BAR HARBOR BANKSHARES_March 31, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2026


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-13349

BAR HARBOR BANKSHARES

(Exact name of registrant as specified in its charter)


Maine		01-0393663
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

PO Box 400
82 Main Street, Bar Harbor, ME		04609-0400
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (207) 288-3314

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, par value $2.00 per share		BHB		NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definition of "large accelerated filer," "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ◻ Accelerated Filer ⌧ Non-Accelerated Filer ◻ Smaller Reporting Company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ⌧

The registrant had 16,742,104 shares of common stock, par value $2.00 per share, outstanding as of May 1, 2026.

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BAR HARBOR BANKSHARES AND SUBSIDIARIES

FORM 10-Q

INDEX

			Page
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (unaudited)

	Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025		4

	Consolidated Statements of Income for the Three Months Ended March 31, 2026 and 2025		5

	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2026 and 2025		6

	Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2026 and 2025		7

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025		8

	Condensed Notes to Unaudited Consolidated Interim Financial Statements		10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		53
		Selected Financial Data	58
		Consolidated Loan and Deposit Analysis	59
		Average Balances and Average Yields/Rates	60
		Reconciliation of Non-GAAP Financial Measures	61

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		63

Item 4.	Controls and Procedures		65

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings		65

Item 1A.	Risk Factors		65

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		65

Item 3.	Defaults Upon Senior Securities		65

Item 4.	Mine Safety Disclosures		65

Item 5.	Other Information		65

Item 6.	Exhibits		66

Signatures			67

Bar Harbor Bankshares conducts business operations principally through Bar Harbor Bank & Trust, which may be referred to as the “Bank” and which is a subsidiary of Bar Harbor Bankshares. Unless the context requires otherwise, references in this report to “the Company,” "our," "us," and similar terms refer to Bar Harbor Bankshares and its subsidiaries, including the Bank, collectively.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q (this “Form 10-Q”) that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this Form 10-Q the words “believe,” “anticipate,” “expect,” “may,” “will,” “assume,” “should,” “predict,” “could,” “would,” “intend,” “targets,” “estimates,” “projects,” “plans,” and “potential,” and other similar words and expressions of the future, are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking, including statements about the Company’s future financial and operating results and the Company’s plans, objectives, and intentions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of the Company to differ materially from any results, performance, or achievements expressed or implied by such forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to:

●

changes in general business and economic conditions on a national basis and in our markets throughout Northern New England;

●

changes in consumer behavior due to political, business, and economic conditions, including ongoing armed conflicts, inflation and concerns about liquidity;

●

the possibility that our asset quality could decline or that we experience greater loan losses than anticipated;

●

the impact of liquidity needs on our results of operations and financial condition; changes in the size and nature of our competition;

●

the effect of interest rate increases on the cost of deposits;

●

unanticipated weakness in loan demand, pricing or collectability;

●

the possibility that future credit losses are higher than currently expected due to changes in economic assumptions or adverse economic developments;

●

operational risks including, but not limited to, changes in information technology, cybersecurity incidents, fraud, natural disasters, climate change, war, terrorism, civil unrest, and future pandemics;

●

lack of strategic growth opportunities or our failure to execute on available opportunities;

●

failure to realize the expected synergies, cost savings and other financial benefits from the acquisition of Guaranty Bancorp, Inc.;

●

our ability to effectively manage problem credits;

●

our ability to successfully develop new products and implement efficiency initiatives on time and with the results projected;

●

our ability to retain executive officers and key employees and their customer and community relationships;

●

regulatory, litigation, and reputational risks and the applicability of insurance coverage;

●

changes in the reliability of our vendors, internal control systems or information systems;

●

the impacts of tariffs, sanctions and other trade policies of the United States and its global trading counterparts;

●

changes in legislation or regulation and accounting principles, policies, and guidelines;

●

reductions in the market value or outflows of wealth management assets under management; and

●

changes in the assumptions used in making such forward-looking statements.

Other factors not identified above, including those described under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “Form 10-K”), our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website at http://www.sec.gov, may also cause actual results to differ materially from those described in our forward-looking statements. Most of these factors are difficult to anticipate and are generally beyond our control. Given these uncertainties, you are cautioned not to place undue reliance on such forward-looking statements, and you should consider these factors in connection with considering any forward-looking statements that may be made by us. We undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.

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PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)


(in thousands, except share data)		March 31, 2026			December 31, 2025
Assets
Cash and cash equivalents:
Cash and due from banks		$	35,595		$	44,947
Interest-earning deposits with other banks			46,620			35,890
Total cash and cash equivalents			82,215			80,837
Securities:
Available-for-sale debt securities			597,977			597,424
Less: Allowance for credit losses on available-for-sale debt securities			—			—
Net securities			597,977			597,424
Federal Home Loan Bank stock			9,567			11,308
Loans held for sale			11,534			5,283
Total loans held for investment			3,585,248			3,605,859
Less: Allowance for credit losses			(34,315)			(34,052)
Net loans held for investment			3,550,933			3,571,807
Premises and equipment, net			58,914			58,188
Other real estate owned			—			—
Goodwill			141,819			141,819
Other intangible assets			15,824			16,407
Cash surrender value of bank-owned life insurance			89,817			96,250
Deferred tax assets, net			30,298			29,926
Other assets			87,330			74,642
Total assets		$	4,676,228		$	4,683,891

Liabilities
Deposits:
Non-interest bearing demand		$	651,282		$	670,786
Interest-bearing demand			1,152,888			1,137,730
Savings			649,302			635,329
Money market			493,432			464,843
Time			920,811			912,594
Total deposits			3,867,715			3,821,282
Borrowings:
Senior			162,297			216,818
Subordinated			53,420			52,825
Total borrowings			215,717			269,643
Other liabilities			54,859			60,425
Total liabilities			4,138,291			4,151,350


Shareholders’ equity
Capital stock, par value $2.00; authorized 30,000,000 shares; issued 17,734,817 shares; outstanding 16,742,104 shares and 16,702,063 shares at March 31, 2026 and December 31, 2025, respectively		35,470		35,470
Additional paid-in capital		233,670		233,335
Retained earnings		322,505		314,372
Accumulated other comprehensive loss		(38,686)		(35,409)
Less: 992,713 and 1,032,754 shares of treasury stock, at cost, at March 31, 2026 and December 31, 2025, respectively		(15,022)		(15,227)
Total shareholders’ equity		537,937		532,541
Total liabilities and shareholders’ equity	$	4,676,228	$	4,683,891

The accompanying notes are an integral part of these consolidated financial statements.

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BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


		Three Months Ended
		March 31,
(in thousands, except earnings per share data)		2026			2025
Interest and dividend income
Loans		$	48,658		$	41,804
Securities and other			6,204			5,283
Federal Home Loan Bank stock			155			137
Interest-earning deposits with other banks			233			314
Total interest and dividend income			55,250			47,538
Interest expense
Deposits			14,889			15,512
Borrowings			3,489			3,019
Total interest expense			18,378			18,531
Net interest income			36,872			29,007
Provision for credit losses on available-for-sale debt securities			—			636
Provision for credit losses on loans			305			(57)
Net interest income after provision for credit losses			36,567			28,428

Non-interest income
Trust and investment management fee income			4,115			3,916
Customer service fees			4,102			3,525
(Loss) gain on available-for-sale debt securities, net			(1,008)			—
Mortgage banking income			682			456
Bank-owned life insurance income			1,987			614
Customer derivative income			329			212
Other income			207			195
Total non-interest income			10,414			8,918

Non-interest expense
Salaries and employee benefits			15,773			13,733
Occupancy and equipment			4,036			3,325
Depreciation			1,134			1,049
Loss (gain) on premises and equipment, net			134			90
Outside services			464			482
Professional services			349			592
Communication			248			166
Marketing			605			518
Amortization of intangible assets			582			233
FDIC assessment			577			456
Acquisition, conversion and other expenses			1,455			239
Provision (credit) for unfunded commitments			(226)			(74)
Other expenses			4,696			3,842
Total non-interest expense			29,827			24,651

Income before income taxes			17,154			12,695
Income tax expense			3,617			2,484
Net income		$	13,537		$	10,211

Earnings per share:
Basic		$	0.81		$	0.67
Diluted			0.81			0.66
Weighted average common shares outstanding:
Basic			16,728			15,304
Diluted			16,804			15,393

The accompanying notes are an integral part of these consolidated financial statements.

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BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


		Three Months Ended
		March 31,
(in thousands)		2026			2025
Net income		$	13,537		$	10,211
Other comprehensive (loss) income, before tax:
Changes in unrealized (loss) gain on available-for-sale debt securities			(3,999)			5,065
Changes in unrealized (loss) gain on hedging derivatives			(411)			(1,954)
Changes in unrealized gain (loss) on pension			—			—

Income taxes related to other comprehensive (income) loss:
Changes in unrealized loss (gain) on available-for-sale debt securities			1,017			(883)
Changes in unrealized loss (gain) on hedging derivatives			116			484
Changes in unrealized loss (gain) on pension			—			—
Total other comprehensive (loss) income			(3,277)			2,712
Total comprehensive income		$	10,260		$	12,923

The accompanying notes are an integral part of these consolidated financial statements.

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BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)


											Accumulated
		Common			Additional						other
		stock			paid-in			Retained			comprehensive			Treasury
(in thousands, except per share data)		amount			capital			earnings			loss			stock			Total
Balance at December 31, 2024		$	32,857		$	194,607		$	297,857		$	(51,536)		$	(15,357)		$	458,428

Net income			—			—			10,211			—			—			10,211
Other comprehensive income			—			—			—			2,712			—			2,712
Cash dividends declared ($0.30 per share)			—			—			(4,620)			—			—			(4,620)
Net issuance (37,439 shares) to employee stock plans, including related tax effects			—			(167)			—			—			240			73
Reclassification of shares			(88)			(171)			—			—			259			—
Recognition of stock based compensation			—			507			—			—			—			507
Balance at March 31, 2025		$	32,769		$	194,776		$	303,448		$	(48,824)		$	(14,858)		$	467,311

Balance at December 31, 2025		$	35,470		$	233,335		$	314,372		$	(35,409)		$	(15,227)		$	532,541

Net income			—			—			13,537			—			—			13,537
Other comprehensive loss			—			—			—			(3,277)			—			(3,277)
Cash dividends declared ($0.32 per share)			—			—			(5,404)			—			—			(5,404)
Net issuance (40,041 shares) to employee stock plans, including related tax effects			—			(490)			—			—			205			(285)
Recognition of stock based compensation			—			825			—			—			—			825
Balance at March 31, 2026		$	35,470		$	233,670		$	322,505		$	(38,686)		$	(15,022)		$	537,937

The accompanying notes are an integral part of these consolidated financial statements.

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BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


		Three Months Ended March 31,
(in thousands)		2026			2025
Cash flows from operating activities:
Net income		$	13,537		$	10,211
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses on loans			305			(57)
Provision for credit losses on available-for-sale debt securities			—			636
Net (accretion) amortization of securities			(411)			283
Change in unamortized net loan costs and premiums			(94)			62
Premises and equipment depreciation			1,134			1,049
Stock-based compensation expense			825			507
Accretion of purchase accounting entries, net			(780)			—
Amortization of other intangibles			582			233
Income from cash surrender value of bank-owned life insurance policies			(1,987)			(614)
Loss (gain) on available-for-sale debt securities			1,008			—
Decrease (increase) right-of-use lease assets			376			311
(Decrease) increase in lease liabilities			(348)			(313)
Loss on premises and equipment, net			134			90
Originations of loans held for sale			(23,254)			(10,095)
Proceeds from loans held for sale			16,494			9,815
Net change in other assets and liabilities			(2,500)			(2,798)
Net cash provided by operating activities			5,021			9,320

Cash flows from investing activities:
Proceeds from maturities, calls and prepayments of available-for-sale debt securities			19,316			28,336
Proceeds from sales of available-for-sale debt securities			—			—
Purchases of available-for-sale debt securities			(25,192)			(18,982)
Purchase of loans held for investment			(12,035)			—
Net change in loans			19,921			22,721
Purchase of Federal Home Loan Bank stock			(4,537)			(1,495)
Proceeds from redemption of Federal Home Loan Bank stock			6,278			3,037
Purchase of premises and equipment			(2,021)			(1,545)
Proceeds from sale of premises held for sale			—			—
Proceeds from death benefit of bank-owned life insurance policy			8,420			—
Net cash provided by (used in) investing activities			10,150			32,072

Cash flows from financing activities:
Net change in deposits			46,433			29,123
Net change in short-term borrowings			(54,537)			(49,996)
Repayments of long-term borrowings			—			(3)
Net issuance to employee stock plans			(285)			73
Cash dividends paid on common stock			(5,404)			(4,620)
Net cash (used in) provided by financing activities			(13,793)			(25,423)

Net change in cash and cash equivalents			1,378			15,969
Cash and cash equivalents at beginning of year			80,837			72,162
Cash and cash equivalents at end of period		$	82,215		$	88,131

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		Three Months Ended March 31,
(in thousands)		2026			2025
Supplemental cash flow information:
Interest paid		$	19,189		$	17,839
Income taxes paid, net			303			5,826
Transfer of non-cash assets			—			1,000
Transfer from loans held for sale to held for investment			1,100			—
Non-cash transfer between loans and other assets			14,436			—

The accompanying notes are an integral part of these consolidated financial statements.

