(1) Loans, including nonaccrual loans, are net of deferred loan origination costs and unadvanced funds.

(2) Loan and securities income are presented on a tax-equivalent basis using a tax rate of 21%. The tax-equivalent adjustment is deducted from tax-equivalent net interest and dividend income to agree to the amount reported on the consolidated statements of net income.

(3) Short-term investments include federal funds sold.

(4) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(5) Net interest rate spread, on a tax-equivalent basis, represents the difference between the tax-equivalent weighted average yield on interest-earning assets and the tax-equivalent weighted average cost of interest-bearing liabilities. See “Explanation of Use of Non-GAAP Financial Measurements”.

(6) Net interest margin represents net interest and dividend income as a percentage of average interest-earning assets.

(7) Net interest margin, on a tax-equivalent basis, represents tax-equivalent net interest and dividend income as a percentage of average interest-earning assets. See “Explanation of Use of Non-GAAP Financial Measurements”.

(8) Annualized.

50

**Rate/Volume Analysis**.

The following table shows how
changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected
our interest and dividend income and interest expense during the periods indicated. Information is provided in each category with respect
to: (1) interest income changes attributable to changes in volume (changes in volume multiplied by prior rate); (2) interest income changes
attributable to changes in rate (changes in rate multiplied by prior volume); and (3) the net change.

The changes attributable to
the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

_Three Months Ended March 31, 2026 compared to Three Months Ended March 31, 2025 · (In thousands)_

| Line item | Increase (Decrease) Due to / Volume | Increase (Decrease) Due to / Rate | Net |
| --- | --- | --- | --- |
| Interest-earning assets |  |  |  |
| Loans(1) | $1,369 | $1,085 | $2,454 |
| Investment securities(1) | (9) | 92 | 83 |
| Other investments - at cost | 10 | (54) | (44) |
| Short-term investments | (566) | (85) | (651) |
| Total interest-earning assets | 804 | 1,038 | 1,842 |
| Interest-bearing liabilities |  |  |  |
| Interest-bearing checking accounts | 14 | 36 | 50 |
| Savings accounts | 1 | 2 | 3 |
| Money market accounts | 137 | (283) | (146) |
| Time deposits | (113) | (1,192) | (1,305) |
| Short-term borrowings and long-term debt | 42 | (91) | (49) |
| Total interest-bearing liabilities | 81 | (1,528) | (1,447) |
| Change in net interest and dividend income(1) | $723 | $2,566 | $3,289 |

(1) Securities, loan income and change in net interest and dividend income are presented on a tax-equivalent basis using a tax rate of 21%. The tax-equivalent adjustment is deducted from tax-equivalent net interest income to agree to the amount reported in the consolidated statements of net income. See “Explanation of Use of Non-GAAP Financial Measurements”.

Net interest income increased $3.3 million, or
21.2%, to $18.8 million, for the three months ended March 31, 2026, from $15.5 million for the three months ended March 31, 2025. The
increase in net interest income was due to an increase in interest and dividend income of $1.8 million, or 6.5%, and a decrease in interest
expense of $1.4 million, or 11.2%. The decrease in interest expense was primarily due to a decrease in the average cost of interest-bearing
liabilities of 36 basis points, from 2.82% for the three months ended March 31, 2025 to 2.46% for the three months ended March 31, 2026.
As a result, the net interest margin increased from 2.49% for the three months ended March 31, 2025, to 2.95% for the three months ended
March 31, 2026. The net interest margin, on a tax-equivalent basis, increased 46 basis points from 2.51% for the three months ended March
31, 2025 to 2.97% for the three months ended March 31, 2026.

The average yield on interest-earning assets,
without the impact of tax-equivalent adjustments, increased 18 basis points from 4.56% for the three months ended March 31, 2025 to 4.74%
for the three months ended March 31, 2026. The average loan yield, without the impact of tax-equivalent adjustments, increased 19 basis
points, from 4.90% for the three months ended March 31, 2025, to 5.09% for the three months ended March 31, 2026. During the three months
ended March 31, 2026, average interest-earning assets increased $61.2 million, or 2.4%, to $2.6 billion, primarily due to an increase
in average loans of $113.0 million, or 5.5%, partially offset by a decrease in average short-term investments, consisting of cash and
cash equivalents, of $51.2 million, or 67.3%.

