Table of Contents
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 No. 001-41899
NB Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Maryland
93-2560883
(State or other jurisdiction ofincorporation or organization)
(I.R.S. EmployerIdentification Number)
1063 Great Plain AvenueNeedham, Massachusetts
02492
(Address of Principal Executive Offices)
(Zip Code)
(781) 444-2100
(Registrant’s telephone number)
N/A
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Common stock, par value $0.01 per share
NBBK
The NASDAQ Stock Market, LLC
(Title of each class to be registered)
(Ticker Symbol)
(Name of each exchange on which
each class is to be registered)
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 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 during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer ☐
Accelerated filer ☒
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO ☒
As of April 30, 2026, 44,706,163 shares of the Registrant’s common stock, par value $0.01 per share, were issued and outstanding.
Form 10-Q
Index
Page
Part I. Financial Information
Item 1.
Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025
1
Consolidated Statements of Income for the Three Months Ended March 31, 2026 and 2025 (unaudited)
2
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2026 and 2025 (unaudited)
3
Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2026 and 2025 (unaudited)
4
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (unaudited)
5
Notes to Consolidated Financial Statements (unaudited)
7
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
37
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
49
Item 4.
Controls and Procedures
Part II. Other Information
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
50
Item 6.
Exhibits
Signature Page
51
Part I. – Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 2026 (Unaudited) and December 31, 2025
(in thousands except share and per share data)
March 31, 2026
December 31, 2025
Assets
Cash and due from banks
$
327,739
325,711
Federal funds sold
47,618
81,885
Total cash and cash equivalents
375,357
407,596
Available-for-sale securities, at fair value
277,241
268,959
Loans held for sale, at fair value
63,971
66,447
Loans receivable, net of deferred fees
6,209,910
5,986,140
Allowance for credit losses
(80,195)
(87,411)
Net loans
6,129,715
5,898,729
Accrued interest receivable
27,150
25,390
Banking premises and equipment, net
47,335
46,209
Non-public investments
40,738
33,740
Bank-owned life insurance ("BOLI")
110,586
104,335
Prepaid expenses and other assets
67,749
68,079
Goodwill
18,512
Core deposit intangible, net
18,411
19,303
Deferred income tax asset, net
49,672
48,831
Total assets
7,226,437
7,006,130
Liabilities and shareholders' equity
Deposits
Core deposits
5,526,936
5,317,853
Brokered deposits
570,052
535,681
Total deposits
6,096,988
5,853,534
Mortgagors' escrow accounts
4,858
5,193
Federal Home Loan Bank ("FHLB") borrowings
189,701
196,235
Accrued expenses and other liabilities
70,983
70,716
Accrued retirement liabilities
21,129
21,520
Total liabilities
6,383,659
6,147,198
Shareholders' equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized; no shares issued and outstanding
—
Common stock, $0.01 par value, 120,000,000 shares authorized; 44,765,178 and 45,770,128
shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively
448
458
Additional paid-in capital
432,858
458,864
Unallocated common shares held by the Employee Stock Ownership Plan ("ESOP")
(41,873)
(42,454)
Retained earnings
456,978
445,200
Accumulated other comprehensive loss
(5,633)
(3,136)
Total shareholders' equity
842,778
858,932
Total liabilities and shareholders' equity
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Consolidated Statements of Income
(Unaudited - Dollars in thousands, except per share data)
For the Three Months Ended
March 31,
2026
2025
INTEREST AND DIVIDEND INCOME
Interest and fees on loans
100,042
71,440
Interest on securities
2,708
2,290
Interest and dividends on cash equivalents and other
2,936
3,121
Total interest and dividend income
105,686
76,851
INTEREST EXPENSE
Interest on deposits
39,579
32,239
Interest on borrowings
1,239
1,086
Total interest expense
40,818
33,325
NET INTEREST INCOME
64,868
43,526
PROVISION FOR CREDIT LOSSES
Provision for credit losses - loans
6,382
947
(Release of) provision for credit losses - unfunded commitments
(54)
211
Total provision for credit losses
6,328
1,158
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
58,540
42,368
NONINTEREST INCOME
Customer service fees
3,131
2,558
Increase in cash surrender value of BOLI
853
1,031
Mortgage banking income
119
149
Swap contract income
201
88
(Loss) gain on sale of loans, net
(1)
27
Other income
210
29
Total noninterest income
4,513
3,882
NONINTEREST EXPENSE
Salaries and employee benefits
25,468
19,149
Director and professional service fees
4,049
2,148
Occupancy and equipment expenses
2,491
1,580
Data processing expenses
4,439
2,765
Marketing and charitable contribution expenses
1,033
846
FDIC and state insurance assessments
1,152
813
Merger and acquisition expenses
534
General and administrative expenses
3,535
1,380
Total noninterest expense
42,701
28,681
INCOME BEFORE TAXES
20,352
17,569
INCOME TAX EXPENSE
5,368
4,914
NET INCOME
14,984
12,655
Weighted average common shares outstanding, basic
40,969,748
38,755,746
Weighted average common shares outstanding, diluted
41,421,002
Earnings per share, basic
0.37
0.33
Earnings per share, diluted
0.36
Consolidated Statements of Comprehensive Income
(Unaudited - Dollars in thousands)
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Net change in fair value of available-for-sale securities
(1,001)
1,702
Net change in fair value of cash flow hedge
(1,496)
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX:
(2,497)
TOTAL COMPREHENSIVE INCOME, NET OF TAX
12,487
14,357
Consolidated Statements of Changes in Shareholders' Equity
Shares of
Unallocated
Accumulated
Common
Additional
Other
Stock
Paid-In
Stock Held by
Retained
Comprehensive
Outstanding
Common Stock
Capital
ESOP
Earnings
Income (Loss)
Total
Balance, December 31, 2024
42,705,729
427
417,247
(44,813)
400,473
(8,167)
765,167
Net income
Other comprehensive income, net of tax
Repurchase of common shares under share repurchase plan
(2,135,286)
(21)
(40,675)
(40,696)
ESOP shares committed to be released (42,121 shares)
582
783
Balance, March 31, 2025
40,570,443
406
376,773
(44,231)
413,128
(6,465)
739,611
Balance, December 31, 2025
45,770,128
Other comprehensive loss, net of tax
(1,288,509)
(13)
(27,750)
(27,763)
Restricted stock award issued
283,559
(3)
Stock-based compensation
1,443
303
885
Dividends paid
(3,206)
Balance, March 31, 2026
44,765,178
432,857
(41,872)
Consolidated Statements of Cash Flows
(Dollars in thousands)
For the Three Months Ended March 31,
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments to reconcile net income to net cash from operating activities:
Net (accretion) amortization of available-for-sale securities
(55)
41
Amortization of core deposit intangible
892
Provision for credit losses
Loan hedge fair value adjustments, net
19
39
Change in net deferred loan origination fees
2,479
233
Loans originated for sale
(2,792)
(340)
Proceeds from sale of loans held for sale
2,984
1,384
Gain on sale of loans
(17)
(27)
Depreciation and amortization expense
901
693
Gain from BOLI death benefit
(25)
Increase in cash surrender values of BOLI
(853)
(1,006)
Deferred income tax benefit
(12)
(9)
ESOP expense
Changes in operating assets and liabilities:
Net change in loans held for sale
3,622
(1,760)
152
424
3,295
(1,750)
(5,575)
(391)
(3,540)
NET CASH PROVIDED BY OPERATING ACTIVITIES
27,331
9,948
CASH FLOWS FROM INVESTING ACTIVITIES
Loan originations and purchases, net of repayments
(241,442)
(134,195)
Purchases of available-for-sale securities
(34,070)
(12,808)
Proceeds from maturities, calls and paydowns of available-for-sale securities
24,512
8,583
Recoveries of loans previously charged off
237
205
Net change in non-public investments
(6,998)
(346)
Proceeds from BOLI death benefit
128
Purchases of BOLI policies
(20,000)
Proceeds from surrender of BOLI policies
14,602
Purchases of banking premises and equipment
(2,027)
(108)
NET CASH USED IN INVESTING ACTIVITIES
(265,186)
(138,541)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits
243,454
148,965
Net change in mortgagors' escrow accounts
(335)
(85)
Repurchase of common shares under share repurchase plans
Advances of FHLB borrowings
415,700
Paydowns of FHLB borrowings
(422,234)
(30,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES
205,616
78,184
NET CHANGE IN CASH AND CASH EQUIVALENTS
(32,239)
(50,409)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
363,855
CASH AND CASH EQUIVALENTS AT END OF PERIOD
313,446
Supplemental disclosure of cash paid during the period for:
Interest
40,719
36,685
Income taxes:
U.S. Federal
Massachusetts
2,520
2,150
Jurisdictions below 5 percent of total income taxes paid, net of refunds
185
Supplemental disclosure of non-cash transactions:
Initial recognition of operating lease right of use assets and lease liabilities
1,947
Increase in operating lease right of use assets and lease liabilities resulting from lease modifications
124
Unrealized (losses) gains on available-for-sale securities
(1,331)
2,291
Unrealized holding losses on cash flow hedge
(1,995)
Mortgage loans transferred to loans held for sale
1,339
1,017
Restricted stock awards granted
6
Notes to Unaudited Consolidated Financial Statements
Note 1 – Corporate Structure and Nature of Operations; Basis of Presentation
Corporate Structure and Nature of Operations
NB Bancorp, Inc., a Maryland corporation (the “Company”), is a bank holding company. Through its wholly-owned subsidiary, Needham Bank (the “Bank”), the Company provides a variety of banking services, through its full-service bank branches, located primarily in eastern Massachusetts and southern New Hampshire.
The activities of the Company and the Bank are subject to the regulatory supervision of the Board of Governors of the Federal Reserve System and the Massachusetts Commissioner of Banks. The Company and the activities of the Bank and its subsidiaries are also subject to various Massachusetts business and banking regulations.
Conversion
Effective December 27, 2023, NB Financial, MHC (the “MHC”), the Bank’s former mutual holding company and the predecessor of the Company, converted from a mutual holding company into a publicly traded stock form of organization. In connection with the conversion, the Company sold 40,997,500 shares of common stock in a public offering at $10.00 per share for net offering proceeds of approximately $400.4 million. Additionally, the Company donated $2.0 million of cash and 1,708,229 shares of common stock to the Needham Bank Charitable Foundation (the “Foundation”).
In connection with the conversion, liquidation accounts are established by the Company and the Bank in an aggregate amount equal to (i) the MHC’s ownership interest in the shareholders’ equity of NB Financial, Inc. as of the date of the latest statement of financial condition included in the Company’s definitive prospectus dated October 12, 2023, plus (ii) the value of the net assets of the MHC as of the date of the MHC’s latest statement of financial condition before the consummation of the Conversion (excluding the MHC’s ownership interest in NB Financial, Inc.). Each eligible account holder and supplemental eligible account holder is entitled to a proportionate share of the liquidation accounts in the event of a liquidation of (i) the Company and the Bank or (ii) the Bank, and only in such events. This share will be reduced if the eligible account holder’s or supplemental account holder’s deposit balance falls below the amounts on the date of record and will cease to exist if the account is closed. The liquidation account will never be increased despite any increase after conversion in the related deposit balance. The Bank may not pay a dividend on its capital stock if the effect thereof would cause retained earnings to be reduced below the liquidation account amount or regulatory capital requirements.