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BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

The consolidated financial statements (unaudited) (the “financial statements”) of Bar Harbor Bankshares and its subsidiaries (the “Company,” “we,” “our,” “us” or similar terms) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company is a Maine financial institution holding company for the purposes of the laws of the State of Maine, and as such is subject to the jurisdiction of the Superintendent of the Maine Bureau of Financial Institutions. These financial statements include our accounts, the accounts of our wholly owned subsidiary Bar Harbor Bank & Trust (the “Bank”) and the Bank’s consolidated subsidiaries. The results of operations of companies or assets acquired are included only from the dates of acquisition. All material wholly owned and majority owned subsidiaries are consolidated unless GAAP requires otherwise.

In addition, these interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X, and accordingly, certain information and footnote disclosures normally included in financial statements prepared according to GAAP have been omitted.

The results for any interim period are not necessarily indicative of results for the full year. The consolidated financial statements should be read in conjunction with the audited financial statements and note disclosures in the Form 10-K previously filed with the SEC. In management's opinion, all adjustments necessary for a fair statement are reflected in the interim periods presented.

Reclassifications: Whenever necessary, amounts in the consolidated financial statements are reclassified to conform to current presentation. The reclassifications had no impact on net income, total shareholders’ equity or total assets and liabilities in the Company’s consolidated financial statements.

Segment Reporting: The Company’s reportable segment is determined by the Chief Executive Officer, who is designated as the chief operating decision maker (“CODM”), based upon information provided about the Company’s products and services offered, primarily banking operations. Operations of the Company are solely within community banking industry and include traditional community banking services, including lending activities, acceptance of demand, savings and time deposits, business services, investment management, trust and third-party brokerage services. These products and services have similar distribution methods, types of customers and regulatory responsibilities. An operating segment is defined as a component of a business for which separate financial information is available that is evaluated regularly by the chief operating decision-maker in deciding how to allocate resources and evaluate performance. Consolidated net income of the company is the primary performance metric utilized by the CODM. The CODM uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets. The CODM uses consolidated net income to benchmark the Company against its competitors. The benchmarking analysis coupled with monitoring of budget to actual results are used in assessment performance and in establishing compensation. The majority of the Company’s revenue is from the business of banking. While the Company has assigned certain management responsibilities by business lines, the Company’s CODM monitors and evaluates financial performance on a Company-wide basis. Accordingly, segment information is not presented in the Consolidated Financial Statements. Therefore, the Company has determined that its business is conducted in one reportable segment and represents the consolidated financial statements of the Company.

Recent Accounting Pronouncements

There were no recent accounting standards updates (“ASU”) issued that could have a material impact to the Company’s consolidated financial statements for the period ended March 31, 2026.

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NOTE 2. ACQUISITION

Guaranty Bancorp, Inc.

On July 31, 2025, the Company completed its acquisition of Guaranty Bancorp, Inc. (“Guaranty”), the holding company of Woodsville Guaranty Savings Bank (“Woodsville”). The acquisition was accounted for as a business combination under ASC Topic 805, and Guaranty’s results of operations have been included in the Company’s consolidated financial statements since the acquisition date.

As of March 31, 2026, the acquisition accounting remains provisional primarily with respect to the valuation of loans, identifiable intangible assets, deposits, and certain assumed liabilities. The measurement period will not exceed one year from the acquisition date. No measurement-period adjustments were recognized during the three months ended March 31, 2026.

Acquisition and integration related costs were expensed as incurred and totaled $1.6 million for the three months ended March 31, 2026 and $239 thousand for the three months ended March 31, 2025, recorded in Acquisition, conversion and other expenses on the income statement.

The following provides the unaudited pro forma results of operations for the three months ended March 31, 2025, as if the acquisition had occurred on January 1, 2025. The pro forma results combine the historical results of Guaranty into our Condensed Consolidated Statements of Income, including the impact of certain acquisition accounting adjustments, which includes loan discount accretion, intangible assets amortization, and deposit premium amortization. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2025. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, provision for credit losses, expense efficiencies or asset dispositions. Recognized acquisition-related expenses and other adjustments related to the timing of expenses, are included in net income. For the three months ended March 31, 2025 total revenue would have been $45.5 million and net income would have been $3.6 million.

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NOTE 3. SECURITIES AVAILABLE FOR SALE

The following is a summary of available-for-sale debt securities (“AFS”):


					Gross			Gross
					Unrealized			Unrealized
(in thousands)		Amortized Cost			Gains			Losses			Fair Value
March 31, 2026
Debt securities:
Obligations of US Government-sponsored enterprises		$	1,033		$	—		$	(23)		$	1,010
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			271,505			2,099			(22,865)			250,739
US Government agency			166,457			164			(10,926)			155,695
Private label			11,536			—			(784)			10,752
Obligations of states and political subdivisions thereof			119,937			2			(17,998)			101,941
Corporate bonds			79,876			304			(2,340)			77,840
Total available-for-sale debt securities		$	650,344		$	2,569		$	(54,936)		$	597,977


					Gross			Gross
					Unrealized			Unrealized
(in thousands)		Amortized Cost			Gains			Losses			Fair Value
December 31, 2025
Debt securities:
Obligations of US Government-sponsored enterprises		$	1,113		$	1		$	(12)		$	1,102
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			268,976			2,734			(22,168)			249,542
US Government agency			163,369			347			(9,816)			153,900
Private label			11,793			—			(794)			10,999
Obligations of states and political subdivisions thereof			120,447			4			(15,912)			104,539
Corporate bonds			79,255			233			(2,146)			77,342
Total available-for-sale debt securities		$	644,953		$	3,319		$	(50,848)		$	597,424

Included in mortgage-backed securities and collateralized mortgage obligations are securities backed by residential and commercial loans.

Credit Quality Information

We monitor the credit quality of available-for-sale debt securities through credit ratings from various rating agencies and substantial price changes. In an effort to make informed decisions, we utilize credit ratings that express opinions about the credit quality of a security. Securities are triggered for further review in the quarter if the security has significant fluctuations in ratings, significant pricing changes, or drops below investment-grade. For securities without credit ratings, we utilize other financial information indicating the financial health of the underlying municipality, agency, or organization associated with the underlying security.

The Company has one previously identified nonaccrual corporate bond with a carrying value of $1.3 million as of March 31, 2026 and $2.2 million as of December 31, 2025. During the period, due to continued credit deterioration the Company did an additional write-down of $896 thousand, which is included in the loss on available-for-sale debt securities in the consolidated statements of income.

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The table below presents a rollforward by major security type for the quarters ended March 31, 2026 and 2025 of the allowance for credit losses on available-for-sale debt securities held at period end:


		Three Months Ended March 31,				Three Months Ended March 31,
		2026				2025
(in thousands)		Corporate Bonds		Total		Corporate Bonds		Total
Beginning Balance	$	—	$	—	$	568	$	568
Provision for credit losses on available-for-sale debt securities		—		—		636		636
Charge-offs		—		—		—		—
Ending Balance	$	—	$	—	$	1,204	$	1,204

The amortized cost and estimated fair value of available-for-sale debt securities segregated by contractual maturity at March 31, 2026 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities and collateralized mortgage obligations are shown in total, as their maturities are highly variable.


		Available for sale
(in thousands)		Amortized Cost			Fair Value
Within 1 year		$	16,074		$	15,975
Over 1 year to 5 years			28,152			27,314
Over 5 years to 10 years			41,168			39,598
Over 10 years			115,452			97,904
Total bonds and obligations			200,846			180,791
Mortgage-backed securities and collateralized mortgage obligations			449,498			417,186
Total available-for-sale debt securities		$	650,344		$	597,977

The proceeds from sales, calls and maturities of available-for-sale debt securities, gross realized gains and losses for the three months ended March 31, 2026 and 2025 are as follows:


		Three Months Ended
		March 31,
(in thousands)		2026			2025
Proceeds from sales		$	—		$	—
Proceeds from calls/paydowns			19,316			28,336
Proceeds from maturities			—			—
Gross realized gains			—			—
Gross realized losses			—			—
Gross impairment losses			(896)			—

Accrued interest receivable on available-for-sale debt securities totaled $3.5 million at March 31, 2026 and $3.2 million at December 31, 2025, which is reported in other assets on the consolidated balance sheets.

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The following tables summarize available-for-sale debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded at March 31, 2026 and December 31, 2025, aggregated by major security type and length of time in continuous unrealized loss position:


		Less Than Twelve Months						Over Twelve Months						Total
		Gross						Gross						Gross
		Unrealized			Fair			Unrealized			Fair			Unrealized			Fair
(in thousands)		Losses			Value			Losses			Value			Losses			Value
March 31, 2026
Debt securities:
Obligations of US Government-sponsored enterprises		$	10		$	672		$	13		$	338		$	23		$	1,010
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			109			16,824			22,756			145,417			22,865			162,241
US Government agency			850			49,579			10,076			88,163			10,926			137,742
Private label			2			1,998			782			8,740			784			10,738
Obligations of states and political subdivisions thereof			147			6,387			17,851			91,052			17,998			97,439
Corporate bonds			532			13,959			1,808			41,192			2,340			55,151
Total available-for-sale debt securities		$	1,650		$	89,419		$	53,286		$	374,902		$	54,936		$	464,321


	Less Than Twelve Months						Over Twelve Months						Total
	Gross						Gross						Gross
	Unrealized			Fair			Unrealized			Fair			Unrealized			Fair
(in thousands)	Losses			Value			Losses			Value			Losses			Value
December 31, 2025
Debt securities:
Obligations of US Government-sponsored enterprises	$	—		$	—		$	12		$	413		$	12		$	413
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises		7			1,241			22,161			150,629			22,168			151,870
US Government agency		970			39,343			8,846			72,849			9,816			112,192
Private label		1			2,000			793			8,984			794			10,984
Obligations of states and political subdivisions thereof		—			—			15,912			97,856			15,912			97,856
Corporate bonds		82			6,911			2,064			53,936			2,146			60,847
Total available-for-sale debt securities	$	1,060		$	49,495		$	49,788		$	384,667		$	50,848		$	434,162

The following summarizes, by investment security type, the impact of performing securities in an unrealized loss position at March 31, 2026:

Obligations of US Government-sponsored enterprises

6 out of the total 6 securities in our portfolio of AFS obligations of US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 2.24% of the amortized cost of securities in unrealized loss positions. The US Small Business Administration guarantees the contractual cash flows of all of our obligations of US Government-sponsored enterprises. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

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US Government-sponsored enterprises

398 out of the total 509 securities in our portfolio of AFS US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 12.35% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association and Federal Home Loan Mortgage Corporation guarantee the contractual cash flows of all of our US Government-sponsored enterprises. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

US Government agency

136 out of the total 170 securities in our portfolio of AFS US Government agency securities were in unrealized loss positions. Aggregate unrealized losses represented 7.35% of the amortized cost of securities in unrealized loss positions. The Government National Mortgage Association guarantees the contractual cash flows of all of our US Government agency securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

Private label

14 of the total 15 securities in our portfolio of AFS private label mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 6.80% of the amortized cost of securities in unrealized loss positions. We expect to receive all of the future contractual cash flows related to the amortized cost on these securities. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

Obligations of states and political subdivisions thereof

54 of the total 64 securities in our portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 15.59% of the amortized cost of securities in unrealized loss positions. We continually monitor the municipal bond sector of the market carefully and periodically evaluate the appropriate level of exposure to the market. At this time, we believe (i) the bonds in this portfolio carry minimal risk of default and (ii) we are appropriately compensated for the risk. There were no material underlying credit downgrades during the quarter. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

Corporate bonds

20 out of the total 33 securities in our portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 4.07% of the amortized cost of bonds in unrealized loss positions. We review the financial strength of all of these bonds, and we have concluded that the amortized cost remains supported by the expected future cash flows of these securities. The most recent review includes all bond issuers and their current credit ratings, financial performance and capitalization. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All but the one corporate bond discussed above are performing.

