First Bancorp, Inc /ME/

Previous wording

In the three months ended March 31, 2025 the ACL-Loans increased by $243,000, the ACL-Off-Balance Commitments decreased by $5,000 and the ACL-HTM Securities increased by $1,000. Further discussion of the ACL may be found in Note 2, "Investment Securities", Note 3, "Loans", and Note 4, "Allowance for Credit Losses", to the consolidated financial statements contained in Item 1 of the Form 10-Q.

Current wording

In the six months ended June 30, 2025 the ACL-Loans decreased by $42,000, the ACL-Off-Balance Commitments increased by $132,000 and the ACL-HTM Securities increased by $2,000. Further discussion of the ACL may be found in Note 2, "Investment Securities", Note 3, "Loans", and Note 4, "Allowance for Credit Losses", to the consolidated financial statements contained in Item 1 of the Form 10-Q.

Previous wording

Fair Value of Securities. Determining a market price for securities carried at fair value is a critical accounting estimate in the Company's financial statements. Pricing of individual securities is subject to a number of factors including changes in market interest rates, changes in prepayment speeds and assumptions, changes in market tolerance for risk, and any changes in the risk profile of the security. The Company subscribes to a widely recognized, independent pricing service and updates carrying values no less frequently than monthly. It also validates the values provided by the pricing service no less frequently than quarterly by measuring against security prices provided by a secondary source. Results of the validation are reported to the ALCO each quarter and any variances between the two sources above defined thresholds are investigated by management. A finding that the Company's methodology for valuation of its investment securities is materially incorrect could result in changes to the carrying value of securities on its balance sheet and corresponding changes in shareholders equity position. As of March 31, 2025 the fair value of AFS securities increased by $6.1 million and the fair value of HTM securities decreased by $2.2 million from that of December 31, 2024. The increase in the fair value of AFS securities is attributable to a combination of rate-driven market price adjustments for the underlying securities and new purchases. The decrease in the fair value of HTM securities in attributable to reinvestment of incoming cash flow to other segments of the balance sheet. Further discussion of the fair value of securities may be found in Note 2, "Investment Securities", to the consolidated financial statements contained in Item 1 of the Form 10-Q.

Current wording

Fair Value of Securities. Determining a market price for securities carried at fair value is a critical accounting estimate in the Company's financial statements. Pricing of individual securities is subject to a number of factors including changes in market interest rates, changes in prepayment speeds and assumptions, changes in market tolerance for risk, and any changes in the risk profile of the security. The Company subscribes to a widely recognized, independent pricing service and updates carrying values no less frequently than monthly. It also validates the values provided by the pricing service no less frequently than quarterly by measuring against security prices provided by a secondary source. Results of the validation are reported to the ALCO each quarter and any variances between the two sources above defined thresholds are investigated by management. A finding that the Company's methodology for valuation of its investment securities is materially incorrect could result in changes to the carrying value of securities on its balance sheet and corresponding changes in shareholders equity position. As of June 30, 2025 the fair value of AFS securities increased by $3.6 million and the fair value of HTM securities decreased by $2.5 million from that of December 31, 2024. The increase in the fair value of AFS securities is attributable to a combination of rate-driven market price adjustments for the underlying securities and new purchases. The decrease in the fair value of HTM securities in attributable to reinvestment of incoming cash flow to other segments of the balance sheet. Further discussion of the fair value of securities may be found in Note 2, "Investment Securities", to the consolidated financial statements contained in Item 1 of the Form 10-Q.

Previous wording

Risks and Uncertainties. Global markets have experienced heightened volatility amidst an escalation of trade disputes, the outcome of which is yet to be determined. The ongoing conflicts between Russia and Ukraine, and Israel and Hamas, as well as other conflicts globally, have the potential to further increase economic uncertainty and geopolitical instability. Finally, the 2024 U.S. election resulted in single party control of the executive and legislative branches of the federal government, with pledges to reign in government spending and reform numerous policies including immigration, and business regulation. Any or all could ultimately have negative downstream effects on the Company's operating results, the extent of which is indeterminable at this time.

Current wording

Risks and Uncertainties. Global markets have calmed somewhat after experiencing heightened volatility amidst an escalation of trade disputes, and the continuing impacts of ongoing conflicts between Russia and Ukraine, and Israel and Hamas, as well as other conflicts globally. All have the potential to reignite leading to economic uncertainty and geopolitical instability. Domestically, a budget package which featured spending reforms and renewal of 2017 tax cuts, that had been scheduled to sunset, has been met favorably by markets, further lessening volatility. The future economic outlook continues to be clouded pending the outcome of threatened tariffs amidst trade negotiations. The FOMC has cited the potential for tariff induced rekindling of inflation in keeping interest rates unchanged year-to-date. Any or all of the foregoing could ultimately have negative downstream effects on the Company's operating results, the extent of which is indeterminable at this time.