Basis of Presentation
The Company’s Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) as set forth by the Financial Accounting Standards Board (“FASB”) and its Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) as well as the rules and interpretive releases of the U.S. Securities and Exchange Commission (“SEC”) under the authority of federal securities laws.
The Consolidated Financial Statements of the Company include the balances and results of operations of the Company and the Bank, its wholly-owned subsidiary, as well as the Bank’s wholly-owned subsidiaries, Needco-op Investment Corporation, Inc., 1892 Investments LLC and Eaton Square Realty LLC. All intercompany accounts and transactions have been eliminated in consolidation.
Certain amounts, previously reported, have been reclassified to state all periods on a comparable basis and had no effect on shareholders’ equity or net income.
The accompanying Consolidated Balance Sheet as of March 31, 2026, the Consolidated Statements of Income, of Comprehensive Income, of Changes in Shareholders’ Equity and of Cash Flows for the three months ended March 31, 2026 and 2025 are unaudited. The Consolidated Balance Sheet as of December 31, 2025 was derived from the Audited Consolidated Financial Statements as of that date. The interim Consolidated Financial Statements and the accompanying notes should be read in conjunction with the annual Consolidated Financial Statements and the accompanying notes contained within the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC. In the opinion of management, the Company’s Consolidated Financial Statements reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The results for the three months ended March 31, 2026 are not necessarily indicative of results to be expected for the year ending December 31, 2026, any other interim period, or any future year or period.
The Company qualifies as an emerging growth company (“EGC”) under the Jumpstart Our Business Startups Act of 2012 and has the ability to defer the adoption of new or revised accounting standards until the nonpublic company effective dates. As such, the Company will adopt standards on the nonpublic company effective dates until such time that we no longer qualify as an EGC.
Subsequent events are events or transactions that occur after the balance sheet date but before consolidated financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the consolidated balance sheet, including the estimates inherent in the process of preparing consolidated financial statements. Non-recognized subsequent events are events that provide evidence about conditions that did not exist at the date of the consolidated balance sheet but arose after that date.
Provident Bancorp, Inc. and BankProv Acquisition
On November 15, 2025, the Company completed its acquisition of Provident Bancorp, Inc. and BankProv (“Provident”). The total consideration paid in the acquisition of Provident was $111.8 million in cash and the issuance of 5,943,682 shares of common stock valued at $114.7 million. The acquisition added $1.40 billion of total assets, $1.23 billion of total loans and $1.14 billion in total deposits, each at fair value, as of the date of closing.
The acquisition was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Under this method of accounting, the respective assets acquired and liabilities assumed were recorded at their estimated fair values. The excess of consideration paid over the estimated fair value of the net assets acquired totaled $18.5 million and was recorded as goodwill. The results of Provident’s operations were included in the Company’s consolidated financial statements beginning on November 15, 2025.
The calculation of goodwill is subject to change for up to one year after the closing date of the transaction as additional information relative to closing date estimated and uncertainties becomes available. The Company made no adjustments to Goodwill during the three months ended March 31, 2026.
Operating Segments
Reportable segments are those revenue producing components for which separate financial information is produced internally and which are subject to evaluation by the chief operating decision maker (“CODM”). The Company has determined that its CODM is its Chief Executive Officer. The Company has one reportable segment: its banking business, which consists of a full range of banking lending, savings, and small business offerings. The CODM regularly assesses performance of the aggregated single operating and reporting segment and decides how to allocate resources based on net income calculated on the same basis as net income reported in the Company’s consolidated statements of income and other comprehensive income. The CODM is also regularly provided with expense information at a level consistent with that disclosed in the Company’s consolidated statements of income and other comprehensive income.
8
Note 2 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the Allowance for Credit Losses (“ACL”) on loans, fair value determination of acquired assets and liabilities and resulting accretion and amortization of purchase accounting premiums/discounts, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans, the valuation of deferred tax assets, actuarial estimates related to the Company’s retirement programs, the valuation of financial instruments and impairment of goodwill and other intangibles. In connection with the determination of the ACL and foreclosed real estate, management obtains independent appraisals for significant properties.
A majority of the Company's loan portfolio consists of one-to-four-family residential, commercial real estate and construction and land development loans in the metro-west area of Boston and its surrounding communities. Accordingly, the ultimate collectability of a substantial portion of the Company's loan portfolio and the recovery of the carrying amount of foreclosed real estate are susceptible to changes in local market conditions.
While management uses currently available information to recognize losses on loans and foreclosed real estate, future additions to the ACL and valuation reserves on foreclosed real estate may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s ACL on loans and valuation reserves on foreclosed real estate. Such agencies may require the Company to recognize additions to the ACL on loans and valuation reserves on foreclosed real estate based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the ACL on loans and valuation reserves on foreclosed real estate may change in the near future.
Business Combinations – Acquisitions of businesses are accounted for using the acquisition method of accounting. In accordance with applicable accounting guidance, we recognize assets acquired and liabilities assumed at their respective fair values as of the date of acquisition, with the related transaction costs expensed in the period incurred. We use third party valuation specialists to assist in the determination of fair value of certain assets and liabilities at the merger date, including loans and core deposit intangibles. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed on the acquisition date, the estimates are inherently uncertain.
For further discussion of our methodology for estimating the fair value of acquired assets and assumed liabilities in connection with our Provident Acquisition, see Note 1 – Corporate Structure and Nature of Operations; Basis of Presentation – Provident Bancorp, Inc. and BankProv Acquisition.
Recent Accounting Pronouncements
Relevant standards that were recently issued but not yet adopted as of March 31, 2026:
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Sub Topic 220-40): Disaggregation of Income Statement Expenses”. ASU 2024-03 improves disclosures about a public business entity’s expenses and addresses requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, SG&A, and research and development). ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The adoption of ASU 2024-03 is not expected to have a material impact on the Company’s consolidated financial statements.
9
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
Note 3 – Securities
The Company's available-for-sale (“AFS”) securities are carried at fair value. For AFS securities in an unrealized loss position, management will first evaluate whether there is intent to sell, or if it is more likely than not that the Company will be required to sell a security prior to anticipated recovery of its amortized cost basis. If either of these criteria are met, the Company will record a write-down of the security's amortized cost basis to fair value through income. For those AFS securities which do not meet the intent or requirement to sell criteria, management will evaluate whether the decline in fair value is a result of credit related matters or other factors.
In performing this assessment, management considers the creditworthiness of the issuer including whether the security is guaranteed by the U.S. Federal Government or other government agency, the extent to which fair value is less than amortized cost, and changes in credit rating during the period, among other factors. If this assessment indicates the existence of credit losses, the security will be written down to fair value, as determined by a discounted cash flow analysis. To the extent the estimated cash flows do not support the amortized cost, the deficiency is considered to be due to credit loss and is recognized in earnings.
Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Losses are charged against the allowance when the uncollectibility of a security is confirmed, or when either of the aforementioned criteria surrounding intent or requirement to sell have been met.
Securities have been classified on the consolidated balance sheets according to management’s intent.
The following tables summarize the amortized cost, allowance for credit losses, and fair value of securities and their corresponding amounts of unrealized gains and losses at the dates indicated:
Amortized
Unrealized
Allowance for
Cost
Gain
Loss
Credit Losses
Fair Value
(in thousands)
Available-for-Sale Debt Securities:
U.S. Treasury securities
96,467
132
(278)
96,321
U.S. Government agencies
4,670
20
(4)
4,686
Agency mortgage-backed securities
91,838
100
(2,085)
89,853
Agency collateralized mortgage obligations
11,321
191
(125)
11,387
Corporate bonds
64,702
271
(2,976)
61,997
Municipal obligations
6,599
(59)
6,540
SBA securities
6,574
(117)
6,457
282,171
714
(5,644)
95,479
407
(103)
95,783
9,159
53
9,212
69,682
162
(1,253)
68,591
12,109
202
(74)
12,237
72,703
263
(3,081)
69,885
6,596
(72)
6,524
6,830
6,727
272,558
1,087
(4,686)
10
The Company did not record a provision for estimated credit losses on any AFS securities for the three months ended March 31, 2026 and 2025. Excluded from the table above is accrued interest on AFS securities of $2.1 million and $1.8 million at March 31, 2026 and December 31, 2025, respectively, which is included within accrued interest receivable on the consolidated balance sheets. Additionally, the Company did not record any write-offs of accrued interest income on AFS securities for the three months ended March 31, 2026 and 2025. No securities held by the Company were delinquent on contractual payments at March 31, 2026 or December 31, 2025, nor were any securities placed on non-accrual status during the three months ended March 31, 2026 and 2025.
The following is a summary of actual maturities of certain AFS securities as of March 31, 2026. The amortized cost and fair values are based on the contractual maturity dates. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty.
Agency mortgage-backed securities and collateralized mortgage obligations are presented as separate lines as paydowns are expected to occur before contractual maturity dates.
Available-for-Sale
Amortized Cost
Within one year
66,586
66,344
Over one year to five years
68,355
68,092
Over five years to ten years
39,940
37,557
Over ten years
4,131
4,008
179,012
176,001
When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. There were no sales of AFS securities during the three months ended March 31, 2026 and 2025.
The carrying value of AFS securities pledged to secure advances from the FHLB were $216.4 million and $111.5 million as of March 31, 2026 and December 31, 2025, respectively.
The following tables present fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of the dates stated.
Less than 12 Months
12 Months or More
Gross
Fair
Number of Securities
Losses
Value
U.S. Treasuries
24
(207)
46,177
(71)
2,930
49,107
U.S. Government Agencies
1,621
36
(882)
48,968
(1,203)
31,175
80,143
(7)
1,958
(118)
6,897
8,855
(459)
7,533
(2,517)
42,741
50,274
(6)
956
(111)
5,501
96
(1,565)
107,213
(4,079)
95,784
202,997
11
(11)
8,929
(92)
10,945
19,874
25
(301)
26,876
(952)
31,890
58,766
1,995
(67)
7,324
9,319
(356)
6,634
(2,725)
53,538
60,172
1,440
5,084
(28)
2,299
(75)
4,428
72
(704)
48,173
(3,982)
113,209
161,382
Management evaluates securities for expected credit losses at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.
Included in corporate bonds are investments in senior and subordinated debt of banks and bank holding companies, some of which do not have investment ratings.
At March 31, 2026, AFS debt securities had unrealized losses with aggregate depreciation of 2.7% from the Company’s amortized cost basis. These unrealized losses relate to changes in market interest rates since acquiring the securities. As management has the intent and ability to hold these securities until maturity or cost recovery, no allowance for credit losses on securities is deemed necessary as of March 31, 2026 and December 31, 2025.
Note 4 – Loans Receivable, Allowance for Credit Losses and Credit Quality
Loans Held for Sale
Loans held for sale to the secondary market are carried at the lower of cost or estimated market value on an individual loan basis. Gains on sales of loans are recognized in the consolidated statements of income at the time of sale. Losses on sales of loans are recognized in the consolidated statements of income when incurred. Interest income is recognized on loans held for sale between the time the loan is funded and the loan is sold. Direct loan origination costs and fees are deferred upon origination and are recognized in the consolidated statements of income on the date of sale. As of March 31, 2026 and December 31, 2025, the Company had $64.0 million and $66.4 million of consumer loans held for sale, respectively.