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We expect to recover the amortized cost basis on all securities in our AFS portfolio. Furthermore, we do not intend to sell nor do we anticipate that we will be required to sell any securities in an unrealized loss position as of March 31, 2026, prior to this recovery.

A summary of securities pledged as collateral for certain deposits and borrowing arrangements for the months ended March 31, 2026 and December 31, 2025 is as follows:


		March 31, 2026						December 31, 2025
		Carrying			Estimated			Carrying			Estimated
(in thousands)		Value			Fair Value			Value			Fair Value
Securities pledged for deposits		$	15,782		$	14,020		$	16,204		$	14,475
Securities pledged for repurchase agreements			14,635			12,666			15,110			13,207
Securities pledged for borrowings ⁽¹⁾			20,592			20,235			14,831			14,515
Total securities pledged		$	51,009		$	46,921		$	46,145		$	42,197

(1)

The Bank pledged securities as collateral for certain borrowing arrangements with the Federal Home Loan Bank of Boston and the Federal Reserve Bank of Boston (the “Reserve Bank”).

NOTE 4. LOANS AND ALLOWANCE FOR CREDIT LOSSES

We evaluate risk characteristics of loans based on regulatory call report code with segmentation based on the underlying collateral for certain loan types. The following is a summary of total loans based on regulatory call report code segmentation for certain loan types:


		March 31,			December 31,
(in thousands)		2026			2025
Commercial construction		$	219,802		$	213,779
Commercial real estate owner occupied			360,331			385,843
Commercial real estate non-owner occupied			1,431,667			1,450,597
Municipal and other			37,713			43,106
Commercial and industrial			345,800			315,370
Residential real estate			1,061,921			1,068,413
Home equity			114,267			114,484
Consumer other			13,747			14,267
Total loans			3,585,248			3,605,859
Allowance for credit losses			34,315			34,052
Net loans		$	3,550,933		$	3,571,807

Total unamortized net costs and premiums included in loan totals were as follows:


		March 31,			December 31,
(in thousands)		2026			2025
Net unamortized loan origination costs		$	1,835		$	1,929
Net unamortized fair value discount on acquired loans			(35,796)			(36,739)
Total		$	(33,961)		$	(34,810)

We exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this footnote. As of March 31, 2026 and December 31, 2025, accrued interest receivable for loans totaled $13.1 million and $11.5 million, respectively, and is included in the “other assets” line item on the consolidated balance sheets.

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Characteristics of each loan portfolio segment, including acquired loans, are as follows:

Commercial construction - Loans in this segment primarily include raw land, land development and construction of commercial and multifamily residential properties. Collateral values are determined based upon appraisals and evaluations of the completed structure in accordance with established policy guidelines. Maximum loan-to-value ratios at origination are governed by established policy guidelines that are more restrictive than on stabilized commercial real estate transactions. Construction loans are primarily paid by the cash flow generated from the completed structure, such as operating leases, rents, or other operating cash flows from the borrower.

Commercial real estate owner occupied and non-owner occupied - Loans in these segments are primarily owner-occupied or income-producing properties. Loans to Real Estate Investment Trusts and unsecured loans to developers that closely correlate to the inherent risk in commercial real estate markets are also included. Commercial real estate loans are typically written with amortizing payment structures. Collateral values are determined based upon appraisals and evaluations in accordance with established policy guidelines. Maximum loan-to-value ratios at origination are governed by established policy and regulatory guidelines. Commercial real estate loans are primarily paid by the cash flow generated from the real property, such as operating leases, rents, or other operating cash flows from the borrower.

Municipal and other - Loans in this segment primarily include loans to various state and municipal government entities. Loans made to these borrowers may provide us with tax-exempt income. While governed and underwritten similar to commercial loans they do have unique requirements based on established polices. Almost all state and municipal loans are considered a general obligation of the issuing entity. Given the size of many municipal borrowers, borrowings are normally not rated by major rating agencies. Municipal loans are primarily repaid by taxes collected by the municipality.

Commercial and industrial loans - Loans consist of revolving and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment in this segment. Generally loans are secured by assets of the business such as accounts receivable, inventory, marketable securities, other liquid collateral, equipment and other business assets. Some loans in this category may be unsecured or guaranteed by government agencies such as the U.S. Small Business Administration. Loans are primarily paid by the operating cash flows of the borrower.

Residential real estate - All loans in this segment are collateralized by one-to-four family homes. Residential real estate loans held in the loan portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to various underwriting factors. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan-to-value ratios within established policy guidelines. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels.

Home equity - All loans and lines of credit are made to qualified individuals and are secured by senior or junior mortgage liens on owner-occupied one- to four-family homes, condominiums, or vacation homes. The home equity loan has a fixed rate and is billed as equal payments comprised of principal and interest. The home equity line of credit has a variable rate and is billed as interest-only payments during the draw period. At the end of the draw period, the home equity line of credit is billed as a percentage of the principal balance plus all accrued interest. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan-to-value ratios within established policy guidelines. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels.

Consumer other - Loans in this segment include personal lines of credit and amortizing loans made to qualified individuals for various purposes such as auto loans, recreational equipment, overdraft protection or other consumer loans. Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines, as applicable. Consumer loans may be secured or unsecured. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels.

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Allowance for Credit Losses

The Allowance for Credit Losses (“ACL”) is comprised of the allowance for loan losses and the allowance for unfunded commitments which is accounted for as a separate liability in other liabilities on our consolidated balance sheets. The level of the ACL represents management’s estimate of expected credit losses over the expected life of the loans at the consolidated balance sheet date.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged off against the allowance when they are deemed uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The allowance is comprised of reserves measured on a collective (pool) basis based on a lifetime loss-rate model when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated on an individual basis.

The estimate of expected credit losses on collectively evaluated loans is based on relevant information about current conditions, past events, and reasonable and supportable forward-looking forecasts regarding collectability of the reported amounts. Management employs a process and methodology to estimate the allowance for credit losses on collectively evaluated loans that evaluates both quantitative and qualitative components. The methodology for evaluating the quantitative component involves pooling loans into portfolio segments for loans that share similar risk characteristics.

For all loan segments measured on a collective basis, the Company utilizes a discounted cash flow (“DCF”) methodology to estimate credit losses over the expected life of the loan. The DCF methodology applies the probability of default (“PD”) and the loss given default (“LGD”) assumptions over the remaining contractual life of the loan which is adjusted for prepayment speeds, curtailment rate and time to recovery assumptions to estimate a reserve for each loan. For all loan segments, the quantitative loss rates are supplemented by qualitative factors reflecting management’s view of how losses may vary from those represented by quantitative loss rates. Qualitative factors are applied to each portfolio segment to reflect management’s estimate of expected changes in current conditions at the balance sheet date relative to historical performance.

The Company uses regression models to develop the PD and LGD assumptions, which are derived primarily from segment-specific selected peers. The loss rates are adjusted by an economic forecast over the reasonable and supportable forecast period after which time they revert back to the historical mean. Key economic indicators used in the model include unemployment rates, commercial real estate values, and housing prices. Management currently applies a two-quarter reasonable and supportable forecast period, followed by a six-quarter straight-line reversion to historical mean for each economic indicator. The combination of adjustments for credit expectations (PD and LGD) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level. Specific instrument effective yields are calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level Net Present Value (“NPV”). An allowance is established for the difference between the instrument’s NPV and amortized cost basis. The allowance is also adjusted for current conditions through the use qualitative factors. The qualitative factors consider both relevant internal and external information in their application.

The activity in the ACL for the periods ended are as follows:


	At or for the Three Months Ended March 31, 2026
	Balance at
	Beginning of						Provision/		Balance at
(in thousands)	Period		Charge Offs		Recoveries		(Credit)		End of Period
Commercial construction	$	4,371	$	—	$	—	$	(43)	$	4,328
Commercial real estate owner occupied		4,045		—		—		(418)		3,627
Commercial real estate non-owner occupied		12,837		—		—		972		13,809
Tax exempt		119		—		—		(8)		111
Commercial and industrial		5,378		—		36		135		5,549
Residential real estate		6,350		(3)		11		(386)		5,972
Home equity		814		(9)		2		(30)		777
Consumer other		138		(85)		6		83		142
Total	$	34,052	$	(97)	$	55	$	305	$	34,315

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	At or for the Three Months Ended March 31, 2025
	Balance at
	Beginning of						Provision/		Balance at
(in thousands)	Period		Charge Offs		Recoveries		(Credit)		End of Period
Commercial construction	$	2,096	$	—	$	—	$	(31)	$	2,065
Commercial real estate owner occupied		2,794		—		—		36		2,830
Commercial real estate non-owner occupied		11,104		—		—		(181)		10,923
Municipal and other		128		—		—		(16)		112
Commercial and industrial		5,064		(39)		2		387		5,414
Residential real estate		6,732		—		4		(289)		6,447
Home equity		741		—		5		(2)		744
Consumer other		85		(45)		—		39		79
Total	$	28,744	$	(84)	$	11	$	(57)	$	28,614

Unfunded Commitments

The ACL on unfunded commitments is recognized as a liability (other liabilities on the consolidated balance sheets), with adjustments to the reserve recognized in other non-interest expense in the consolidated statements of income. Unfunded commitments to extend credit include unused portions of lines of credit and standby and commercial letters of credit. The process used to determine the allowance for these exposures is consistent with the process for determining the allowance for loans, as adjusted for estimated funding probabilities or loan equivalency factors. A charge (credit) to provision for credit losses on the consolidated statements of income is made to account for the change in the allowance on off-balance sheet exposures between reporting periods.

The activity in the ACL on unfunded commitments for the periods ended was as follows:


	Three Months Ended March 31,
(in thousands)	2026			2025
Beginning Balance	$	3,845		$	3,049
Provision for credit losses		(226)			(74)
Ending Balance	$	3,619		$	2,975

Loan Origination/Risk Management: We have certain lending policies and procedures in place designed to maximize loan income within an acceptable level of risk. Our Board of Directors reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the Board of Directors with frequent reports related to loan production, loan quality, and concentration of credit, loan delinquencies, non-performing loans and potential problem loans. We seek to diversify the loan portfolio as a means of managing risk associated with fluctuations in economic conditions.

Credit Quality Indicators: In monitoring the credit quality of the portfolio, management applies a credit quality indicator and uses an internal risk rating system to categorize commercial loans. These credit quality indicators range from one through nine, with a higher number correlating to increasing risk of loss. Consistent with regulatory guidelines, the Company provides for the classification of loans which are considered to be of lesser quality as special mention, substandard, doubtful, or loss (i.e. risk-rated 6, 7, 8 and 9, respectively). Residential, home equity and consumer loans are classified as performing or non-performing based on payment performance.

The following are the definitions of our credit quality indicators:

Pass: Loans we consider in the commercial portfolio segments that are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan agreement. Management believes there is a low risk of loss related to these loans considered pass-rated.

