Avidia Bancorp, Inc.

Previous wording

inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments, including our mortgage servicing rights asset, or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make;

Current wording

inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments, including our mortgage servicing rights asset, or our level of loan originations, or increases in the level of defaults, losses and prepayments on loans we have made and make;

Previous wording

Changes in the ACL are recorded as credit loss expense (or reversal). Losses are charged against the allowance when management believes the uncollectibility of an available for sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Current wording

Changes in the ACL are recorded as credit loss expense (or reversal). Losses are charged against the allowance when management believes the uncollectibility of an available for sale debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Previous wording

Goodwill. Goodwill is recognized when the fair value of consideration transferred in an acquisition is greater than the fair value of assets acquired and liabilities assumed, and the excess is allocated to goodwill. Goodwill has an indefinite useful life and is evaluated on at least an annual basis for potential impairment, and more often if circumstances warrant more frequent evaluations. An impairment loss is recognized to the extent that the carrying value exceeds fair value. Significant judgment and assumptions are utilized by management in the impairment analysis. Avidia Bank was created by a merger between Hudson Savings Bank and The Westborough Savings Bank in 2007. Goodwill of $11.9 million resulting from the merger is not amortized but is evaluated for impairment on an annual basis. Impairment of goodwill is recognized in earnings. As of March 31, 2025, no impairment has been recognized.

Current wording

Goodwill. Goodwill is recognized when the fair value of consideration transferred in an acquisition is greater than the fair value of assets acquired and liabilities assumed. Goodwill has an indefinite useful life and is evaluated on at least an annual basis for potential impairment, and more often if circumstances warrant more frequent evaluations. An impairment loss is recognized to the extent that the carrying value exceeds fair value. Significant judgment and assumptions are utilized by management in the impairment analysis. Avidia Bank was created by a merger between Hudson Savings Bank and The Westborough Savings Bank in 2007. Goodwill of $11.9 million resulting from the merger is not amortized but is evaluated for impairment on an annual basis. Impairment of goodwill is recognized in earnings. As of June 30, 2025, no impairment has been recognized.

Previous wording

Total Assets. Total assets increased $50.1 million, or 1.9%, to $2.71 billion at March 31, 2025 from $2.66 billion at December 31, 2024. The increase was primarily the result of increases in net loans and cash and short-term investments, offset, in part, by decreases in securities available for sale.

Current wording

Total Assets. Total assets increased $301.4 million, or 11.3%, to $2.96 billion at June 30, 2025 from $2.66 billion at December 31, 2024. The increase was primarily the result of increases in cash and cash equivalents and in net loans.

Previous wording

Securities Available for Sale. Securities available for sale decreased $4.0 million, or 1.5%, to $261.9 million at March 31, 2025 from $265.9 million at December 31, 2024. During the first quarter of 2025, $8.4 million in securities were sold at a net loss of $541 thousand.

Current wording

Securities Available for Sale. Securities available for sale increased $316 thousand, or 0.1%, to $266.2 million at June 30, 2025 from $265.9 million at December 31, 2024. During the first half of 2025, $8.9 million in securities were sold at a net loss of $619 thousand.

Previous wording

Federal Home Loan Bank Stock. Federal Home Loan Bank stock of $14.7 million remained unchanged from December 31, 2024 to March 31, 2025. The amount of stock we are required to purchase is in proportion to our Federal Home Loan Bank borrowings and our total assets.

Current wording

Federal Home Loan Bank Stock. Federal Home Loan Bank stock decreased $2.6 million, or 18%, to $12.1 million at June 30, 2025 from $14.7 million at December 31, 2024. The amount of stock we are required to own is in proportion to our Federal Home Loan Bank borrowings and our total assets.

Previous wording

Loans, net. Loans, net, increased $34.7 million, or 1.6%, to $2.21 billion at March 31, 2025 from $2.18 billion at December 31, 2024. Loan growth from December 31, 2024 to March 31, 2025 related to increases in commercial real estate loans of $24.3 million, or 5.0%, other commercial and industrial loans of $11.8 million, or 2.4%, multi-family real estate loans of $5.6 million, or 6.6%, one to four family residential mortgage loans of $1.7 million, or 0.3%, and home equity and second mortgages of $601 thousand, or 0.9%.