51

The average cost of total funds, including non-interest
bearing accounts and borrowings, decreased 28 basis points from 2.16% for the three months ended March 31, 2025, to 1.88% for the three
months ended March 31, 2026. The average cost of core deposits, which the Company defines as all deposits except time deposits, decreased
six basis points from 1.08% for the three months ended March 31, 2025 to 1.02% for the three months ended March 31, 2026. The average
cost of time deposits decreased 70 basis points from 4.11% for the three months ended March 31, 2025 to 3.41% for the three months ended
March 31, 2026. The average cost of borrowings, including subordinated debt, decreased 29 basis points from 5.04% for the three months
ended March 31, 2025 to 4.75% for the three months ended March 31, 2026. Average demand deposits, an interest-free source of funds, increased
$18.9 million, or 3.3%, from $569.6 million, or 24.8% of total average deposits, for the three months ended March 31, 2025, to $588.5
million, or 25.1% of total average deposits, for the three months ended March 31, 2026.

**Provision for Credit Losses.**

The provision for credit losses is reviewed by
management based upon our evaluation of economic and business conditions affecting our key lending areas and other conditions, such as
new loan products, credit quality trends (including trends in nonaccrual loans expected to result from existing conditions), collateral
values, loan volumes and concentrations, specific industry conditions using reasonable and supportable forecasts and the impact that such
conditions were believed to have had on the collectability of the loan portfolio.

During the three months ended March 31, 2026,
the Company recorded a provision for credit losses of $75,000, a decrease of $67,000, or 47.2%, from $142,000 for the three months ended
March 31, 2025. The decrease was primarily due to a decrease in unfunded commitments. The provision for credit losses was determined
by a number of factors, including, the continued strong credit performance of the Company’s loan portfolio, changes in the loan
portfolio mix and management’s consideration of existing economic conditions. Management will continue to monitor macroeconomic
variables related to the current interest rate environment, tariffs, global unrest resulting from conflicts, and the concerns of an economic
downturn. Management believes it is appropriately reserved for the current economic environment and supportable forecast.

During the three months ended March 31, 2026,
the Company recorded net charge-offs of $55,000, compared to net charge-offs of $29,000 for the three months ended March 31, 2025. Although
we believe that we have established and maintained the allowance for credit losses at adequate levels, future adjustments may be necessary
if economic, real estate, and other conditions differ substantially from the current operating environment.

**Non-Interest Income.**

Non-interest income increased $674,000, or 24.4%,
from $2.8 million for the three months ended March 31, 2025 to $3.4 million for the three months ended March 31, 2026. During the three
months ended March 31, 2026, non-interest income included the recognition of $449,000 in BOLI death benefits. During the same period,
service charges and fees on deposits increased $108,000, or 5.3%, and wealth management income increased $129,000, or 49.4%, from $261,000
for the three months ended March 31, 2025 to $390,000 for the three months ended March 31, 2026. Income from BOLI increased $3,000, or
0.6%, from $473,000 for the three months ended March 31, 2025 to $476,000 for the three months ended March 31, 2026.

During the three months ended March 31, 2026 and
the three months ended March 31, 2025, the Company reported unrealized losses on marketable equity securities of $13,000 and $5,000, respectively.
During the three months ended March 31, 2025, the Company reported a gain of $7,000 from mortgage banking activities and did not have
a comparable gain or loss during the three months ended March 31, 2026.

**Non-Interest Expense.**

Non-interest expense increased $824,000, or
5.4%, from $15.2 million for the three months ended March 31, 2025 to $16.0 million for the three months ended March 31, 2026. The
increase in non-interest expense was primarily due to an increase of $816,000, or 9.7%, in salaries and benefits due to increases in
health insurance benefits and annual merit increases. Occupancy expense increased $150,000, or 10.6%, due to $255,000 in snow
removal costs during the three months ended March 31, 2026, compared to $143,000 for the three months ended March 31, 2025. Debit
card processing and ATM network costs increased $86,000, or 14.9%; software related expenses increased $30,000, or 4.6%; and
advertising expense increased $13,000, or 3.0%. These expenses were partially offset by a decrease in other non-interest expense of
$80,000, or 5.9%, a decrease in data processing expense of $61,000, or 6.9%, a decrease in furniture and equipment expense of
$54,000, or 11.1%, a decrease in FDIC insurance expense of $39,000, or 9.0%, and a decrease in professional fees of $37,000, or
6.8%.

