First Bancorp, Inc /ME/

Previous wording

In the three months ended March 31, 2026 the ACL-Loans decreased by $156,000, the ACL-Off-Balance Commitments decreased by $29,000 and the ACL-HTM Securities decreased 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, 2026 the ACL-Loans decreased by $810,000, the ACL-Off-Balance Commitments decreased by $12,000 and the ACL-HTM Securities decreased by $3,000. 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, 2026 the fair value of AFS securities decreased by $7.7 million and the fair value of HTM securities decreased by $6.8 million from that of December 31, 2025. The decrease in the fair value of AFS securities is attributable to a combination of rate-driven market price adjustments for the underlying securities, principal returned via maturity, call, sale, or amortization, and new purchases. The decrease in the fair value of HTM securities is primarily attributable to rate-driven price adjustments for the underlying securities, along with principal return via call or maturity. 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, 2026 the fair value of AFS securities increased by $11.6 million and the fair value of HTM securities decreased by $4.3 million from that of December 31, 2025. The increase in the fair value of AFS securities is attributable to new purchases, and partially offset by a combination of rate-driven market price adjustments for the underlying securities, and principal returned via maturity, call, sale, or amortization. The decrease in the fair value of HTM securities is attributable to a combination of rate-driven price adjustments for the underlying securities and principal return via call or maturity. 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

Net income for the three months ended March 31, 2026 was $9.0 million, up $1.9 million or 27.1% from the same period in 2025. Earnings per common share on a fully diluted basis were $0.80 for the three months ended March 31, 2026, up $0.17 or 26.8% from the $0.63 posted for the same period in 2025. Dividends totaling $0.37 per share have been declared year-to-date, representing a payout to our shareholders of 45.7% of basic earnings per share for the period. On a PTPP basis, earnings for the three months ended March 31, 2026 were $11.5 million, up $2.6 million, or 28.7% from the prior year.

Current wording

Net income for the six months ended June 30, 2026 was $18.6 million, up $3.4 million or 22.5% from the same period in 2025. Earnings per common share on a fully diluted basis were $1.65 for the six months ended June 30, 2026, up $0.29 or 22.0% from the $1.35 posted for the same period in 2025. Dividends totaling $0.75 per share have been declared year-to-date, representing a payout to our shareholders of 44.9% of basic earnings per share for the period. On a PTPP basis, earnings for the six months ended June 30, 2026 were $24.0 million, up $4.7 million, or 24.2% from the prior year.

Previous wording

Net interest income on a tax-equivalent basis was up $2.8 million or 15.4% in the three months ended March 31, 2026 compared to the same period in 2025. The tax equivalent net interest margin for the three months ended March 31, 2026, was 2.86%, up from 2.48% for the same period in 2025. 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.

Current wording

Net interest income on a tax-equivalent basis was up $5.6 million or 14.8% in the six months ended June 30, 2026 compared to the same period in 2025. The tax equivalent net interest margin for the six months ended June 30, 2026, was 2.87%, up from 2.50% for the same period in 2025. 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. The tax equivalent yield on earning assets remained stable despite rate cuts by the FOMC, while funding costs fell. The same factors influenced the quarter ended June 30, 2026, as net interest income on a tax-equivalent basis increased $2.7 million or 14.3% compared to the same three-month period in 2025, and net interest margin improved to 2.88%, up from 2.52% for the same period in 2025.

Previous wording

Non-interest income for the three months ended March 31, 2026 was $4.5 million, up $449,000 or 11.2%, from the three months ended March 31, 2025. The increase was centered in Wealth Management revenue which was up $169,000 or 12.8% from the prior year, and other operating income which increased $228,000 or 28.9%.

Current wording

Non-interest income for the six months ended June 30, 2026 was $9.1 million, up $981,000 or 12.1%, from the six months ended June 30, 2025. The increase was centered in Wealth Management revenue which was up $381,000 or 14.4% from the prior year, and other operating income which increased $439,000 or 28.6%.