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Special Mention: Loans considered having some potential weaknesses, but are deemed to not carry levels of risk inherent in one of the subsequent categories, are designated as special mention. A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. This might include loans which may require a higher level of supervision or internal reporting because of: (i) declining industry trends; (ii) increasing reliance on secondary sources of repayment; (iii) the poor condition of or lack of control over collateral; or (iv) failure to obtain proper documentation or any other deviations from prudent lending practices. Economic or market conditions which may, in the future, affect the obligor may warrant special mention of the asset. Loans for which an adverse trend in the borrower's operations or an imbalanced position in the balance sheet which has not reached a point where the liquidation is jeopardized may be included in this classification. Special mention loans are not adversely classified and do not expose us to sufficient risks to warrant classification.

Substandard: Loans we consider as substandard are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard loans have a well-defined weakness that jeopardizes liquidation of the debt. Substandard loans include those loans where there is the distinct possibility of some loss of principal, if the deficiencies are not corrected.

Doubtful: Loans we consider as doubtful have all of the weaknesses inherent in those loans that are classified as substandard. These loans have the added characteristic of a well-defined weakness which is inadequately protected by the current sound worth and paying capacity of borrower or of the collateral pledged, if any, and calls into question the collectability of the full balance of the loan. The possibility of loss is high but because of certain important and reasonably specific pending factors, which may work to the advantage and strengthening of the loan, its classification as loss is deferred until its more exact status is determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans. The entire amount of the loan might not be classified as doubtful when collection of a specific portion appears highly probable. Loans are generally not classified doubtful for an extended period of time (i.e., over a year).

Loss: Loans we consider as losses are those considered uncollectible and of such little value that their continuance as an asset is not warranted and the uncollectible amounts are charged-off. This classification does not mean the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this worthless asset even though partial recovery may be effected in the future. Losses are taken in the period in which they are determined to be uncollectible.

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The following table presents our loans by year of origination, loan segmentation and risk indicator as of March 31, 2026:



(in thousands)		2026			2025			2024			2023			2022			Prior			Total
Commercial construction
Risk rating:
Pass		$	803		$	80,856		$	61,622		$	47,255		$	22,429		$	6,808		$	219,773
Special mention			—			—			—			—			—			—			—
Substandard			—			—			—			—			—			29			29
Total		$	803		$	80,856		$	61,622		$	47,255		$	22,429		$	6,837		$	219,802
Current period gross write-offs			—			—			—			—			—			—			—

Commercial real estate owner occupied
Risk rating:
Pass		$	14,828		$	43,641		$	37,528		$	43,488		$	72,572		$	130,275		$	342,332
Special mention			—			—			—			871			590			14,474			15,935
Substandard			—			—			—			—			—			2,004			2,004
Doubtful			—			—			—			—			—			60			60
Total		$	14,828		$	43,641		$	37,528		$	44,359		$	73,162		$	146,813		$	360,331
Current period gross write-offs			—			—			—			—			—			—			—

Commercial real estate non-owner occupied
Risk rating:
Pass		$	48,344		$	237,462		$	78,958		$	55,769		$	327,565		$	542,171		$	1,290,269
Special mention			—			—			25,356			—			32,489			48,032			105,877
Substandard			—			—			—			7,567			—			16,502			24,069
Doubtful			—			—			—			—			—			11,452			11,452
Total		$	48,344		$	237,462		$	104,314		$	63,336		$	360,054		$	618,157		$	1,431,667
Current period gross write-offs			—			—			—			—			—			—			—

Municipal and other
Risk rating:
Pass		$	475		$	3,258		$	2,850		$	4,630		$	6,030		$	20,470		$	37,713
Special mention			—			—			—			—			—			—			—
Substandard			—			—			—			—			—			—			—
Total		$	475		$	3,258		$	2,850		$	4,630		$	6,030		$	20,470		$	37,713
Current period gross write-offs			—			—			—			—			—			—			—

Commercial and industrial
Risk rating:
Pass		$	23,599		$	43,538		$	72,994		$	53,334		$	40,367		$	94,304		$	328,136
Special mention			104			9,984			95			1,421			850			1,187			13,641
Substandard			—			69			585			63			390			2,671			3,778
Doubtful			—			—			—			—			85			160			245
Total		$	23,703		$	53,591		$	73,674		$	54,818		$	41,692		$	98,322		$	345,800
Current period gross write-offs			—			—			—			—			—			—			—


Residential real estate
Performing	$	18,744	$	47,382	$	42,554	$	72,699	$	206,930	$	665,214	$	1,053,523
Nonperforming		—		—		—		1,242		1,999		5,157		8,398
Total	$	18,744	$	47,382	$	42,554	$	73,941	$	208,929	$	670,371	$	1,061,921
Current period gross write-offs		—		—		—		—		—		3		3

Home equity
Performing	$	2,768	$	22,376	$	21,750	$	14,905	$	11,837	$	39,550	$	113,186
Nonperforming		—		—		—		95		222		764		1,081
Total	$	2,768	$	22,376	$	21,750	$	15,000	$	12,059	$	40,314	$	114,267
Current period gross write-offs		—		—		—		—		—		9		9

Consumer other
Performing	$	2,312	$	5,070	$	2,218	$	2,425	$	642	$	983	$	13,650
Nonperforming		—		46		11		40		—		—		97
Total	$	2,312	$	5,116	$	2,229	$	2,465	$	642	$	983	$	13,747
Current period gross write-offs		—		6		—		7		1		71		85

Total Loans	$	111,977	$	493,682	$	346,521	$	305,804	$	724,997	$	1,602,267	$	3,585,248

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The following table presents our loans by year of origination, loan segmentation and risk indicator as of December 31, 2025:



(in thousands)		2025			2024			2023			2022			2021			Prior			Total
Commercial construction
Risk rating:
Pass		$	62,267		$	62,422		$	43,824		$	22,609		$	2,373		$	5,819		$	199,314
Special mention			—			14,434			—			—			—			—			14,434
Substandard			—			—			—			—			—			31			31
Total		$	62,267		$	76,856		$	43,824		$	22,609		$	2,373		$	5,850		$	213,779
Current period gross write-offs			—			—			—			—			—			—			—

Commercial real estate owner occupied
Risk rating:
Pass		$	60,013		$	37,785		$	47,601		$	74,993		$	31,512		$	115,774		$	367,678
Special mention			—			—			878			596			13,377			1,329			16,180
Substandard			—			—			—			—			—			1,895			1,895
Doubtful			—			—			—			—			—			90			90
Total		$	60,013		$	37,785		$	48,479		$	75,589		$	44,889		$	119,088		$	385,843
Current period gross write-offs			—			—			—			—			—			—			—

Commercial real estate non-owner occupied
Risk rating:
Pass		$	234,960		$	78,781		$	56,134		$	329,779		$	188,810		$	420,958		$	1,309,422
Special mention			—			25,392			—			32,650			21,930			25,313			105,285
Substandard			—			—			7,596			—			—			28,294			35,890
Doubtful			—			—			—			—			—			—			—
Total		$	234,960		$	104,173		$	63,730		$	362,429		$	210,740		$	474,565		$	1,450,597
Current period gross write-offs			—			—			—			—			—			—			—

Municipal and other
Risk rating:
Pass		$	7,824		$	2,852		$	4,629		$	6,030		$	918		$	20,853		$	43,106
Special mention			—			—			—			—			—			—			—
Substandard			—			—			—			—			—			—			—
Total		$	7,824		$	2,852		$	4,629		$	6,030		$	918		$	20,853		$	43,106
Current period gross write-offs			—			—			—			—			—			—			—

Commercial and industrial
Risk rating:
Pass		$	54,711		$	67,007		$	45,202		$	41,687		$	9,046		$	88,496		$	306,149
Special mention			127			104			1,366			1,766			431			1,108			4,902
Substandard			70			581			56			395			395			2,576			4,073
Doubtful			—			—			—			85			5			156			246
Total		$	54,908		$	67,692		$	46,624		$	43,933		$	9,877		$	92,336		$	315,370
Current period gross write-offs			—			86			—			—			25			626			737


Residential real estate
Performing	$	45,303	$	47,589	$	76,856	$	211,153	$	187,848	$	491,752	$	1,060,501
Nonperforming		—		—		1,279		1,289		1,229		4,115		7,912
Total	$	45,303	$	47,589	$	78,135	$	212,442	$	189,077	$	495,867	$	1,068,413
Current period gross write-offs		—		—		—		—		—		—		—

Home equity
Performing	$	20,279	$	22,933	$	15,121	$	12,304	$	6,672	$	35,992	$	113,301
Nonperforming		—		—		99		227		89		768		1,183
Total	$	20,279	$	22,933	$	15,220	$	12,531	$	6,761	$	36,760	$	114,484
Current period gross write-offs		—		—		—		—		—		—		—

Consumer other
Performing	$	6,764	$	2,538	$	2,848	$	971	$	328	$	742	$	14,191
Nonperforming		46		11		17		—		—		2		76
Total	$	6,810	$	2,549	$	2,865	$	971	$	328	$	744	$	14,267
Current period gross write-offs		—		26		27		16		4		211		284

Total Loans	$	492,364	$	362,429	$	303,506	$	736,534	$	464,963	$	1,246,063	$	3,605,859

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Past Dues

The following is a summary of past due loans for the periods ended:


	March 31, 2026
(in thousands)	30-59		60-89		90+		Total Past Due		Current		Total Loans
Commercial construction	$	150	$	—	$	—	$	150	$	219,652	$	219,802
Commercial real estate owner occupied		250		480		668		1,398		358,933		360,331
Commercial real estate non-owner occupied		—		—		116		116		1,431,551		1,431,667
Municipal and other		—		—		—		—		37,713		37,713
Commercial and industrial		431		311		724		1,466		344,334		345,800
Residential real estate		11,593		510		3,287		15,390		1,046,531		1,061,921
Home equity		546		65		290		901		113,366		114,267
Consumer other		188		16		51		255		13,492		13,747
Total	$	13,158	$	1,382	$	5,136	$	19,676	$	3,565,572	$	3,585,248


	December 31, 2025
(in thousands)	30-59		60-89		90+		Total Past Due		Current		Total Loans
Commercial construction	$	162	$	—	$	—	$	162	$	213,617	$	213,779
Commercial real estate owner occupied		641		—		723		1,364		384,479		385,843
Commercial real estate non-owner occupied		—		—		122		122		1,450,475		1,450,597
Municipal and other		—		—		—		—		43,106		43,106
Commercial and industrial		899		26		893		1,818		313,552		315,370
Residential real estate		9,162		1,190		4,640		14,992		1,053,421		1,068,413
Home equity		876		549		476		1,901		112,583		114,484
Consumer other		33		45		51		129		14,138		14,267
Total	$	11,773	$	1,810	$	6,905	$	20,488	$	3,585,371	$	3,605,859

Non-Accrual Loans

The following is a summary of non-accrual loans for the periods ended:


	March 31, 2026
			Nonaccrual With No		90+ Days Past
(in thousands)	Nonaccrual		Related Allowance		Due and Accruing
Commercial construction	$	29	$	—	$	—
Commercial real estate owner occupied		770		228		158
Commercial real estate non-owner occupied		11,627		—		—
Municipal and other		—		—		—
Commercial and industrial		1,139		141		—
Residential real estate		8,398		1,024		—
Home equity		1,081		1		—
Consumer other		97		4		—
Total	$	23,141	$	1,398	$	158

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	December 31, 2025
			Nonaccrual With No		90+ Days Past
(in thousands)	Nonaccrual		Related Allowance		Due and Accruing
Commercial construction	$	31	$	—	$	—
Commercial real estate owner occupied		829		237		—
Commercial real estate non-owner occupied		184		—		—
Municipal and other		—		—		—
Commercial and industrial		1,371		141		—
Residential real estate		7,912		1,044		—
Home equity		1,183		1		—
Consumer other		76		4		—
Total	$	11,586	$	1,427	$	—

Our policy is to reverse previously recorded interest income when a loan is placed on non-accrual, as such, the Company did not record any interest income on its non-accrual loans for the three months ended March 31, 2026 and 2025.

Collateral Dependent Loans

Loans that do not share risk characteristics are evaluated on an individual basis. For loans that are individually evaluated and collateral dependent, financial loans where we have determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and we expect repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date.