Loans Receivable
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported as held for investment at their outstanding principal balance adjusted for any charge-offs and net of any deferred fees (including purchase accounting adjustments) and origination costs (collectively referred to as “amortized cost”). Loan origination fees and certain direct origination costs are deferred and amortized as an adjustment of yield using the payment terms required by the loan contract. When loans are sold or repaid, any unamortized fees and costs are recorded to interest income on loans. Interest income on loans is accrued based upon the daily principal amount outstanding except for loans on non-accrual status. For acquired loans with no signs of credit deterioration at acquisition, interest income is also accrued based upon the daily principal amount outstanding, adjusted further by the accretion of any discount or amortization of any premium associated with the loan.
Loans are generally placed into nonaccrual status when they are past due 90 days or more as to either principal or interest or when, in the opinion of management, the collection of principal and/or interest is in doubt. A loan remains in nonaccrual status until the loan is current as to payment of both principal and interest or past due less than 90 days and the borrower demonstrates the ability to pay and remain current. When cash payments are received, they are applied to principal first, then to accrued interest. It is the Company’s policy not to record interest income on nonaccrual loans until principal has become current. In certain instances, accruing loans that are past due 90 days or more as to principal or interest may not go on nonaccrual status if the Company determines that the loans are well-secured and are in the process of collection.
12
Allowance for Credit Losses
The ACL represents management’s best estimate of credit losses over the remaining life of the loan portfolio. Loans are charged-off against the ACL when management believes the loan balance is no longer collectible. Subsequent recoveries of previously charged-off amounts are recorded as increases to the ACL. The provision for credit losses is an amount sufficient to bring the ACL to an estimated balance that management considers adequate to absorb lifetime expected losses in the Company’s held-for-investment loan portfolio. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.
Management’s determination of the adequacy of the ACL under FASB ASC 326 is based on an evaluation of the composition of the loan portfolio, current economic conditions, historical loan loss experience, reasonable and supportable forecasts, and other risk factors. The Company uses a third-party CECL model as part of its estimation of the ACL on a quarterly basis. Loans with similar risk characteristics are collectively assessed within pools (or segments). Loss estimates within the collectively assessed population are based on a combination of pooled assumptions and loan-level characteristics. The Company has determined that using federal call codes is an appropriate loan segmentation methodology, as it is generally based on risk characteristics of a loan’s underlying collateral.
Using federal call codes also allows the Company to utilize and assess publicly available external information when developing its estimate of the ACL. The weighted average remaining maturity (“WARM”) method is the primary credit loss estimation methodology used by the Company and involves estimating future cash flows and expected credit losses for pools of loans using their expected remaining WARM.
In applying future economic forecasts, the Company utilizes a forecast period of up to two years. The Company considers economic forecasts of inflation, national gross domestic product, and unemployment rates sourced from the Federal Open Market Committee’s “Summary of Economic Projections” to inform the model for future loss estimation.
Additionally, interest rate forecasts sourced from CME Group’s “FedWatch”, Wells Fargo’s “U.S. Economic Outlook,” and FHN Financial’s “Economic Forecast” publications are used for consideration of rate sensitivity in the model’s loan prepayment speed estimation. Historical loss rates used in the quantitative model are primarily derived using both the Bank’s data and peer bank data obtained from publicly available sources (i.e., federal call reports). The Bank’s peer group is comprised of financial institutions of relatively similar size and in similar markets (i.e., $10 billion or less of total assets and headquartered in New England). The peer group used for certain loan segments is a national peer group of financial institutions of relatively similar size, where appropriate. The changes did not have a material impact on the ACL during the year ended December 31, 2025.
Management also considers qualitative adjustments when estimating credit losses to take into account the model’s quantitative limitations.
Management continually assesses the peer group and related data used to inform the ACL calculation.
Qualitative adjustments to quantitative loss factors, either negative or positive, may include considerations of economic conditions including economic forecasts as detailed above, volume and severity of past due loans, value of underlying collateral, experience, depth, and ability of management, and concentrations of credit.
The Company made no significant changes to loss factors, assumptions nor qualitative factors within the CECL model during the three months ended March 31, 2026 and 2025.
For those loans that do not share similar risk characteristics, the Company evaluates the ACL needs on an individual (or loan by loan) basis. This population of individually evaluated loans (or loan relationships with the same primary source of repayment) is determined on a quarterly basis and consists of: loans with a risk rating of substandard or worse or loan terms differing significantly from other pooled loans. In accordance with the Company’s policy, non-accrual residential real estate loans that are below $500,000 and well secured (loan-to-value <60%) are excluded from being individually evaluated.
13
Measurement of credit loss is based on the expected future cash flows of an individually evaluated loan, discounted at the loan’s effective interest rate, or measured on an observable market value, if one exists, or the estimated market value of the collateral underlying the loan, discounted to consider estimated costs to sell the collateral for collateral-dependent loans. If the net value is less than the loan’s amortized cost, a specific reserve in the ACL is recorded, which is charged-off in the period when management believes the loan balance is no longer collectible.
The Company’s Troubled Asset Resolution Committee approves the key methodologies and assumptions, as well as the ACL on at least a quarterly basis. While management uses available information at the time of estimation to determine expected credit losses on loans, future changes in the ACL may be necessary based on changes in portfolio composition, portfolio credit quality, and/or economic conditions. In addition, bank regulatory agencies periodically review the Bank’s ACL and may require an increase in the provision for credit losses or the recognition of further loan charge-offs, based on judgments different than those of management.
Collateral-dependent Loans – The Company has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following provides more detail about the types of collateral that secure collateral-dependent loans:
Non-owner-occupied commercial real estate loans are generally secured by office buildings and complexes, retail facilities, multifamily complexes, land under development, industrial properties, as well as other commercial or industrial real estate.
Purchased Credit-Deteriorated (“PCD”) Loans - PCD loans are acquired individual loans (or acquired groups of loans with similar risk characteristics) that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality, as determined by the Company’s analyses. A PCD loan is recorded at its purchase price plus the ACL expected at the time of acquisition, or “gross up” of the amortized cost basis, if any. Changes in the current estimate of the ACL subsequent to acquisition from the estimated allowance previously recorded are recognized in the income statement as provision for credit losses or recoveries of credit losses in subsequent periods as they arise.
14
Evidence that purchased loans, measured at amortized cost, have more-than-insignificant deterioration in credit quality and, therefore meet the PCD definition, may include past-due status, non-accrual status, risk rating and other standard indicators (i.e., modification due to financial difficulty, charge-offs, bankruptcy).
In the ordinary course of business, the Company enters into commitments to extend credit. Such financial instruments are recorded in the consolidated financial statements when they are funded. The credit risk associated with these commitments is evaluated in a manner similar to the ACL on loans. The reserve for unfunded commitments is included in other liabilities on the consolidated balance sheets.
Loans consist of the following as of the dates stated:
Amount
Percent
One-to-four-family residential
1,185,601
19.06
%
1,177,156
19.64
Home equity
155,717
2.50
152,602
2.55
Total residential real estate
1,341,318
21.56
1,329,758
22.19
Commercial real estate
1,924,862
30.95
1,924,043
32.09
Multi-family residential
538,164
8.65
517,527
8.63
Total commercial real estate
2,463,026
39.60
2,441,570
40.72
Construction and land development
782,721
12.58
730,573
12.19
Commercial and industrial
1,143,086
18.38
1,007,669
16.81
Total commercial
4,388,833
70.56
4,179,812
69.72
Consumer, net of premium/discount
212,923
3.42
203,497
3.40
Mortgage warehouse
277,191
4.46
280,949
4.69
Total loans
6,220,265
100.00
5,994,016
Deferred fees, net
(10,355)
(7,876)
Included in the above are approximately $466.8 million and $404.8 million in loans to borrowers in the cannabis industry at March 31, 2026 and December 31, 2025, respectively. Of that total, $321.0 million and $228.8 million were direct loans to cannabis companies and were collateralized by real estate at March 31, 2026 and December 31, 2025, respectively.
During the three months ended March 31, 2026 and 2025, the Company purchased approximately $14.7 million and $14.4 million of consumer loan pools, respectively. The loans purchased during the three months ended March 31, 2026 and 2025 included loan pools collateralized by automobiles.
The outstanding balances of consumer purchased loans, shown net of premium (discount) are as follows as of the dates stated:
Gross Loan
Premium (Discount)
Net Loan
Student loans
4,993
5,029
Automobile loans
82,167
Solar panel loans
47,364
(4,284)
43,080
Home improvement loans
34,108
(24)
34,084
168,632
(4,272)
164,360
15
5,421
34
5,455
Boat and RV loans
238
75,560
49,077
(4,667)
44,410
35,845
35,832
166,141
(4,646)
161,495
The carrying value of loans pledged to secure advances from the FHLB were $1.25 billion and $1.56 billion as of March 31, 2026 and December 31, 2025, respectively.
The following table presents the aging of the amortized cost of loans receivable by loan category as of the date stated:
30-59
60-89
90 Days or
Current
Days
More Past Due
Loans
Past Due
Still Accruing
Nonaccrual
Real estate loans:
1,178,542
5,225
71
1,763
153,511
533
1,673
1,911,674
60
80
12,654
394
782,711
1,102,974
351
876
38,885
Consumer
204,088
4,407
1,590
2,838
6,148,855
10,576
2,617
45,563
1,166,731
7,232
481
2,712
150,413
445
385
1,359
1,923,108
855
730,563
895,662
73,225
2,531
36,251
194,595
4,665
2,022
2,215
Mortgage Warehouse
5,859,548
85,647
5,419
43,402
As of March 31, 2026, the Company had one commercial and industrial loan with an outstanding balance of $12.7 million that was ninety days past due and still accruing. The loan is well secured and in the process of collection, as the borrower has brought the loan current. The Company had no loans ninety days past due and still accruing as of March 31, 2025.
16
The following table presents the amortized cost of nonaccrual loans receivable by loan category as of the dates stated:
Loans with
No ACL
an ACL
(In thousands)
18,421
20,464
19,799
16,452
25,099
26,950
During the three months ended March 31, 2026 and 2025, the Company reversed $483,000 and $378,000 of interest income for loans that were placed on non-accrual respectively.
Credit Quality Information
The Company utilizes a nine-grade internal rating system for all loans, except consumer loans, which are not risk rated, as follows:
Loans rated 1-5: Loans in these categories are considered “pass” rated loans with low to average risk.
Loans rated 6: Loans in this category are considered “special mention”. These loans are starting to show signs of potential weakness and are being closely monitored by management.
Loans rated 7: Loans in this category are considered “substandard”. Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected. Non-accrual residential real estate and commercial loans are downgraded to a substandard risk rating.
Loans rated 8: Loans in this category are considered “doubtful”. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.
Loans rated 9: Loans in this category are considered uncollectible (“loss”) and of such little value that their continuance as loans is not warranted.
On an annual basis, or more often if needed, the Company reviews the accuracy of risk ratings for all commercial real estate, construction and land development loans, and commercial and industrial loans based on various ongoing performance characteristics and supporting information that is provided from time to time by commercial borrowers. Annually, the Company engages an independent third-party to review a significant portion of loans within these segments. Management uses the results of these reviews as part of its annual review process.