Current wording

Net Loans. Net loans increased $48.1 million, or 2.2%, to $2.22 billion at June 30, 2025 from $2.18 billion at December 31, 2024. Loan growth from December 31, 2024 to June 30, 2025 related to increases in commercial real estate loans of $28.4 million, or 5.9%, home equity and second mortgages of $8.1 million, or 12.2%, multi-family real estate loans of $7.9 million, or 9.5%, one to four family residential mortgage loans of $2.6 million, or 0.5%, and commercial and industrial loans of $2.5 million, or 0.5%.

Previous wording

This loan growth was partially offset by decreases from December 31, 2024 to March 31, 2025 of $1.9 million, or 0.4%, in condominium association loans, $6.8 million, or 13.9%, in construction and land loans, and $346 thousand, or 6.8%, in consumer loans.

Current wording

This loan growth was partially offset by a decrease from December 31, 2024 to June 30, 2025 of $517 thousand, or 10.2% in consumer loans.

Previous wording

Bank-owned Life Insurance. We invest in bank-owned life insurance to help offset the costs of our employee benefit plan obligations. Bank-owned life insurance also generally provides noninterest income that is non-taxable. Bank-owned life insurance increased $279 thousand, or 0.8%, to $35.8 million at March 31, 2025 from $35.5 million at December 31, 2024. The increase was primarily due to an increase in the cash surrender value of existing policies.

Current wording

Bank-owned Life Insurance. We invest in bank-owned life insurance to help offset the costs of our employee benefit plan obligations. Bank-owned life insurance also generally provides noninterest income that is non-taxable. Bank-owned life insurance increased $567 thousand, or 1.6%, to $36.1 million at June 30, 2025 from $35.5 million at December 31, 2024. The increase was primarily due to an increase in the cash surrender value of existing policies.

Previous wording

Deposits. Deposits increased $67.9 million, or 3.3%, to $2.13 billion at March 31, 2025 from $2.06 billion at December 31, 2024. Core deposits (which we define as all deposits, other than certificates of deposit and brokered deposits) increased $78.2 million, or 4.7%, to $1.75 billion at March 31, 2025 from $1.67 billion at December 31, 2024. The increase was the result of growth in all core deposit categories during the period with a $39.0 million, or 5.7%, increase in interest-bearing checking accounts, a $17.6 million, or 4.6%, increase in regular and other savings accounts, a $15.4 million, or 6.2%, increase in money market accounts and a $6.2 million, or 1.7%, increase in non-interest bearing checking. Certificates of deposit (excluding brokered certificates of deposit) decreased $10.4 million, or 2.9%, to $353.2 million at March 31, 2025 from $363.6 million at December 31, 2024. Brokered deposits remained unchanged at $27.0 million from December 31, 2024 to March 31, 2025.

Current wording

Deposits. Deposits increased $376.4 million, or 18.2%, to $2.44 billion at June 30, 2025 from $2.06 billion at December 31, 2024. Core deposits (which we define as all deposits, other than certificates of deposit and brokered deposits) increased $428.5 million, or 25.6%, to $2.10 billion at June 30, 2025 from $1.67 billion at December 31, 2024. The increase was primarily related to the funds received from the IPO subscription offering and growth in most core deposits categories during the period with a $399.0 million, or 58.4%, increase in interest-bearing checking accounts, a $25.4 million, or 6.6%, increase in regular and other savings accounts, a $18.4 million, or 7.3%, increase in money market accounts, offset by a $14.2 million, or 4.0%, decrease in non-interest bearing checking. Certificates of deposit (excluding brokered certificates of deposit) decreased $37.1 million, or 10.2%, to $326.4 million at June 30, 2025 from $363.6 million at December 31, 2024. Brokered deposits decreased $15.0 million to $12.0 million at June 30, 2025 from $27.0 million from December 31, 2024.

