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 September 30, 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)
(Ticker Symbol(s))
(Name of each exchange on which
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 October 31, 2026, 43,818,490 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.
Financial Statements
Consolidated Balance Sheets as of September 30, 2026 (unaudited) and December 31, 2025
1
Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2026 and 2025 (unaudited)
2
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2026 and 2025 (unaudited)
3
Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2026 and 2025 (unaudited)
4
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 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
38
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
55
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
Item 6.
Exhibits
56
Signature Page
57
Part I. – Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 2026 (Unaudited) and December 31, 2025
(in thousands except share and per share data)
September 30, 2026
December 31, 2025
Assets
Cash and due from banks
$
238,502
325,969
Federal funds sold
27,555
81,885
Total cash and cash equivalents
266,057
407,854
Available-for-sale securities, at fair value
279,518
268,959
Loans held for sale, at fair value
55,906
66,447
Loans receivable, net of deferred fees
6,765,853
5,986,140
Allowance for credit losses
(78,305)
(87,411)
Net loans
6,687,548
5,898,729
Accrued interest receivable
29,971
25,390
Banking premises and equipment, net
51,107
46,209
Non-public investments
49,161
33,740
Bank-owned life insurance ("BOLI")
98,178
104,335
Prepaid expenses and other assets
71,048
68,079
Goodwill
16,520
18,512
Core deposit intangible, net
16,628
19,303
Deferred income tax asset, net
62,354
48,831
Total assets
7,683,996
7,006,388
Liabilities and shareholders' equity
Deposits
Core deposits
5,828,759
5,318,111
Brokered deposits
692,637
535,681
Total deposits
6,521,396
5,853,792
Mortgagors' escrow accounts
4,919
5,193
Federal Home Loan Bank ("FHLB") borrowings
150,322
196,235
Accrued expenses and other liabilities
127,414
70,716
Accrued retirement liabilities
22,542
21,520
Total liabilities
6,826,593
6,147,456
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; 43,818,490 and 45,770,128
shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively
438
458
Additional paid-in capital
417,943
458,864
Unallocated common shares held by the Employee Stock Ownership Plan ("ESOP")
(40,690)
(42,454)
Retained earnings
495,082
445,200
Accumulated other comprehensive loss
(15,370)
(3,136)
Total shareholders' equity
857,403
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
For the Nine Months Ended
September 30,
2026
2025
INTEREST AND DIVIDEND INCOME
Interest and fees on loans
110,730
77,365
317,345
223,524
Interest on securities
3,144
2,253
8,609
6,850
Interest and dividends on cash equivalents and other
2,282
2,070
7,679
8,012
Total interest and dividend income
116,156
81,688
333,633
238,386
INTEREST EXPENSE
Interest on deposits
42,896
31,273
123,161
95,201
Interest on borrowings
1,820
2,240
5,020
4,478
Total interest expense
44,716
33,513
128,181
99,679
NET INTEREST INCOME
71,440
48,175
205,452
138,707
PROVISION FOR CREDIT LOSSES
Provision for credit losses - loans
1,391
1,041
10,767
6,232
(Release of) provision for credit losses - unfunded commitments
(145)
355
(517)
Total provision for credit losses
1,246
1,396
5,715
NET INTEREST INCOME AFTER
70,194
46,779
194,685
132,992
NONINTEREST INCOME
Customer service fees
3,505
2,498
10,317
7,610
Increase in cash surrender value of BOLI
808
631
2,623
2,449
Mortgage banking income
165
148
376
417
Swap contract income
479
208
751
820
(Loss) gain on sale of loans, net
(185)
45
41
93
Other income
333
152
1,069
747
Total noninterest income
5,105
3,682
15,177
12,136
NONINTEREST EXPENSE
Salaries and employee benefits
27,499
18,641
78,515
56,358
Director and professional service fees
4,158
2,920
12,023
8,010
Occupancy and equipment expenses
3,047
1,559
8,005
4,604
Data processing expenses
5,351
2,911
14,689
8,169
Marketing and charitable contribution expenses
1,073
949
3,636
2,750
FDIC and state insurance assessments
1,434
928
4,170
2,624
Core deposit intangible amortization expense
892
37
2,675
112
General and administrative expenses
2,827
2,554
9,285
6,251
Total noninterest expense
46,281
30,499
132,998
88,878
INCOME BEFORE TAXES
29,018
19,962
76,864
56,250
INCOME TAX EXPENSE
5,885
4,600
17,624
13,654
NET INCOME
23,133
15,362
59,240
42,596
Weighted average common shares outstanding, basic
39,432,499
35,372,205
40,030,768
37,100,616
Weighted average common shares outstanding, diluted
39,833,964
35,579,456
40,417,396
37,289,349
Earnings per share, basic
0.59
0.43
1.48
1.15
Earnings per share, diluted
0.58
1.47
1.14
Consolidated Statements of Comprehensive Income
(Unaudited - Dollars in thousands)
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX:
Net change in fair value of available-for-sale securities
(3,852)
1,780
(5,219)
3,805
Net change in fair value of cash flow hedge
(3,556)
1,240
(7,015)
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX:
(7,408)
3,020
(12,234)
5,045
TOTAL COMPREHENSIVE INCOME, NET OF TAX
15,725
18,382
47,006
47,641
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, June 30, 2025
40,748,380
407
358,793
(43,643)
427,707
(6,142)
737,122
Net income
Other comprehensive income, net of tax
Repurchase of common shares under share repurchase plan
(921,934)
(9)
(17,523)
(17,532)
Stock-based compensation
1,061
ESOP shares committed to be released (43,057 shares)
195
594
789
Dividends paid
(2,788)
Balance, September 30, 2025
39,826,446
398
342,526
(43,049)
440,281
(3,122)
737,034
Balance, June 30, 2026
43,818,490
415,841
(41,285)
474,970
(7,962)
842,002
Other comprehensive loss, net of tax
1,737
365
595
960
(3,021)
Balance, September 30, 2026
Balance, December 31, 2024
42,705,729
427
417,247
(44,813)
400,473
(8,167)
765,167
(4,163,808)
(41)
(77,084)
(77,125)
Restricted stock awards issued
1,284,525
12
(12)
1,848
ESOP shares committed to be released (127,766 shares)
527
1,764
2,291
Balance, December 31, 2025
45,770,128
(2,207,236)
(22)
(46,237)
(46,259)
283,559
(3)
Restricted stock awards cancelled (1)
(27,961)
(1)
(554)
(555)
4,917
956
2,720
(9,358)
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments to reconcile net income to net cash from operating activities:
Net accretion of available-for-sale securities
(283)
(215)
Amortization of core deposit intangible
Provision for credit losses
Loan hedge fair value adjustments, net
(117)
(115)
Change in net deferred loan origination fees
3,480
506
Loans originated for sale
(10,097)
(4,983)
Proceeds from sale of loans held for sale
16,672
8,043
Gain on sale of loans
(94)
(217)
Depreciation and amortization expense
3,001
2,173
Gain from BOLI death benefit
(25)
Increase in cash surrender values of BOLI
(2,623)
(2,424)
Deferred income tax benefit
(10,212)
(29)
ESOP expense
Restricted stock awards cancelled
Changes in operating assets and liabilities:
Net change in loans held for sale
11,343
(4,581)
(1,389)
(6,376)
6,636
50,804
3,978
1,022
(3,269)
NET CASH PROVIDED BY OPERATING ACTIVITIES
131,704
61,232
CASH FLOWS FROM INVESTING ACTIVITIES
Loan originations and purchases, net of repayments
(812,012)
(389,776)
Purchases of available-for-sale securities
(89,493)
(45,558)
Proceeds from maturities, calls and paydowns of available-for-sale securities
72,247
48,032
Recoveries of loans previously charged off
1,726
1,517
Net change in non-public investments
(15,421)
(20,167)
Proceeds from BOLI death benefit
128
Purchases of BOLI policies
(20,000)
Proceeds from surrender of BOLI policies
28,780
48,764
Purchases of banking premises and equipment
(7,899)
(1,361)
NET CASH USED IN INVESTING ACTIVITIES
(842,072)
(358,421)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits
667,604
388,068
Net change in mortgagors' escrow accounts
(274)
(6)
Repurchase of common shares under share repurchase plans
Decrease in FHLB borrowings, net
(43,142)
(79,382)
NET CASH PROVIDED BY FINANCING ACTIVITIES
568,571
228,767
NET CHANGE IN CASH AND CASH EQUIVALENTS
(141,797)
(68,422)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
363,855
CASH AND CASH EQUIVALENTS AT END OF PERIOD
295,433
Supplemental disclosure of cash paid during the period for:
Interest
127,525
104,974
Income taxes:
U.S. Federal
2,337
900
Massachusetts
2,644
4,425
New York
666
California
464
Jurisdictions below 5 percent of total income taxes paid, net of refunds
1,201
Supplemental disclosure of non-cash transactions:
Initial recognition of operating lease right of use assets and lease liabilities
5,076
1,238
Increase in operating lease right of use assets and lease liabilities resulting from lease modifications
818
2,732
Unrealized (losses) gains on available-for-sale securities
(6,970)
5,077
Unrealized holding (losses) gains on cash flow hedge
(9,354)
1,653
Mortgage loans transferred to loans held for sale
7,337
2,967
Restricted stock awards granted
Correction of an immaterial error - Goodwill
1,992
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 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 (the “Conversion”). 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 were 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 the 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, 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 September 30, 2026, and the Consolidated Statements of Income, of Comprehensive Income, of Changes in Shareholders’ Equity and of Cash Flows for the three and nine months ended September 30, 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 and nine months ended September 30, 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 (together, “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 estimates and uncertainties become available. During the three and nine months ended September 30, 2026, the Company corrected an immaterial error related to the acquisition-date accounting for an FHLB advance assumed in the acquisition as a correction of an error under ASC 250, Accounting Changes and Error Corrections (“ASC 250”). Refer to Note 5 – Goodwill and Other Intangibles for disclosure of the adjustment.