Previous wording

Non-interest expense for the three months ended March 31, 2026 was $13.6 million, up $772,000 or 6.0% from the three months ended March 31, 2025. The period-to-period change is centered in employee salaries and benefits, resulting from annual salary adjustments, lower deferred salaries, and higher health insurance expenses.

Current wording

Non-interest expense for the six months ended June 30, 2026 was $27.0 million, up $2.0 million or 7.8% from the six months ended June 30, 2025. The period-to-period change is centered in employee salaries and benefits, resulting from annual salary adjustments, lower deferred salaries, and higher health insurance expenses.

Previous wording

Asset quality continues to be satisfactory. Non-performing assets stood at 0.51% of total assets as of March 31, 2026, up from 0.41% as of December 31, 2025 and up from 0.19% of total assets as of March 31, 2025. Total past-due loans were 1.14% of total loans as of March 31, 2026, up from 0.90% and up from 0.33% of total loans as of December 31, 2025 and March 31, 2025, respectively.

Current wording

Asset quality continues to be satisfactory. Non-performing assets stood at 0.54% of total assets as of June 30, 2026, up slightly from 0.51% as of December 31, 2025 and up from 0.19% of total assets as of June 30, 2025. Total past-due loans were 0.93% of total loans as of June 30, 2026, up slightly from 0.90% and up from 0.23% of total loans as of December 31, 2025 and June 30, 2025, respectively.

Previous wording

The provision for credit losses on loans for the first three months of 2026 was $650,000, up from the $396,000 provisioned in the same period in 2025. Net charge-offs for the three months ended March 31, 2026 were $806,000 or 0.034% of total loans, compared to net charge-offs of $153,000 or 0.026% as of the three months ended March 31, 2025. The ACL for loans decreased $156,000 between December 31, 2025 and March 31, 2026, and now stands at 1.05% of loans outstanding as of March 31, 2026, as compared to 1.06% at December 31, 2025 and 1.05% at March 31, 2025.

Current wording

The provision for credit losses on loans for the first six months of 2026 was $1.6 million, up from the $744,000 provisioned in the same period in 2025. Net charge-offs for the six months ended June 30, 2026 were $2.4 million or 0.20% of total loans, compared to net charge-offs of $786,000 or 0.07% as of the six months ended June 30, 2025. The ACL for loans decreased $810,000 between December 31, 2025 and June 30, 2026, with $415,000 of the reduction coming from changes in reserve estimates on IALs, and $395,000 from pooled reserve requirements resulting from changes in portfolio composition, economic factors and other quantitative inputs. The ACL-Loans now stands at 1.01% of loans outstanding as of June 30, 2026, as compared to 1.05% at December 31, 2025 and 1.04% at June 30, 2025.

Previous wording

The Company's balance sheet continued to expand in the first three months of 2026 as total assets increased $34.5 million or 1.1% year-to-date. The loan portfolio increased $11.0 million or 0.5% in the three months ended March 31, 2026 and $22.0 million or 0.9% from a year ago. Commercial loans increased by $2.3 million during the period, led by increases in owner-occupied commercial real estate of $4.3 million and commercial & industrial loans of $16.1 million, while non-owner occupied commercial real estate decreased $4.8 million, multifamily decreased $8.5 million, and construction loan balances decreased $4.8 million. Residential loans increased by $4.0 million and home equity loans increased by $4.9 million in the first three months of 2026. The investment portfolio has decreased $9.5 million year-to-date and decreased $37.7 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 first six months of 2026 as total assets increased $49.8 million or 1.6% year-to-date. The loan portfolio increased $29.6 million or 1.2% in the six months ended June 30, 2026 and has increased $29.7 million from a year ago. Driving balance changes year-to-date in the commercial loan segments of the portfolio were commercial real estate & construction loans which decreased $14.7 million, commercial & industrial loans which increased $17.2 million, and multifamily loans which decreased $19.1 million. Elsewhere, residential loans increased by $16.0 million, home equity loans increased by $18.0 million, and municipal loans increased $8.8 million in the first six months of 2026. The investment portfolio has increased $8.1 million year-to-date and decreased $17.1 million from a year ago based upon cash flow of amortizing securities, measured levels of 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 at March 31, 2026 were $2.66 billion, unchanged from year-end 2025. Low-cost deposits (Demand, NOW, Savings) decreased $42.1 million year-to-date and money market balances decreased $16.5 million. Local CDs increased $5.8 million while wholesale CDs decreased $52.7 million year-to-date. During the same period, borrowings increased by $8.0 million.