The following table presents the amortized cost basis of collateral-dependent loans by loan portfolio segment for the periods ended:


		March 31, 2026						December 31, 2025
(in thousands)		Real Estate			Other			Real Estate			Other
Commercial construction		$	—		$	—		$	—		$	—
Commercial real estate owner occupied			365			—			378			—
Commercial real estate non-owner occupied			13,419			—			1,985			—
Municipal and other			—			—			—			—
Commercial and industrial			—			2,078			—			2,410
Residential real estate			166			—			318			—
Home equity			—			—			119			—
Consumer other			—			—			—			—
Total		$	13,950		$	2,078		$	2,800		$	2,410

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Loan Modifications to Borrowers Experiencing Financial Difficulty

In January 2023, the Company adopted ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” which eliminated the accounting guidance for troubled debt restructurings while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty. This guidance was applied on a prospective basis. Upon adoption of this guidance, we are no longer required to establish a specific reserve for modifications to borrowers experiencing financial difficulty. Instead, these modifications are included in their respective category and a historical loss rate is applied to the current loan balance to arrive at the quantitative baseline portion of the ACL.

These modifications typically result from loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions.

The following table presents the amortized cost basis of loans that were both experiencing financial difficulty and modified during the three months ended March 31, 2026 and 2025, by class and by type of modification.


(in thousands)	Principal Forgiveness		Payment Delay		Term Extension		Interest Rate Reduction		Combination Interest Rate Reduction and Term Extension		% of Total Class of Loans
Three Months Ended March 31, 2026
Commercial construction	$	—	$	—	$	—	$	—	$	—	—	%
Commercial real estate owner occupied		—		157		—		—		—	0.04
Commercial real estate non-owner occupied		—		11,452		—		—		—	0.80
Municipal and other		—		—		—		—		—	—
Commercial and industrial		—		32		69		—		—	0.03
Residential real estate		—		—		—		—		—	—
Home equity		—		—		—		—		—	—
Consumer other		—		—		—		—		—	—
Total	$	—	$	11,641	$	69	$	—	$	—	0.33	%


(in thousands)	Principal Forgiveness		Payment Delay		Term Extension		Interest Rate Reduction		Combination Interest Rate Reduction and Term Extension		% of Total Class of Loans
Three Months Ended March 31, 2025
Commercial construction	$	—	$	—	$	—	$	—	$	—	—	%
Commercial real estate owner occupied		—		—		—		—		—	—
Commercial real estate non-owner occupied		—		—		—		—		—	—
Municipal and other		—		—		—		—		—	—
Commercial and industrial		—		—		283		—		—	0.09
Residential real estate		—		—		—		—		—	—
Home equity		—		—		—		—		—	—
Consumer other		—		—		—		—		—	—
Total	$	—	$	—	$	283	$	—	$	—	0.01	%

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The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2026 and 2025.


	Weighted-Average Months of Payment Delay		Weighted-Average Months of Term Extension		Weighted-Average Interest Rate Reduction
Three Months Ended March 31, 2026
Commercial construction		—		—	—	%
Commercial real estate owner occupied		6		—	—
Commercial real estate non-owner occupied		4		—	—
Municipal and other		—		—	—
Commercial and industrial		4		12	—
Residential real estate		—		—	—
Home equity		—		—	—
Consumer other		—		—	—


	Weighted-Average Months of Payment Delay		Weighted-Average Months of Term Extension		Weighted-Average Interest Rate Reduction
Three Months Ended March 31, 2025
Commercial construction		—		—	—	%
Commercial real estate owner occupied		—		—	—
Commercial real estate non-owner occupied		—		—	—
Municipal and other		—		—	—
Commercial and industrial		—		53	—
Residential real estate		—		—	—
Home equity		—		—	—
Consumer other		—		—	—

As of March 31, 2026 the Bank had no loans that were modified during the current period that defaulted within 12 months of the modification date.

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PCD Loans

PCD loans were recorded at their amortized cost, less an allowance for credit losses on the Acquisition Date. There is no provision for credit loss expense recognized on PCD loans because the initial allowance is established by grossing-up the amortized cost of the PCD loans. The remaining difference between the net amortized cost basis and the allowance for credit losses and the fair value allocated to the loans on the date of acquisition is recognized as a non-credit-related discount that will be accreted into interest income over the life of the loans.

The following tables presents the unpaid principal balance and carrying amount of PCD loans. The balances do not include an allowance for credit losses which was $749 thousand as of March 31, 2026 and $751 thousand as of December 31, 2025.


	March 31, 2026					December 31, 2025
(in thousands)	Unpaid Principal Balance		Carrying Value			Unpaid Principal Balance		Carrying Value
Commercial real estate owner occupied	$	1,081	$	1,012		$	1,103	$	1,032
Commercial real estate non-owner occupied		4,594		4,335			4,632		4,359
Commercial and industrial		2,083		2,051			2,139		2,104
Residential real estate		1,275		1,191			1,306		1,221
Home equity		505		488			506		479
Consumer other		40		38			40		39
Total	$	9,578	$	9,115		$	9,726	$	9,234

The following table presents a reconciliation of acquired Guaranty PCD loans between their purchase price and par value at the time of the acquisition:


(in thousands)
Fair value of PCD loans at acquisition		$	8,887
Non-credit related discount			713
Allowance for credit losses on PCD loans			1,622
Par value of PCD loans at acquisition		$	11,222

Foreclosure

There were $121 thousand of residential mortgage loans collateralized by real estate that are in the process of foreclosure as of March 31, 2026. Residential mortgage loans collateralized by real estate that were in the process of foreclosure as of December 31, 2025 totaled $171 thousand.

Mortgage Banking

Loans Held for Sale

Loans held for sale at March 31, 2026 had an unpaid principal balance of $11.4 million and $5.2 million as of December 31, 2025. The interest rate exposure on loans held for sale is mitigated through forward sale commitments with certain approved secondary market investors. Forward sale commitments had a notional amount of $6.4 million at March 31, 2026, and $5.2 million at December 31, 2025. Refer to Note 9 for further discussion of forward sale commitments.

Loans Sold

For the three months ended March 31, 2026 and 2025, we sold $16.2 million and $9.8 million, respectively, of residential mortgage loans on the secondary market, which resulted in a net gain on sale of loans (net of costs, including direct and indirect origination costs) of $260 thousand and $174 thousand, respectively.

We sell residential loans on the secondary market while primarily retaining the servicing of these loans. Servicing retained loans helps to maintain customer relationships and earn fees over the servicing period. Loans serviced for others are not included in the accompanying consolidated balance sheets. The risks inherent in servicing assets relate primarily to level of prepayments that result from shifts in interest rates. We obtain third-party valuations of our servicing assets portfolio quarterly, and the assumptions are reflected in Fair Value disclosures.

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NOTE 5. BORROWED FUNDS

Borrowed funds at March 31, 2026 and December 31, 2025 are summarized, as follows:


		March 31, 2026					December 31, 2025
					Weighted					Weighted
(dollars in thousands)		Carrying Value			Average Rate		Carrying Value			Average Rate
Short-term borrowings
Advances from the FHLB		$	77,200		3.92	%	$	130,000		3.90	%
Other borrowings			3,078		0.16			4,802		0.17
Total short-term borrowings			80,278		3.76			134,802		3.77
Long-term borrowings
Advances from the FHLB			82,019		2.83			82,016		2.81
Subordinated borrowings			53,420		11.09			52,825		11.31
Total long-term borrowings			135,439		6.16			134,841		6.14
Total		$	215,717		5.20	%	$	269,643		4.93	%

Short-term debt includes FHLB advances with a remaining maturity of less than one year. We also maintain a $1.0 million secured line of credit with the FHLB that bears a daily adjustable rate calculated by the FHLB. There was no outstanding balance on the FHLB line of credit for the periods ended March 31, 2026 and December 31, 2025. There are no variable rate short-term FHLB borrowings.

We have the capacity to borrow funds on a secured basis utilizing the Borrower in Custody program, and the Discount Window at the Reserve Bank. At March 31, 2026, our available secured line of credit at the Reserve Bank was $94.5 million versus $94.0 million at December 31, 2025. We have pledged certain loans and securities to the Reserve Bank to support this arrangement.

We maintain an unused unsecured federal funds line of credit with a correspondent bank that has an aggregate overnight borrowing capacity of $40.0 million as of March 31, 2026 and December 31, 2025. There was no outstanding balance on the line of credit as of March 31, 2026 and December 31, 2025.

Long-term FHLB advances consist of advances with a remaining maturity of more than one year. The advances outstanding at March 31, 2026 include callable advances of $80.0 million, non-callable advances of $1.0 million and amortizing advances of $1.0 million. There were $80.0 million of callable advances outstanding, non-callable advances of $1.0 million and $1.0 million of amortizing advances at December 31, 2025. All FHLB borrowings, including the line of credit, are secured by a blanket security agreement on certain qualified collateral, principally residential first mortgage loans and certain securities. There are no variable rate long-term FHLB borrowings.

A summary of maturities of FHLB advances as of March 31, 2026 is, as follows:


					Weighted Average
(in thousands, except rates)		Amount			Rate
2026		$	77,200		3.92	%
2027			56,014		2.91
2028			25,000		2.31
2029			—		—
2030			—		—
Thereafter			1,005		11.32
Total FHLB advances		$	159,219		3.36	%

Each advance is payable at its maturity date, with a prepayment penalty for fixed rate advances. The advances were collateralized by $867.7 million and $740.7 million of loans under a blanket lien arrangement as of March 31, 2026 and December 31, 2025, respectively. Based on this collateral and the Company’s holdings of FHLB stock, the Company is eligible to borrow up to a total of $451.5 million at March 31, 2026.

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At months ended March 31, 2026 and December 31, 2025, subordinated borrowings was as follows:


	March 31, 2026				December 31, 2025
(in thousands)		Principal		Unamortized Discount and Debt Issuance Costs		Principal		Unamortized Discount and Debt Issuance Costs
NHTB Capital Trust II Variable Debentures	$	10,310	$	—	$	10,310	$	—
NHTB Capital Trust III Fixed Debentures		10,310		—		10,310		—
Subordinated Notes due 2029		20,000		—		20,000		—
Subordinated Notes due 2031		13,000		(200)		13,000		(795)
Total	$	53,620	$	(200)	$	53,620	$	(795)

We executed a Subordinated Note Purchase Agreement with an aggregate of $40.0 million of subordinated notes (the “2029 Notes”) to accredited investors on November 26, 2019. The 2029 Notes have a maturity date of December 1, 2029 and bear a fixed interest rate of 4.63% through December 1, 2024 payable semi-annually in arrears. From December 1, 2024 and thereafter the interest rate shall be reset quarterly to an interest rate per annum equal to the then current three-month Secured Overnight Financing Rate (“SOFR”) plus 3.27%. We have the option beginning with the interest payment date of December 1, 2024, and on any scheduled payment date thereafter, to redeem the 2029 Notes, in whole or in part upon prior approval of the Board of Governors of the Federal Reserve System (“Federal Reserve”). During the fourth quarter of 2024 we paid down $20.0 million of the outstanding subordinated notes. As of March 31, 2026 we have an outstanding subordinated note balance of $20.0 million.

We also have $20.6 million in floating Junior Subordinated Deferrable Interest Debentures (“Debentures”) issued by NHTB Capital Trust II (“Trust II”) and NHTB Capital Trust III (“Trust III”), which are both Connecticut statutory trusts. The Debentures issued on March 30, 2004 carry a variable interest rate of three-month SOFR plus 2.79%, and mature in 2034. The Debentures are callable by the Company at the time when any interest payment is made. Trust II and Trust III are considered variable interest entities for which we are not the primary beneficiary. Accordingly, Trust II and Trust III are not consolidated into our financial statements.

In connection with the acquisition, the Company assumed $13.0 million in fixed-to-floating rate subordinated notes, that had a fair value of $11.2 million (the “2031 Notes”) issued by Guaranty. The 2031 Notes were originally issued on March 23, 2021 with a maturity date of April 1, 2031. The 2031 Notes bear a fixed-to-floating interest rate of 4.875% through April 1, 2026, payable quarterly in arrears. Beginning April 1, 2026 and thereafter, the interest rate shall be reset quarterly to an interest rate per annum equal to the then current three-month SOFR plus 4.82%. We have the option beginning with the interest payment date of April 1, 2026, and on any scheduled payment date thereafter, to redeem the 2031 Notes, in whole or in part upon prior approval of the Federal Reserve.