17
The following table presents the amortized cost of loans receivable by internal risk grade by year of origination as of March 31, 2026. Also presented are current period gross charge-offs by loan type and vintage year for the three months ended March 31, 2026:
Term Loans Amortized Cost Basis by Origination Year (in thousands)
Risk Rating
2024
2023
2022
Prior
Revolving Loans
One-to-Four-Family Residential
Grade:
Pass
1-5
34,044
111,535
91,410
128,377
249,884
531,121
37,309
1,183,680
Special Mention
Substandard
1,793
1,921
Doubtful
Loans not formally risk rated (1)
532,914
37,437
Current period gross charge-offs
56
Home Equity
494
245
761
152,543
154,043
62
125
450
1,037
1,674
556
370
1,211
153,580
Commercial Real Estate
38,914
315,912
163,071
270,371
340,981
597,223
72,775
1,799,247
13,395
33,569
48,800
6,561
102,325
23,290
176,466
303,940
389,781
627,074
Multi-Family
21,015
52,911
17,020
78,387
231,887
135,286
1,658
Construction and Land Development
36,390
107,159
212,312
252,742
12,750
19,579
122,141
763,073
19,638
32,388
19,589
Commercial and Industrial
200,953
85,481
64,217
100,716
75,819
145,284
291,815
964,285
13,628
465
1,156
9,034
10,823
94,719
129,825
9,500
3,519
16,183
13,403
6,362
48,967
108,609
64,682
105,391
101,045
169,510
392,896
7,072
5,298
12,370
18
14,814
57,344
36,789
3,615
38,833
56,483
5,045
164
91
496
651
1,409
Total Loans
331,316
672,998
548,524
830,838
911,321
1,429,254
955,432
5,679,683
13,860
34,725
77,472
17,384
251,788
3,644
38,936
7,527
75,852
346,130
753,470
599,235
872,822
1,043,818
1,542,067
1,062,723
7,568
6,005
13,835
(1) Consumer loans are not formally risk rated and included $2.8 million of loans on non-accrual as of March 31, 2026.
The following table presents the amortized cost of loans receivable by internal risk grade by year of origination as of December 31, 2025. Also presented are current period gross charge-offs by loan type and vintage year for the three months ended December 31, 2025:
2021
109,894
99,901
133,211
252,202
230,200
310,541
38,849
1,174,798
239
1,983
136
2,358
230,439
312,524
38,985
919
149,598
151,243
1,172
543
150,770
277,427
176,824
268,778
350,792
166,603
443,438
109,330
1,793,192
33,785
49,323
4,277
6,918
106,957
457
23,437
23,894
189,478
302,563
400,572
170,880
473,793
51,330
17,220
79,309
232,302
29,510
106,112
1,744
95,751
212,670
256,764
13,536
16,138
3,466
99,857
698,182
32,381
45,917
3,476
72,148
65,844
99,436
91,265
106,858
61,608
387,604
884,763
1,696
2,262
12,851
10,417
4,306
45,454
76,986
2,437
4,878
8,776
6,389
45,815
105
81,648
67,540
104,135
118,056
122,153
74,690
439,447
3,762
56,733
40,589
3,775
41,676
36,574
20,694
3,456
144
43
732
374
1,324
606,550
572,940
837,743
940,097
549,309
926,084
1,067,931
5,500,654
14,350
36,047
94,555
14,694
11,224
216,324
2,562
14,292
5,117
34,196
7,697
73,426
115
672,783
627,941
880,127
1,090,725
605,694
992,208
1,124,538
750
3,786
5,104
(1) Consumer loans are not formally risk rated and included $2.2 million of loans on non-accrual as of December 31, 2025.
The following table presents an analysis of the change in the ACL by major loan segment for the periods stated:
For the Three Months Ended March 31, 2026
One-to-Four
Construction
Family
Commercial
and Land
Commercial and
Residential
Real Estate
Development
Industrial
Balance at December 31, 2025
1,703
21,599
1,188
5,050
49,599
7,895
225
87,411
Provision for (release of) credit losses
386
209
154
4,093
1,478
Charge-offs
(56)
(12,370)
(1,409)
(13,835)
Recoveries of loans previously charged-off
Balance at March 31, 2026
1,709
155
21,985
1,397
5,204
41,334
8,189
222
80,195
For the Three Months Ended March 31, 2025
Balance at December 31, 2024
1,195
74
9,481
599
4,137
11,174
12,084
38,744
98
(723)
703
(62)
Charge offs
(1,558)
193
Balance at March 31, 2025
1,293
8,758
615
4,840
12,087
10,657
38,338
The charge-offs in the commercial and industrial portfolio during the quarter ended March 31, 2026 were primarily driven by two large charge-offs of PCD loans, in amounts of $10.6 million and $1.8 million. These loans were previously reserved for through purchase accounting adjustments as of the acquisition date and resulted in no additional loss to the Company.
21
The following table presents the amortized cost of collateral-dependent loans as of March 31, 2026 and December 31, 2025:
As of
One to four-family residential
1,690
2,433
1,635
1,338
18,606
19,057
Commercial and industrial loans
48,286
62,986
70,227
85,824
The Company closely monitors the performance of borrowers experiencing financial difficulty to understand the effectiveness of its loan modification efforts.
The following table presents the period end amortized cost basis of loans modified to borrowers experiencing financial difficulty during the three months ended March 31, 2026, disaggregated by class of financing receivable, type of modification granted and the financial effect of the modifications.
Three Months Ended March 31, 2026
% of Total Class of
Cost Basis
Financing Receivable
Financial Effect
Interest rate reduction
4,334
0.2
Terminated swap, changed interest rate index, reduced spread and added rate floors
Modifications to borrowers experiencing financial difficulty were performing in accordance with the modified terms, current and not in default as of March 31, 2026 and December 31, 2025. During the three months ended March 31, 2025, the Company did not modify any loans to borrowers experiencing financial difficulty.
Note 5 – Goodwill and Other Intangible Assets
The table below sets forth the carrying amount of goodwill and other intangible assets, net of accumulated amortization as of the dates indicated:
Balances not subject to amortization:
Balances subject to amortization:
Core deposit intangibles
Total goodwill and other intangibles (1)
36,923
37,815
The changes in the carrying value of goodwill for the periods indicated were as follows:
March 31, 2025
Balance at beginning of period
Goodwill recorded during the period
Goodwill disposed of during the period
Balance at end of period
22
The following table sets forth the carrying amount of the Company’s other intangible assets, net of accumulated amortization, as of the dates indicated below:
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
Core deposit intangible - Provident
18,800
1,283
17,517
Core deposit intangible - Century Cannabis
1,488
594
894
Total core deposit intangibles
20,288
1,877
428
18,372
557
931
985
In accordance with the accounting guidance codified in ASC 350-20, the Company performs a test of goodwill for impairment at the reporting segment level on an annual basis, or sooner, if an event occurs or circumstances change which might indicate that the fair value of a reporting unit is below its carrying amount. The Company has one identified reporting segment and assigned goodwill to the banking business reporting segment.
An assessment is also required to be performed to the extent relevant events and/or circumstances occur which may indicate it is more-likely-than-not that the fair value of a reporting segment is less than its carrying amount.
The Company performed its annual assessment for the banking business as of December 31, 2025. The assessment included a qualitative assessment which indicated that it was more likely than not that the fair value of the reporting unit exceeded the carrying value. Based upon the assessment, it was determined there was no impairment of the Company’s goodwill as of December 31, 2025.
The amortization expense of the Company’s other intangible assets was $892,000 and $37,000 during the three months ended March 31, 2026 and 2025, respectively.
The weighted average original amortization period and weighted average remaining useful life of the Company’s other intangible assets is 10.0 years and 9.3 years, respectively. Management performs an assessment of the remaining useful lives of the Company’s intangible assets on a quarterly basis to determine if such lives remain appropriate.
The estimated amortization expense for the remaining useful life of the Company’s other intangible assets is as follows (in thousands):
Year
2,632
2027
3,183
2028
2,841
2029
2,499
2030
2,157
2031 and thereafter
5,099
Note 6 – Employee Benefits
401(k) Plan – The Company has an employee tax deferred incentive plan (the “401(k) plan”) under which the Company makes voluntary contributions within certain limitations. All employees who meet specified age and length of service requirements are eligible to participate in the 401(k) plan.
23
The amount contributed by the Company to the 401(k) Plan is included in salaries and employee benefits in the consolidated statements of income. The amounts contributed to the 401(k) plan for the three months ended March 31, 2026 and 2025 were $1.1 million and $688,000, respectively.
Employee Pension Plan – The Company provided pension benefits through a defined benefit plan maintained with the Co-operative Banks Employees Retirement Association (“CBERA”) (the “Plan”). The Plan was a multi-employer plan whereby the contributions by each bank are not restricted to provide benefits to the employees of the contributing bank; therefore, the Company is not required to recognize the funded status of the plan on its consolidated balance sheet and need only accrue for any quarterly contributions due and payable on demand, or any withdrawal liabilities assessed by CBERA if the Company intended to withdraw from the Plan.
The Company determined to freeze benefit accruals and withdraw from the CBERA Plan as of December 31, 2023. The Company withdrew from the Plan in the second quarter of 2024.
During the three months ended March 31, 2025, as part of the final CBERA Plan liquidation, the Company contributed an additional $1.2 million to the CBERA Plan.
Officers’ Deferred Compensation Plan – The Company maintains an unfunded, defined contribution, Non-qualified Deferred Compensation Plan (“Officers’ Deferred Comp Plan”) for select employees of the Company. The Officers’ Deferred Comp Plan was provided to key management of the Company and results in 5% - 20% of the employee’s then current base salary being credited to the participant’s account annually, subject to increases based upon increases in annual base compensation and the possibility of additional discretionary contributions. The employees vest at varying dates in accordance with each individual’s deferred compensation participation agreement; however, all key officers will be fully vested upon the attainment of age 65. The obligations under these plans are included in accrued retirement liabilities in the Company’s consolidated balance sheets and approximated $2.5 million and $2.4 million at March 31, 2026 and December 31, 2025, respectively. The expense under the Officers’ Deferred Comp Plan (recorded in salaries and employee benefits in the consolidated statements of income) approximated $88,000 and $89,000 for the three months ended March 31, 2026 and 2025, respectively.
Deferred Compensation Plans – The Company maintains an unfunded Non-qualified Deferred Compensation Plan (“Deferred Comp Plan”) for select employees of the Company. The Deferred Comp Plan was provided to key management of the Company and allows for the employees to defer amounts from their salary, bonus, or Long-Term Incentive Plan (“LTIP”) into the Deferred Comp Plan to be paid out at a future date. Amounts deferred under the Deferred Comp Plan increase in value based upon the growth of the Bank’s tangible capital, with the Compensation Committee holding discretionary authority. The obligations under the Deferred Comp Plan are included in accrued retirement liabilities on the Company’s consolidated balance sheets and approximated $8.0 million and $5.1 million at March 31, 2026 and December 31, 2025, respectively.