Current wording

On the liability side of the balance sheet, total deposits at June 30, 2026 were $2.68 billion, an increase of $15.0 million from year-end 2025. Low-cost deposits (Demand, NOW, Savings) decreased $39.7 million year-to-date and money market balances decreased $47.6 million. These decreases in non-maturity deposits are consistent with historical, seasonal patterns in the first half of the year. Local CDs decreased $5.2 million while wholesale CDs have increased $107.6 million year-to-date and borrowings increased by $26.2 million, mostly short-term.

Previous wording

Remaining well capitalized is a top priority for The Company. The Company's total risk-based capital ratio was 14.05% as of March 31, 2026, 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 14.23% as of June 30, 2026, 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 1.15% and return on average tangible common equity of 14.15% for the three months ended March 31, 2026 compared to 0.91% and 12.64%, respectively, for the same period in 2025. The Company's PTPP return of average assets for the three months ended March 31, 2026 was 1.47% compared to 1.15% in the prior year period. Our non-GAAP efficiency ratio continues to be an important component in the Company's overall performance and stood at 52.64% for the three months ended March 31, 2026 compared to 56.93% for the same period in 2025, 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 1.18% and return on average tangible common equity of 14.41% for the six months ended June 30, 2026 compared to 0.96% and 13.31%, respectively, for the same period in 2025. The Company's PTPP return of average assets for the six months ended June 30, 2026 was 1.52% compared to 1.22% in the prior year period. Our non-GAAP efficiency ratio continues to be an important component in the Company's overall performance and stood at 51.47% for the six months ended June 30, 2026 compared to 54.63% for the same period in 2025, the change being attributable primarily to higher levels of net interest income, complimented by higher non-interest revenue and controlled operating expenses.

Previous wording

Total interest expense of $18.5 million for the three months ended March 31, 2026, was a decrease of $2.5 million or 11.8% compared to total interest expense for the three months ended March 31, 2025. Interest expense on deposits fell $2.6 million year-to-date as compared to prior year on lower average funding rates and modestly lower volume. Borrowed funds expense was up $107,000 compared to the prior year period attributable to higher utilization of short-term FHLB funding.

Current wording

Total interest expense of $37.1 million for the six months ended June 30, 2026, was a decrease of $5.2 million or 12.3% compared to total interest expense for the six months ended June 30, 2025. Interest expense on deposits fell $5.4 million year-to-date as compared to prior year on lower average funding rates and modestly lower volume. Borrowed funds expense was up $209,000 compared to the prior year period attributable to higher utilization of short-term FHLB funding. The total average cost of interest bearing liabilities was 2.88% for the period, a reduction of 39 basis points.

Previous wording

As a result, net interest income of $20.7 million for the three months ended March 31, 2026 was an increase of $2.9 million or 16.2% compared to net interest income of $17.8 million for the three months ended March 31, 2025. The Company's net interest margin on a tax-equivalent basis for the three months ended March 31, 2026 was 2.86%, up from 2.48% for the first three months of 2025. Tax-exempt interest income amounted to $2.5 million for the three months ended March 31, 2026 compared to $2.7 million for the three months ended March 31, 2025.

Current wording

As a result, net interest income of $41.9 million for the six months ended June 30, 2026 was an increase of $5.6 million or 15.6% compared to net interest income of $36.2 million for the six months ended June 30, 2025. The Company's net interest margin on a tax-equivalent basis for the six months ended June 30, 2026 was 2.87%, up from 2.50% for the first six months of 2025. Tax-exempt interest income amounted to $5.0 million for the six months ended June 30, 2026 compared to $5.3 million for the six months ended June 30, 2025.