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 September 30, 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, through an allowance for credit losses. 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
93,869
(1,270)
92,599
U.S. Government agencies
4,694
(141)
4,553
Agency mortgage-backed securities
112,129
(6,235)
105,894
Agency collateralized mortgage obligations
12,933
137
(506)
12,564
Corporate bonds
58,745
(2,467)
56,390
Municipal obligations
2,000
(40)
1,960
SBA securities
5,717
(159)
5,558
290,087
249
(10,818)
95,479
(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 during the three and nine months ended September 30, 2026 and 2025. Excluded from the table above is accrued interest on AFS securities of $2.0 million and $1.8 million at September 30, 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 and nine months ended September 30, 2026 and 2025. No securities held by the Company were delinquent on contractual payments at September 30, 2026 or December 31, 2025, nor were any securities placed on non-accrual status for the three and nine months ended September 30, 2026 and 2025.
The following is a summary of actual maturities of certain AFS securities as of September 30, 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
37,932
37,775
Over one year to five years
88,885
87,187
Over five years to ten years
34,037
32,087
Over ten years
4,171
4,011
165,025
161,060
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 and nine months ended September 30, 2026 and 2025.
The carrying value of AFS securities pledged to secure advances from the FHLB were $221.9 million and $111.5 million as of September 30, 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
(Dollars in thousands)
Gross
Fair
Number of Securities
Losses
Value
U.S. Treasuries
44
(1,151)
79,777
(119)
7,820
87,597
U.S. Government Agencies
54
(3,436)
76,868
(2,799)
29,026
(173)
6,379
(333)
6,025
12,404
19
(288)
13,712
(2,179)
35,567
49,279
133
(5,189)
181,289
(5,629)
85,956
267,245
11
(11)
8,929
(92)
10,945
19,874
25
(301)
26,876
(952)
31,890
58,766
(7)
1,995
(67)
7,324
9,319
24
(356)
6,634
(2,725)
53,538
60,172
1,440
(71)
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 September 30, 2026, AFS debt securities had unrealized losses with aggregate depreciation of 3.9% 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 AFS debt securities until maturity or cost recovery, no allowance for credit losses on securities is deemed necessary as of September 30, 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. Changes in the fair value of loans held for sale are recognized in the consolidated statements of income when there is a change in the balance of loans being sold at a discount. 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 September 30, 2026 and December 31, 2025, the Company had $55.9 million and $66.4 million of consumer loans held for sale, respectively. The sale of the loans held for sale at September 30, 2026 has been delayed due to liquidity needs of the purchaser but is expected to close in the fourth quarter of 2026.
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.
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 Current Expected Credit Loss (“CECL”) model as part of its estimation of the ACL on a quarterly basis. Loans with similar risk characteristics are collectively assessed within pools (or segments). Loss estimates within the collectively assessed population are based on a combination of pooled assumptions and loan-level characteristics. The Company has determined that using federal call report codes is an appropriate loan segmentation methodology, as it is generally based on risk characteristics of a loan’s underlying collateral.
Using federal call report 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 (i.e., $10 billion or less of total assets), where appropriate. Management continually assesses the peer group and related data used to inform the ACL calculation.
Management also considers qualitative adjustments when estimating credit losses to take into account the model’s quantitative limitations. 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 or qualitative factors within the CECL model during the three and nine months ended September 30, 2026. During the three and nine months ended September 30, 2025, as part of management’s annual analysis of prepayment speeds, the historical prepayment speed analysis of the purchased consumer loans portfolio used in the ACL calculation was enhanced, transitioning from a lifetime analysis to a month-over-month analysis. The resulting Other Consumer loans prepayment speed forecast dropped from 16.8% to 10.1% and resulted in a $1.3 million increase in the quantitative value of the Other Consumer Loans ACL.
13
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.
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. For enterprise value loans within the commercial and industrial loan portfolio, 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 judgements concerning differences in financial and operating characteristics in addition to other factors that may impact value over time. 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 trends. 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:
14
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.
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
1,252,252
18.48
%
1,177,156
19.64
Home equity
177,528
2.62
152,602
2.55
Total residential real estate
1,429,780
21.10
1,329,758
22.19
Commercial real estate
2,304,739
34.01
1,924,043
32.09
Multi-family residential
584,967
8.63
517,527
Total commercial real estate
2,889,706
42.64
2,441,570
40.72
Construction and land development
846,453
12.49
730,573
12.19
Commercial and industrial
1,137,411
16.78
1,007,669
16.81
Total commercial
4,873,570
71.91
4,179,812
69.72
Consumer, net of premium/discount
235,761
3.48
203,497
3.40
Mortgage warehouse
238,098
3.51
280,949
4.69
Total loans
6,777,209
100.00
5,994,016
Deferred fees, net
(11,356)
(7,876)
Included in the above are approximately $576.3 million and $404.8 million in loans to borrowers in the cannabis industry at September 30, 2026 and December 31, 2025, respectively. Of those totals, $401.3 million and $228.8 million were direct loans to cannabis companies and were collateralized by real estate at September 30, 2026 and December 31, 2025, respectively.
During the three and nine months ended September 30, 2026, the Company purchased approximately $15.0 million and $45.2 million of consumer automobile loan pools, respectively.
15
During the three and nine months ended September 30, 2025, the Company purchased approximately $20.3 million and $34.7 million of consumer automobile loan pools, respectively.
The outstanding balances of these purchased consumer loan pools, shown net of premium (discount) are as follows as of the dates stated:
Gross Loan
Premium (Discount)
Net Loan
Student loans
4,403
33
4,436
Automobile loans
94,422
Solar panel loans
43,133
(3,735)
39,398
Home improvement loans
30,478
30,480
172,436
(3,700)
168,736
5,421
34
5,455
Boats and RV loans
238
75,560
49,077
(4,667)
44,410
35,845
(13)
35,832
166,141
(4,646)
161,495
The carrying value of loans pledged to secure advances from the FHLB were $1.03 billion and $1.56 billion as of September 30, 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:
1,248,128
461
408
3,255
174,905
1,077
1,546
2,290,430
722
13,587
841,273
5,180
1,119,870
726
129
16,686
Consumer
228,699
4,474
1,586
1,002
6,726,370
12,640
2,123
36,076
16
1,166,731
7,232
481
2,712
150,413
445
385
1,359
1,923,108
80
855
730,563
895,662
73,225
2,531
36,251
197,196
3,416
1,337
1,548
Mortgage Warehouse
5,862,149
84,398
4,734
42,735
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)
9,837
6,849
19,799
16,452
29,227
26,283
During the three and nine months ended September 30, 2026, the Company reversed $295,000 and $890,000 of interest income for loans that were placed on non-accrual, respectively. During the three and nine months ended September 30, 2025, the Company reversed $82,000 and $288,000 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.