Previous wording

Total Capital. Total capital decreased $7.8 million, or 4.0%, to $186.1 million at March 31, 2025 from $193.8 million at December 31, 2024, due to a net loss of $11.6 million for the three months ended March 31, 2025, offset, in part, by a decrease in accumulated other comprehensive loss of $3.8 million. The decrease in accumulated other comprehensive loss was primarily due to the impact of the lower market interest rate environment on our unrealized loss on available for sale securities and interest rate swaps.

Current wording

Total Capital. Total capital decreased $2.4 million, or 1.2%, to $191.4 million at June 30, 2025 from $193.8 million at December 31, 2024, due to a net loss of $7.7 million for the six months ended June 30, 2025, offset by a decrease in accumulated other comprehensive loss of $5.3 million. The decrease in accumulated other comprehensive loss was primarily due to the impact of the lower market interest rate environment on our unrealized loss on securities available for sale and interest rate swaps.

Previous wording

Comparison of Operating Results for the Three Months Ended March 31, 2025 and 2024

Current wording

Comparison of Operating Results for the Three and Six Months Ended June 30, 2025 and 2024

Previous wording

Net Loss/Income. Net loss was $11.6 million for the three months ended March 31, 2025, compared to net income of $3.5 million for the three months ended March 31, 2024, a decrease of $15.1 million. The decrease was primarily due to a $17.0 million increase in the provision for credit losses, a $3.7 million increase in non-interest expense, and a $2.2 million decrease in non-interest income, partially offset by a $1.6 million increase in net interest income.

Current wording

Net loss for the six months ended June 30, 2025 was $7.7 million, compared to net income of $5.9 million for the six months ended June 30, 2024, a decrease of $13.6 million. The decrease was primarily due to a $18.4 million increase in the credit loss expense, a $4.5 million increase in non-interest expense, and a $370 thousand decrease in non-interest income, partially offset by a $3.9 million increase in net interest income.

Previous wording

Interest and Dividend Income. Interest and dividend income increased $1.2 million, or 4.0%, to $31.0 million for the three months ended March 31, 2025, from $29.8 million for the three months ended March 31, 2024, primarily due to a $925 thousand increase in interest on loans. The increase in interest on loans resulted primarily from an increase of $42.8 million in the average balance of loans to $2.21 billion for the three months ended March 31, 2025 from $2.17 billion for the three months ended March 31, 2024, due to growth in the commercial real estate portfolio. The weighted average yield on loans increased to 5.16% for the three months ended March 31, 2025 compared to 5.05% for the three months ended March 31, 2024.

Current wording

Interest and Dividend Income. Interest and dividend income increased $1.0 million, or 3.1%, to $31.9 million for the three months ended June 30, 2025, from $30.9 million for the three months ended June 30, 2024, primarily due to a $1.4 million increase in interest on loans. The increase in interest on loans resulted primarily from an increase of $88.9 million in the average balance of loans to $2.23 billion for the three months ended June 30, 2025 from $2.14 billion for the three months ended June 30, 2024. The weighted average yield on loans increased to 5.20% for the three months ended June 30, 2025 compared to 5.16% for the three months ended June 30, 2024.

Previous wording

Average interest-earning assets increased $60.6 million, to $2.56 billion for the three months ended March 31, 2025, from $2.50 billion for the three months ended March 31, 2024. The yield on interest-earning assets increased to 4.92% for the three months ended March 31, 2025, from 4.80% for the three months ended March 31, 2024.

Current wording

Average interest-earning assets increased $51.4 million, to $2.59 billion for the three months ended June 30, 2025, from $2.54 billion for the three months ended June 30, 2024. The yield on interest-earning assets increased to 4.93% for the three months ended June 30, 2025, from 4.89% for the three months ended June 30, 2024.