Previous wording

Net income for the three months ended March 31, 2025 was $7.1 million, up $1.1 million or 17.5% from the same period in 2024. Earnings per common share on a fully diluted basis were $0.63 for the three months ended March 31, 2025, up $0.09 or 17.0% from the $0.54 posted for the same period in 2024. Dividends totaling $0.36 per share have been declared year-to-date, representing a payout to our shareholders of 56.3% of basic earnings per share for the period.

Current wording

Net income for the six months ended June 30, 2025 was $15.1 million, up $2.9 million or 24.2% from the same period in 2024. Earnings per common share on a fully diluted basis were $1.35 for the six months ended June 30, 2025, up $0.26 or 23.6% from the $1.10 posted for the same period in 2024. Dividends totaling $0.73 per share have been declared year-to-date, representing a payout to our shareholders of 53.4% of basic earnings per share for the period. For the quarter ended June 30, 2025, net income was $8.1 million, up $1.9 million or 30.7% from the same period in 2024. Earnings per common share on a fully diluted basis were $0.72 for the quarter ended June 30, 2025, up $0.17 or 30.0% from the $0.55 posted for the same period in 2024.

Previous wording

Net interest income on a tax-equivalent basis was up $3.0 million or 19.0% in the three months ended March 31, 2025 compared to the same period in 2024. The tax equivalent net interest margin for the three months ended March 31, 2025, was 2.48%, up from 2.22% for the same period in 2024. The period-to-period change in net interest income and net interest margin is primarily attributable to an increase in the tax equivalent yield on earning assets coupled with decrease in the cost of total liabilities.

Current wording

Net interest income on a tax-equivalent basis was up $6.3 million or 20.1% in the six months ended June 30, 2025 compared to the same period in 2024. The tax equivalent net interest margin for thesix months ended June 30, 2025, was 2.50%, up from 2.21% for the same period in 2024. The period-to-period change in net interest income and net interest margin is attributable to favorable changes on both sides of the balance sheet as an increase in tax equivalent yield on earning assets was coupled with decrease in the cost of total liabilities. For the quarter ended June 30, 2025, net interest income on a tax-equivalent basis increased $3.3 million or 21.2% compared to the same period in 2024, with the net interest margin at 2.52% compared to 2.21% for the same period in 2024.

Previous wording

Non-interest income for the three months ended March 31, 2025 was $4.0 million, up $362,000 or 9.9%, from the three months ended March 31, 2024. As compared to the prior year, service charges on deposit accounts were up $32,000, or 6.4%, and debit card revenue decreased $16,000, or 1.3%. Revenue at First National Wealth Management increased $129,000 or 10.9% over the same period and mortgage banking revenue increased $65,000 or 50.0%.

Current wording

Non-interest income for the six months ended June 30, 2025 was $8.1 million, up $334,000 or 4.3%, from the six months ended June 30, 2024. As compared to the prior year, service charges on deposit accounts were up $29,000, or 2.8%, and debit card revenue decreased $63,000, or 2.5%. Revenue at First National Wealth Management increased $196,000 or 8.0% over the same period and mortgage banking revenue increased $97,000 or 30.4%.

Previous wording

Non-interest expense for the three months ended March 31, 2025 was $12.8 million, up $1.1 million or 9.2% from the three months ended March 31, 2024. FDIC insurance premiums increased $130,000 from the same period in 2024, salaries and employee benefits increased 13.1% and other operating expense increased 2.6% over the same period.

Current wording

Non-interest expense for the six months ended June 30, 2025 was $25.0 million, up $2.0 million or 8.8% from the six months ended June 30, 2024. FDIC insurance premiums increased $269,000 from the same period in 2024, salaries and employee benefits increased 12.7% and other operating expense increased 1.8% over the same period.

Previous wording

Asset quality continues to be strong and stable. Non-performing assets stood at 0.19% of total assets as of March 31, 2025, up slightly from 0.14% of total assets as of December 31, 2024 and up from 0.09% of total assets as of March 31, 2024. Total past-due loans remain low and were 0.33% of total loans as of March 31, 2025, down from 0.40% and up from 0.09% of total loans as of December 31, 2024 and March 31, 2024, respectively.

Current wording

Asset quality continues to be strong and stable. Non-performing assets stood at 0.19% of total assets as of June 30, 2025, unchanged from December 31, 2024 and up modestly from 0.09% of total assets as of June 30, 2024. Total past-due loans remain low and were 0.23% of total loans as of June 30, 2025, down from 0.40% and up from 0.15% of total loans as of December 31, 2024 and June 30, 2024, respectively.