Repurchase Agreements

We can raise additional liquidity by entering into repurchase agreements at our discretion. In a security repurchase agreement transaction, we will generally sell a security, agreeing to repurchase either the same or substantially identical security on a specified later date, at a greater price than the original sales price. The difference between the sale price and purchase price is the cost of the proceeds, which is recorded as interest expense on the consolidated statements of income. The securities underlying the agreements are delivered to counterparties as security for the repurchase obligations. Since the securities are treated as collateral and the agreement does not qualify for a full transfer of effective control, the transactions do not meet the criteria to be classified as sales, and are therefore considered secured borrowing transactions for accounting purposes. Payments on such borrowings are interest only until the scheduled repurchase date. In a repurchase agreement, we are subject to the risk that the purchaser may default at maturity and not return the securities underlying the agreements. In order to minimize this potential risk, we either deal with established firms when entering into these transactions or with customers whose agreements stipulate that the securities underlying the agreement are not delivered to the customer and instead are held in segregated safekeeping accounts by our safekeeping agents.

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(in thousands)	March 31, 2026		December 31, 2025
Customer Repurchase Agreements
US Government-sponsored enterprises	$	3,078	$	4,802
Total	$	3,078	$	4,802

NOTE 6. DEPOSITS

A summary of time deposits is, as follows:


(in thousands)	March 31, 2026		December 31, 2025
Time less than $100	$	404,613	$	384,042
Time $100 through $250		290,547		298,447
Time $250 or more		225,651		230,105
Total	$	920,811	$	912,594

At March 31, 2026 and December 31, 2025, the scheduled maturities by year for time deposits are, as follows:


(in thousands)	March 31, 2026		December 31, 2025
Within 1 year	$	890,537	$	876,348
Over 1 year to 2 years		19,899		25,438
Over 2 years to 3 years		4,797		4,933
Over 3 years to 4 years		3,066		2,845
Over 4 years to 5 years		2,493		3,001
Over 5 years		19		29
Total	$	920,811	$	912,594

Included in time deposits are brokered deposits of $169.6 million and $151.6 million at March 31, 2026 and December 31, 2025, respectively. Also included in time deposits are reciprocal deposits of $80.6 million and $88.7 million at March 31, 2026 and December 31, 2025, respectively.

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NOTE 7. CAPITAL RATIOS AND SHAREHOLDERS’ EQUITY

The Company and the Bank are subject to various regulatory capital requirements administered by the Federal Reserve and the FDIC. Failure to meet minimum capital requirements can result in mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s unaudited Consolidated Financial Statements.

Under the capital rules, risk-based capital ratios are calculated by dividing Tier 1, common equity Tier 1, and total risk-based capital, respectively, by risk-weighted assets. Assets and off-balance sheet credit equivalents are assigned to one of several risk-weight categories, based primarily on relative risk. The rules require banks and bank holding companies to maintain a minimum common equity Tier 1 capital ratio of 4.5%, a minimum Tier 1 capital ratio of 6.0% and a total capital ratio of 8.0%. In addition, a Tier 1 leverage ratio of 4.0% is required. Additionally, the capital rules require a bank holding company to maintain a capital conservation buffer of common equity Tier 1 capital in an amount above the minimum risk-based capital requirements equal to 2.5% of total risk weighted assets, or face restrictions on the ability to pay dividends, pay discretionary bonuses, and to engage in share repurchases.

Under the FDIC’s prompt corrective action rules, an insured state nonmember bank is considered “well capitalized” if its capital ratios meet or exceed the ratios as set forth in the following table and is not subject to any written agreement, order, capital directive, or prompt corrective action directive to meet and maintain a specific capital level for any capital measure. The Bank must meet well capitalized requirements under prompt corrective action provisions. Prompt corrective action provisions are not applicable to bank holding companies.

A bank holding company is considered “well capitalized” if the bank holding company (i) has a total risk-based capital ratio of at least 10.0%, (ii) has a Tier 1 risk-based capital ratio of at least 6.0%, and (iii) is not subject to any written agreement order, capital directive or prompt corrective action directive to meet and maintain a specific capital level for any capital measure.

At March 31, 2026, the capital levels of both the Company and the Bank exceeded all regulatory capital requirements, and their regulatory capital ratios were above the minimum levels required to be considered well capitalized for regulatory purposes. The actual and required capital ratios are, as follows:


		March 31, 2026
							Minimum Required for						Minimum Required to
		Actual					Capital Adequacy purposes						be Well Capitalized
(in thousands, except ratios)		Amount			Ratio		Amount			Ratio		Amount		Ratio
Company (consolidated)
Total capital to risk-weighted assets		$	501,784		13.43	%	$	298,841		8.00	%	$	N/A	N/A	%
Common equity Tier 1 capital to risk-weighted assets			418,980		11.22			168,099		4.50			N/A	N/A
Tier 1 capital to risk-weighted assets			439,600		11.77			224,131		6.00			N/A	N/A
Tier 1 capital to average assets (leverage ratio)			439,600		9.66			182,016		4.00			N/A	N/A

Bank
Total capital to risk-weighted assets		$	502,331		13.47	%	$	298,372		8.00	%	$	372,965	10.00	%
Common equity Tier 1 capital to risk-weighted assets			465,147		12.47			167,834		4.50			242,427	6.50
Tier 1 capital to risk-weighted assets			465,147		12.47			223,779		6.00			298,372	8.00
Tier 1 capital to average assets (leverage ratio)			465,147		10.23			181,853		4.00			227,316	5.00

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		December 31, 2025
							Minimum Required for						Minimum Required to
		Actual					Capital Adequacy purposes						be Well Capitalized
(in thousands, except ratios)		Amount			Ratio		Amount			Ratio		Amount		Ratio
Company (consolidated)
Total capital to risk-weighted assets		$	491,619		13.18	%	$	298,331		8.00	%	$	N/A	N/A	%
Common equity Tier 1 capital to risk-weighted assets			409,725		10.99			167,812		4.50			N/A	N/A
Tier 1 capital to risk-weighted assets			430,345		11.54			223,752		6.00			N/A	N/A
Tier 1 capital to average assets (leverage ratio)			430,345		9.45			182,147		4.00			N/A	N/A

Bank
Total capital to risk-weighted assets		$	486,568		13.08	%	$	297,675		8.00	%	$	372,093	10.00	%
Common equity Tier 1 capital to risk-weighted assets			450,294		12.10			167,443		4.50			241,861	6.50
Tier 1 capital to risk-weighted assets			450,294		12.10			223,257		6.00			297,676	8.00
Tier 1 capital to average assets (leverage ratio)			450,294		9.90			181,970		4.00			227,463	5.00

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Accumulated other comprehensive income (loss)

Components of accumulated other comprehensive income (loss) is, as follows:


(in thousands)		March 31, 2026			December 31, 2025
Accumulated other comprehensive loss, before tax:
Net unrealized loss on AFS securities, net of reclassifications		$	(45,704)		$	(41,705)
Net unrealized loss on hedging derivatives			(4,196)			(3,785)
Net unrealized loss on post-retirement plans			(1,288)			(1,288)

Income taxes related to items of accumulated other comprehensive loss:
Net unrealized loss on AFS securities, net of reclassifications			11,124			10,107
Net unrealized loss on hedging derivatives			1,020			904
Net unrealized loss on post-retirement plans			358			358
Accumulated other comprehensive loss		$	(38,686)		$	(35,409)

The following table presents the components of other comprehensive income (loss) for the three months ended March 31, 2026 and 2025:


(in thousands)		Before Tax			Tax Effect			Net of Tax
Three Months Ended March 31, 2026
Net unrealized gain (loss) on AFS securities, net of reclassifications:
Net unrealized gain (loss) arising during the period		$	(3,999)		$	1,017		$	(2,982)
Less: reclassification adjustment for gains (losses) realized in net income			—			—			—
Net unrealized gain (loss) on AFS securities			(3,999)			1,017			(2,982)

Net unrealized gain (loss) on hedging derivatives:
Net unrealized gain (loss) arising during the period			(411)			116			(295)
Less: reclassification adjustment for gains (losses) realized in net income			—			—			—
Net unrealized gain (loss) on cash flow hedging derivatives			(411)			116			(295)

Net unrealized gain (loss) on post-retirement plans:
Net unrealized gain (loss) arising during the period			—			—			—
Less: reclassification adjustment for gains (losses) realized in net income			—			—			—
Net unrealized gain (loss) on post-retirement plans			—			—			—
Other comprehensive income (loss)		$	(4,410)		$	1,133		$	(3,277)

Three Months Ended March 31, 2025
Net unrealized gain (loss) on AFS securities, net of reclassifications:
Net unrealized gain (loss) arising during the period		$	3,861		$	(732)		$	3,129
Less: reclassification adjustment for gains (losses) realized in net income			(1,204)			151			(1,053)
Net unrealized gain (loss) on AFS securities			5,065			(883)			4,182

Net unrealized gain (loss) on hedging derivatives:
Net unrealized gain (loss) arising during the period			(1,954)			484			(1,470)
Less: reclassification adjustment for gains (losses) realized in net income			—			—			—
Net unrealized gain (loss) on cash flow hedging derivatives			(1,954)			484			(1,470)

Net unrealized gain (loss) on post-retirement plans:
Net unrealized gain (loss) arising during the period			—			—			—
Less: reclassification adjustment for gains (losses) realized in net income			—			—			—
Net unrealized gain (loss) on post-retirement plans			—			—			—
Other comprehensive income (loss)		$	3,111		$	(399)		$	2,712

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The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax impacts, for the three months ended March 31, 2026 and 2025:



		Net unrealized			Net unrealized			Net unrealized
		gain (loss)			gain (loss)			loss
		on AFS			on hedging			on pension
(in thousands)		Securities			derivatives			plans			Total
Three Months Ended March 31, 2026
Balance at beginning of period		$	(31,598)		$	(2,881)		$	(930)		$	(35,409)
Other comprehensive gain (loss) before reclassifications			(2,982)			(295)			—			(3,277)
Less: amounts reclassified from accumulated other comprehensive income			—			—			—			—
Total other comprehensive income (loss)			(2,982)			(295)			—			(3,277)
Balance at end of period		$	(34,580)		$	(3,176)		$	(930)		$	(38,686)

Three Months Ended March 31, 2025
Balance at beginning of period		$	(47,741)		$	(2,582)		$	(1,213)		$	(51,536)
Other comprehensive gain (loss) before reclassifications			3,129			(1,470)			—			1,659
Less: amounts reclassified from accumulated other comprehensive income			(1,053)			—			—			(1,053)
Total other comprehensive income (loss)			4,182			(1,470)			—			2,712
Balance at end of period		$	(43,559)		$	(4,052)		$	(1,213)		$	(48,824)

The following tables presents the amounts reclassified out of each component of accumulated other comprehensive income for the three months ended March 31, 2026 and 2025:


		Three Months Ended March 31,						Affected Line Item where
(in thousands)		2026			2025			Net Income is Presented
Net realized (losses) gains on AFS securities:
Before tax		$	—		$	(1,204)		Non-interest income
Tax effect			—			151		Tax expense
Total reclassifications for the period		$	—		$	(1,053)

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NOTE 8. EARNINGS PER SHARE

The following table presents the calculation of earnings per share:


		Three Months Ended
		March 31,
(in thousands, except per share and share data)		2026			2025
Net income		$	13,537		$	10,211

Average number of basic common shares outstanding⁽¹⁾			16,728,128			15,303,645
Plus: dilutive effect of stock options and awards outstanding			76,010			88,894
Average number of diluted common shares outstanding⁽²⁾			16,804,138			15,392,539

Earnings per share:
Basic		$	0.81		$	0.67
Diluted			0.81			0.66

(1)	In the third quarter of 2025 the Company issued 1,350,464 shares of common stock in consideration for the acquisition of Guaranty. Refer to Note 2 of the consolidated financial statements for further details.