Previous wording

Interest Expense. Total interest expense decreased $423 thousand, or 3.5%, to $11.8 million for the three months ended March 31, 2025, from $12.3 million for the three months ended March 31, 2024. Interest expense on Federal Home Loan Bank advances decreased $567 thousand, or 13.0%, to $3.8 million for the three months ended March 31, 2025, from $4.4 million for the three months ended March 31, 2024, due to a decrease in the average advances of $43.2 million between periods. Interest expense on deposit accounts increased $144 thousand, or 1.9%, to $7.7 million for the three months ended March 31, 2025, from $7.6 million for the three months ended March 31, 2024, due to an increase in the average balance of interest-bearing deposits of $155.7 million, or 9.9%, to $1.72 billion for the three months ended March 31, 2025, from $1.57 billion for the three months ended March 31, 2024, offset, in part, by a decrease in the weighted average rate on interest-bearing deposits to 1.82% for the three months ended March 31, 2025, from 1.95% for the three months ended March 31, 2024.

Current wording

Interest Expense. Total interest expense decreased $1.3 million, or 10.7%, to $11.2 million for the three months ended June 30, 2025, from $12.6 million for the three months ended June 30, 2024. Interest expense on deposit accounts decreased $1.0 million, or 12.6%, to $7.2 million for the three months ended June 30, 2025, from $8.3 million for the three months ended June 30, 2024, due to a decrease in the weighted average rate on interest-bearing deposits to 1.69% for the three months ended June 30, 2025, from 2.05% for the three months ended June 30, 2024. Interest expense on Federal Home Loan Bank advances decreased $338 thousand, or 8.5%, to $3.6 million for the three months ended June 30, 2025, from $4.0 million for the three months ended June 30, 2024, due to a decrease in the average advances of $28.2 million between periods.

Previous wording

Net Interest Income. Net interest income increased $1.6 million, or 9.2%, to $19.2 million for the three months ended March 31, 2025, from $17.6 million for the three months ended March 31, 2024, primarily due to an increase in net interest margin to 3.04% for the three months ended March 31, 2025, from 2.83% for the three months ended March 31, 2024 and $60.6 million increase in the average balance of interest-earning assets during the three months ended March 31, 2025. Net interest rate spread increased to 2.62%, for the three months ended March 31, 2025, compared to 2.30% for the three months ended March 31, 2024. The increase in net interest margin and spread was driven by an increase in the weighted average yield on interest earning assets combined with a decrease in the weighted average rate paid on interest-bearing liabilities to 2.30% for the three months ended March 31, 2025, from 2.50% for the three months ended March 31, 2024.

Current wording

Net Interest Income. Net interest income increased $2.3 million, or 12.6%, to $20.6 million for the three months ended June 30, 2025, from $18.3 million for the three months ended June 30, 2024, primarily due to an increase in net interest margin to 3.19% for the three months ended June 30, 2025, from 2.90% for the three months ended June 30, 2024 and a $51.4 million increase in the average balance of interest-earning assets during the three months ended June 30, 2025. Net interest rate spread increased to 2.76%, for the three months ended June 30, 2025, compared to 2.38% for the three months ended June 30, 2024. The increase in net interest margin and spread was driven by an increase in the weighted average yield on interest earning assets combined with a decrease in the weighted average rate paid on interest-bearing liabilities to 2.17% for the three months ended June 30, 2025, from 2.51% for the three months ended June 30, 2024.

Previous wording

Provision for Credit Losses. Based on management’s analysis of the adequacy of allowance for credit losses, a provision of $17.6 million was recorded for the three months ended March 31, 2025, compared to a provision of $630,000 for the three months ended March 31, 2024. The $17.0 million increase is primarily related to the $16.7 million charge-off related to the land loan. See “—Loan Matter” above.

Current wording

Allowance for Credit Losses. Based on management’s analysis of the adequacy of allowance for credit losses, a credit loss expense of $1.1 million was recorded for the three months ended June 30, 2025, compared to a credit loss reversal of $320 thousand for the three months ended June 30, 2024.

Previous wording

Non-interest Income. Non-interest income decreased $2.2 million, or 36.8%, to $3.7 million for the three months ended March 31, 2025, from $5.9 million for the three months ended March 31, 2024. The decrease was primarily due to the $1.9 million decrease in net gains and losses on equity and available for sale securities, from a loss of $541 thousand for the three months ended March 31, 2025, compared to a $1.4 million gain for the three months ended March 31, 2024. Non-interest income was also impacted by a $378 thousand decrease in the valuation of mortgage servicing rights for the three months ended March 31, 2025, compared to March 31, 2024, resulting from a decline in market interest rates.