17
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 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.
The following table presents the amortized cost of loans receivable by internal risk grade by year of origination as of September 30, 2026. Also presented are current period gross charge-offs by loan type and vintage year for the three months ended September 30, 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
178,447
107,830
82,045
116,188
238,287
490,776
33,481
1,247,054
Special Mention
2,103
Substandard
3,095
Doubtful
Loans not formally risk rated (1)
495,846
33,609
Current period gross charge-offs
Home Equity
482
245
634
174,622
175,983
62
124
449
910
1,545
544
369
1,083
175,532
Commercial Real Estate
391,712
326,213
158,780
306,151
350,487
493,157
157,975
2,184,475
33,597
9,592
43,189
13,390
1,207
62,478
77,075
172,170
385,291
565,227
Multi-Family
29,568
47,912
24,954
133,373
206,192
141,696
1,272
18
Construction and Land Development
146,159
122,503
182,303
177,969
13,275
9,080
179,518
830,807
12,532
3,114
15,646
190,501
16,389
Commercial and Industrial
248,953
68,298
51,600
66,111
68,786
99,106
367,460
970,314
9,500
5,422
343
3,816
7,036
31,609
57,726
443
81,528
7,726
14,467
5,198
109,362
77,798
57,465
147,982
80,337
120,609
404,267
2,428
1,616
4,044
65,748
48,066
29,637
2,800
35,199
47,869
6,442
39
175
656
1,335
Total Loans
994,839
672,756
500,164
800,037
877,027
1,234,449
1,152,426
6,231,698
12,875
40,527
18,731
118,664
13,895
81,652
8,933
80,361
6,236
191,077
1,060,587
730,322
549,118
897,364
961,695
1,381,410
1,196,713
2,603
2,061
5,379
(1) Consumer loans are not formally risk rated and included $1.0 million of loans on non-accrual as of September 30, 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
125
1,172
543
370
150,770
277,427
176,824
268,778
350,792
166,603
443,438
109,330
1,793,192
12,654
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
13,835
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
20
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 $1.5 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 September 30, 2026
One-to-Four
Family
Commercial
Construction and
Commercial and
Residential
Real Estate
Land Development
Industrial
Balance at June 30, 2026
1,709
149
22,634
1,247
6,110
40,440
9,647
82,088
Provision for (release of) credit losses
273
733
155
857
(1,942)
1,243
Charge-offs
(4,044)
(1,335)
(5,379)
Recoveries of loans previously charged-off
193
205
Balance at September 30, 2026
1,982
159
23,367
1,402
6,967
34,466
9,748
214
78,305
For the Three Months Ended September 30, 2025
Balance at June 30, 2025
1,288
91
10,081
538
7,153
14,315
9,135
42,601
222
(322)
65
(1,165)
174
2,034
Charge offs
(693)
103
Balance at September 30, 2025
1,510
9,759
603
5,988
14,501
10,567
43,052
For the Nine Months Ended September 30, 2026
Balance at December 31, 2025
1,703
21,599
1,188
5,050
49,599
7,895
225
87,411
335
1,778
1,917
363
6,164
(56)
(10)
(16,708)
(4,825)
(21,599)
1,212
514
For the Nine Months Ended September 30, 2025
Balance at December 31, 2024
1,195
74
9,481
599
4,137
11,174
12,084
38,744
315
50
(645)
1,851
3,291
1,366
(3,441)
923
36
558
21
The charge-offs in the commercial and industrial portfolio during the three months ended September 30, 2026 were primarily driven by one relationship resulting in three charge-offs of PCD loans, in the amount of $4.0 million. The charge-offs in the commercial and industrial portfolio during the nine months ended September 30, 2026 were primarily driven by three large charge-offs of PCD loans, in amounts of $10.6 million, $4.0 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.
The following table presents the amortized cost of collateral-dependent loans as of September 30, 2026 and December 31, 2025:
As of
3,145
2,433
1,467
1,338
72,279
19,057
Commercial and industrial loans
119,286
62,986
196,177
85,824
The increase in collateral-dependent loans as of September 30, 2026 was primarily attributable to one commercial and industrial relationship totaling $71.5 million, and one non-owner occupied commercial real estate relationship totaling $38.1 million. Both relationships are actively being managed through workout strategies. Based on management’s evaluation of the two additional collateral-dependent relationships as of September 30, 2026, only one commercial and industrial PCD loan required a specific reserve of $1.6 million, with no additional losses expected on the two relationships.
The Company closely monitors the performance of borrowers experiencing financial difficulty to understand the effectiveness of its loan modification efforts. The following tables present the period end amortized cost basis of loans modified during the three and nine months ended September 30, 2026 and 2025 to borrowers experiencing financial difficulty, disaggregated by class of financing receivable, type of modification granted and the financial effect of the modifications.
Three Months Ended September 30, 2026
% of Total Class of
Cost Basis
Financing Receivable
Financial Effect
Interest rate reduction
15,311
1.3
P&I extension, cash injection, maturity extensions and rate reductions
Maturity extension
80,051
7.0
Maturity extension, forbearance extension, re-amortization and loan aggregation
95,362
Three Months Ended September 30, 2025
37,098
2.0
Terminated swap, changed interest rate index, reduced spread and added rate floors
Nine Months Ended September 30, 2026
7,264
0.3
Aggregated term loans, cash injection to pay down principal, P&I payment structure extended
102,626
22
Nine Months Ended September 30, 2025
Modifications to borrowers experiencing financial difficulty were performing in accordance with the modified terms, current and not in default as of three and nine months ended September 30, 2026 and 2025.
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)
33,148
37,815
The changes in the carrying value of goodwill for the periods indicated were as follows:
Balance at beginning of period
Goodwill recorded during the period
Goodwill disposed of during the period
Immaterial correction of error during the period
(1,992)
Balance at end of period
There was no goodwill for the three and nine months ended September 30, 2025 as the Bank did not record any goodwill until the acquisition of Provident on November 15, 2025.
During the three months ended September 30, 2026, the Company identified an error related to the acquisition-date fair value adjustment recorded on a FHLB advance assumed in the BankProv acquisition completed on November 15, 2025. The acquisition-date fair value adjustment was recorded in the incorrect direction, resulting in an offsetting overstatement of goodwill and an immaterial impact on subsequent accretion/amortization recognized since the acquisition date.
Management evaluated the error in accordance with ASC 250 and SEC Staff Accounting Bulletin Nos. 99 and 108, and concluded that the error was not material to any previously issued financial statements and that correction of the error is not material to the current period. Accordingly, the Company corrected the error during the current quarter, resulting in a decrease in goodwill of approximately $2.0 million and a corresponding decrease in the carrying value of FHLB advances of approximately $2.8 million, net of the deferred tax impact. Additionally, for the year ended December 31, 2025 and for the nine months ended September 30, 2026, pre-tax net income was immaterially overstated by $16,000 and $108,000, respectively, and on a tax effected basis by $11,000 and $77,000, respectively, due to accretion being recorded instead of amortization as a result of the Day 1 fair value adjustment being recorded in reverse. Prior-period financial statements have not been restated.
23
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
2,991
15,809
Core deposit intangible - Century Cannabis
1,488
669
819
Total core deposit intangibles
20,288
3,660
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 it is more-likely-than-not that the fair value of a reporting segment is less than its carrying amount. The Company has one identified reporting segment and assigned goodwill to the banking business reporting segment.
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 September 30, 2026 and 2025, respectively, and $2.7 million and $112,000 during the nine months ended September 30, 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 8.8 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
850
2027
3,183
2028
2,841
2029
2,499
2030
2,157
2031 and thereafter
5,098
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.
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 September 30, 2026 and 2025 were $1.0 million and $735,000, respectively, and $3.0 million and $2.2 million for the nine months ended September 30, 2026 and 2025, 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 providing 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 decided to freeze benefit accruals and withdraw from the Plan as of December 31, 2023. The Company withdrew from the Plan in the second quarter of 2024.