Previous wording

The provision for credit losses on loans for the first three months of 2025 was $396,000, up from the $99,000 provisioned in the same period in 2024. Net charge-offs for the three months ended March 31, 2025 were $153,000 or 0.026% of average loans on an annualized basis, compared to net recoveries of $78,000 or 0.015% as of the three months ended March 31, 2024. The ACL for loans increased $243,000 between December 31, 2024 and March 31, 2025, and now stands at 1.05% of loans outstanding as of March 31, 2025, as compared to 1.06% at December 31, 2024 and 1.11% at March 31, 2024.

Current wording

The provision for credit losses on loans for the first six months of 2025 was $744,000, up from the $638,000 provisioned in the same period in 2024. Net charge-offs for the six months ended June 30, 2025 were $786,000 or 0.067% of average loans on an annualized basis, compared to net recoveries of $25,000 or 0.002% as of the six months ended June 30, 2024. The ACL for loans decreased $42,000 between December 31, 2024 and June 30, 2025, and now stands at 1.04% of loans outstanding as of June 30, 2025, as compared to 1.06% at December 31, 2024 and 1.10% at June 30, 2024.

Previous wording

The Company's balance sheet continued to expand in the first three months of 2025 as total assets increased $30.4 million or 1.0% year-to-date. The loan portfolio increased $42.2 million or 1.8% in the three months ended March 31, 2025 and $209.4 million or 9.6% from a year ago. Loan growth in the first three months of 2025 was centered in the commercial and residential portfolios. Commercial loans increased by $30.9 million during the period, led by increases in owner-occupied commercial real estate of $11.9 million, non-owner occupied commercial real estate of $9.6 million, commercial & industrial loans of $14.0 million and multifamily of $22.3 million. Residential term and home equity loans each increased by $8.5 million in the first three months of 2025. The investment portfolio increased $5.3 million year-to-date and decreased $3.0 million from a year ago based upon cash flow of amortizing securities, limited reinvestment or new purchases, and changes in the carrying value of AFS securities.

Current wording

The Company's balance sheet continued to expand in the firstsix months of 2025 as total assets increased $42.5 million or 1.3% year-to-date. The loan portfolio increased $53.1 million or 2.3% in the six months ended June 30, 2025 and $146.3 million or 6.5% from a year ago. Loan growth in the firstsix months of 2025 was centered in the commercial and residential portfolios. Commercial loans increased by $31.4 million during the period, led by increases in owner-occupied commercial real estate of $12.7 million, non-owner occupied commercial real estate of $20.7 million, commercial & industrial loans of $15.6 million and multifamily of $28.2 million, and partially offset by a decrease of $46.6 million in the construction segment. Residential term increased by $13.5 million and home equity loans increased by $11.2 million in the firstsix months of 2025. The investment portfolio increased $2.3 million year-to-date and decreased $4.3 million from a year ago based upon cash flow of amortizing securities, limited reinvestment or new purchases, and changes in the carrying value of AFS securities.

Previous wording

On the liability side of the balance sheet, total deposits decreased $13.9 million, or 0.5%, year-to-date to $2.71 billion. Low-cost deposits (Demand, NOW, Savings) followed typical seasonal patterns and decreased $91.0 million in the period, money market balances increased $22.3 million, and local CDs decreased $5.5 million, year-to-date. To balance this activity and to support earning asset growth, wholesale CDs have increased $60.2 year-to-date and borrowings have increased by $39.2 million.

Current wording

On the liability side of the balance sheet, total deposits decreased $19.9 million, or 0.7%, year-to-date to $2.71 billion. Low-cost deposits (Demand, NOW, Savings) followed typical seasonal patterns and decreased $95.5 million in the period, money market balances increased $11.6 million, and local CDs decreased $3.6 million, year-to-date. To balance this activity and to support earning asset growth, wholesale CDs have increased $67.7 million year-to-date and borrowings have increased by $49.9 million.

Previous wording

Remaining well capitalized is a top priority for The Company. The Company's total risk-based capital ratio was 13.12% as of March 31, 2025, solidly above the well-capitalized threshold of 10.0% set by the FDIC, the FRBB, and the OCC.

Current wording

Remaining well capitalized is a top priority for The Company. The Company's total risk-based capital ratio was 13.31% as of June 30, 2025, solidly above the well-capitalized threshold of 10.0% set by the FDIC, the FRBB, and the OCC.

Previous wording

Among the Company's operating ratios, the return on average assets was 0.91% and return on average tangible common equity of 12.64% for the three months ended March 31, 2025 compared to 0.82% and 11.36%, respectively, for the same period in 2024. Our non-GAAP efficiency ratio continues to be an important component in the Company's overall performance and stood at 56.93% for the three months ended March 31, 2025 compared to 61.15% for the same period in 2024, the change being attributable primarily to higher levels of net interest income.