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, 2026 and 2025. Tax-exempt income is calculated on a tax-equivalent basis, using a 21.0% Federal Income Tax rate:

Current wording

The following tables present 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, 2026 and 2025. 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, 2026 compared to 2025. Tax-exempt income is calculated on a tax-equivalent basis, using a 21% Federal Income Tax rate:

Current wording

The following tables present 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, 2026 compared to 2025. 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, 2026 and 2025:

Current wording

The following table shows the Company's average daily balance sheets for the six months and quarters end ended June 30, 2026 and 2025:

Previous wording

Non-interest income of $4.5 million for the three months ended March 31, 2026 is an increase of $449,000 compared to the same period in 2025. The increase was centered in Wealth Management revenue which was up $169,000 or 12.8% from the prior year, and other operating income which increased $228,000 or 28.9%. Over the same period, service charges on deposit accounts were up $29,000, or 5.5%, debit card revenue increased $30,000, or 2.6%, and mortgage banking revenue decreased $19,000 or 9.7%.

Current wording

Non-interest income of $9.1 million for the six months ended June 30, 2026 is an increase of $981,000 compared to the same period in 2025. The increase was centered in Wealth Management revenue which was up $381,000 or 14.4% from the prior year, and other operating income which increased $439,000 or 28.6%. Over the same period, service charges on deposit accounts were up $75,000, or 7.0%, debit card revenue increased $119,000, or 4.8%, and mortgage banking revenue decreased $45,000 or 10.8%. Non-interest income of $4.7 million for the quarter ended June 30, 2026 is an increase of $532,000 compared to the same period in 2025.

Previous wording

Non-interest expense of $13.6 million for the three months ended March 31, 2026 is an increase of 6.0% or $772,000 compared to the same period in 2025. Salaries and employee benefits increased $480,000, or 7.0%, attributable to annual salary adjustments, lower deferred salaries, and higher health insurance expenses. Furniture and equipment expense was up $81,000 or 5.5% on higher software costs, and other operating expense increased $256,000 or 8.7%.

Current wording

Non-interest expense of $27.0 million for the six months ended June 30, 2026 is an increase of 7.8% or $2.0 million compared to the same period in 2025. Salaries and employee benefits increased $1.3 million, or 10.1%, attributable to annual salary adjustments, lower deferred salaries, and higher health insurance expenses. Furniture and equipment expense was up $97,000 or 3.3% on higher software costs, and other operating expense increased $711,000 or 12.1%. Non-interest expense of $13.4 million for the quarter ended June 30, 2026 is an increase of 9.7% compared to non-interest expense of $12.2 million million for the same period in 2025 due to the reasons mentioned.

Previous wording

Income taxes on operating earnings were $1.9 million for the three months ended March 31, 2026, up $423,000 from the same period in 2025.

Current wording

Income taxes on operating earnings were $3.9 million for the six months ended June 30, 2026, up $584,000 from the same period in 2025.

Previous wording

The carrying value of the Company's investment portfolio decreased by $9.5 million between December 31, 2025 and March 31, 2026 from $628.7 million to $619.2 million. The change in value of the portfolio is attributable to lack of like-kind re-investment of incoming cash flow from amortizing investments, limited new purchases and the negative effects of interest rate movement on the fair value of AFS holdings. As of March 31, 2026, mortgage-backed securities had a carrying value of $253.9 million and a fair value of $245.0 million. Of this total, securities with a fair value of $63.6 million or 26.0% of the mortgage-backed portfolio were issued by GNMA and securities with a fair value of $181.4 million or 74.0% of the mortgage-backed portfolio were issued by FHLMC and FNMA.

Current wording

The carrying value of the Company's investment portfolio increased by $8.1 million between December 31, 2025 and June 30, 2026 from $628.7 million to $636.8 million. The change in value of the portfolio is attributable new purchases and the effects of interest rate movements on the fair value of AFS holdings. As of June 30, 2026, mortgage-backed securities had a carrying value of $270.6 million and a fair value of $261.7 million. Of this total, securities with a fair value of $60.9 million or 23.3% of the mortgage-backed portfolio were issued by GNMA and securities with a fair value of $200.8 million or 76.7% 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 $35,000 at March 31, 2026. This compares to $38,000 and $45,000, net of taxes, at December 31, 2025 and March 31, 2025, 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 $32,000 at June 30, 2026. This compares to $38,000 and $60,000, net of taxes, at December 31, 2025 and June 30, 2025, respectively. These securities were transferred as a part of the Company's overall investment and balance sheet strategies.