LTIP – In January 2020, the Company put into place a long-term incentive plan for certain members of its management team where benefits are awarded annually on a discretionary basis and cliff vest after three years. Under this plan, individuals are granted “phantom shares” and benefits are accrued based upon the projected growth of the Bank’s capital. The obligations under this plan are included in accrued retirement liabilities on the Company’s consolidated balance sheets and approximated $3.8 million and $7.2 million as of March 31, 2026 and December 31, 2025, respectively. The expense under this plan (recorded in salaries and employee benefits in the consolidated statements of income) approximated $612,000 and $832,000 for the three months ended March 31, 2026 and 2025, respectively.
Director Pension Plan – The Company has a director defined benefit pension plan (“Director Pension Plan”), covering directors who were in service prior to 2023 and have met the plan’s vesting requirements. The Company’s liabilities for the Director Pension Plan are calculated by an independent actuary who uses the “projected unit credit” actuarial method to determine the normal cost and actuarial liability. The liability for the Director Pension Plan amounted to $6.9 million and $6.8 million as of March 31, 2026 and December 31, 2025, respectively, and is recorded on the consolidated balance sheets.
The expense under this plan (recorded in salaries and employee benefits in the consolidated statements of income) approximated $160,000 and $162,000 for the three months ended March 31, 2026 and 2025, respectively.
The Company records an estimate of net periodic pension cost for the director pension plan to accrued retirement liabilities on the consolidated balance sheet on a quarterly basis. Equity adjustments, to accumulated other comprehensive loss, in conjunction with the pension plan are recorded by the Company annually upon receipt of the independent actuarial report.
Employment and Change in Control Agreements – The Company entered into an employment agreement with the Chief Executive Officer that renews for one additional year each January 1st. During 2025, the Company entered into Change in Control agreements with certain executive officers, which provide severance payments in the event of the executive’s involuntary or constructive termination of employment, including upon a termination following a change in control as defined in the agreements.
Employee Stock Ownership Plan – As part of the Initial Public Offering ("IPO") completed on December 27, 2023, the Bank established a tax-qualified Employee Stock Ownership Plan ("ESOP") to provide eligible employees the opportunity to own Company shares. The ESOP borrowed $47.2 million from the Company to purchase 3,416,458 common shares on the open market.
The original loan was payable in annual installments over 20 years at an interest rate of 8.50%. During the year ended December 31, 2025, the loan was refinanced into annual installments over the remaining 19 years at an interest rate of 7.50%. As the loan is repaid to the Company, shares are released and allocated proportionally to eligible participants on the basis of each participant’s proportional share of compensation relative to the compensation of all participants. The unallocated ESOP shares are pledged as collateral on the loan. The Company accounts for its ESOP in accordance with FASB ASC 718-40, Compensation – Stock Compensation.
Under this guidance, unreleased shares are deducted from shareholders’ equity as unearned ESOP shares on the accompanying consolidated balance sheets.
The Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they are committed to be released. To the extent that the fair value of the Company’s ESOP shares differs from the cost of such shares, the difference will be credited or debited to shareholders' equity.
As the loan is internally leveraged, the loan receivable from the ESOP to the Company is not reported as an asset nor is the debt of the ESOP shown as a liability on the Company’s consolidated balance sheets. Total compensation expense recognized in connection with the ESOP was $885,000 and $783,000 for the three months ended March 31, 2026 and 2025, respectively.
The following table presents share information held by the ESOP:
Allocated shares
170,823
Shares committed to be released
42,121
Unallocated shares
3,203,514
3,074,812
Total shares
3,416,458
Fair value of unallocated shares
67,498
60,943
Stock-Based Compensation – On April 23, 2025, the shareholders of the Company approved the NB Bancorp, Inc. 2025 Equity Incentive Plan (“2025 Plan”). The 2025 Plan provides for the issuance of up to 5,987,802 shares of common stock pursuant to grants of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), non-qualified stock options and incentive stock options, any or all of which can be granted with performance-based vesting conditions.
Under the 2025 Plan, 1,708,229 shares may be issued as RSAs or RSUs, including those issued as performance shares and PSUs, and 4,270,573 shares may be issued upon the exercise of stock options. These shares may be awarded from the Company’s authorized but unissued shares. However, the 2025 Plan permits the grant of additional awards of restricted stock or RSUs above the aforementioned limit, provided that, for each additional share of RSA or RSU awarded in excess of such limit, the pool of shares available to be issued upon the exercise of stock options will be reduced by three shares.
The following table presents RSA activity for the periods indicated (dollars in thousands).
Three Months Ended March 31, 2025
Number of Shares
Weighted-Average Grant Date Fair Value Per Share
Non-vested balance at beginning of period
1,284,525
16.41
Granted
21.64
Vested
Forfeited
Non-vested balance at end of period
1,568,084
17.36
The following table presents stock-based compensation expense for the periods indicated.
Three Months Ended
Stock-based compensation expense:
Restricted stock awards
Total stock-based compensation expense
Related tax benefits recognized in earnings
During the three months ended March 31, 2026, the Company granted 283,559 shares of restricted stock with a weighted-average grant date fair value per share of $21.64 and recognized $1.4 million of stock compensation expense. The Company did not have any restricted stock activity or recognize any stock compensation expense during the three months ended March 31, 2025.
Unrecognized stock compensation expense, which is included in Additional Paid-in Capital on the Consolidated Balance Sheets was $22.9 million and $18.2 million at March 31, 2026 and December 31, 2025, respectively.
Note 7 – Fair Value Measurements
ASC 820-10, Fair Value Measurement – Overall (“ASC 820-10”), provides a framework for measuring fair value under U.S. GAAP. This guidance also allows the Company the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis.
In accordance with ASC 820-10, the Company groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.
Level 1 – Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.
Level 2 – Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or comparable assets or liabilities.
26
Level 3 – Valuations for assets and liabilities that are derived from other methodologies, including option pricing models, discounted cash flow models and similar techniques, and are not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets and liabilities.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities carried at fair value for March 31, 2026 and December 31, 2025.
AFS securities – Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds (such as U.S. Treasuries), mortgage products and exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Level 2 securities would include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions, and certain corporate, asset-backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy.
Derivative arrangements – The fair values of derivative arrangements are estimated by the Company using a third-party derivative valuation expert who relies on Level 2 inputs, namely discounted cash flow models to determine fair value by calculating a settlement termination value with the counterparty.
Assets measured and reported at estimated fair value on a recurring basis are summarized below:
Level 1
Level 2
Level 3
Assets:
Available-for-sale debt securities:
47,753
14,244
Total available-for-sale debt securities
166,676
Derivative assets
20,527
Liabilities:
Derivative liabilities
21,249
55,664
14,221
158,955
23,562
22,295
The Company had no purchases, sales or transfers of Level 3 assets during the three months ended March 31, 2026 and 2025. The changes in Level 3 assets during the three months ended March 31, 2026 and 2025 are attributable to total net gains (losses) included in Other Comprehensive Income on subordinated debentures.
The Company may also be required from time to time to measure certain other assets on a non-recurring basis in accordance with U.S. GAAP. Any adjustments to fair value usually result in write-downs of individual assets.
Collateral-Dependent Loans – Collateral-dependent loans with specific reserves are carried at fair value, which equals the estimated market value of the collateral less estimated costs to sell. A loan may have multiple types of collateral; however, the majority of the Company’s loan collateral is real estate. The value of real estate collateral is generally determined utilizing a market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company using observable market data (Level 2). However, if the collateral value is significantly adjusted due to differences in the comparable properties or is discounted by the Company because of lack of marketability, then the fair value is considered Level 3.
The value of business equipment is based upon an outside appraisal if deemed significant or the net book value on the applicable borrower’s financial statements if not considered significant.
Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Fair value adjustments are recorded in the period incurred as provision for credit losses on the consolidated statements of income.
Enterprise value is defined as imputed value for the entire underlying business. To determine an appropriate range of enterprise value, management relies on a standardized set of valuation methodologies that take into account future projected cash flows, market-based multiples, as well as asset values. Valuations involve both quantitative and qualitative considerations and professional judgments concerning differences in financial and operating characteristics in addition to other factors that may impact values over time (Level 3).
The Company had no liabilities measured at fair value on a non-recurring basis.
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The following table summarizes assets measured at fair value on a non-recurring basis:
Collateral-dependent loans, net of reserve
39,632
42,041
For Level 3 assets and liabilities measured at fair value on a nonrecurring basis as of March 31, 2026 and December 31, 2025, the significant unobservable inputs used in the fair value measurements were as follows:
Significant
Valuation
Observable
Unobservable
Technique
Inputs
Collateral-dependent loans
Appraisal Value / Comparison Sales / Enterprise Value
Appraisals and/or sales of comparable properties or financial statements of the business
Appraisals discounted 5 to 20% for sales commission and other holding costs; Enterprise value discounts of assets, liabilities and equity; industry Earnings Before Interest, Taxes, Depreciation and Amortization multiples
ASC Topic 825, Financial Instruments (ASC 825), requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above.
ASC 825 requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The exit price notion is a market-based measurement of fair value that is represented by the price to sell an asset or transfer a liability in the principal market (or most advantageous market in the absence of a principal market) on the measurement date. As of March 31, 2026 and December 31, 2025, fair values of loans are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors.
The following tables present the estimated fair values, related carrying amounts, and valuation level of the financial instruments as of the dates stated:
Carrying
Financial Assets:
Cash and cash equivalents
Loans receivable, net
6,207,104
23,465
17,273
BOLI
Financial Liabilities:
Deposits, other than time deposits
3,518,621
Time deposits
2,578,367
2,578,013
FHLB borrowings
186,033
5,893,652
16,594
17,146
3,348,643
2,504,891
2,506,499
191,970
Note 8 – Commitments and Contingencies
The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to originate loans, to disburse funds to borrowers on unused construction and land development loans, and to disburse funds on committed but unused lines of credit.
These financial agreements involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The contract amounts of these instruments reflect the extent of involvement the Company has in particular classes of financial instruments.
Commitments to originate loans and disburse additional funds to borrowers on lines of credit are agreements to lend to a customer provided there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower.
The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for loan commitments, is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The commitments to originate loans and lines of credit may expire without being funded or drawn upon; therefore, the total commitment amounts do not necessarily represent future cash requirements.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance by a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. As of March 31, 2026 and December 31, 2025, the maximum potential amount of the Company’s obligation was $9.0 million for standby letters of credit. The Company’s outstanding letters of credit generally have a term of less than one year. If a letter of credit is drawn upon, the Company may seek recourse through the customer’s underlying line of credit. If the customer’s line of credit is also in default, the Company may take possession of the collateral, if any, securing the line of credit.
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Financial instruments whose contract amounts represents off-balance sheet credit risk and are not reflected on the Company’s consolidated balance sheets consist of the following at the dates stated:
Commitments to originate loans
11,298
45,391
Unadvanced funds on lines of credit
822,843
742,375
Unadvanced funds on construction loans
380,397
409,180
Unadvanced funds on mortgage warehouse loans
386,744
Letters of credit
8,977
9,013
1,610,259
1,205,959
The Bank accrues for credit losses related to off-balance sheet financial instruments. Potential losses on off-balance sheet loan commitments are estimated using the same risk factors used to determine the allowance for credit losses on loans, adjusted for the likelihood that funding will occur. The allowance for off-balance sheet commitments is recorded within other liabilities on the consolidated balance sheets and amounted to $3.3 million as of March 31, 2026 and December 31, 2025. For the three months ended March 31, 2026 and 2025, the Company recorded a release of credit losses on unfunded commitments of $54,000 and a provision for credit losses on unfunded commitments of $211,000, respectively.