Current wording

Among the Company's operating ratios, the return on average assets was 0.96% and return on average tangible common equity of 13.31% for the six months ended June 30, 2025 compared to 0.82% and 11.49%, respectively, for the same period in 2024. Our non-GAAP efficiency ratio continues to be an important component in the Company's overall performance and stood at 54.63% for the six months ended June 30, 2025 compared to 58.70% for the same period in 2024, the change being attributable primarily to higher levels of net interest income.

Previous wording

Total interest income of $38.7 million for the three months ended March 31, 2025 was an increase of $3.7 million or 10.6% compared to total interest income of $35.0 million for the same period of 2024. All of the increase is attributable to the loan portfolio which benefited from both greater volume and higher average yields as compared to the prior year.

Current wording

Total interest income of $78.5 million for the six months ended June 30, 2025 was an increase of $7.0 million or 9.8% compared to total interest income of $71.5 million for the same period of 2024. Nearly all of the increase is attributable to the loan portfolio which benefited from both greater volume and higher average yields as compared to the prior year.

Previous wording

Total interest expense of $20.9 million for the three months ended March 31, 2025, was an increase of $802,000 or 4.0% compared to total interest expense for the three months ended March 31, 2024. The increase was concentrated within borrowed funds expense which was up $710,000 based mostly in higher utilization of FHLB funding as compared to the prior year.

Current wording

Total interest expense of $42.3 million for the six months ended June 30, 2025, was an increase of $735,000 or 1.8% compared to total interest expense for the six months ended June 30, 2024. The increase was concentrated within borrowed funds expense which was up $734,000 based mostly in higher utilization of FHLB funding as compared to the prior year.

Previous wording

As a result, net interest income of $17.8 million for the three months ended March 31, 2025 was an increase of $2.9 million or 19.6% compared to net interest income of $14.9 million for the same period ended March 31, 2024. The Company's net interest margin on a tax-equivalent basis for the three months ended March 31, 2025 was 2.48%, up from 2.22% for the first three months of 2024. Tax-exempt interest income amounted to $2.7 million for the three months ended March 31, 2025 compared to $2.5 million for the three months ended March 31, 2024.

Current wording

As a result, net interest income of $36.2 million for the six months ended June 30, 2025 was an increase of $6.3 million or 20.9% compared to net interest income of $30.0 million for the same period ended June 30, 2024. The Company's net interest margin on a tax-equivalent basis for the six months ended June 30, 2025 was 2.50%, up from 2.21% for the first six months of 2024. Tax-exempt interest income amounted to $5.3 million for the six months ended June 30, 2025 compared to $5.1 million for the six months ended June 30, 2024.

Previous wording

The following table presents the amount of interest earned or paid, as well as the average yield or rate on an annualized basis, for each major category of assets or liabilities for the three months ended March 31, 2025 and 2024. Tax-exempt income is calculated on a tax-equivalent basis, using a 21.0% Federal Income Tax rate.

Current wording

The following table presents the amount of interest earned or paid, as well as the average yield or rate on an annualized basis, for each major category of assets or liabilities for the six months and quarters ended June 30, 2025 and 2024. Tax-exempt income is calculated on a tax-equivalent basis, using a 21.0% Federal Income Tax rate.

Previous wording

The following table presents changes in interest income and expense attributable to changes in interest rates and volume for interest-earning assets and liabilities for the three months ended March 31, 2025 compared to 2024. Tax-exempt income is calculated on a tax-equivalent basis, using a 21% Federal Income Tax rate.

Current wording

The following table presents changes in interest income and expense attributable to changes in interest rates and volume for interest-earning assets and liabilities for the six months and quarters ended June 30, 2025 compared to 2024. Tax-exempt income is calculated on a tax-equivalent basis, using a 21% Federal Income Tax rate.

Previous wording

The following table shows the Company's average daily balance sheets for the three months ended March 31, 2025 and 2024:

Current wording

The following table shows the Company's average daily balance sheets for the six months and quarters ended June 30, 2025 and 2024:

Previous wording

Non-interest income of $4.0 million for the three months ended March 31, 2025 is an increase of $362,000 compared to the same period in 2024. Service charges on deposit accounts were up $32,000, or 6.4%, debit card revenue was down $16,000, or 1.3%, and revenue at First National Wealth Management increased $129,000 or 10.9%. Over the same period, Mortgage banking revenue was up $65,000, or 50.0%.

Current wording

Non-interest income of $8.1 million for the six months ended June 30, 2025 is an increase of $334,000 compared to the same period in 2024. Service charges on deposit accounts were up $29,000, or 2.8%, debit card revenue was down $63,000, or 2.5%, and revenue at First National Wealth Management increased $196,000 or 8.0%. Over the same period, Mortgage banking revenue was up $97,000, or 30.4%. Non-interest income of $4.1 million for the quarter ended June 30, 2025 is a decrease of $28,000 compared to the same period in 2024.