During the three and nine months ended September 30, 2025, as part of the final Plan liquidation, the Company received $739,000 as a result of an overfunding and contributed $480,000 to the Plan, respectively.
2014 Deferred Compensation Plan. In 2014, the Company put into place an unfunded, defined contribution, Non-qualified Deferred Compensation Plan (“2014 Deferred Comp Plan”) for select employees of the Company. The 2014 Deferred Comp Plan was provided to key management of the Company and results in 5% to 20% of the employee’s then current base salary being credited to the participant’s account annually, subject to 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 participation agreements are included in accrued retirement liabilities on the Company’s consolidated balance sheets and totaled approximately $2.6 million and $2.4 million as of September 30, 2026 and December 31, 2025, respectively. The expense under the 2014 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 September 30, 2026 and 2025, respectively, and $264,000 and $266,000 for the nine months ended September 30, 2026 and 2025, respectively.
2022 Deferred Compensation Plan. In January 2022, the Company put into place an unfunded Non-qualified Deferred Compensation Plan (“2022 Deferred Comp Plan”) for select employees of the Company. The 2022 Deferred Comp Plan was provided to key management of the Company and allows for such employees to defer amounts from their salary, bonus, or LTIP (as defined below) into the 2022 Deferred Comp Plan to be paid out at a future date. Amounts deferred under the 2022 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 2022 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 September 30, 2026 and December 31, 2025, respectively.
LTIP. In January 2020, the Company put into place a long-term incentive plan (the “LTIP”) for certain members of its management team where benefits are awarded annually on a discretionary basis and cliff vest after three years. Under the LTIP, individuals are granted “phantom shares”, and benefits are accrued based upon the projected growth of the Bank’s capital. The obligations under the LTIP are included in accrued retirement liabilities on the Company’s consolidated balance sheets and approximated $4.9 million and $7.2 million as of September 30, 2026 and December 31, 2025, respectively. The expense under the LTIP (recorded in salaries and employee benefits in the consolidated statements of income) approximated $610,000 and $946,000 for the three months ended September 30, 2026 and 2025, respectively, and $1.8 million and $2.6 million for the nine months ended September 30, 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 September 30, 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 September 30, 2026 and 2025, respectively, and $480,000 and $486,000 for the nine months ended September 30, 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 Director 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 additional one-year periods 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 Company’s initial public offering (“IPO”) completed on December 27, 2023, the Bank established a tax-qualified Employee Stock Ownership Plan (“ESOP”) to provide eligible employees with 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 “ESOP Loan”). The ESOP Loan is payable in annual installments over 20 years at an interest rate of 8.50%, which was refinanced to 7.50% during 2025. As the ESOP 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 ESOP 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 ESOP 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 $959,000 and $790,000 for the three months ended September 30, 2026 and 2025, respectively. Total compensation expense recognized in connection with the ESOP was $2.7 million and $2.4 million for the nine months ended September 30, 2026 and 2025, respectively.
The following table presents information regarding shares held by the ESOP:
Allocated shares
341,646
170,823
Shares committed to be released
127,766
Unallocated shares
2,947,046
3,074,812
Total shares
3,416,458
Fair value of unallocated shares
65,189
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”).
26
The 2025 Plan provides for the issuance of up to 5,978,802 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 RSAs or RSUs above the aforementioned limit, provided that, for each additional share underlying an 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 RSAs are measured based on grant-date fair value, which reflects the 10-day volume-weighted average price of our common stock, on the date of the grant. Of the RSAs granted to date, 1,477,571 shares vest over five years in equal portions beginning on the first anniversary date of the RSA grant date and 90,513 shares vest over five years in equal portions when certain performance metrics are met.
The following table summarizes the Company’s RSA activities for the periods indicated:
Number of Shares
Weighted-Average Grant Date Fair Value Per Share
Non-vested balance at beginning of period
1,283,224
17.57
16.41
Granted
Vested
Cancelled (1)
Non-vested balance at end of period
21.64
(256,899)
The following table represents the compensation expense and income tax benefits recognized for RSAs for the periods indicated:
Three Months Ended
Nine Months Ended
September 30, 2025
Stock-based compensation expense:
Restricted stock awards
Total stock-based compensation expense
Related tax benefits recognized in earnings
47
140
The company had total unrecognized compensation expense related to unvested restricted stock awards of $19.3 million and $18.2 million expected to be recognized over a weighted-average period of 3.28 and 4.31 years as of September 30, 2026 and December 31, 2025, respectively.
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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.
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 September 30, 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 a fair value by calculating a settlement termination value with the counterparty.
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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:
42,061
14,329
Total available-for-sale debt securities
172,590
Derivative assets
30,716
Liabilities:
Derivative liabilities
38,847
55,664
14,221
158,955
23,578
22,311
The Company had no purchases, sales or transfers of Level 3 assets during the three and nine months ended September 30, 2026 and 2025. The change in the value of Level 3 assets during the three and nine months ended September 30, 2026 and 2025 was a direct result of the change in market value of the underlying securities.
The Company may also be required from time to time to measure certain other assets at fair value 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 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.
29
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.
The following table summarizes assets measured at fair value on a non-recurring basis:
Collateral-dependent loans, net of reserve
168,920
42,041
For Level 3 assets and liabilities measured at fair value on a nonrecurring basis as of September 30, 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 September 30, 2026 and December 31, 2025, fair values of loans are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors.
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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
6,751,710
22,092
27,069
BOLI
Financial Liabilities:
Deposits, other than time deposits
3,766,279
Time deposits
2,755,117
2,747,409
FHLB and FRB borrowings
151,608
5,893,652
16,594
17,146
3,348,901
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.
31
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 September 30, 2026 and December 31, 2025, the maximum potential amount of the Company’s obligation was $7.5 million and $9.0 million, respectively, 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.
Financial instruments whose contract amounts represent 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
34,730
45,391
Unadvanced funds on lines of credit
796,757
742,375
Unadvanced funds on construction loans
440,682
409,180
Unadvanced funds on mortgage warehouse loans
474,998
287,655
Letters of credit
7,548
9,013
1,754,715
1,493,614
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 ACL 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 September 30, 2026 and December 31, 2025. For the three months ended September 30, 2026, the Company recorded a release of the allowance for unfunded commitments of $145,000. For the nine months ended September 30, 2026, the Company did not record a provision for the allowance for unfunded commitments. For the three and nine months ended September 30, 2025, the Company recorded a provision for the allowance for unfunded commitments of $355,000 and a release of the allowance for unfunded commitments $517,000, 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.
32
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) (1)
(in years)
Interest rate swaps
300,000
2.3
3.65
3.44
(8,070)
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 began exchanging cash flows during 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 other comprehensive income (“OCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.
The Company expects approximately $3.0 million (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 September 30, 2026. This reclassification is due to anticipated payments that will be made and/or received on the swaps based on the forward curve at September 30, 2026.
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 to apply hedge accounting. Changes in fair 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. Risk Participation Agreements (“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.
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
77
563,838
RPA credit contracts
33,639
Total derivatives not designated as hedging instruments
597,477
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)
30,717
22,294
22,295
Swap contract fees, net of brokerage costs, recognized in earnings on the above noted interest rate products and RPA contracts approximated $479,000 and $208,000 for the three months ended September 30, 2026 and 2025, respectively, and $751,000 and $820,000 for the nine months ended September 30, 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 hold $21.4 million of collateral deposit accounts of the counterparties to these agreements as of September 30, 2026 and maintain $9.1 million of collateral deposit accounts with the counterparties as of December 31, 2025.
Note 10 – Other Comprehensive Income (Loss)
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:
Pre-Tax
Tax
After-Tax
Benefit
Expense
Change in fair value of available-for-sale securities
(5,109)
1,257
2,379
(599)
Change in fair value of cash flow hedges
(4,742)
1,186
(413)
Change in fair value of cash flow hedge, net of tax
Total other comprehensive income (loss)
(9,851)
2,443
4,032
(1,012)
1,751
(1,272)
Change in fair value of cash flow hedge
2,339
Net change in fair value of cash flow hedge, net of tax
(16,324)
4,090
6,730
(1,685)
The following table presents the components of accumulated other comprehensive loss as of September 30, 2026 and December 31, 2025:
Net unrealized holding losses on available-for-sale securities, net of tax
(7,856)
(2,637)
Net unrealized (loss) gain on cash flow hedge, net of tax
(6,051)
964
Unrecognized director pension plan benefits, net of tax
(1,463)
Total accumulated other comprehensive loss
35
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 September 30, 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 September 30, 2026 and December 31, 2025, that the Company and the Bank meet all capital adequacy requirements to which each is subject.