52

For the three months ended March 31, 2026 and
the three months ended March 31, 2025, the efficiency ratio was 71.9% and 83.0%, respectively. For the three months ended March 31, 2026,
the adjusted efficiency ratio, a non-GAAP financial measure, was 73.4% compared to 83.0% for the three months ended March 31, 2025. The
decreases in both the efficiency ratio and the adjusted efficiency ratio were driven by a $4.0 million, or 21.7%, increase in total revenues
from the three months ended March 31, 2025 to the three months ended March 31, 2026, while expenses increased $824,000, or 5.4%, during
the same period. See “Explanation of Use of Non-GAAP Financial Measurements” for the related efficiency ratio and adjusted
efficiency ratio calculations and a reconciliation of GAAP to non-GAAP financial measures.

**Income Taxes.**

For the three months ended March 31, 2026, income
tax expense was $1.4 million, with an effective tax rate of 22.6%, compared to $664,000, with an effective tax rate of 22.4%, for the
three months ended March 31, 2025.

**Explanation of Use of Non-GAAP Financial Measurements.**

We believe that it is common practice in the banking
industry to present interest income and related yield information on tax-exempt loans and securities on a tax-equivalent basis, as well
as presenting tangible book value per share and adjusted efficiency ratio, and that such information is useful to investors because it
facilitates comparisons among financial institutions. However, the adjustment of interest income and yields on tax-exempt loans and securities
to a tax-equivalent amount, as well as the presentation of tangible book value per share and adjusted efficiency ratio, may be considered
to include financial information that is not in compliance with GAAP. A reconciliation from GAAP to non-GAAP is provided below.

_(Dollars in thousands)_

| Line item | For the three months ended / 3/31/2026 | For the three months ended / 3/31/2025 |
| --- | --- | --- |
| Loans (no tax adjustment) | $27,440 | $24,984 |
| Tax-equivalent adjustment(1) | 119 | 121 |
| Loans (tax-equivalent basis) | $27,559 | $25,105 |
| Net interest income (no tax adjustment) | $18,825 | $15,534 |
| Tax equivalent adjustment(1) | 119 | 121 |
| Net interest income (tax-equivalent basis) | $18,944 | $15,655 |
| Average interest-earning assets | $2,590,928 | $2,529,715 |
| Net interest margin (no tax adjustment) | 2.95% | 2.49% |
| Net interest margin, tax-equivalent | 2.97% | 2.51% |

_(Dollars in thousands)_

| Line item | At or for the three months ended / 3/31/2026 | At or for the three months ended / 3/31/2025 |
| --- | --- | --- |
| Book Value per Share (GAAP) | $12.26 | $11.44 |
| Non-GAAP adjustments: |  |  |
| Goodwill | (0.62) | (0.60) |
| Core deposit intangible | (0.05) | (0.06) |
| Tangible Book Value per Share (non-GAAP) | $11.59 | $10.78 |
| Adjusted Efficiency Ratio: |  |  |
| Non-interest Expense (GAAP) | $16,008 | $15,184 |

53

_(Dollars in thousands)_

| Line item | For the three months ended / 3/31/2026 | For the three months ended / 3/31/2025 |
| --- | --- | --- |
| Net Interest Income (GAAP) | $18,825 | $15,534 |
| Non-interest Income (GAAP) | $3,433 | $2,759 |
| Non-GAAP adjustments: |  |  |
| Unrealized loss on marketable equity securities | 13 | 5 |
| Gain on bank-owned life insurance death benefit | (449) | — |
| Non-interest Income for Adjusted Efficiency Ratio (non-GAAP) | $2,997 | $2,764 |
| Total Revenue for Adjusted Efficiency Ratio (non-GAAP) | $21,822 | $18,298 |
| Efficiency Ratio (GAAP) | 71.92% | 83.00% |
| Adjusted Efficiency Ratio (Non-interest Expense (GAAP)/Total Revenue for Adjusted Efficiency Ratio (non-GAAP)) | 73.36% | 82.98% |

(1) The tax equivalent adjustment is based upon a 21% tax rate for all periods presented.