Note 9 – Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives – The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities.
The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters 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.
The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s assets and liabilities.
Interest Rate Positions – The Company may utilize various interest rate derivatives as hedging instruments against interest rate risk associated with the Company’s borrowings and loan portfolios. An interest rate derivative is an agreement whereby one party agrees to pay a floating rate of interest on a notional principal amount in exchange for receiving a fixed rate of interest on the same notional amount, for a predetermined period of time, from a second party. The amounts relating to the notional principal amount are not actually exchanged.
The following tables reflect information about the Company’s derivative positions at the dates indicated below for interest rate swaps which qualify as cash flow hedges for accounting purposes, included in prepaid expenses and other assets on the consolidated balance sheet.
Weighted Average Rate
Notional
Weighted Average
Current Rate
Maturity
Paid
Received
Asset (Liability)
(in years)
Interest rate swaps
300,000
2.8
3.64
3.44
(711)
31
3.5
3.87
1,284
The maximum length of time over which the Company is currently hedging its exposure to the variability in future cash flows for forecasted transactions related to the payment of variable interest on existing financial instruments is 3 years. Included in the table above is a forward-starting interest rate swap with a notional amount of $150 million, which does not begin exchanging cash flows until the third quarter of 2026 and carries a 3-year term during the swap period.
For derivative instruments that are designated and qualify as cash flow hedging instruments, the effective portion of the gains or losses is reported as a component of OCI and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company expects approximately $492,000 (pre-tax) to be reclassified as an increase to net interest income from OCI related to the Company’s cash flow hedges in the twelve months following March 31, 2026.
This reclassification is due to anticipated payments that will be made and/or received on the swaps based on the forward curve at March 31, 2026. The company had no hedges in place for the quarter ended March 31, 2025.
Non-designated Hedges – Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements and/or the Company has not elected apply hedge accounting. Changes air value of derivatives not designated in hedging relationships, exclusive of credit valuation adjustments, are recorded directly in earnings. The Company executes interest rate swaps and cap agreements with commercial banking customers to facilitate its respective risk management strategies. Those interest rate swap and cap agreements are simultaneously hedged by offsetting interest rate swaps and caps that are executed with a third party, such that the Company minimizes its net risk exposure resulting from such transactions.
Risk Participation Agreements (“RPAs”) – RPAs are guarantees issued by the Company to other parties for a fee, whereby the Company agrees to participate in the credit risk of a derivative customer of the other party. Under the terms of these agreements, the “participating bank” receives a fee from the “lead bank” in exchange for the guarantee of reimbursement if the customer defaults on an interest rate swap.
The interest rate swap is transacted such that any and all exchanges of interest payments (favorable and unfavorable) are made between the lead bank and the customer. In the event that an early termination of the swap occurs, and the customer is unable to make a required close out payment, the participating bank assumes that obligation and is required to make this payment. RPAs where the Company acts as the lead bank are referred to as “participations-out,” in reference to the credit risk associated with the customer derivatives being transferred out of the Company. Participations-out generally occur concurrently with the sale of new customer derivatives. RPAs where the Company acts as the participating bank are referred to as “participations-in,” in reference to the credit risk associated with the counterparty’s derivatives being assumed by the Company. The Company’s maximum credit exposure is based on its proportionate share of the settlement amount of the referenced interest rate swap. Settlement amounts are generally calculated based on the fair value of the swap plus outstanding accrued interest receivable from the customer.
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The table below presents the number of positions and total notional amount of non-designated hedges and RPAs as of the dates stated:
Number of Positions
Derivatives not designated as hedging instruments:
Interest rate products
78
554,191
RPA credit contracts
44,565
Total derivatives not designated as hedging instruments
598,756
75
532,972
44,634
577,606
Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheet – The table below presents the fair value of the Company’s derivative financial instruments not designated as hedging instruments, as well as their classification on the consolidated balance sheets as of the dates stated:
Derivative
Assets (1)
Liabilities (2)
20,538
22,294
Swap contract fees, net of brokerage costs, recognized in earnings on the above noted interest rate products and RPA contracts approximated $200,000 and $89,000 for the three months ended March 31, 2026 and 2025, respectively.
The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults (or is capable of being declared in default) on any of its indebtedness, then the Company could also be declared in default on its derivative obligations, and it could be required to terminate its derivative positions with the counterparty.
The Company also has agreements with certain of its derivative counterparties that contain a provision whereby if the counterparty fails to maintain its status as a well-capitalized institution, then the Company could be required to terminate its derivative positions with the counterparty.
In order to mitigate counterparty default risk in conjunction with these interest rate products and RPA credit contracts, the Company was required to maintain $9.1 million of collateral deposit accounts with the counterparties to these agreements as of March 31, 2026 and December 31, 2025.
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Note 10 – Other Comprehensive Income
U.S. GAAP generally requires 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 shareholders' equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income (loss).
The components of other comprehensive income (loss) and related tax effects are as follows for the periods indicated:
Tax
Pre-Tax
(Expense)
After-Tax
Benefit
Change in fair value of available-for-sale securities
330
(589)
Less: Reclassification adjustment for realized gains (losses) in net income
Change in fair value of cash flow hedges
499
Change in fair value of cash flow hedge, net of tax
Total other comprehensive income (loss)
(3,326)
829
The following table presents the components of accumulated other comprehensive loss as of March 31, 2026 and December 31, 2025:
Net unrealized holding losses on available-for-sale securities, net of tax
(3,638)
(2,637)
Net unrealized (loss) gain on cash flow hedge, net of tax
(533)
964
Unrecognized director pension plan benefits, net of tax
(1,462)
(1,463)
Total accumulated other comprehensive loss
Note 11 – Regulatory Capital Requirements
The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.
Under regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
The Company operated under the risk-based framework as of March 31, 2026 and December 31, 2025.
Under this framework, quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of Total Capital, Tier 1 Capital and Common Equity Tier 1 Capital to Risk-Weighted Assets, and Tier 1 Capital to Total Average Assets (as defined in the regulations). Management believes, as of March 31, 2026 and December 31, 2025, that the Company and the Bank meet all capital adequacy requirements to which each is subject.
As of March 31, 2026 and December 31, 2025, the Company and the Bank were categorized as well capitalized under the regulatory framework for prompt corrective action.
To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, Common Equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the Bank’s category. The Bank’s actual capital amounts and ratios are presented in the table as of the date indicated:
To be well capitalized
For minimum capital
under prompt corrective
Actual
adequacy purposes
action provisions
Ratio
Total Capital
812,238
12.2%
531,937
8.0%
664,922
10.0%
(to Risk-Weighted Assets)
Tier 1 Capital
757,905
11.4%
398,953
6.0%
Common Equity Tier I Capital
299,215
4.5%
432,199
6.5%
11.0%
274,662
4.0%
343,328
5.0%
(to Total Average Assets)
791,298
12.4%
511,589
639,486
742,881
11.6%
383,692
287,769
415,666
244,395
305,494
The Company’s actual consolidated capital amounts and ratios are presented in the table as of the date indicated:
863,940
13.0%
531,338
664,173
809,607
398,504
298,878
431,713
11.7%
277,376
346,720
35
871,043
13.6%
512,904
641,130
822,626
12.8%
384,678
288,508
416,734
13.3%
247,709
309,636
Note 12 – Earnings Per Share (“EPS”)
Basic EPS represents net income available to common shareholders divided by the weighted-average number of common shares outstanding during the period.
Diluted EPS have been calculated in a manner similar to that of basic EPS except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares (such as those resulting from the exercise of stock options) were issued during the period, computed using the treasury stock method.
The Company has restricted stock awards that had a dilutive effect during the three months ended March 31, 2026. There were no securities that had a dilutive effect during the three months ended March 31, 2025, and therefore the weighted-average common shares outstanding used to calculate both basic and diluted EPS are the same during the three months ended March 31, 2025. Unallocated ESOP shares are not deemed outstanding for earnings per share calculations.
For the three months ended March 31, 2026 and 2025, there were no anti-dilutive shares.
The table below sets forth our earnings per share for the periods indicated:
(Dollars in thousands, except per share data)
Net income applicable to common shares
Average number of common shares outstanding
45,463,892
42,001,381
Less: average unallocated ESOP shares
(3,074,812)
(3,245,635)
Less: average unvested restricted stock awards
(1,419,332)
Average number of common shares outstanding used to calculate basic EPS
Add: assumed conversion - unvested restricted stock awards
451,254
Average number of common shares outstanding used to calculate diluted EPS
Earnings per common share - basic
Earnings per common share - diluted
General
Management’s discussion and analysis of the financial condition and results of operations at and for the three months ended March 31, 2026 and 2025 is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto, appearing on Part I, Item 1 of this quarterly report on Form 10-Q.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “could,” “might,” “indicate,” “would,” “contemplate,” “continue,” “target,” “forecast,” “outlook,” “guidance,” “objective,” “goal,” “strategy,” “potential,” “predict,” “projection,” “trend,” “designed to,” “opportunity,” “positioned to,” and other similar expressions or the negative of these terms. These forward-looking statements include, but are not limited to:
These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.
Critical Accounting Policies and Estimates
There are no material changes to the critical accounting policies disclosed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 3, 2026.
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Non-GAAP Financial Measures
In addition to results presented in accordance with U.S. GAAP, this quarterly report on Form 10-Q contains certain non-GAAP financial measures, including pre-provision net revenue, operating net income, operating pre-tax income, operating noninterest expense, operating noninterest income, operating effective tax rate, operating earnings per share, basic, operating earnings per share, diluted, operating return on average assets, operating return on average shareholders’ equity, operating efficiency ratio, tangible shareholders’ equity, tangible assets and tangible book value per share. The Company presents certain non-GAAP financial measures, which management uses to evaluate the Company’s performance, and which exclude the effects of certain transactions, non-cash items and U.S. GAAP adjustments that we believe are unrelated to our core business and are therefore not necessarily indicative of the Company’s current performance or financial position. Management believes excluding these items facilitates greater visibility for investors into our core businesses as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding U.S. GAAP financial measures. These unaudited disclosures should not be viewed as a substitute for financial results determined in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.