(2)	Average diluted shares outstanding are computed using the treasury stock method.

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NOTE 9. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

We use derivative instruments to minimize fluctuations in earnings and cash flows caused by interest rate volatility. Our interest rate risk management strategy involves modifying the re-pricing characteristics of certain assets or liabilities so the changes in interest rates do not have a significant effect on net interest income. Thus, all of our derivative contracts are considered to be interest rate contracts.

We recognize our derivative instruments on the Consolidated Balance Sheets at fair value. On the date the derivative instrument is entered into, we designate whether the derivative is part of a hedging relationship (i.e., cash flow or fair value hedge). We formally document relationships between hedging instruments and hedged items, as well as our risk management objective and strategy for undertaking hedge transactions. We also assess, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting the changes in cash flows or fair values of hedged items. Changes in fair value of derivative instruments that are highly effective and qualify as cash flow hedges are recorded in other comprehensive income or loss.

We offer derivative products in the form of interest rate swaps, to commercial loan customers to facilitate their risk management strategies. These instruments are executed through Master Netting Arrangements (“MNAs”) with financial institution counterparties or Risk Participation Agreements (“RPAs”) with commercial bank counterparties, for which we assume a pro rata share of the credit exposure associated with a borrower's performance related to the derivative contract with the counterparty.

Information about derivative assets and liabilities at March 31, 2026 and December 31, 2025, follows:


		March 31, 2026
					Weighted
		Notional			Average			Fair Value			Location Fair
		Amount			Maturity			Asset (Liability)			Value Asset
		(in thousands)			(in years)			(in thousands)			(Liability)
Cash flow hedges:
Interest rate swap on wholesale funding		$	—			—		$	—		Other assets
Interest rate swap on variable rate loans			—			—			—		Other liabilities
Total cash flow hedges			—						—

Fair value hedges:
Interest rate swap on securities			37,190			3.3			2,468		Other assets
Total fair value hedges			37,190						2,468

Economic hedges:
Forward sale commitments			6,440			0.1			28		Other assets
Customer Loan Swaps-MNA Counterparty			400,589			4.7			(5,968)		Other liabilities
Customer Loan Swaps-RPA Counterparty			194,430			4.2			(1,309)		Other liabilities
Customer Loan Swaps-MNA Customer			400,589			4.7			5,968		Other assets
Customer Loan Swaps-RPA Customer			194,430			4.2			1,309		Other liabilities
Total economic hedges			1,196,478						28

Non-hedging derivatives:
Interest rate lock commitments			4,368			0.1			148		Other assets
Total non-hedging derivatives			4,368						148

Total		$	1,238,036					$	2,644

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		December 31, 2025
					Weighted
		Notional			Average			Fair Value			Location Fair
		Amount			Maturity			Asset (Liability)			Value Asset
		(in thousands)			(in years)			(in thousands)			(Liability)
Cash flow hedges:
Interest rate swap on wholesale funding		$	—			—		$	—		Other assets
Interest rate swap on variable rate loans			50,000			0.2			(336)		Other liabilities
Total cash flow hedges			50,000						(336)

Fair value hedges:
Interest rate swap on securities			37,190			3.6			2,374		Other assets
Total fair value hedges			37,190						2,374

Economic hedges:
Forward sale commitments			5,248			—			(14)		Other liabilities
Customer Loan Swaps-MNA Counterparty			358,846			4.8			(4,264)		Other liabilities
Customer Loan Swaps-RPA Counterparty			195,546			4.5			(2,070)		Other liabilities
Customer Loan Swaps-MNA Customer			358,846			4.8			4,264		Other assets
Customer Loan Swaps-RPA Customer			195,546			4.5			2,070		Other liabilities
Total economic hedges			1,114,032						(14)

Non-hedging derivatives:
Interest rate lock commitments			2,698			0.1			98		Other assets
Total non-hedging derivatives			2,698						98

Total		$	1,203,920					$	2,122

As of March 31, 2026 and December 31, 2025, the following amounts were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges:


							Cumulative Amount of Fair
		Location of Hedged Item on		Carrying Amount of Hedged			Value Hedging Adjustment in
		Balance Sheet		Assets			Carrying Amount
March 31, 2026
Interest rate swap on securities		Securities available for sale		$	30,527		$	(6,663)

December 31, 2025
Interest rate swap on securities		Securities available for sale		$	31,366		$	(5,824)

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Information about derivative assets and liabilities for three months ended March 31, 2026 and 2025, follows:


	Three Months Ended March 31, 2026
	Amount of			Amount of
	Gain (Loss)			Gain (Loss)
	Recognized in			Reclassified		Location of	Amount of
	Other		Location of Gain (Loss)	from Other		Gain (Loss)	Gain (Loss)
	Comprehensive		Reclassified from Other	Comprehensive		Recognized in	Recognized
(in thousands)	Income		Comprehensive Income	Income		Income	in Income
Cash flow hedges:
Interest rate swap on wholesale funding	$	—	Interest expense	$	—	Interest expense	$	—
Interest rate swap on variable rate loans		254	Interest income		—	Interest income		(339)
Total cash flow hedges		254			—			(339)

Fair value hedges:
Interest rate swap on securities		(549)	Interest income		—	Interest income		210
Total fair value hedges		(549)			—			210

Economic hedges:
Forward commitments		—	Other income		—	Mortgage banking income		42
Total economic hedges		—			—			42

Non-hedging derivatives:
Interest rate lock commitments		—	Other income		—	Mortgage banking income		50
Total non-hedging derivatives		—			—			50

Total	$	(295)		$	—		$	(37)

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	Three Months Ended March 31, 2025
	Amount of			Amount of
	Gain (Loss)			Gain (Loss)
	Recognized in			Reclassified		Location of	Amount of
	Other		Location of Gain (Loss)	from Other		Gain (Loss)	Gain (Loss)
	Comprehensive		Reclassified from Other	Comprehensive		Recognized in	Recognized
(in thousands)	Income		Comprehensive Income	Income		Income	in Income
Cash flow hedges:
Interest rate swap on wholesale funding	$	(188)	Interest expense	$	—	Interest expense	$	252
Interest rate swap on variable rate loans		370	Interest income		—	Interest income		(455)
Total cash flow hedges		182			—			(203)

Fair value hedges:
Interest rate swap on securities		(1,652)	Interest income		—	Interest income		275
Total economic hedges		(1,652)			—			275

Economic hedges:
Forward commitments		—	Other income		—	Mortgage banking income		(21)
Total economic hedges		—			—			(21)

Non-hedging derivatives:
Interest rate lock commitments		—	Other income		—	Mortgage banking income		29
Total non-hedging derivatives		—			—			29

Total	$	(1,470)		$	—		$	80

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The effect of cash flow hedging and fair value accounting on the consolidated statements of income for the three months ended March 31, 2026 and 2025:


		Three Months Ended March 31, 2026
		Interest and Dividend Income					Interest Expense
(in thousands)		Loans		Securities and other			Deposits		Borrowings			Non-interest Income
Income and expense line items presented in the consolidated statements of income		$	48,658	$	6,204		$	14,889	$	3,489		$	10,414

The effects of cash flow and fair value hedging:

Gain (loss) on cash flow hedges:
Interest rate swap on wholesale funding			—		—			—		—			—
Interest rate swap on variable rate loans			(339)		—			—		—			—

Gain (loss) on fair value hedges:
Interest rate swap on securities			—		210			—		—			—

		Three Months Ended March 31, 2025
		Interest and Dividend Income					Interest Expense
(in thousands)		Loans		Securities and other			Deposits		Borrowings			Non-interest Income
Income and expense line items presented in the consolidated statements of income		$	41,804	$	5,734		$	15,512	$	3,019		$	8,918

The effects of cash flow and fair value hedging:

Gain (loss) on cash flow hedges:
Interest rate swap on wholesale funding			—		—			—		252			—
Interest rate swap on variable rate loans			(455)		—			—		—			—

Gain (loss) on fair value hedges:
Interest rate swap on securities			—		275			—		—			—

The effect of economic hedges and derivatives not designated as hedging instruments on the consolidated statements of income for three months ended March 31, 2026 and 2025 is as follows:


	Location of Gain (Loss) Recognized	Three Months Ended March 31,
(In thousands)	in Non-interest Income	2026		2025
Economic hedges:
Forward commitments	Mortgage banking income	$	42	$	(21)

Non-hedging derivatives:
Interest rate lock commitments	Mortgage banking income		50		29

Cash flow hedges

Interest rate swaps on wholesale funding

As of March 31, 2026, we have no remaining interest rate swaps on wholesale borrowings.

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Interest rate swap on variable rate loans

As of March 31, 2026, we have no remaining interest rate swaps on loans. The $50 million loan swap we entered into in March 2021 matured effective March 2026.

Fair value hedges

Interest rate swap on securities

For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged asset or liability attributable to the hedged risk are recognized in current earnings. We utilize interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of fixed rate callable securities available-for-sale. The hedging strategy on securities converts the fixed interest rates to SOFR based variable interest rates. These derivatives are designated as partial term hedges of selected cash flows covering specified periods of time prior to the call dates of the hedged securities. These derivatives are intended to protect against the effects of changing interest rates on the fair values of fixed rate securities. The fixed rates on the transactions have a weighted average rate of 1.696%.

Economic hedges

Forward sale commitments

We utilize forward sale commitments on residential mortgage loans to hedge interest rate risk and the associated effects on the fair value of interest rate lock commitments and loans originated for sale. The forward sale commitments are accounted for as derivatives. We typically use a combination of best efforts and mandatory delivery contracts. The contracts are loan sale agreements where we commit to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. Generally, we enter into contracts just prior to the loan closing with a customer.

Customer loan derivatives

We enter into customer loan derivatives to facilitate the risk management strategies for commercial banking customers. We mitigate this risk by entering into equal and offsetting loan swap agreements with highly rated third-party financial institutions. The loan swap agreements are free standing derivatives and are recorded at fair value in our consolidated balance sheets. We are party to MNAs with our financial institutional counterparties; however, we do not offset assets and liabilities under these arrangements for financial statement presentation purposes.

The MNAs provide for a single net settlement of all loan swap agreements, as well as collateral or cash funds, in the event of default on, or termination of, any one contract. Collateral is provided by cash or securities received or posted by the counterparty with net liability positions, respectively, in accordance with contract thresholds.

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The below tables describe the potential effect of master netting arrangements on the Consolidated Balance Sheets and the financial collateral pledged for these arrangements:


		Gross Amounts Offset in the Consolidated Balance Sheet
		Derivative						Cash Collateral
(in thousands)		Liabilities			Derivative Assets			Pledged			Net Amount
As of March 31, 2026
Customer Loan Derivatives:
RPA counterparty			(1,309)			1,309			—			—
Total		$	(1,309)		$	1,309		$	—		$	—


		Gross Amounts Offset in the Consolidated Balance Sheet
		Derivative						Cash Collateral
(in thousands)		Liabilities			Derivative Assets			Pledged			Net Amount
As of December 31, 2025
Customer Loan Derivatives:
RPA counterparty			(2,070)			2,070			—			—
Total		$	(2,070)		$	2,070		$	—		$	—

Non-hedging derivatives

Interest rate lock commitments

We enter into interest rate lock commitments (“IRLCs”) for residential mortgage loans, which commit us to lend funds to a potential borrower at a specific interest rate and within a specified period of time. IRLCs relate to the origination of residential mortgage loans that are held for sale and are considered derivative financial instruments under applicable accounting guidance. Outstanding IRLCs expose us to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. The IRLCs are free standing derivatives, which are carried at fair value with changes recorded in non-interest income in our Consolidated Statements of Income. Changes in the fair value of IRLCs subsequent to inception are based on (i) changes in the fair value of the underlying loan resulting from the fulfillment of the commitment and (ii) changes in the probability when the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and the passage of time.