As of September 30, 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 the relevant date 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
862,549
12.0%
574,857
8.0%
718,571
10.0%
(to Risk-Weighted Assets)
Tier 1 Capital
806,519
11.2%
431,143
6.0%
Common Equity Tier I Capital
323,357
4.5%
467,071
6.5%
10.9%
296,606
4.0%
370,757
5.0%
(to Total Average Assets)
791,298
12.4%
511,589
639,486
742,881
11.6%
383,692
287,769
415,666
12.2%
244,395
305,494
The Company’s actual consolidated capital amounts and ratios are presented in the tables below as of the date indicated:
893,757
575,546
719,432
837,727
431,659
323,745
467,631
11.3%
297,833
372,291
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 has 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 shares of common stock (such as those resulting from the vesting of RSAs) were issued during the period, computed using the treasury stock method.
The Company has RSAs that had a dilutive effect during the three and nine months ended September 30, 2026 and 2025. Unallocated ESOP shares and unvested RSAs are not deemed outstanding for earnings per share calculations.
For the three and nine months ended September 30, 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
39,902,365
44,474,428
41,099,086
Less: weighted average unallocated ESOP shares
(1,311,179)
(3,245,635)
(1,368,848)
Less: weighted average unvested restricted stock awards
(3,074,812)
(1,284,525)
(752,835)
Weighted average number of common shares outstanding used to calculate basic EPS
Common stock equivalents
401,465
207,251
386,628
188,733
Weighted 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 and nine months ended September 30, 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
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.
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:
Contract settlement fees
871
Defined benefit pension termination (refund) expense
(739)
480
Non-recurring fees for business line expansion
1,149
State tax expense - voluntary disclosure agreements
561
BOLI surrender tax and modified endowment contract penalty
78
218
Merger and acquisition expenses
994
830
1,525
Total adjustments to net income
816
2,928
2,784
Less net tax benefit associated with pre-tax non-GAAP adjustments to net income
176
653
639
Non-GAAP adjustments, net of tax
695
640
2,275
2,145
Operating net income (non-GAAP)
23,828
16,002
61,515
44,741
Operating earnings per share, basic (non-GAAP)
0.60
0.45
1.54
1.21
Operating earnings per share, diluted (non-GAAP)
1.52
1.20
Pre-tax income (GAAP)
Adjustments to pre-tax income:
Defined benefit pension termination expense (refund)
Total adjustments to pre-tax income
255
2,850
2,005
Operating pre-tax income (non-GAAP)
29,889
20,217
79,714
58,255
Net interest income (GAAP)
Subtract (Add):
Adjustments to net interest income:
Purchase accounting adjustments
2,614
6,209
Total impact of non-GAAP net interest income adjustments
Net interest income, excluding purchase accounting adjustments (non-GAAP)
68,826
199,243
Noninterest expense (GAAP)
Adjustments to noninterest expense:
Defined benefit pension termination refund
Total impact of non-GAAP noninterest expense adjustments
Noninterest expense on an operating basis (non-GAAP)
45,410
30,244
130,148
86,873
40
Average assets
7,474,341
5,273,875
7,232,140
5,200,691
Operating return on average assets (non-GAAP)
1.26%
1.20%
1.14%
1.15%
Average shareholders’ equity
855,206
729,979
853,695
744,230
Operating return on average shareholders' equity (non-GAAP)
11.05%
8.70%
9.63%
8.04%
Operating noninterest expense (non-GAAP)
Total pre-provision net revenue (net interest income plus total noninterest income)
76,545
51,857
220,629
150,843
Operating efficiency ratio (non-GAAP)
59.32%
58.32%
58.99%
57.59%
Income tax expense (GAAP)
Adjustments to income tax expense:
(561)
Net tax benefit associated with pre-tax non-GAAP adjustments to net income
(78)
(218)
Total impact of non-GAAP income tax expense adjustments
(385)
575
(140)
Income tax expense on an operating basis (non-GAAP)
6,061
4,215
18,199
13,514
Operating effective tax rate (non-GAAP)
20.3%
20.8%
23.7%
24.0%
Total shareholders’ equity (GAAP)
Subtract:
Intangible assets (core deposit intangible)
28,814
Total tangible shareholders’ equity (non-GAAP)
828,589
821,117
Total assets (GAAP)
Total tangible assets (non-GAAP)
7,655,182
6,968,573
Tangible shareholders' equity / tangible assets (non-GAAP)
10.82%
11.78%
Total common shares outstanding
Tangible book value per share (non-GAAP)
18.91
17.94
Comparison of Financial Condition as of September 30, 2026 and December 31, 2025
Total Assets. Total assets increased $677.6 million, or 9.7%, to $7.68 billion as of September 30, 2026 from $7.01 billion as of December 31, 2025. The increase was primarily driven by increases in net loans, non-public investments and deferred tax assets, offset partially by decreases in cash and cash equivalents.
Cash and Cash Equivalents. Cash and cash equivalents decreased $141.8 million, or 34.8%, to $266.1 million as of September 30, 2026 from $407.9 million as of December 31, 2025. The decrease in cash and cash equivalents was primarily a result of gross loan growth of $779.7 million outpacing deposit growth of $667.6 million and the repurchase of 2,207,236 shares during the nine months ended September 30, 2026.
Available-for-Sale Securities. Available-for-sale securities increased $10.6 million, or 3.9%, to $279.5 million as of September 30, 2026 from $269.0 million as of December 31, 2025, primarily as a result of purchases of mortgage-backed securities.
Loans. Net loans increased $788.8 million, or 13.4%, to $6.69 billion as of September 30, 2026 from $5.90 billion as of December 31, 2025. The increase resulted primarily from increases in: commercial real estate loans, which increased $380.7 million, or 19.8%; commercial and industrial loans, which increased $129.7 million, or 12.9%; construction and land development loans, which increased $115.9 million, or 15.9%; residential real estate loans, including home equity loans, which increased $100.0 million, or 7.5%; multi-family loans, which increased $67.4 million, or 13.0%; and consumer loans, which increased $32.3 million, or 15.9%, partially offset by a decrease in mortgage warehouse loans of $42.9 million, or 15.3%. The increase in our loan portfolio reflects our strategy to prudently grow the balance sheet by continuing to diversify into higher-yielding loans to improve net margins while managing interest rate risk.
Loans to borrowers in the cannabis industry increased $171.5 million, or 42.4%, to $576.3 million as of September 30, 2026 from $404.8 million as of December 31, 2025. Of those totals, $401.3 million and $228.8 million at September 30, 2026 and December 31, 2025, respectively, were direct loans to cannabis companies and were collateralized by real estate.
Collateral dependent loans increased $126.9 million, or 301.8%, to $168.9 million as of September 30, 2026, from $42.0 million as of December 31, 2025, primarily attributable to one commercial and industrial relationship totaling $71.5 million and one non-owner occupied commercial real estate relationship totaling $38.1 million. Both relationships are actively being managed through workout strategies. Based on management’s evaluation as of September 30, 2026, only one commercial and industrial PCD loan required a specific reserve of $1.6 million, with no additional losses expected on the three relationships.
Non-Public Investments. Non-public investments increased $15.4 million, or 45.7%, to $49.2 million as of September 30, 2026 compared to $33.7 million as of December 31, 2025, primarily as a result of the Company’s continued investment in income tax credit entities.
Deferred Income Tax Assets. Deferred income tax assets increased $13.5 million, or 27.7%, to $62.4 million as of September 30, 2026 compared to $48.8 million as of December 31, 2025, primarily as a result of the purchase of low-income housing tax credits during the three months ended September 30, 2026.