Net income (GAAP)
Add (Subtract):
Adjustments to net income:
Defined benefit pension termination expense
1,217
Non-recurring fees for business line expansion
500
BOLI surrender tax and modified endowment contract penalty
Total adjustments to net income
1,084
1,371
Less net tax benefit associated with pre-tax non-GAAP adjustments to net income
(277)
(333)
Non-GAAP adjustments, net of tax
807
1,038
Operating net income (non-GAAP)
15,791
13,693
Operating earnings per share, basic (non-GAAP)
0.39
0.35
Operating earnings per share, diluted (non-GAAP)
0.38
Pre-tax income (GAAP)
Adjustments to pre-tax income:
Defined benefit pension termination refund
Total adjustments to pre-tax income
1,034
Operating pre-tax income (non-GAAP)
21,386
18,786
Noninterest expense (GAAP)
Subtract (Add):
Adjustments to noninterest expense:
Total impact of non-GAAP noninterest expense adjustments
Noninterest expense on an operating basis (non-GAAP)
41,667
27,464
Average assets
6,970,059
5,146,528
Operating return on average assets (non-GAAP)
0.92%
1.08%
Average shareholders’ equity
861,505
757,341
Operating return on average shareholders' equity (non-GAAP)
7.43%
7.33%
Total pre-provision net revenue (net interest income plus total noninterest income)
69,381
47,408
Operating efficiency ratio (non-GAAP)
60.06%
57.93%
Income tax expense (GAAP)
Adjustments to income tax expense:
Net tax benefit associated with pre-tax non-GAAP adjustments to net income
(50)
(154)
Total impact of non-GAAP income tax expense adjustments
(327)
(487)
Income tax expense on an operating basis (non-GAAP)
5,041
4,427
Operating effective tax rate (non-GAAP)
23.6%
Total shareholders’ equity (GAAP)
Subtract:
Intangible assets (core deposit intangible)
Total tangible shareholders’ equity (non-GAAP)
805,855
821,117
Total assets (GAAP)
Total tangible assets (non-GAAP)
7,189,514
6,968,315
Tangible shareholders' equity / tangible assets (non-GAAP)
11.21%
11.78%
Total common shares outstanding
Tangible book value per share (non-GAAP)
18.00
17.94
Comparison of Financial Condition as of March 31, 2026 and December 31, 2025
Total Assets. Total assets increased $220.3 million, or 3.1%, to $7.23 billion as of March 31, 2026 from $7.01 billion as of December 31, 2025. The increase was primarily driven by increases in net loans, partially offset by decreases in cash and cash equivalents.
Cash and Cash Equivalents. Cash and cash equivalents decreased $32.2 million, or 7.9%, to $375.4 million as of March 31, 2026 from $407.6 million as of December 31, 2025. The decrease in cash and cash equivalents was primarily due to loan originations and the repurchase of 1,288,509 shares totaling $27.8 million, partially offset by the increase in deposits of $243.5 million during the current quarter.
Available-for-Sale Securities. Available-for-sale securities increased $8.3 million, or 3.1%, to $277.2 million as of March 31, 2026 from $269.0 million as of December 31, 2025 primarily due to purchases of U.S. treasuries, mortgage backed-securities and corporate bonds.
Loans. Net loans increased $231.0 million, or 3.9%, to $6.13 billion as of March 31, 2026 from $5.90 billion as of December 31, 2025. The increase resulted primarily from increases in: commercial and industrial loans, which increased $135.4 million, or 13.4%, construction and development loans, which increased $52.1 million, or 7.1% and multi-family residential loans, which increased $20.6 million, or 4.0%. The increase in our loan portfolio reflects our strategy to prudently grow the balance sheet by continuing to diversify into these higher-yielding loans to improve net margins and manage interest rate risk.
The Company had approximately $466.8 million and $404.8 million in loans to borrowers in the cannabis industry at March 31, 2026 and December 31, 2025, respectively. Of that total, $321.0 million and $228.8 million were direct loans to cannabis companies and were primarily collateralized by real estate at March 31, 2026 and December 31, 2025, respectively.
Deposits. Deposits increased $243.5 million, or 4.2%, to $6.10 billion as of March 31, 2026 from $5.85 billion as of December 31, 2025. Core deposits (which we define as all deposits including certificates of deposit, other than brokered deposits) increased $209.1 million, or 3.9%, to $5.53 billion as of March 31, 2026 from $5.32 billion as of December 31, 2025. The increase in deposits was the result of growth in customer deposits, primarily money market accounts, which increased $92.3 million, or 5.6%, noninterest bearings demand deposits of $44.6 million, or 5.4%, certificates of deposit of $39.1 million, or 2.0%, brokered deposits of $34.4 million, or 6.4% and NOW accounts of $30.4 million, or 4.6%.
The Company had $455.6 million and $453.0 million in deposits from the cannabis industry, representing 7.5% and 7.7% of total deposits, as of March 31, 2026 and December 31, 2025, respectively.
Shareholders’ Equity. Total shareholders’ equity decreased $16.2 million, or 1.9%, to $842.8 million as of March 31, 2026 from $858.9 million as of December 31, 2025, primarily as a result of the repurchase of 1,288,509 shares of common stock at an all-in weighted average cost of $21.55 per share totaling $27.8 million and $3.2 million in dividends paid during the quarter, partially offset by net income of $15.0 million during the three months ended March 31, 2026.
40
Comparison of Operating Results for the Three Months Ended March 31, 2026 and March 31, 2025
Net Income. Net income was $15.0 million for the quarter ended March 31, 2026, compared to net income of $12.7 million for the quarter ended March 31, 2025, an increase of approximately $2.3 million, or 18.4%. An increase of $21.3 million, or 49.0%, in net interest income was partially offset by a $14.0 million, or 48.9%, increase in noninterest expense and a $5.2 million, or 446.5%, increase in the provision for credit losses.
Operating net income, excluding one-time charges, amounted to $15.8 million, or $0.38 per diluted share, for the quarter ended March 31, 2026, compared to operating net income of $13.7 million, or $0.35 per diluted share, for the quarter ended March 31, 2025, representing an increase of $2.1 million, or 15.3%.
The material one-time charges for the quarter ended March 31, 2026 include:
The material one-time charges for the quarter ended March 31, 2025 include:
Interest and Dividend Income. Interest and dividend income increased $28.8 million, or 37.5%, to $105.7 million for the quarter ended March 31, 2026, from $76.9 million for the quarter ended March 31, 2025, primarily due to a $28.6 million, or 40.0% increase in interest and fees on loans. The increase in interest and fees on loans was primarily due to an increase of $1.72 billion, or 39.5%, in the average balance of the loan portfolio to $6.09 billion for the quarter ended March 31, 2026, from $4.37 billion for the quarter ended March 31, 2025, reflecting the growth of our commercial loan portfolio.
Average interest-earning assets increased $1.79 billion, or 36.7% to $6.68 billion for the quarter ended March 31, 2026, from $4.89 billion for the quarter ended March 31, 2025. The significant increase in the average balance of loans was a result of the Provident acquisition which closed during the quarter ending December 31, 2025. The yield on interest-earning assets was 6.41% for the quarter ended March 31, 2026, compared to 6.38% for the quarter ended March 31, 2025, representing a 3 basis point expansion. The ending balance of gross loans of $6.21 billion, is $119.7 million or 2.0%, higher than the average balance of gross loans at the end of the quarter, primarily the result of one large cannabis loan of $115.0 million closing near the end of the quarter, which includes a credit enhancement on a first out basis, and did not have a significant impact on loan yields during the quarter.
Interest Expense. Total interest expense increased $7.5 million, or 22.5%, to $40.8 million for the quarter ended March 31, 2026, from $33.3 million for the quarter ended March 31, 2025.
Interest expense on deposit accounts increased $7.3 million, or 22.8%, to $39.6 million for the quarter ended March 31, 2026, from $32.2 million for the quarter ended March 31, 2025. The increase was due to the Provident acquisition and organic growth which resulted in increases in the average balance of money market accounts of $638.6 million, 59.5%, to $1.71 billion for the quarter ended March 31, 2026, from $1.07 billion for the quarter ended March 31, 2025 and certificates of deposit and individual retirement accounts of $518.0 million, or 26.2%, to $2.50 billion for the quarter ended March 31, 2026, from $1.98 billion for the quarter ended March 31, 2025; offset partially by decreases in the weighted average rate on certificates of deposit and individual retirement accounts of 60 basis points to 3.99% for the quarter ended March 31, 2026, from 4.59% for the quarter ended March 31, 2025 and money market accounts of 28 basis points to 3.02% for the quarter ended March 31, 2026, from 3.29% for the quarter ended March 31, 2025.
Net Interest Income. Net interest income increased $21.3 million, or 49.0%, to $64.9 million for the quarter ended March 31, 2026, from $43.5 million for the quarter ended March 31, 2025, primarily due to a $1.79 billion, or 36.7%, increase in the average balance of interest-earning assets to $6.68 billion for the quarter ended March 31, 2026, from $4.89 billion for the quarter ended March 31, 2025 and a decrease in the weighted average rate on interest-bearing liabilities of 44 basis points from 3.63% for the quarter ended March 31, 2025 to 3.19% for the quarter ended March 31, 2026. These increases were offset partially by a $1.46 billion increase in the average balance of interest-bearing liabilities to $5.19 billion for the quarter ended March 31, 2026, from $3.73 billion for the quarter ended March 31, 2025.
Provision for Credit Losses. Based on management’s analysis of the adequacy of the ACL, a total provision for credit losses of $6.3 million was recorded for the quarter ended March 31, 2026, of which $6.4 million related to the provision for credit losses on loans, compared to a total provision for credit losses of $1.2 million for the quarter ended March 31, 2025, which included a $947 thousand provision for credit losses on loans. The provision for credit losses on unfunded commitments decreased $265,000, or 125.6%, during the three months ended March 31, 2026, as a result of an increase in net unfunded commitments of $58 million in the prior quarter, compared to a $14.5 million increase in the current quarter. The increase of $5.2 million, or 446.5%, in the total provision for credit losses was primarily due to growth in the balance of commercial and industrial loans, larger peer commercial real estate credit losses realized in the prior quarter impacting quantitative reserves, and an elevated qualitative factor risk grade for the commercial and industrial loan portfolio.
The Company recorded charge-offs of $13.9 million during the quarter ended March 31, 2026, compared to $1.6 million during the quarter ended March 31, 2025. The increase in charge-offs was primarily driven by two large charge-offs of PCD commercial and industrial loans, in amounts of $10.6 million and $1.8 million. These loans were previously reserved for through purchase accounting adjustments as of the acquisition date and resulted in no additional loss to the Company.
Noninterest Income. Noninterest income increased $631 thousand, or 16.3%, to $4.5 million for the quarter ended March 31, 2026, from $3.9 million for the quarter ended March 31, 2025. The increase resulted primarily from increases in customer service fees of $573 thousand, or 22.4%, due to higher loan and cash management fees. The table below sets forth our noninterest income for the quarters ended March 31, 2026 and 2025:
Change
573
22.40%
(178)
(17.26)%
(30)
(20.13)%
113
128.41%
(103.70)%
181
624.14%
631
16.25%
Noninterest Expense. Noninterest expense increased $14.0 million, or 48.9%, to $42.7 million for the quarter ended March 31, 2026, from $28.7 million for the quarter ended March 31, 2025. Salaries and employee benefit expenses increased $6.3 million, or 33.0%, resulting primarily from a $4.5 million increase in employee compensation, an $819 thousand increase in medical and dental benefits and $803 thousand increase in employee bonus expense due to a full quarter of increased headcount from the Provident acquisition and continued growth, along with a $495 thousand increase in stock compensation expense as result from grants made subsequent to March 31, 2025; partially offset by a $1.2 million decrease in pension expense due to completion of the plan liquidation during 2025. General and administrative expenses increased $2.2 million, or 156.2%, primarily due to a full quarter’s worth of core deposit intangible amortization resulting in an $854 thousand increase, a $353 thousand increase in tax credit amortization expenses resulting from additional investments and a $124 thousand increase in loan workout expenses related to the acquired Provident enterprise value loan portfolio. Director and professional service fees increased $1.9 million, or 88.5%, resulting from director stock compensation from grants made subsequent to March 31, 2025 of $948 thousand and the non-recurring $500 thousand business line expansion fee.