Current wording

Non-interest income decreased $370 thousand, or 4.0%, to $9.0 million for the six months ended June 30, 2025, from $9.3 million for the six months ended June 30, 2024. The decrease was primarily due to a $1.6 million decrease in net gains on equity securities, from no gains for the six months ended June 30, 2025, compared to a $1.6 million gain for the six months ended June 30, 2024. The decrease was also due to a $747 thousand decrease in net loss on securities available for sale, from losses of $619 thousand for the six months ended June 30, 2025, compared to a $1.4 million loss for the six months ended June 30, 2024. Non-interest income was also impacted by a $356 thousand write-down of equipment no longer in use and a $498 thousand decrease in the valuation of mortgage servicing rights for the six months ended June 30, 2025, compared to June 30, 2024, resulting from a decline in market interest rates. This was partially offset by a $611 thousand increase in payment processing income and a $250 thousand gain on the sale of the Direct Merchant Processing Book for the six months ended June 30, 2025.

Previous wording

Non-interest Expense. Non-interest expense increased $3.7 million, or 20.6%, to $21.8 million for the three months ended March 31, 2025, from $18.1 million for the three months ended March 31, 2024. Salary and employee benefit expenses increased $3.0 million, or 34.4%, primarily due to a $1.1 million increase in the long-term incentive expense resulting from the termination of the plan and immediate vesting of participants, a $1.1 million increase in short-term incentive, payroll taxes and retirement expenses, and a $689 thousand increase in salaries. Data processing costs increased $1.2 million, or 53.2%, primarily due to a new on-line banking platform, increased account volume and licensing costs, and one-time expenses of $379 thousand related to contract terminations. All other non-interest expenses decreased $397 thousand, or 5.5%, to $6.9 million for the three months ended March 31, 2025, from $7.3 million for the three months ended March 31, 2024, due to lower advertising expense and the sale of the credit card portfolio.

Current wording

Non-interest expense increased $4.5 million, or 12.2%, to $41.6 million for the six months ended June 30, 2025, from $37.1 million for the six months ended June 30, 2024. Salary and employee benefit expenses increased $3.2 million, or 18.3%, primarily due to a $756 thousand increase in the long-term incentive expense which was primarily the result of the termination of the plan and immediate vesting of participants, a $1.3 million increase in short-term incentives, payroll taxes and retirement expenses, and a $879 thousand increase in salaries. Data processing costs increased $1.9 million, or 44.1%, primarily due to a new on-line banking platform, increased account volume and licensing costs, and one-time expenses of $379 thousand related to contract terminations. All other non-interest expenses decreased $580 thousand, or 3.8%, to $14.7 million for the six months ended June 30, 2025, from $15.3 million for the six months ended June 30, 2024, due to lower occupancy and equipment expense and the sale of the credit card portfolio.

Previous wording

Income Tax Benefit/Expense. Income tax benefit was $4.9 million for the three months ended March 31, 2025, compared to an income tax expense of $1.2 million for the three months ended March 31, 2024. The effective tax rate was 29.8% and 25.5% for the three months ended March 31, 2025, and March 31, 2024, respectively.

Current wording

Income Tax Benefit/Expense. Income tax expense was $1.2 million for the three months ended June 30, 2025, compared to an income tax expense of $759 thousand for the three months ended June 30, 2024. The effective tax rate was 23.0% and 24.4% for the three months ended June 30, 2025, and June 30, 2024, respectively.

Previous wording

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. In addition, we have available credit facilities with the Federal Home Loan Bank of Boston, correspondent banks, and the Federal Reserve Bank of Boston. At March 31, 2025, we had the ability to borrow $684.5 million from the Federal Home Loan Bank of Boston, of which $325.0 million was outstanding. At March 31, 2025, we also had a $500 thousand line of credit with the Federal Home Loan Bank of Boston with no borrowings outstanding. At March 31, 2025, we had $18.0 million of available lines of credit with correspondent banks with no borrowings outstanding under any of them. At March 31, 2025, we also had aggregate available borrowing capacity of $330.0 million through the discount window and the borrower-in-custody program at the Federal Reserve Bank of Boston with no borrowings under either facility.