Previous wording

Holdings of AFS Securities and HTM securities have been evaluated to determine the need to establish an ACL, if any. The total ACL for HTM securities was $145,000 as of March 31, 2026, $146,000 as of December 31, 2025 and $197,000 March 31, 2025. Further details are included in Note 2 of the accompanying financial statements.

Current wording

Holdings of AFS Securities and HTM securities have been evaluated to determine the need to establish an ACL, if any. The total ACL for HTM securities was $143,000 as of June 30, 2026, $146,000 as of December 31, 2025 and $198,000 as of June 30, 2025. 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, 2026 amounted to $41.7 million, or 13.99% of the amortized cost of the total securities portfolio. At December 31, 2025, this amount was $40.1 million, or 13.19% 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, 2026 amounted to $41.2 million, or 13.00% of the amortized cost of the total securities portfolio. At December 31, 2025, this amount was $40.1 million, or 13.19% of the amortized cost of total securities portfolio.

Previous wording

As of March 31, 2026, the Company had AFS debt securities in an unrealized loss position with a fair value of $233.3 million and unrealized losses of $41.7 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 $212.3 million as of March 31, 2026, compared with $226.9 million at December 31, 2025. 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, 2026:

Current wording

As of June 30, 2026, the Company had AFS debt securities in an unrealized loss position with a fair value of $253.7 million and unrealized losses of $41.2 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 $207.8 million as of June 30, 2026, compared with $226.9 million at December 31, 2025. 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, 2026:

Previous wording

AFS Mortgage-backed securities issued by U.S. Government agencies and U.S. Government-sponsored enterprises. As of March 31, 2026, there were $30.8 million of unrealized losses on these securities compared with $30.1 million at December 31, 2025. 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, 2026 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, 2026, there were $31.0 million of unrealized losses on these securities compared with $30.1 million at December 31, 2025. 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, 2026 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 Obligations of state and political subdivisions. As of March 31, 2026, there were $5.9 million of unrealized losses on these securities compared to $5.0 million at December 31, 2025. Municipal securities are supported by the general taxing authority of the municipality or a dedicated revenue stream, and, in the case of school districts, are generally supported by state aid. At March 31, 2026, all municipal bond issuers were current on contractually obligated interest and principal payments. The Company attributes the unrealized losses at March 31, 2026 to changes in prevailing market yields and pricing spreads since the date the underlying securities were purchased, combined with general market conditions. The Company has the ability and intent to hold these securities until a recovery of their amortized cost, which may be at maturity, and believes that 100% of the amounts contractually due will be realized.

Current wording

AFS Obligations of state and political subdivisions. As of June 30, 2026, there were $5.1 million of unrealized losses on these securities compared to $5.0 million at December 31, 2025. Municipal securities are supported by the general taxing authority of the municipality or a dedicated revenue stream, and, in the case of school districts, are generally supported by state aid. At June 30, 2026, all municipal bond issuers were current on contractually obligated interest and principal payments. The Company attributes the unrealized losses at June 30, 2026 to changes in prevailing market yields and pricing spreads since the date the underlying securities were purchased, combined with general market conditions. The Company has the ability and intent to hold these securities until a recovery of their amortized cost, which may be at maturity, and believes that 100% of the amounts contractually due will be realized.

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, 2026, the Bank's investment in FHLBB stock totaled $7.3 million. This compares to $7.2 million as of December 31, 2025 and $6.5 million as of March 31, 2025. 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, 2026.

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, 2026, the Bank's investment in FHLBB stock totaled $7.7 million. This compares to $7.2 million as of December 31, 2025 and $6.7 million as of June 30, 2025. 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, 2026.