**Liquidity and Capital Resources.**

The term “liquidity”
refers to our ability to generate adequate amounts of cash to fund loan originations, loan purchases, deposit withdrawals and operating
expenses. Our primary sources of liquidity are deposits, scheduled amortization and prepayments of loan principal and mortgage-backed
securities, maturities, and calls of investment securities and funds provided by our operations. We also can borrow funds from the FHLB
and the FRB based on eligible collateral of loans and securities. Our material cash commitments include funding loan originations, fulfilling
contractual obligations with third-party service providers, maintaining operating leases for certain of our Bank properties and satisfying
repayment of our long-term debt obligations.

*Primary Sources of Liquidity*

The Company, on an ongoing basis, closely monitors
the Company’s liquidity position for compliance with internal policies, and believes that available sources of liquidity are adequate
to meet funding needs in the normal course of business. As part of that monitoring process, the Company stresses the potential liabilities
calculation to ensure a strong liquidity position. Included in the calculation are assumptions of some significant deposit run-off
as well as funds needed for loan closing and investment purchases. The Company does not anticipate engaging in any activities, either
currently or over the long-term, for which adequate funding would not be available and which would therefore result in significant pressure
on liquidity. However, an economic recession could negatively impact the Company’s liquidity. The Bank relies heavily
on FHLB as a source of funds, particularly with its overnight line of credit. In past economic recessions, some FHLB branches have
suspended dividends, cut dividend payments, and not bought back excess FHLB stock that members hold in an effort to conserve capital. FHLB
has stated that it expects to be able to continue to pay dividends, redeem excess capital stock, and provide competitively priced advances
in the future.

At March 31, 2026 and December 31, 2025, outstanding
borrowings from the FHLB were $93.0 million and $83.0 million, respectively. At March 31, 2026, the Company had $485.1 million in available
borrowing capacity with the FHLB, including the $9.5 million Ideal Way Line of Credit. The Company has the ability to increase its borrowing
capacity with the FHLB by pledging additional investment securities or loans.

The Company has an available line of credit
of $337.3 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 eligible loan collateral and securities from the Company’s investment portfolio not
otherwise pledged. As of March 31, 2026 and December 31, 2025, there were no advances outstanding under either of these lines.

54

In addition, we have available lines of credit
of $15.0 million and $10.0 million with two correspondent banks. Interest rates on these lines are determined and reset on a daily basis
by each respective bank. At March 31, 2026 and December 31, 2025, the Company did not have an outstanding balance under either of these
lines of credit. In addition, the Company may enter into reverse repurchase agreements with approved broker-dealers which would allow
the Company to borrow money by pledging securities as collateral.

The Company also has outstanding, at any time,
a significant number of commitments to extend credit and provide financial guarantees to third parties. These arrangements are subject
to strict credit control assessments. Guarantees specify limits to our obligations. Since many commitments and almost all guarantees
expire without being funded in whole or in part, the contract amounts are not estimates of future cash flows. The Company is also obligated
under agreements with the FHLB to repay borrowed funds and is obligated under leases for certain branches, ATMs and equipment.

Maturing investment securities are a relatively
predictable source of funds. However, deposit flows, calls of securities and prepayments of loans and mortgage-backed securities are strongly
influenced by interest rates, general and local economic conditions, and competition in the marketplace. These factors reduce the predictability
of the timing of these sources of funds.

The Company’s primary activities are the
origination of commercial real estate loans, commercial and industrial loans, and residential real estate loans, as well as and the purchase
of mortgage-backed and other investment securities. At March 31, 2026, the Company had approximately $131.2 million in loan commitments
and letters of credit to borrowers and approximately $349.4 million in available home equity and other unadvanced lines of credit.

Deposit inflows and outflows are affected by
the level of interest rates, the products and interest rates offered by competitors and by other factors. At March 31, 2026, time deposit
accounts scheduled to mature within one year totaled $676.4 million, or 95.3% of total time deposits. Based on the Company’s deposit
retention experience and current pricing strategy, we anticipate that a significant portion of these time deposits will remain on deposit.
We monitor our liquidity position frequently and anticipate that it will have sufficient funds to meet our current funding commitments
for the next 12 months and beyond.