Previous wording

Non-interest expense of $12.8 million for the three months ended March 31, 2025 is an increase of 9.2% or $1.1 million compared to non-interest expense of $11.8 million for the same period in 2024. Salaries and employee benefits increased $793,000, or 13.1%, attributable to a combination of salary adjustments, incentive compensation accruals, increased benefit costs, and several one-time expenses resulting from retirements. Furniture and equipment expense was up $73,000 or 5.3% on higher software costs, and other operating expense increased $76,000 or 2.6%. FDIC insurance premiums increased by $130,000 due to balance sheet expansion.

Current wording

Non-interest expense of $25.0 million for the six months ended June 30, 2025 is an increase of 8.8% or $2.0 million compared to non-interest expense of $23.0 million for the same period in 2024. Salaries and employee benefits increased $1.5 million, or 12.7%, attributable to a combination of salary adjustments, incentive compensation accruals, increased benefit costs, and several one-time expenses resulting from retirements. Furniture and equipment expense was up $134,000 or 4.8% on higher software costs, and other operating expense increased $101,000 or 1.8%. FDIC insurance premiums increased by $269,000 due to balance sheet expansion. Non-interest expense of $12.2 million for the quarter ended June 30, 2025 is an increase of 8.4% compared to non-interest expense of $11.3 million for the same period in 2024 due to the reasons mentioned.

Previous wording

Income taxes on operating earnings were $1.5 million for the three months ended March 31, 2025, up $237,000 from the same period in 2024.

Current wording

Income taxes on operating earnings were $3.3 million for the six months ended June 30, 2025, up $728,000 from the same period in 2024.

Previous wording

The carrying value of the Company's investment portfolio increased by $5.3 million between December 31, 2024 and March 31, 2025 from $651.6 million to $656.8 million. The change in value of the portfolio is attributable to a combination of incoming cash flow from amortizing investments, limited re-investment or new purchases, and the effects of interest rate movement on the fair value of AFS holdings. As of March 31, 2025, mortgage-backed securities had a carrying value of $278.5 million and a fair value of $268.1 million. Of this total, securities with a fair value of $74.8 million or 28.7% of the mortgage-backed portfolio were issued by GNMA and securities with a fair value of $185.7 million or 71.3% of the mortgage-backed portfolio were issued by FHLMC and FNMA.

Current wording

The carrying value of the Company's investment portfolio increased by $2.3 million between December 31, 2024 and June 30, 2025 from $651.6 million to $653.9 million. The positive change in value of the portfolio is attributable to the effects of interest rate movement on the fair value of AFS holdings, partially countered by limited re-investment of incoming cash flow from amortizing investments and limited new purchases. As of June 30, 2025, mortgage-backed securities had a carrying value of $274.9 million and a fair value of $264.8 million. Of this total, securities with a fair value of $74.8 million or 28.7% of the mortgage-backed portfolio were issued by GNMA and securities with a fair value of $185.7 million or 71.3% of the mortgage-backed portfolio were issued by FHLMC and FNMA.

Previous wording

During the third quarter of 2014, the Company transferred securities with a total amortized cost of $89,780,000 and a corresponding fair value of $89,757,000 from AFS to HTM. The net unrealized loss, net of taxes, on these securities at the date of the transfer was $15,000. The net unrealized holding loss at the time of transfer continues to be reported in AOCI, net of tax and is amortized over the remaining lives of the securities as an adjustment of the yield. The amortization of the net unrealized loss reported in AOCI will offset the effect on interest income of the discount for the transferred securities. The remaining unamortized balance of the net unrealized losses for the securities transferred from AFS to HTM was $45,000 at March 31, 2025. This compares to $47,000 and $54,000, net of taxes, at December 31, 2024 and March 31, 2024, respectively. These securities were transferred as a part of the Company's overall investment and balance sheet strategies.

Current wording

During the third quarter of 2014, the Company transferred securities with a total amortized cost of $89,780,000 and a corresponding fair value of $89,757,000 from AFS to HTM. The net unrealized loss, net of taxes, on these securities at the date of the transfer was $15,000. The net unrealized holding loss at the time of transfer continues to be reported in AOCI, net of tax and is amortized over the remaining lives of the securities as an adjustment of the yield. The amortization of the net unrealized loss reported in AOCI will offset the effect on interest income of the discount for the transferred securities. The remaining unamortized balance of the net unrealized losses for the securities transferred from AFS to HTM was $60,000 at June 30, 2025. This compares to $47,000 and $51,000, net of taxes, at December 31, 2024 and June 30, 2024, respectively. These securities were transferred as a part of the Company's overall investment and balance sheet strategies.

Previous wording

The Company adopted ASC 326, the CECL standard in 2023. In conjunction with adoption, holdings of AFS Securities and HTM securities were evaluated to determine the need to establish an ACL, if any. The total ACL for HTM securities was $197,000 as of March 31, 2025, $196,000 as of December 31, 2024 and $182,000 March 31, 2024. Further details are included in Note 2 of the accompanying financial statements.