Current wording

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. In addition, we have available credit facilities with the Federal Home Loan Bank of Boston, correspondent banks, and the Federal Reserve Bank of Boston. At June 30, 2025, we had the ability to borrow $680.4 million from the Federal Home Loan Bank of Boston, of which $260.0 million was outstanding. At June 30, 2025, we also had a $500 thousand line of credit with the Federal Home Loan Bank of Boston with no borrowings outstanding. At June 30, 2025, we had $18.0 million of available lines of credit with correspondent banks with no borrowings outstanding under any of them. At June 30, 2025, we also had aggregate available borrowing capacity of $324.1 million through the discount window and the borrower-in-custody program at the Federal Reserve Bank of Boston with no borrowings under either facility.

Previous wording

Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. We anticipate that we will have sufficient funds available to meet our current lending commitments. At March 31, 2025, off-balance sheet commitments totaled $422.9 million.

Current wording

Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. We anticipate that we will have sufficient funds available to meet our current lending commitments. At June 30, 2025, off-balance sheet commitments totaled $426.9 million.

Previous wording

General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in market interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. Our Asset Liability Committee is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk according to the policy and guidelines approved by our board of directors. The Asset Liability Committee meets at least quarterly, is comprised of directors, executive officers and certain senior management, and reports to the full board of directors on at least a quarterly basis. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.

Current wording

General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in market interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. Our Asset Liability Committee is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk according to the policy and guidelines approved by our board of directors. The Asset Liability Committee meets at least quarterly, is comprised of executive officers and certain senior management, and reports to the full board of directors on at least a quarterly basis. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changing interest rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.

Previous wording

Interest Rate Swaps. We employ various financial risk methodologies that limit, or “hedge,” the adverse effects of increasing or decreasing market interest rates on our investment portfolio, loan portfolio and short-term liabilities, such as Federal Home Loan Bank advances. At March 31, 2025, we had interest rate swaps related to Federal Home Loan Bank advances with a notional amount of $150.0 million and interest rate swaps on agency securities with a notional amount of $10.0 million. We also engage in hedging strategies with respect to arrangements where our commercial banking customers swap floating interest rate obligations for fixed interest rate obligations, or vice versa. At March 31, 2025, we had interest rate swaps related to customer loans of a notional amount of $87.5 million. Our hedging activity varies based on the level and volatility of interest rates and other changing market conditions.

Current wording

Interest Rate Swaps. We employ various financial risk methodologies that limit, or “hedge,” the adverse effects of increasing or decreasing market interest rates on our investment portfolio, loan portfolio and short-term liabilities, such as Federal Home Loan Bank advances. At June 30, 2025, we had interest rate swaps related to Federal Home Loan Bank advances with a notional amount of $100.0 million and interest rate swaps on agency securities with a notional amount of $35.0 million. We also engage in hedging strategies with respect to arrangements where our commercial banking customers swap floating interest rate obligations for fixed interest rate obligations, or vice versa. At June 30, 2025, we had interest rate swaps related to customer loans of a notional amount of $105.3 million. Our hedging activity varies based on the level and volatility of interest rates and other changing market conditions.

Previous wording

The table above indicates that at March 31, 2025, we would have experienced a 7.9% decrease in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 2.4% increase in net interest income in the event of an instantaneous 200 basis point decrease in market interest rates.

Current wording

The table above indicates that at June 30, 2025, we would have experienced a 2.6% decrease in net interest income in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 4.3% decrease in net interest income in the event of an instantaneous 200 basis point decrease in market interest rates.

Previous wording

The table above indicates that at March 31, 2025, we would have experienced a 12.6% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 6.0% increase in EVE in the event of an instantaneous 200 basis point decrease in market interest rates.

Current wording

The table above indicates that at June 30, 2025, we would have experienced a 11.3% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 0.9% decrease in EVE in the event of an instantaneous 200 basis point decrease in market interest rates.