*Material Cash Commitments*

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 March 31, 2026 were estimated to be $1.8 million, which is expected to be paid within one year. Further,
the Company has operating leases for certain of its banking offices and ATMs. Our leases have remaining lease terms of less than one year
to twelve years, some of which include options to extend the leases for additional five-year terms up to ten years. At March 31, 2026,
undiscounted lease liabilities totaled $7.3 million. Principal payments expected to be made on our lease liabilities during the twelve
months ended March 31, 2027 totaled $1.4 million. The remaining lease liability payments totaled $5.9 million and are expected to be made
after March 31, 2027.

On April 20, 2021, the Company
completed an offering of its private placement of $20.0 million aggregate principal amount of 4.875% fixed-to-floating rate subordinated
notes due on May 1, 2031, unless earlier redeemed, to certain qualified institutional buyers (the “Notes”). The Notes 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 (“SOFR”), 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. At March 31, 2026 and December 31, 2025, $19.8 million in aggregate principal amount
of the Notes was outstanding.

55

At March 31, 2026, the Company exceeded each of
the applicable regulatory capital requirements to be considered “well-capitalized”. As of March 31, 2026, the Bank is considered
“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. There are no conditions or events since that notification that management believes would change our category.

The Company’s and the Bank’s capital
ratios are also presented in the following table for the periods noted.

_(Dollars in thousands)_

| March 31, 2026 | Actual / Amount | Actual / Ratio | Minimum For Capital Adequacy Purpose / Amount | Minimum For Capital Adequacy Purpose / Ratio | Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions / Amount | Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions / Ratio |
| --- | --- | --- | --- | --- | --- | --- |
| Total Capital (to Risk Weighted Assets): |  |  |  |  |  |  |
| Consolidated | $292,885 | 14.14% | $165,744 | 8.00% | N/A | N/A |
| Bank | 278,394 | 13.46 | 165,516 | 8.00 | $206,895 | 10.00% |
| Tier 1 Capital (to Risk Weighted Assets): |  |  |  |  |  |  |
| Consolidated | 252,088 | 12.17 | 124,308 | 6.00 | N/A | N/A |
| Bank | 257,398 | 12.44 | 124,137 | 6.00 | 165,516 | 8.00 |
| Common Equity Tier 1 Capital (to Risk Weighted Assets): |  |  |  |  |  |  |
| Consolidated | 252,088 | 12.17 | 93,231 | 4.50 | N/A | N/A |
| Bank | 257,398 | 12.44 | 93,103 | 4.50 | 134,482 | 6.50 |
| Tier 1 Leverage Ratio (to Adjusted Average Assets): |  |  |  |  |  |  |
| Consolidated | 252,088 | 9.16 | 110,112 | 4.00 | N/A | N/A |
| Bank | 257,398 | 9.36 | 110,043 | 4.00 | 137,554 | 5.00 |

_(Dollars in thousands)_

| December 31, 2025 | Actual / Amount | Actual / Ratio | Minimum For Capital Adequacy Purpose / Amount | Minimum For Capital Adequacy Purpose / Ratio | Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions / Amount | Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions / Ratio |
| --- | --- | --- | --- | --- | --- | --- |
| Total Capital (to Risk Weighted Assets): |  |  |  |  |  |  |
| Consolidated | $291,864 | 14.19% | $164,584 | 8.00% | N/A | N/A |
| Bank | 276,990 | 13.48 | 164,435 | 8.00 | $205,544 | 10.00% |
| Tier 1 Capital (to Risk Weighted Assets): |  |  |  |  |  |  |
| Consolidated | 251,103 | 12.21 | 123,438 | 6.00 | N/A | N/A |
| Bank | 256,019 | 12.46 | 123,326 | 6.00 | 164,435 | 8.00 |
| Common Equity Tier 1 Capital (to Risk Weighted Assets): |  |  |  |  |  |  |
| Consolidated | 251,103 | 12.21 | 92,578 | 4.50 | N/A | N/A |
| Bank | 256,019 | 12.46 | 92,495 | 4.50 | 133,603 | 6.50 |
| Tier 1 Leverage Ratio (to Adjusted Average Assets): |  |  |  |  |  |  |
| Consolidated | 251,103 | 9.13 | 110,013 | 4.00 | N/A | N/A |
| Bank | 256,019 | 9.32 | 109,878 | 4.00 | 137,347 | 5.00 |