Current wording

The Company adopted ASC 326, the CECL standard in 2023. In conjunction with adoption, holdings of AFS Securities and HTM securities were evaluated to determine the need to establish an ACL, if any. The total ACL for HTM securities was $198,000 as of June 30, 2025, $196,000 as of December 31, 2024 and $149,000 June 30, 2024. Further details are included in Note 2 of the accompanying financial statements.

Previous wording

The securities portfolio contains certain AFS securities where the amortized cost of which exceeds fair value, which at March 31, 2025 amounted to $49.4 million, or 14.98% of the amortized cost of the total securities portfolio. At December 31, 2024, this amount was $54.2 million, or 16.48% of the amortized cost of total securities portfolio.

Current wording

The securities portfolio contains certain AFS securities where the amortized cost of which exceeds fair value, which at June 30, 2025 amounted to $47.6 million, or 14.64% of the amortized cost of the total securities portfolio. At December 31, 2024, this amount was $54.2 million, or 16.48% of the amortized cost of total securities portfolio.

Previous wording

As of March 31, 2025, the Company had AFS debt securities in an unrealized loss position with a fair value of $247.7 million and unrealized losses of $49.4 million, as identified in the table below. AFS Securities in a continuous unrealized loss position for more than twelve months amounted to a fair value of $232.6 million as of March 31, 2025, compared with $234.1 million at December 31, 2024. The Company has concluded that these securities are fully collectible and that no charge against the allowance is required. This conclusion was based on the issuer's continued satisfaction of the securities obligations in accordance with their contractual terms and the expectation that the issuer will continue to do so, Management's intent and ability to hold these securities for a period of time sufficient to allow for any anticipated recovery in fair value which may be at maturity, the expectation that the Company will receive 100% of future contractual cash flows, as well as the evaluation of the fundamentals of the issuer's financial condition and other objective evidence. The following table summarizes AFS debt securities in an unrealized loss position for which an ACL has not been recorded at March 31, 2025:

Current wording

As of June 30, 2025, the Company had AFS debt securities in an unrealized loss position with a fair value of $240.9 million and unrealized losses of $47.6 million, as identified in the table below. AFS Securities in a continuous unrealized loss position for more than twelve months amounted to a fair value of $228.9 million as of June 30, 2025, compared with $234.1 million at December 31, 2024. The Company has concluded that these securities are fully collectible and that no charge against the allowance is required. This conclusion was based on the issuer's continued satisfaction of the securities obligations in accordance with their contractual terms and the expectation that the issuer will continue to do so, Management's intent and ability to hold these securities for a period of time sufficient to allow for any anticipated recovery in fair value which may be at maturity, the expectation that the Company will receive 100% of future contractual cash flows, as well as the evaluation of the fundamentals of the issuer's financial condition and other objective evidence. The following table summarizes AFS debt securities in an unrealized loss position for which an ACL has not been recorded at June 30, 2025:

Previous wording

AFS Securities issued by the U.S. Treasury and U.S. Government-sponsored agencies & enterprises. As of March 31, 2025, there were $5.6 million of unrealized losses on these securities compared to $6.2 million at December 31, 2024. All of these securities were credit rated "AAA" or "AA+" by the major credit rating agencies. Management believes that securities issued by the U.S. Treasury and U.S. Government-sponsored agencies and enterprises carry zero or near-zero credit risk, and that 100% of the amounts contractually due will be collected.

Current wording

AFS Securities issued by the U.S. Treasury and U.S. Government-sponsored agencies & enterprises. As of June 30, 2025, there were $5.5 million of unrealized losses on these securities compared to $6.2 million at December 31, 2024. All of these securities were credit rated "AAA" or "AA+" by the major credit rating agencies. Management believes that securities issued by the U.S. Treasury and U.S. Government-sponsored agencies and enterprises carry zero or near-zero credit risk, and that 100% of the amounts contractually due will be collected.

Previous wording

AFS Mortgage-backed securities issued by U.S. Government agencies and U.S. Government-sponsored enterprises. As of March 31, 2025, there were $36.4 million of unrealized losses on these securities compared with $41.0 million at December 31, 2024. All of these securities were credit rated "AAA" or "AA+" by the major credit rating agencies. Management believes that securities issued by U.S. Government agencies bear no credit risk because they are backed by the full faith and credit of the United States and that securities issued by U.S. Government-sponsored enterprises have minimal credit risk, as these agencies and enterprises play a vital role in the nation's financial markets. Management believes that the unrealized losses at March 31, 2025 were attributable to changes in current market yields and spreads since the date the underlying securities were purchased, and that 100% of the amounts contractually due will be realized. The Company also has the ability and intent to hold these securities until a recovery of their amortized cost, which may be at maturity.