Deposits. Deposits increased $667.6 million, or 11.4%, to $6.52 billion as of September 30, 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 $510.6 million, or 9.6%, to $5.83 billion as of September 30, 2026 from $5.32 billion as of December 31, 2025. The increase in deposits was the result of growth in customer deposits, which primarily included the following: noninterest-bearing demand deposits, which increased $170.2 million, or 20.6%; money market accounts, which increased $126.8 million, or 7.7%; NOW accounts, which increased $107.2 million, or 16.2%; and customer certificates of deposit, which increased $94.3 million, or 4.8%. Brokered deposits increased $156.9 million, or 29.3%, to $692.6 million as of September 30, 2026 from $535.7 million as of December 31, 2025.
Deposits from customers in the cannabis industry increased $122.1 million, or 26.9%, to $575.1 million as of September 30, 2026 from $453.0 million as of December 31, 2025.
FHLB Borrowings. FHLB borrowings decreased $45.9 million, or 23.4%, to $150.3 million as of September 30, 2026 from $196.2 million as of December 31, 2025, primarily driven by paydowns of FHLB borrowings and increased usage of brokered deposits.
Accrued Expenses and Other Liabilities. Accrued expenses and other liabilities increased $56.7 million, or 80.2%, to $127.4 million as of September 30, 2026 from $70.7 million as of December 31, 2025, primarily as a result of the Company calling $21.4 million in collateral on our derivatives and a $16.5 million increase in our derivative liabilities driven by market rate changes, and $8.5 million increase in accrued federal taxes, a $6.3 million increase in lease liabilities as a result of the opening of three new branches and a $4.8 million increase in deferred solar investments for two new solar tax credit investment commitments.
Shareholders’ Equity. Total shareholders’ equity decreased $1.5 million, or 0.2%, to $857.4 million as of September 30, 2026 from $858.9 million as of December 31, 2025, due to the $40.9 million decrease in additional paid-in capital resulting from the completion of our share repurchase program in which we repurchased a total of 2,207,236 shares during the nine months ended September 30, 2026 at an all-in weighted average cost of $20.96 per share totaling $46.3 million, together with a $12.2 million, or 390.1%, increase in other comprehensive loss as a result of the interest rate environment negatively impacting the value of our AFS securities portfolio and our balance sheet hedges and dividends paid of $9.4 million, partially offset by net income of $59.2 million during the nine months ended September 30, 2026.
Comparison of Operating Results for the Three Months Ended September 30, 2026 and 2025
Net Income. Net income increased $7.8 million, or 50.6%, to $23.1 million, or $0.58 per diluted common share, for the quarter ended September 30, 2026, compared to net income of $15.4 million, or $0.43 per diluted common share, for the quarter ended September 30, 2025. Net interest income increased $23.3 million, or 48.3%, and noninterest income increased $1.4 million, or 38.6%, partially offset by increased noninterest expense of $15.8 million, or 51.7%, and increased income tax expense of $1.3 million, or 27.9%.
42
Operating net income, excluding one-time charges, amounted to $23.8 million, or $0.60 per basic and diluted common share for the quarter ended September 30, 2026 compared to operating net income, excluding one-time charges, of $16.0 million, or $0.45 per basic and diluted common share, for the quarter ended September 30, 2025, which represents an increase of $7.8 million, or 48.9%.
The material one-time charges for the quarter ended September 30, 2026 were:
The material one-time charges for the quarter ended September 30, 2025 were:
Interest and Dividend Income. Interest and dividend income increased $34.5 million, or 42.2%, to $116.2 million for the quarter ended September 30, 2026 from $81.7 million for the quarter ended September 30, 2025, primarily due to increased interest and fees on loans of $33.4 million, or 43.1%. The increase in interest and fees on loans was primarily due to an increase of $1.99 billion, or 43.1%, in the average balance of the loan portfolio to $6.60 billion for the quarter ended September 30, 2026 from $4.61 billion for the quarter ended September 30, 2025, reflecting both the Provident acquisition, which was completed on November 15, 2025, and the growth of our commercial and construction loan portfolios.
Average interest-earning assets increased $2.09 billion, or 41.2%, to $7.15 billion for the quarter ended September 30, 2026 from $5.06 billion for the quarter ended September 30, 2025. The yield on interest-earning assets increased 4 basis points to 6.45% for the quarter ended September 30, 2026 from 6.41% for the quarter ended September 30, 2025.
Interest and dividend income included $2.6 million of fair value mark accretion related to the acquisition of Provident, representing 3.8%, or 15 basis points, of net interest margin, during the three months ended September 30, 2026. The Company recorded no fair value mark accretion during the three months ended September 30, 2025, as the acquisition of Provident closed on November 15, 2025.
Interest Expense. Total interest expense increased $11.2 million, or 33.4%, to $44.7 million for the quarter ended September 30, 2026 from $33.5 million for the quarter ended September 30, 2025. Interest expense on deposits increased $11.6 million, or 37.2%, to $42.9 million for the quarter ended September 30, 2026 from $31.3 million for the quarter ended September 30, 2025. The increase in interest expense on deposits was primarily driven by an increase in the average balance of certificates of deposit and individual retirement accounts of $749.2 million, or 38.7%, to $2.68 billion for the quarter ended September 30, 2026 from $1.93 billion for the quarter ended September 30, 2025; an increase in the average balance of money market accounts of $616.3 million, or 55.1%, to $1.74 billion for the quarter ended September 30, 2026 from $1.12 billion for the quarter ended September 30, 2025; and an increase in the average balance of NOW accounts of $302.6 million, or 64.7%, to $770.4 million for the quarter ended September 30, 2026 from $467.8 million for the quarter ended September 30, 2025, partially offset by a decrease in the weighted average rate on certificates of deposit and individual retirement accounts of 28 basis points to 3.89% for the quarter ended September 30, 2026 from 4.18% for the quarter ended September 30, 2025.
Interest expense on FHLB and FRB borrowings decreased $420,000, or 18.8%, to $1.8 million for the quarter ended September 30, 2026 from $2.2 million for the quarter ended September 30, 2025, primarily from a decrease in the average balance of FHLB borrowings of $121.2 million, or 60.6%, to $78.7 million during the quarter ended September 30, 2026 from $199.9 million for the quarter ended September 30, 2025, partially offset by an increase in the average balance of FRB borrowings of $100.5 million, or 100%, to $100.5 million during the quarter ended September 30, 2026 from $0 during the quarter ended September 30, 2025.
Net Interest Income. Net interest income increased $23.3 million, or 48.3%, to $71.4 million for the quarter ended September 30, 2026 from $48.2 million for the quarter ended September 30, 2025, primarily due to a $2.09 billion, or 41.2%, increase in the average balance of interest-earning assets to $7.15 billion for the quarter ended September 30, 2026 from $5.06 billion for the quarter ended September 30, 2025 and a decrease in the weighted average rate on interest-bearing liabilities of 28 basis points to 3.18% for the quarter ended September 30, 2026 from 3.46% for the quarter ended September 30, 2025. These increases were partially offset by an increase in the average balance of interest-bearing liabilities of $1.74 billion, or 45.4%, to $5.59 billion at September 30, 2026 from $3.84 billion at September 30, 2025.
Provision for Credit Losses. Based on management’s analysis of the adequacy of the ACL, a provision of $1.2 million was recorded for the quarter ended September 30, 2026, of which $1.4 million related to the provision for credit losses on loans, compared to a provision of $1.4 million for the quarter ended September 30, 2025, which included a $1.0 million provision for credit losses on loans. The increase in the provision for credit losses on loans was primarily driven by loan growth, charge-off replenishment and lower prepayment speed forecasts updated with rising interest rates. The provision for credit losses on unfunded commitments decreased $500,000 during the three months ended September 30, 2026 as a result of commercial and industrial drawdowns and credit line reductions.
Noninterest Income. Noninterest income increased $1.4 million, or 38.6%, to $5.1 million for the quarter ended September 30, 2026 from $3.7 million for the quarter ended September 30, 2025. The increase resulted primarily from increased customer service fees of $1.0 million, or 40.3%, due to higher cash management, loan and debit card fees.