Previous wording

Loans held for sale are carried at the lower of cost or market value. As of March 31, 2026, the Bank had no loans

Current wording

Loans held for sale are carried at the lower of cost or market value. As of June 30, 2026, the Bank had $190,000 in loans held for sale. This compares to no loans held for sale at December 31, 2025 and June 30, 2025.

Previous wording

The loan portfolio increased during the first three months of 2026, with total loans at $2.41 billion at March 31, 2026, up $11.0 million or 0.5% from total loans of $2.39 billion at December 31, 2025. Commercial loans increased by $2.3 million during the period, led by increases in owner-occupied commercial real estate of $4.3 million and commercial & industrial loans of $16.1 million, while non-owner occupied commercial real estate decreased $4.8 million, multifamily decreased $8.5 million, and construction loan balances decreased$4.8 million. Residential loans increased by $4.0 million and home equity loans increased by $4.9 million in the first three months of 2026.

Current wording

The loan portfolio increased during the first six months of 2026, with total loans at $2.42 billion at June 30, 2026, up $29.6 million or 1.2% from total loans of $2.39 billion at December 31, 2025. Commercial loans decreased by $14.4 million during the period. Owner-occupied commercial real estate increased $1.3 million and commercial & industrial loans increased $17.2 million, while non-owner occupied commercial real estate decreased $10.0 million, multifamily decreased $19.1 million, and construction loan balances decreased $6.0 million. Residential loans increased by $16.0 million and home equity loans increased by $18.0 million in the first six months of 2026.

Previous wording

As of March 31, 2026, 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 $252.2 million, or 10.49% of total loans. This compares to two concentrations of loans in two particular industries that exceeded 10% of its total loan portfolio as of March 31, 2025: (1) loans to hotels (except Casino hotels) and motels, totaling $253.4 million, or 10.63% of total loans, and (2) loans to lessors of residential buildings and dwellings, $266.7 million, or 11.19% of total loans.

Current wording

As of June 30, 2026, 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 $245.1 million, or 10.11% of total loans. This compares to one concentration of loans in one particular industry that exceeded 10% of its total loan portfolio as of June 30, 2025: (1) loans to lessors of residential buildings and dwellings, $272.0 million, or 11.36% of total loans.

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, 2026, IAL with specific reserves totaled $5.0 million and the amount of such reserves was $2.7 million. This compares to IAL with specific reserves of $4.1 million at December 31, 2025 and the amount of such reserves was $2.7 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, 2026, IAL with specific reserves totaled $4.1 million and the amount of such reserves was $2.3 million. This compares to IAL with specific reserves of $4.1 million at December 31, 2025 and the amount of such reserves was $2.7 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 $650,000 for the first three months of 2026 and $396,000 the first three months of 2025. Net charge-offs were $806,000 in the first three months of 2026, compared to net charge-offs of $153,000 in the first three months of 2025. The ACL as a percentage of outstanding loans was 1.05% as of March 31, 2026, 1.06% as of December 31, 2025, and 1.05% as of March 31, 2025.

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 $1.6 million for the first six months of 2026 and $744,000 the first six months of 2025. Net charge-offs were $2.4 million in the first six months of 2026, compared to net charge-offs of $786,000 in the first six months of 2025. The ACL as a percentage of outstanding loans was 1.01% as of June 30, 2026, 1.06% as of December 31, 2025, and 1.04% as of June 30, 2025.

Previous wording

The following table summarizes the activities in the ACL for the three months ended March 31, 2026 and 2025 and for the year ended December 31, 2025:

Current wording

The following table summarizes the activities in the ACL for the six months ended June 30, 2026 and 2025 and for the year ended December 31, 2025:

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 $536,000 as of March 31, 2026.

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 $553,000 as of June 30, 2026.

Previous wording

Nonperforming loans, expressed as a percentage of total loans, totaled 0.67% at March 31, 2026 compared to 0.54% at December 31, 2025 and 0.25% at March 31, 2025. The following table shows the distribution of nonperforming loans by class as of March 31, 2026 and 2025 and December 31, 2025:

Current wording

Nonperforming loans, expressed as a percentage of total loans, totaled 0.71% at June 30, 2026 compared to 0.54% at December 31, 2025 and 0.25% at June 30, 2025. The following table shows the distribution of nonperforming loans by class as of June 30, 2026 and 2025 and December 31, 2025:

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, 2026, loans 90 or more days past due and still accruing interest totaled $596,000, compared to $665,000 at December 31, 2025 and $695,000 at March 31, 2025.