Current wording

AFS Mortgage-backed securities issued by U.S. Government agencies and U.S. Government-sponsored enterprises. As of June 30, 2025, there were $34.7 million of unrealized losses on these securities compared with $41.0 million at December 31, 2024. All of these securities were credit rated "AAA" or "AA+" by the major credit rating agencies. Management believes that securities issued by U.S. Government agencies bear no credit risk because they are backed by the full faith and credit of the United States and that securities issued by U.S. Government-sponsored enterprises have minimal credit risk, as these agencies and enterprises play a vital role in the nation's financial markets. Management believes that the unrealized losses at June 30, 2025 were attributable to changes in current market yields and spreads since the date the underlying securities were purchased, and that 100% of the amounts contractually due will be realized. The Company also has the ability and intent to hold these securities until a recovery of their amortized cost, which may be at maturity.

Previous wording

AFS Asset-backed securities. As of March 31, 2025, there were $6,000 of unrealized losses on these securities compared with none at December 31, 2024. These securities consist of U.S. Government backed student loans along with other credit enhancements.

Current wording

AFS Asset-backed securities. As of June 30, 2025, there were $16,000 of unrealized losses on these securities compared with none at December 31, 2024. These securities consist of U.S. Government backed student loans along with other credit enhancements.

Previous wording

The Bank is a member of the FHLBB, a cooperatively owned wholesale bank for housing and finance in the six New England States. As a requirement of membership in the FHLBB, the Bank must own a minimum required amount of FHLBB stock, calculated periodically based primarily on its level of borrowings from the FHLBB. The Bank uses the FHLBB for a portion of its wholesale funding needs. As of March 31, 2025, the Bank's investment in FHLBB stock totaled $6.5 million. This compares to $6.2 million as of December 31, 2024 and $4.9 million as of March 31, 2024. FHLBB stock is a non-marketable equity security and therefore is reported at cost, subject to adjustments for any observable market transactions on the same or similar instruments of the investee. No impairment losses have been recorded through March 31, 2025.

Current wording

The Bank is a member of the FHLBB, a cooperatively owned wholesale bank for housing and finance in the six New England States. As a requirement of membership in the FHLBB, the Bank must own a minimum required amount of FHLBB stock, calculated periodically based primarily on its level of borrowings from the FHLBB. The Bank uses the FHLBB for a portion of its wholesale funding needs. As of June 30, 2025, the Bank's investment in FHLBB stock totaled $6.7 million. This compares to $6.2 million as of December 31, 2024 and $6.1 million as of June 30, 2024. FHLBB stock is a non-marketable equity security and therefore is reported at cost, subject to adjustments for any observable market transactions on the same or similar instruments of the investee. No impairment losses have been recorded through June 30, 2025.

Previous wording

The loan portfolio increased during the first three months of 2025, with total loans at $2.38 billion at March 31, 2025, up $42.2 million or 1.8% from total loans of $2.34 billion at December 31, 2024. Commercial loans increased $30.9 million or 2.2% between December 31, 2024 and March 31, 2025, municipal loans decreased $6.7 million or 10.9%, and both residential term loans and home equity lines of credit increased $8.5 million.

Current wording

The loan portfolio increased during the first six months of 2025, with total loans at $2.39 billion at June 30, 2025, up $53.1 million or 2.3% from total loans of $2.34 billion at December 31, 2024. Commercial loans increased $31.4 million or 2.3% between December 31, 2024 and June 30, 2025, municipal loans increased $1.1 million or 1.8%, residential term loans increased $13.5 million, and home equity lines of credit increased $11.2 million.

Previous wording

As of March 31, 2025 and 2024, the Bank had two concentration of loans in two particular industries that exceeded 10% of its total loan portfolio: (1) loans to hotels (except Casino hotels) and motels, totaling $253.4 million, or 10.63% and $231.5 million, or 10.65% of total loans, respectively; and (2) loans to lessors of residential buildings and dwellings, totaling $266.7 million, or 11.19% and $229.5 million, or 10.56% of total loans, respectively.

Current wording

As of June 30, 2025, the Bank had one concentration of loans in one particular industry that exceeded 10% of its total loan portfolio: (1) loans to lessors of residential buildings and dwellings, totaling $272.0 million, or 11.36% of total loans. This compares to two concentrations of loans in one particular industry that exceeded 10% of its total loan portfolio: (1) loans to hotels (except Casino hotels) and motels, totaling $246.0 million, or 10.95% of total loans, and (2) loans to lessors of residential buildings and dwellings, $243.3 million, or 10.83% of total loans, as of June 30, 2024.