The table below sets forth our noninterest income for the three months ended September 30, 2026 and 2025:
Change
1,007
40.31%
177
28.05%
11.49%
271
130.29%
(230)
(511.11)%
181
119.08%
1,423
38.65%
Noninterest Expense. Noninterest expense increased $15.8 million, or 51.7%, to $46.3 million for the quarter ended September 30, 2026 from $30.5 million for the quarter ended September 30, 2025. Salaries and employee benefit expenses increased $8.9 million, or 47.5%, resulting primarily from a $4.8 million increase in employee compensation, a $980,000 increase in medical and dental benefits, a $964,000 increase in employee bonus expense, a $335,000 increase in federal employer taxes and a $308,000 increase in 401(k) match expenses, all due to headcount increases related to the Provident acquisition and the Company’s continued organic growth; a $739,000 increase in pension expense resulting from a liquidation refund for the same amount during the quarter ended September 30, 2025; and a $434,000 increase in stock-based compensation as a result of the grants made during the current year. Data processing expenses increased $2.4 million, or 83.8%, primarily driven by our continued investment in technology and related systems in support of upcoming revenue initiatives, requiring the operation of systems in parallel for a period of time while new systems are implemented. Occupancy and equipment expenses increased $1.5 million, or 95.4%, primarily driven by the Provident acquisition, as well as the opening of three new branches and contract settlement fees. Director and professional service fees increased $1.2 million, or 42.4%, primarily driven by increased legal expenses resulting from contract settlement fees of $651,000. Core deposit intangible amortization expense increased $855,000, or 2,310.8%, primarily driven by amortization of the core deposit intangible acquired with Provident.
The table below sets forth our noninterest expense for the three months ended September 30, 2026 and 2025:
8,858
47.52%
2,440
83.82%
42.40%
95.45%
54.53%
13.07%
2310.81%
10.69%
15,782
51.75%
Income Tax Expense. Income tax expense increased $1.3 million, or 27.9%, to $5.9 million for the quarter ended September 30, 2026 from $4.6 million for the quarter ended September 30, 2025. The increase in tax expense was from higher pre-tax income during the quarter ended September 30, 2026 compared to September 30, 2025. The effective tax rate was 20.3% and 23.0% for the quarters ended September 30, 2026 and 2025, respectively. The decrease in the effective tax rate was driven by investment in two income tax credit entities, as well as the purchase of low-income housing tax credits during the quarter ended September 30, 2026.
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:
6,599,690
6.66
4,612,631
6.65
Securities
280,383
4.45
236,187
3.78
Other investments (5)
22,788
252
4.39
32,585
223
2.72
Short-term investments (5)
243,386
2,030
3.31
178,290
1,847
4.11
Total interest-earning assets
7,146,247
6.45
5,059,693
6.41
Non-interest-earning assets
409,580
256,928
(81,486)
(42,746)
Interest-bearing liabilities:
Savings accounts
218,715
488
0.89
121,704
NOW accounts
770,406
2,771
1.43
467,761
1,397
1.18
Money market accounts
1,735,863
13,305
3.04
1,119,539
9,331
Certificates of deposit and individual retirement accounts
2,682,909
26,332
3.89
1,933,665
20,364
4.18
Total interest-bearing deposits
5,407,893
3.15
3,642,669
3.41
FHLB borrowings
78,665
868
4.38
199,852
FRB borrowings
100,543
952
3.76
Total interest-bearing liabilities
5,587,101
3.18
3,842,521
3.46
Non-interest-bearing deposits
915,117
606,046
Other non-interest-bearing liabilities
116,917
95,329
6,619,135
4,543,896
Shareholders' equity
Net interest income
Net interest rate spread (1)
3.27
2.95
Net interest-earning assets (2)
1,559,146
1,217,172
Net interest margin (3)
3.97
Average interest-earning assets to interest-bearing liabilities
127.91
131.68
46
Rate/Volume Analysis. The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). 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 volume and the changes due to rate. There were no out-of-period items or adjustments required to be excluded from the table below.
September 30, 2026 vs. 2025
Increase (Decrease) Due to
Increase
Volume
Rate
(Decrease)
33,339
33,365
460
431
891
Other investments
Short-term investments
392
(209)
183
34,163
305
34,468
189
118
307
1,044
330
1,374
4,653
(679)
3,974
7,239
(1,271)
5,968
13,125
(1,502)
11,623
(1,338)
(34)
(1,372)
12,739
(1,536)
11,203
Change in net interest income
21,424
1,841
23,265
Comparison of Operating Results for the Nine Months Ended September 30, 2026 and 2025
Net Income. Net income increased approximately $16.6 million, or 39.1%, to $59.2 million, or $1.47 per diluted common share, for the nine months ended September 30, 2026, compared to net income of $42.6 million, or $1.14 per diluted common share, for the nine months ended September 30, 2025. The increase was primarily due to increased net interest income of $66.7 million, or 48.1%, partially offset by increased noninterest expense of $44.1 million, or 49.6%, and increased provision for credit losses of $5.1 million, or 88.4%.
Operating net income, excluding one-time charges, amounted to $61.5 million, or $1.52 per diluted common share, for the nine months ended September 30, 2026 compared to operating net income, excluding one-time charges, of $44.7 million, or $1.20 per diluted common share, for the nine months ended September 30, 2025, an increase of $16.8 million, or 37.5%.
The material one-time charges for the nine months ended September 30, 2026 were:
The material one-time charges for the nine months ended September 30, 2025 were:
Interest and Dividend Income. Interest and dividend income increased $95.2 million, or 40.0%, to $333.6 million for the nine months ended September 30, 2026 from $238.4 million for the nine months ended September 30, 2025, primarily due to a $93.8 million, or 42.0%, increase in interest and fees on loans, reflecting the Provident acquisition and the growth of our commercial and construction loan portfolios. The increase in interest and fees on loans was primarily due to an increase of $1.87 billion, or 41.7%, in the average balance of the loan portfolio to $6.36 billion for the nine months ended September 30, 2026 from $4.49 billion for the nine months ended September 30, 2025 reflecting the Provident acquisition, which was completed on November 15, 2025, and the growth of our commercial and construction loan portfolios.
Average interest-earning assets increased $1.96 billion, or 39.4%, to $6.92 billion for the nine months ended September 30, 2026 from $4.96 billion for the nine months ended September 30, 2025. The yield on interest-earning assets increased 2 basis points to 6.44% for the nine months ended September 30, 2026 from 6.42% for the nine months ended September 30, 2025.
Interest Expense. Total interest expense increased $28.5 million, or 28.6%, to $128.2 million for the nine months ended September 30, 2026 from $99.7 million for the nine months ended September 30, 2025. Interest expense on deposit accounts increased $28.0 million, or 29.4%, to $123.2 million for the nine months ended September 30, 2026 from $95.2 million for the nine months ended September 30, 2025. The increase was primarily due to an increase in the average balance of certificate of deposit and individual retirement accounts of $633.8 million, or 32.4%, to $2.59 billion for the nine months ended September 30, 2026 from $1.96 billion for the nine months ended September 30, 2025 and an increase in the average balance of money market accounts of $621.0 million, or 56.7%, to $1.72 billion for the nine months ended September 30, 2026 from $1.09 billion for the nine months ended September 30, 2025, partially offset by a decrease in the weighted average rate on certificate of deposit and individual retirement accounts of 43 basis points to 3.94% for the nine months ended September 30, 2026 from 4.37% for the nine months ended September 30, 2025.
Net Interest Income. Net interest income increased $66.7 million, or 48.1%, to $205.5 million for the nine months ended September 30, 2026 from $138.7 million for the nine months ended September 30, 2025, primarily due to a $1.96 billion, or 39.4%, increase in the average balance of interest-earning assets to $6.92 billion for the nine months ended September 30, 2026 from $4.96 billion for the nine months ended September 30, 2025 and a decrease in the weighted average rate on interest-bearing liabilities of 36 basis points to 3.17% for the nine months ended September 30, 2026 from 3.53% for the nine months ended September 30, 2025. These increases were partially offset by an increase in the average balance of interest-bearing liabilities of $1.63 billion, or 43.1%, to $5.40 billion for the nine months ended September 30, 2026 from $3.77 billion for the nine months ended September 30, 2025.