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, 2026, loans 90 or more days past due and still accruing interest totaled $756,000, compared to $665,000 at December 31, 2025 and $457,000 at June 30, 2025.

Previous wording

The Bank's overall loan delinquency ratio was 1.14% at March 31, 2026 compared to 0.90% at December 31, 2025 and 0.33% at March 31, 2025. Loans 90 or more days delinquent and accruing decreased from $665,000 at December 31, 2025 to $596,000 as of March 31, 2026. The following table sets forth loan delinquencies as of March 31, 2026 and 2025 and December 31, 2025:

Current wording

The Bank's overall loan delinquency ratio was 0.93% at June 30, 2026 compared to 0.90% at December 31, 2025 and 0.23% at June 30, 2025. Loans 90 or more days delinquent and accruing increased from $665,000 at December 31, 2025 to $756,000 as of June 30, 2026. The following table sets forth loan delinquencies as of June 30, 2026 and 2025 and December 31, 2025:

Previous wording

Potential problem loans consist of classified, accruing commercial and commercial real estate loans that were between 30 and 89 days past due. Such loans are characterized by weaknesses in the financial condition of borrowers or collateral deficiencies. Based on historical experience, the credit quality of some of these loans may improve due to improvements in the economy as well as changes in collateral values or the financial condition of the borrowers, while the credit quality of other loans may deteriorate, resulting in some amount of loss. At March 31, 2026, there were two potential problem loans reported with a balance of $241,000 or 0.010% of total loans. This compares to five potential problem loans with a balance of $3.7 million or 0.156% of total loans at December 31, 2025.

Current wording

Potential problem loans consist of classified, accruing commercial and commercial real estate loans that were between 30 and 89 days past due. Such loans are characterized by weaknesses in the financial condition of borrowers or collateral deficiencies. Based on historical experience, the credit quality of some of these loans may improve due to improvements in the economy as well as changes in collateral values or the financial condition of the borrowers, while the credit quality of other loans may deteriorate, resulting in some amount of loss. At June 30, 2026, there were seven potential problem loans reported with a balance of $4.0 million or 0.167% of total loans. This compares to five potential problem loans with a balance of $3.7 million or 0.156% of total loans at December 31, 2025.

Previous wording

As of March 31, 2026, there were eight residential loans in the process of foreclosure totaling $1.8 million, one home equity line of credit totaling $63,000 and one consumer loan totaling $7,000. The Bank's residential foreclosure process begins when a loan becomes 75 days past due at which time a Demand/Breach Letter is sent to the borrower. If the loan becomes 120 days past due, copies of the promissory note and mortgage deed are forwarded to the Bank's attorney for review and a complaint for foreclosure is then prepared. An authorized Bank officer signs the affidavit certifying the validity of the documents and verification of the past due amount which is then forwarded to the court. Once a Motion for Summary Judgment is granted, a POR begins which gives the customer 90 days to cure the default. A foreclosure auction date is then set 30 days from the POR expiration date if the default is not cured.

Current wording

As of June 30, 2026, there were seven residential loans in the process of foreclosure totaling $1.6 million, one home equity line of credit totaling $63,000 and one consumer loan totaling $7,000. The Bank's residential foreclosure process begins when a loan becomes 75 days past due at which time a Demand/Breach Letter is sent to the borrower. If the loan becomes 120 days past due, copies of the promissory note and mortgage deed are forwarded to the Bank's attorney for review and a complaint for foreclosure is then prepared. An authorized Bank officer signs the affidavit certifying the validity of the documents and verification of the past due amount which is then forwarded to the court. Once a Motion for Summary Judgment is granted, a POR begins which gives the customer 90 days to cure the default. A foreclosure auction date is then set 30 days from the POR expiration date if the default is not cured.