Previous wording

The ACL includes reserve amounts assigned to IAL. This includes loans with balances of $250,000 or more that have been placed into non-accrual or are loans identified by management as having characteristics that may impact ultimate collectibility and therefore merit individual analysis. A specific reserve is allocated to an individual loan when the amount of a probable loss is estimable on the basis of its collateral value, the present value of anticipated future cash flows, or its net realizable value. At March 31, 2025, IAL with specific reserves totaled $1.3 million and the amount of such reserves was $1.0 million. This compares to IAL with specific reserves of $1.7 million at December 31, 2024 and the amount of such reserves was $1.0 million.

Current wording

The ACL includes reserve amounts assigned to IAL. This includes loans with balances of $250,000 or more that have been placed into non-accrual or are loans identified by management as having characteristics that may impact ultimate collectibility and therefore merit individual analysis. A specific reserve is allocated to an individual loan when the amount of a probable loss is estimable on the basis of its collateral value, the present value of anticipated future cash flows, or its net realizable value. At June 30, 2025, IAL with specific reserves totaled $729,000 and the amount of such reserves was $326,000. This compares to IAL with specific reserves of $1.7 million at December 31, 2024 and the amount of such reserves was $1.0 million.

Previous wording

Based upon Management's evaluation, provisions are made to maintain the allowance as a best estimate of expected losses within the portfolio. The provision for credit losses to maintain the allowance was $396,000 for the first three months of 2025 and $99,000 the first three months of 2024. Net charge-offs were $153,000 in the first three months of 2025, compared to net recoveries of $78,000 in the first three months of 2024. The ACL as a percentage of outstanding loans was 1.05% as of March 31, 2025, down slightly from 1.06% as of December 31, 2024, and down from 1.11% as of March 31, 2024.

Current wording

Based upon Management's evaluation, provisions are made to maintain the allowance as a best estimate of expected losses within the portfolio. The provision for credit losses to maintain the allowance was $744,000 for the first six months of 2025 and $638,000 the first six months of 2024. Net charge-offs were $786,000 in the first six months of 2025, compared to net recoveries of $25,000 in the first six months of 2024. The ACL as a percentage of outstanding loans was 1.04% as of June 30, 2025, down slightly from 1.06% as of December 31, 2024, and down from 1.10% as of June 30, 2024.

Previous wording

The following table summarizes the activities in the ACL for the three months ended March 31, 2025 and 2024 and for the year ended December 31, 2024:

Current wording

The following table summarizes the activities in the ACL for the six months ended June 30, 2025 and 2024 and for the year ended December 31, 2024:

Previous wording

The Bank's modeling methodology applies the same class level credit loss factors used in the ACL for loans model to applicable classes of unfunded commitments to determine an appropriate ACL level. Utilization assumptions are based upon an independent analysis of the Bank's historical data. The ACL for unfunded commitments is reported on the Company's consolidated balance sheets within other liabilities and totaled $709,000 as of March 31, 2025.

Current wording

The Bank's modeling methodology applies the same class level credit loss factors used in the ACL for loans model to applicable classes of unfunded commitments to determine an appropriate ACL level. Utilization assumptions are based upon an independent analysis of the Bank's historical data. The ACL for unfunded commitments is reported on the Company's consolidated balance sheets within other liabilities and totaled $846,000 as of June 30, 2025.

Previous wording

Once a loan is placed on nonaccrual, it remains in nonaccrual status until the loan is current as to payment of both principal and interest and the borrower demonstrates the ability to pay and remain current. All payments made on nonaccrual loans are applied to the principal balance of the loan.

Current wording

Once a loan is placed on non-accrual, it remains in non-accrual status until the loan is current as to payment of both principal and interest and the borrower demonstrates the ability to pay and remain current. All payments made on non-accrual loans are applied to the principal balance of the loan.

Previous wording

Nonperforming loans, expressed as a percentage of total loans, totaled 0.25% at March 31, 2025 compared to 0.18% at December 31, 2024 and 0.12% at March 31, 2024. The following table shows the distribution of nonperforming loans by class as of March 31, 2025 and 2024 and December 31, 2024:

Current wording

Nonperforming loans, expressed as a percentage of total loans, totaled 0.25% at June 30, 2025 compared to 0.18% at December 31, 2024 and 0.11% at June 30, 2024. The following table shows the distribution of nonperforming loans by class as of June 30, 2025 and 2024 and December 31, 2024:

Previous wording

The amounts shown for total nonperforming loans do not include loans 90 or more days past due and still accruing interest. These are loans for which we expect to collect all amounts due, including past-due interest. As of March 31, 2025, loans 90 or more days past due and still accruing interest totaled $695,000, compared to $1.0 million at December 31, 2024 and $50,000 at March 31, 2024.

Current wording

The amounts shown for total nonperforming loans do not include loans 90 or more days past due and still accruing interest. These are loans for which we expect to collect all amounts due, including past-due interest. As of June 30, 2025, loans 90 or more days past due and still accruing interest totaled $457,000, compared to $1.0 million at December 31, 2024 and $87,000 at June 30, 2024.