42
Data processing expenses increased $1.7 million, or 60.5%, primarily the result of our significant investment in technology and systems, as well as a full quarter of increased transactional volume from the Provident acquisition.
The table below sets forth our noninterest expense for the quarters ended March 31, 2026 and 2025:
6,319
33.00%
60.54%
1,901
88.50%
911
57.66%
339
41.70%
187
22.10%
-
100.00%
2,155
156.16%
14,020
48.88%
Income Tax Expense. Income tax expense increased $454 thousand, or 9.2%, to $5.4 million for the quarter ended March 31, 2026, from $4.9 million for the quarter ended March 31, 2025. The increase was due to the increase in pretax income of $2.8 million, or 15.8%. The effective tax rate was 26.4% and 28.0% for the quarter ended March 31, 2026 and 2025, respectively, with the decline attributable to increased investments in tax credits.
Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. Non-accrual loans were included in the computation of average balances. All average balances are daily average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense; such fees, discounts and premiums were not material for the periods presented.
Average
Balance
Yield/Rate (4)
Interest-earning assets:
6,090,227
6.66
4,366,206
6.64
Securities
273,308
4.02
230,406
4.03
Other investments (5)
28,275
265
3.80
27,529
219
3.23
Short-term investments (5)
290,385
2,671
3.73
264,343
2,902
4.45
Total interest-earning assets
6,682,195
6.41
4,888,484
6.38
Non-interest-earning assets
375,966
296,729
(88,102)
(38,685)
Interest-bearing liabilities:
Savings accounts
207,681
0.51
113,750
46
0.16
NOW accounts
639,347
2,006
1.27
470,469
1,074
0.93
Money market accounts
1,711,672
12,732
3.02
1,073,041
8,716
3.29
Certificates of deposit and individual retirement accounts
2,497,213
24,578
3.99
1,979,184
22,403
4.59
Total interest-bearing deposits
5,055,913
3.17
3,636,444
3.60
135,441
3.71
91,168
4.83
Total interest-bearing liabilities
5,191,354
3.19
3,727,612
3.63
Non-interest-bearing deposits
819,830
571,552
Other non-interest-bearing liabilities
97,370
90,023
6,108,554
4,389,187
Shareholders' equity
Net interest income
Net interest rate spread (1)
3.22
2.75
Net interest-earning assets (2)
1,490,841
1,160,872
Net interest margin (3)
3.94
3.61
Average interest-earning assets to interest-bearing liabilities
128.72
131.14
44
Rate/Volume Analysis. The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the table below.
March 31, 2026 vs. 2025
Increase (Decrease) Due to
Increase
Volume
Rate
(Decrease)
28,319
283
28,602
425
418
Other investments
Short-term investments
358
(231)
29,108
(273)
28,835
61
156
217
456
476
932
4,678
(662)
4,016
4,338
(2,163)
2,175
9,533
(2,193)
7,340
Federal Home Loan Bank advances
293
(140)
153
9,826
(2,333)
7,493
Change in net interest income
19,282
2,060
21,342
Management of Market Risk
General. The Bank’s most significant form of market risk is interest rate risk as the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. Our ERM Committee is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our Board of Directors. The ERM Committee meets at least quarterly, is comprised of directors, executive officers and certain members of senior management, and reports to the full Board of Directors on at least a quarterly basis. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the Board of Directors.
We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. We have implemented the following strategies to manage our interest rate risk:
45
Shortening the average term of our interest-earning assets by increasing our investments in shorter-term assets, as well as originating loans with variable interest rates, helps to match the maturities and interest rates of our assets and liabilities better, thereby reducing the exposure of our net interest income to changes in market interest rates.
On occasion, we have employed various financial risk methodologies that limit, or “hedge,” the adverse effects of rising or decreasing interest rates on our loan portfolios and short-term liabilities. We also engage in hedging strategies with respect to arrangements where our customers swap floating interest rate obligations for fixed interest rate obligations, or vice versa. Our hedging activity varies based on the level and volatility of interest rates and other changing market conditions.
Net Interest Income. We analyze our sensitivity to changes in interest rates through a net interest income model. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings. We estimate what our net interest income would be for a 12-month period. We then calculate what the net interest income would be for the same period under the assumptions that the United States Treasury yield curve increases or decreases instantaneously by various basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100-basis point increase in the “Change in Interest Rates” column below.
The following table sets forth, as of March 31, 2026, the calculation of the estimated changes in our net interest income that would result from the designated immediate changes in the United States Treasury yield curve.
At March 31, 2026
Change in Interest Rates
Net Interest Income
Year 1 Change from
(basis points) (1)
Year 1 Forecast
Level
300
275,608
5.5
200
271,756
4.0
267,723
2.5
261,269
(100)
257,262
(1.5)
(200)
254,567
(2.6)
(300)
252,994
(3.2)
The table above indicates that as of March 31, 2026, we would have experienced a 4.0% increase in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 2.6% decrease in net interest income in the event of an instantaneous 200 basis point decrease in market interest rates.
Economic Value of Equity (“EVE”). We also compute amounts by which the net present value of our assets and liabilities, or EVE, would change in the event of a range of assumed changes in market interest rates. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value.
The model estimates the economic value of each type of asset, liability and off-balance sheet contract under the assumptions that the United States Treasury yield curve increases instantaneously by 100, 200 and 300 basis point increments or decreases instantaneously by 100, 200 and 300 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.
The following table sets forth, as of March 31, 2026, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the United States Treasury yield curve.
Estimated Increase
Estimated
(Decrease) in EVE
Change in Interest Rates (basis points) (1)
EVE (2)
1,160,382
(120,052)
(9.4)
1,210,126
(70,308)
(5.5)
1,257,033
(23,401)
(1.8)
1,280,434
1,291,870
11,436
0.9
1,272,992
(7,442)
(0.6)
1,221,726
(58,708)
(4.6)
The table above indicates that as of March 31, 2026, we would have experienced a 5.5% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 0.6% decrease in EVE in the event of an instantaneous 200 basis point decrease in market interest rates.
Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The net interest income and EVE tables presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates, and actual results may differ. Interest rate risk calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, deposits, derivatives and borrowings.
Liquidity and Capital Resources
Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. We are also able to borrow from the FHLB and the Discount Window at the Federal Reserve Bank of Boston (“FRB”). As of March 31, 2026, we had outstanding advances of $189.7 million from the FHLB and an unused borrowing capacity of $892.7 million with the FHLB. At March 31, 2026, the Bank had $1.01 billion available from a line under the Borrower in Custody (“BIC”) program at the FRB. Additionally, as of March 31, 2026, we had $570.1 million of brokered deposits and pursuant to our internal liquidity policy, which allows us to utilize brokered deposits up to 25.0% of our total assets, we had an additional capacity of up to approximately $1.2 billion of brokered deposits.
While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.
Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities.
47
At March 31, 2026, we had $11.3 million in outstanding commitments to originate loans. In addition, we had $822.8 million in unused lines of credit to borrowers, $386.7 million in unconditionally cancelable unadvanced mortgage warehouse loans, $380.4 million in unadvanced construction loans and $9.0 million in letters of credit outstanding.
Non-brokered certificates of deposit due within one year of March 31, 2026 totaled $1.93 billion, or 31.6%, of total deposits. If these deposits do not remain with us, we may be required to seek other sources of funds, including brokered deposits, FHLB advances and FRB borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the non-brokered certificates of deposit due on or before March 31, 2027, or on our other interest-bearing deposit accounts. We believe, however, based on historical experience and current market interest rates that we will retain, upon maturity, a large portion of our certificates of deposit with maturities of one year or less as of March 31, 2026.
Our primary investing activity is originating loans. During the three months ended March 31, 2026, we originated $226.7 million of loans, net of repayments.
Financing activities consist primarily of activity in deposit accounts and FHLB advances. We experienced net increases in deposits of $243.5 million for the three months ended March 31, 2026. At March 31, 2026 and December 31, 2025, the level of brokered deposits was $570.1 million and $535.7 million, respectively. Deposit flows are affected primarily by the overall level of interest rates and the interest rates and products offered by us and our competitors. FHLB advances decreased $6.5 million during the three months ended March 31, 2026.
For additional information, see the consolidated statements of cash flows for the three months ended March 31, 2026 and 2025 included as part of the consolidated financial statements appearing elsewhere in this Form 10-Q.
We are committed to maintaining a strong liquidity position. We continuously monitor our liquidity position and adjustments are made to the balance between sources and uses of funds as deemed appropriate by management. Liquidity risk management is an important element in our asset/liability management process. We regularly model liquidity stress scenarios to assess potential liquidity outflows or funding problems resulting from economic disruptions, volatility in the financial markets, unexpected credit events or other significant occurrences deemed problematic by management. These scenarios are incorporated into our contingency funding planning process, which provides the basis for the identification of our liquidity needs. We anticipate that we will have sufficient funds to meet our current funding commitments. In addition, based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained.
As of March 31, 2026, Needham Bank and NB Bancorp, Inc. exceeded all of their regulatory capital requirements, and were categorized as well-capitalized at that date. Management is not aware of any conditions or events since the most recent notification of well-capitalized status that would change our category. See Note 11 of the notes to consolidated financial statements.
Impact of Inflation and Changing Prices
The consolidated financial statements and related data presented in this Form 10-Q have been prepared in accordance with U.S. GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates, generally, have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.
48
Item 3.Quantitative and Qualitative Disclosures About Market Risk
The information called for by this Item is incorporated by reference to the discussion of market risk in Item 2 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Management of Market Rate Risk.”
Item 4.Controls and Procedures
An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2026. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Registrant’s disclosure controls and procedures were effective.
During the quarter ended March 31, 2026, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Part II – Other Information
Item 1.Legal Proceedings
The Company is subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s or the Bank’s financial condition or results of operations.
Item 1A. Risk Factors
There have been no material changes in risk factors applicable to the Company from those disclosed in “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Item 2.Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities
Total Number of Shares
Maximum Number of Shares
Purchased as Part of the
That May Yet Be
Total Number
Average Price
Publicly Announced
Purchased Under the
of Shares
Paid per Share (1)
Share Repurchase Program
Share Repurchase Program (2)
January 1 - January 31, 2026
29,918
20.65
2,258,591
February 1 - February 28, 2026
487,015
21.91
516,933
1,771,576
March 1 - March 31, 2026
771,576
21.36
1,288,509
1,000,000
21.55
(1) Includes commissions paid and excise tax.
(2) On January 22, 2026, the Company announced a third stock repurchase program that authorizes the Company to purchase up to 2,288,509 shares, or 5%, of the Company's outstanding shares of common stock.
Item 3.Defaults Upon Senior Securities
None.
Item 4.Mine Safety Disclosures
Not applicable.
Item 5.Other Information
During the three months ended March 31, 2026, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” as that term is used in SEC regulations.
Item 6.Exhibits
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
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 104
Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
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.
NB BANCORP, INC.
Date: May 8, 2026
/s/ Joseph Campanelli
Joseph Campanelli
Chairman, President and Chief Executive Officer
/s/ Jean-Pierre Lapointe
Jean-Pierre Lapointe
Senior Executive Vice President and Chief Financial Officer