Provision for Credit Losses. Based on management’s analysis of the adequacy of the ACL, a provision of $10.8 million was recorded for the nine months ended September 30, 2026, all of which related to the provision for credit losses on loans, compared to a provision of $5.7 million for the nine months ended September 30, 2025, which included a $6.2 million provision for credit losses on loans. The increase of $4.5 million, or 72.8%, in the provision for credit losses on loans was primarily driven by loan growth, larger peer commercial real estate credit losses impacting quantitative reserves, and an elevated qualitative factor risk grade for the commercial and industrial loan portfolio. The Company did not record a provision for credit losses on unfunded commitments during the nine months ended September 30, 2026, while recording a release of credit losses on unfunded commitments of $517,000 during the nine months ended September 30, 2025. The change was driven by an increase in unfunded commitments during the nine months ended September 30, 2026.
48
Noninterest Income. Noninterest income increased $3.0 million, or 25.1%, to $15.2 million for the nine months ended September 30, 2026 from $12.1 million for the nine months ended September 30, 2025. The increase resulted primarily from increased customer service fees of $2.7 million, or 35.6%, due to higher cash management, debit card and interchange fees. The table below sets forth our noninterest income for the nine months ended September 30, 2026 and 2025:
2,707
35.57%
7.10%
(9.83)%
(69)
(8.41)%
(52)
(55.91)%
322
43.11%
3,041
25.06%
Noninterest Expense. Noninterest expense increased $44.1 million, or 49.6%, to $133.0 million for the nine months ended September 30, 2026 from $88.9 million for the nine months ended September 30, 2025. Salaries and employee benefit expenses increased $22.2 million, or 39.3%, primarily from a $13.4 million increase in employee compensation expense, a $2.9 million increase in medical and dental benefits expense, a $2.3 million increase in employee bonus expense, an $855,000 increase in 401(k) employer match expenses and an $874,000 increase in employer federal income tax withholding expenses driven by three quarters of increased headcount from the Provident acquisition and the hiring of additional employees consistent with our organic growth, as well as a $1.5 million increase in employee stock compensation expense resulting from the original grants being awarded in April 2025 driving lower expense during the nine months ended September 30, 2025, offset partially by a $778,000 decrease in LTIP expenses and a $480,000 decrease in pension expenses due to completion of the Plan liquidation during 2025. Data processing expenses increased $6.5 million, or 79.8%, primarily driven by our continued investment in technology and related systems in support of upcoming revenue initiatives, requiring the operation of systems in parallel for a period of time while new systems are implemented. Director and professional service fees increased $4.0 million, or 50.1%, primarily driven by a $1.6 million increase in director stock compensation expense, a $1.2 million increase in consulting expense from business line expansion fees and a $731,000 increase in contract settlement legal expenses. General and administrative expenses increased $3.0 million, or 48.5%, primarily driven by our acquisition of Provident resulting in $2.6 million in additional core deposit intangible amortization expenses. Also contributing to the increase in general and administrative expenses was $275,000 in utility expenses, $230,000 in courier expenses and $213,000 in loan workout expenses driven by the Provident acquisition and the opening of three new branches during 2026. Data processing expenses increased $6.5 million, or 79.8%, during the nine months ended September 30, 2026, primarily the result of our significant investment in technology and systems, as well as three full quarters of increased transactional volume from the Provident acquisition. Occupancy and equipment expenses increased $3.4 million, or 73.9%, primarily driven by our acquisition of Provident, as well as the opening of three new branches and contract settlement fees. Core deposit intangible amortization expense increased $2.6 million, or 2,288.4%, primarily driven by amortization of the core deposit intangible acquired with Provident.
The table below sets forth our noninterest expense for the nine months ended September 30, 2026 and 2025:
22,157
39.31%
6,520
79.81%
4,013
50.10%
3,401
73.87%
886
32.22%
58.92%
2,563
2288.39%
3,034
48.54%
44,120
49.64%
49
Income Tax Expense. Income tax expense increased $4.0 million, or 29.1%, to $17.6 million for the nine months ended September 30, 2026 from $13.7 million for the nine months ended September 30, 2025, mainly resulting from the increase in net income during the quarter ended September 30, 2026. The effective tax rate was 22.9% and 24.3% for the nine months ended September 30, 2026 and 2025, respectively. The decrease in the effective tax rate was driven by continued income tax credit purchases and investments.
6,357,513
6.67
4,487,007
277,655
4.15
233,156
3.93
28,435
1,130
5.31
29,565
1,046
4.73
258,625
6,549
3.39
214,386
6,966
4.34
6,922,228
6.44
4,964,114
6.42
393,509
277,045
(83,597)
(40,468)
212,354
1,075
0.68
118,426
360
0.41
704,120
6,949
1.32
469,224
3,632
1.03
1,715,378
38,818
3.03
1,094,418
27,204
3.32
2,592,828
76,319
3.94
1,959,009
64,005
4.37
5,224,680
3,641,077
3.50
140,645
4,063
3.86
131,691
4,472
4.54
34,066
957
5,399,391
3.17
3,772,951
3.53
874,812
590,686
104,242
92,824
6,378,445
4,456,461
2.89
1,522,837
1,191,163
3.74
128.20
131.57
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.
93,368
453
93,821
1,363
396
1,759
(38)
122
84
6,007
(6,424)
(417)
100,700
(5,453)
95,247
389
326
715
2,141
1,176
3,317
13,792
(2,178)
11,614
17,750
(5,436)
12,314
34,072
(6,112)
27,960
342
(751)
(409)
951
35,366
(6,864)
28,502
65,334
1,411
66,745
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:
51
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 are intended to 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 first 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 in the table below.
The following table sets forth, as of September 30, 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 September 30, 2026
Change in Interest Rates
Net Interest Income
Year 1 Change from
(basis points) (1)
Year 1 Forecast
Level
300
313,603
6.8
200
307,671
4.8
100
301,449
2.6
293,698
(100)
285,737
(2.7)
(200)
280,513
(4.5)
(300)
276,082
(6.0)
The table above indicates that as of September 30, 2026, we would have experienced a 4.8% increase in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 4.5% 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.
52
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 September 30, 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
1,313,557
(162,159)
(11.0)
1,372,841
(102,875)
(7.0)
1,429,845
(45,871)
(3.1)
1,475,716
1,502,117
26,401
1.8
1,498,494
22,778
1.5
1,464,219
(11,497)
(0.8)
The table above indicates that as of September 30, 2026, we would have experienced a 7.0% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 1.5% increase 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 above 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 materially. 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 FRB. As of September 30, 2026, we had outstanding advances of $150.3 million from the FHLB. As of September 30, 2026, we had unused borrowing capacity of $680.3 million with the FHLB. At September 30, 2026, the Bank had $1.16 billion available from the discount window under the Borrower in Custody (“BIC”) program at the FRB. Additionally, as of September 30, 2026, we had $692.6 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 $1.23 billion of brokered deposits. Uninsured deposits were $2.00 billion and $1.66 billion as of September 30, 2026 and December 31, 2025, respectively.
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.
At September 30, 2026, we had $34.7 million in outstanding commitments to originate loans. In addition, we had $796.8 million in unused lines of credit to borrowers, $475.0 million in unused mortgage warehouse lines, $440.7 million in unadvanced construction loans and $7.5 million in letters of credit outstanding.
Non-brokered certificates of deposit due within one year of September 30, 2026 totaled $1.83 billion, or 28.0%, 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 September 30, 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 September 30, 2026.
Our primary investing activity is originating loans. During the nine months ended September 30, 2026, we originated $766.8 million of loans, net of repayments.
Financing activities consist primarily of activity in deposit accounts and FHLB advances. We experienced net increases in total deposits of $667.6 million for the nine months ended September 30, 2026. At September 30, 2026 and December 31, 2025, the level of brokered time deposits was $692.6 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 $45.9 million during the nine months ended September 30, 2026.
For additional information, see the consolidated statements of cash flows for the nine months ended September 30, 2026 and 2025 included as part of the consolidated financial statements appearing elsewhere in this quarterly report on 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 September 30, 2026, the Bank and the Company 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 for more information.
Impact of Inflation and Changing Prices
The consolidated financial statements and related data presented in this quarterly report on 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.
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 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 September 30, 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 three months ended September 30, 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
None.
Item 3.Defaults Upon Senior Securities
Item 4.Mine Safety Disclosures
Not applicable.
Item 5.Other Information
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
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Exhibit 104
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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: November 4, 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