**OFF-BALANCE SHEET ARRANGEMENTS.**

The Company does not have any off-balance sheet
arrangements, other than noted above under Material Cash Commitments, that have or are reasonably likely to have a current or future effect
on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures
or capital resources that are material to investors.

## ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our assessment
of our sensitivity to market risk since our presentation in our 2025 Annual Report. Please refer to Item 7A of the 2025 Annual Report
for additional information.

56

## ITEM 4: CONTROLS AND PROCEDURES

**Disclosure Controls and Procedures.**

Management, including our Chief Executive Officer
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 the evaluation, the Chief Executive Officer 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 Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized
and reported as and when required and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely discussion regarding required disclosure.

**Changes in Internal Control Over Financial
Reporting.**

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

**PART II – OTHER INFORMATION**

## Item 1. Legal Proceedings ITEM 1. LEGAL PROCEEDINGS.

Except as set forth in Item 3 of our Annual Report
on Form 10-K for the year ended December 31, 2025, the Company was not involved in any material pending legal proceedings as a plaintiff
or as a defendant, other than routine legal proceedings occurring in the ordinary course of business. We believe that all such claims
and actions currently pending against us, if any, are either adequately covered by insurance or would not have a material adverse effect
on us if decided in a manner unfavorable to us.

## Item 1A. Risk Factors ITEM 1A. RISK FACTORS.

For a summary of risk factors relevant to our
operations, see Part 1, Item 1A, “Risk Factors” in our 2025 Annual Report. There are no additional material changes in the
risk factors relevant to our operations since December 31, 2025.

## Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The following table sets forth
information with respect to purchases made by us of our common stock during the three months ended March 31, 2026.

| Period | Total Number of Shares Purchased | Average Price Paid per Share ($) | Total Number of Shares Purchased as Part of Publicly Announced Programs | Maximum Number of Shares that May Yet Be Purchased Under the Program(1) |
| --- | --- | --- | --- | --- |
| January 1 - 31, 2026 | — | — | — | 872,465 |
| February 1 – 28, 2026 | 125,698 | 13.80 | 125,698 | 746,767 |
| March 1 - 31, 2026 | 60,302 | 12.81 | 60,302 | 686,465 |
| Total | 186,000 | 13.48 | 186,000 | 686,465 |

(1) On April 22, 2025, the Board authorized a new stock repurchase plan (the “2025 Plan”) under which the Company is authorized to repurchase up to 1,000,000 shares of its common stock, which was approximately 4.8%, of the Company’s outstanding shares of common stock, as of the date the 2025 Plan was adopted.

There were no sales by us of unregistered securities during the three
months ended March 31, 2026.

57

## Item 3. Defaults upon Senior Securities ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

## Item 4. Mine Safety Disclosures ITEM 4. MINE SAFETY DISCLOSURE.

Not applicable.

## Item 5. Other Information ITEM 5. OTHER INFORMATION.

During the quarter ended March 31, 2026, no director or officer of
the Company adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.

## Item 6. Exhibits ITEM 6. EXHIBITS.

| Exhibit Number | Exhibit Description |
| --- | --- |
| 3.2 | 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). |
| 3.3 | 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). |
| 4.1 | 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 No. 333-137024 on Form S-1 filed with the Securities and Exchange Commission on August 31, 2006). |
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1* | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2* | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101** | Financial statements from the quarterly report on Form 10-Q of Western New England Bancorp, Inc. for the quarter ended March 31, 2026, formatted in Inline 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 Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

\* Filed herewith.

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

58

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on May
8, 2026.

Western New England Bancorp, Inc.

By: /s/ James C. Hagan

James C. Hagan

President and Chief Executive Officer

By: /s/ Guida R. Sajdak

Guida R. Sajdak

Executive Vice President and Chief Financial Officer