NOTE 10. FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:


		March 31, 2026
		Level 1			Level 2			Level 3			Total
(in thousands)		Inputs			Inputs			Inputs			Fair Value
Available-for-sale debt securities:
Obligations of US Government-sponsored enterprises		$	—		$	1,010		$	—		$	1,010
Mortgage-backed securities:
US Government-sponsored enterprises			—			250,739			—			250,739
US Government agency			—			155,695			—			155,695
Private label			—			10,752			—			10,752
Obligations of states and political subdivisions thereof			—			101,941			—			101,941
Corporate bonds			—			76,511			1,329			77,840
Loans held for sale			—			11,534			—			11,534
Derivative assets			—			9,745			176			9,921
Derivative liabilities			—			(7,277)			—			(7,277)

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		December 31, 2025
		Level 1			Level 2			Level 3			Total
(in thousands)		Inputs			Inputs			Inputs			Fair Value
Available-for-sale debt securities:
Obligations of US Government-sponsored enterprises		$	—		$	1,102		$	—		$	1,102
Mortgage-backed securities:
US Government-sponsored enterprises			—			249,542			—			249,542
US Government agency			—			153,900			—			153,900
Private label			—			10,999			—			10,999
Obligations of states and political subdivisions thereof			—			104,539			—			104,539
Corporate bonds			—			75,139			2,203			77,342
Loans held for sale			—			5,283			—			5,283
Derivative assets			—			8,708			98			8,806
Derivative liabilities			—			(6,670)			(14)			(6,684)

Available-for-sale Debt Securities: All securities and major categories of securities classified as available-for-sale are reported at fair value utilizing Level 2 inputs, unless otherwise disclosed. For these securities, we obtain fair value measurements from independent pricing providers. The fair value measurements used by the pricing providers consider observable data that may include dealer quotes, market maker quotes and live trading systems. If quoted prices are not readily available, fair values are determined using matrix pricing models, or other model-based valuation techniques requiring observable inputs other than quoted prices such as market pricing spreads, credit information, callable features, cash flows, the US Treasury yield curve, trade execution data, market consensus prepayment speeds, default rates, and the securities’ terms and conditions, among other things. For securities where fair value is calculated using a discounted cash flow model or other market indicators are reported at fair value utilizing Level 3 inputs.

Corporate Bonds

At March 31, 2026, the Company held one corporate bond investment classified as available-for-sale for which the fair value was determined using unobservable inputs, resulting in a Level 3 classification under the fair value hierarchy. During the quarter ended June 30, 2025, management identified a change in the estimated future cash flows associated with this security. As a result, the Company recognized an impairment loss of $4.4 million and charged off an allowance for credit losses of $1.2 million. In the third quarter 2025, the Company wrote down an additional $200 thousand resulting in a fair value of $2.2 million as of September 30, 2025. In the first quarter of 2026, the Company wrote down an additional $874 thousand resulting in a fair value of $1.3 million. These losses were recorded in net gain (loss) on available-for-sale debt securities in the consolidated statements of income.

The fair value of the corporate bond was determined using a present value discounted cash flow approach. This method incorporated management’s current expectations about the timing and amount of future cash flows, which were adjusted for expected prepayments and credit-related losses. The revised cash flows were then discounted using the bond’s original effective interest rate. Unobservable inputs used in the fair value measurement included the discount rate, expected cash flows, and loss severity. The discount rate reflects the original effective yield at the time of purchase, adjusted for changes in market conditions and issuer-specific risk. Expected cash flows were developed based on management’s assessment of the issuer’s current financial condition, forward-looking performance expectations, and relevant macroeconomic indicators. Loss severity was estimated based on the Company’s expectations regarding the potential shortfall in principal and interest in the event of default, taking into account the nature of the issuer’s collateral, if any.

Loans Held for Sale: The valuation of the Company’s loans held for sale are determined on an individual basis using quoted secondary market prices and are classified as Level 2 measurements.

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Derivative Assets and Liabilities

Cash Flow Hedges: The valuations of our cash flow hedges are obtained from a third party. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The inputs used to value the cash flow hedges are all classified as Level 2 measurements.

Interest Rate Lock Commitments: We enter into IRLCs for residential mortgage loans, which commit us to lend funds to potential borrowers at a specific interest rate and within a specified period of time. The estimated fair value of commitments to originate residential mortgage loans for sale is based on quoted prices for similar loans in active markets. However, this value is adjusted by a factor which considers the likelihood of a loan in a lock position will ultimately close. The closing ratio is derived from internal data and is adjusted using significant management judgment. As such, IRLCs are classified as Level 3 measurements.

Forward Sale Commitments: We utilize forward sale commitments as economic hedges against potential changes in the values of the IRLCs and loans originated for sale. The fair values of mandatory delivery loan sale commitments are determined similarly to the IRLCs using quoted prices in the market place that are observable. However, closing ratios included in the calculation are internally generated and are based on management’s judgment and prior experience, which are not considered observable factors. As such, mandatory delivery forward commitments are classified as Level 3 measurements.

The table below presents the changes in Level 3 assets and liabilities that were measured at fair value on a recurring basis for the three months ended March 31, 2026 and 2025:


		Assets (Liabilities)
		Interest Rate Lock		Forward		Corporate
(in thousands)		Commitments		Commitments		Bond
Three Months Ended March 31, 2026
Balance at beginning of period		$	98	$	(14)	$	2,203
Realized gain (loss) recognized in non-interest income			50		42		(874)
Balance at end of period		$	148	$	28	$	1,329

Three Months Ended March 31, 2025
Balance at beginning of period		$	85	$	13	$	—
Realized gain (loss) recognized in non-interest income			29		(21)		—
Balance at end of period		$	114	$	(8)	$	—

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Quantitative information about the significant unobservable inputs within Level 3 recurring assets and liabilities is, as follows:


		Fair Value							Significant
		March 31,			Valuation		Unobservable		Unobservable
(in thousands, except ratios)		2026			Techniques		Inputs		Input Value
Assets (Liabilities)
Interest Rate Lock Commitment		$	148		Pull-through Rate Analysis		Closing Ratio			92	%
					Pricing Model		Origination Costs, per loan		$	1.7
					Discount Cash Flows		Mortgage Servicing Asset			1.0	%

Forward Commitments			28		Quoted prices for similar loans in active markets		Freddie Mac pricing system			$98.5 to $101.5

Corporate bond			1,329		Discounted Cash Flows		Discount Rate			7.39	%
							Cash Flows			$0 to $1,329
							Loss Severity			83	%
Total		$	1,505

		Fair Value							Significant
		December 31,			Valuation		Unobservable		Unobservable
(in thousands, except ratios)		2025			Techniques		Inputs		Input Value
Assets (Liabilities)
Interest Rate Lock Commitment		$	98		Pull-through Rate Analysis		Closing Ratio			96	%
					Pricing Model		Origination Costs, per loan		$	1.7
					Discount Cash Flows		Mortgage Servicing Asset			1.0	%

Forward Commitments			(14)		Quoted prices for similar loans in active markets		Freddie Mac pricing system			$100.7 to $103.4

Corporate bond			2,203		Discounted Cash Flows		Discount Rate			7.39	%
							Cash Flows			$0 to $2,203
							Loss Severity			65	%
Total		$	2,287

At the end of the second quarter 2025 the Company transferred a corporate bond with a fair value of $2.4 million into level 3 due to a change in the fair value technique to using a present value discounted cash flow approach. During the quarter ended September 30, 2025 the Company wrote down an additional $200 thousand resulting in a fair value of $2.2 million. During the quarter ended March 31, 2026 the Company wrote down an additional $874 thousand resulting in a fair value of $1.3 million. This write down incorporated management’s current expectations about the timing and amount of future cash flows, which were adjusted for expected prepayments and credit-related losses. The revised cash flows were then discounted using the bond’s original effective interest rate. Unobservable inputs used in the fair value measurement included the discount rate, expected cash flows, and loss severity.

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Non-Recurring Fair Value Measurements

We are required, on a non-recurring basis, to adjust the carrying value or provide valuation allowances for certain assets using fair value measurements in accordance with GAAP. The following is a summary of applicable non-recurring fair value measurements:


								Fair Value
								Measurement Date as of
		Mar 31, 2026			Dec 31, 2025			March 31, 2026
		Level 3			Level 3			Level 3
(in thousands)		Inputs			Inputs			Inputs
Assets
Individually evaluated loans		$	16,028		$	5,091		March 2026
Capitalized servicing rights			7,299			6,832		March 2026
Total		$	23,327		$	11,923

There are no liabilities measured at fair value on a non-recurring basis as of March 31, 2026 and December 31, 2025.

Individually evaluated loans

Loans are generally not recorded at fair value on a recurring basis. Periodically, we record non-recurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Non-recurring adjustments can also include certain impairment amounts for collateral-dependent loans calculated when establishing the ACL. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace. However, the choice of observable data is subject to significant judgment, and there are often adjustments based on judgment in order to make observable data comparable and to consider the impact of time, the condition of properties, interest rates, and other market factors on current values. Additionally, commercial real estate appraisals frequently involve discounting of projected cash flows, which relies inherently on unobservable data. Therefore, non-recurring fair value measurement adjustments relating to real estate collateral have generally been classified as Level 3. Estimates of fair value for other collateral supporting commercial loans are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3.

Capitalized loan servicing rights

A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of loan servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Adjustments are only recorded when the discounted cash flows derived from the valuation model are less than the carrying value of the asset. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy.

We are required, on a non-recurring basis, to adjust the carrying value or provide valuation allowances for certain assets using fair value measurements in accordance with GAAP. There are no liabilities measured at fair value on a non-recurring basis as of March 31, 2026 and December 31, 2025.

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Quantitative information about the significant unobservable inputs within Level 3 non-recurring assets follows:


(in thousands, except ratios)		Fair Value March 31, 2026			Valuation Techniques		Unobservable Inputs		Range (Weighted Average)^(a)
Assets
Individually evaluated loans
Commercial Real Estate Owner Occupied		$	365		Fair value of collateral-appraised value		Loss severity			33% to 60%
							Appraised value			$250 to $975
Commercial Real Estate Non-Owner Occupied			13,419		Fair value of collateral-appraised value		Loss severity			0% to 40%
							Appraised value			$1,700 to $10,700
Commercial and Industrial			2,078		Fair value of collateral-appraised value		Loss severity			10% to 80%
							Appraised value			$212 to $1,057
Residential Real Estate			166		Fair value of collateral-appraised value		Loss severity			20%
							Appraised value			$240

Capitalized servicing rights			7,299		Discounted cash flow		Constant prepayment rate			7.36%
							Discount rate			9.62%
Total		$	23,327

(a)	Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individual properties.



(in thousands, except ratios)		Fair Value December 31, 2025			Valuation Techniques		Unobservable Inputs		Range (Weighted Average)^(a)
Assets
Individually evaluated loans
Commercial Real Estate Owner Occupied		$	378		Fair value of collateral-appraised value		Loss severity			33% to 60%
							Appraised value			$250 to $975
Commercial Real Estate Non-Owner Occupied			1,985		Fair value of collateral-appraised value		Loss severity			20% to 40%
							Appraised value			$1,700 to $1,775
Commercial and Industrial			2,410		Fair value of collateral-appraised value		Loss severity			5% to 80%
							Appraised value			$212 to $1,112
Residential Real Estate			318		Fair value of collateral-appraised value		Loss severity			20%
							Appraised value			$240

Capitalized servicing rights			6,832		Discounted cash flow		Constant prepayment rate			8.97%
							Discount rate			9.62%
Total		$	11,923

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(a)	Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individual properties.

There were no Level 1 or Level 2 non-recurring fair value measurements for the periods ended March 31, 2026 and December 31, 2025.

Summary of Estimated Fair Values of Financial Instruments

The estimated fair values, and related carrying amounts, of our financial instruments are included in the table below. Certain financial instruments and all non-financial instruments are excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented herein may not necessarily represent the underlying fair value of the Company.


		March 31, 2026
		Carrying			Fair
(in thousands)		Amount			Value			Level 1			Level 2			Level 3
Financial Assets
Cash and cash equivalents		$	82,215		$	82,215		$	82,215		$	—		$	—
Available-for-sale debt securities			597,977			597,977			—			596,648			1,329
FHLB stock			9,567			n/a			n/a			n/a			n/a
Loans held for sale			11,534			11,534			—			11,534			—
Net loans			3,550,933			3,489,882			—			—			3,489,882
Accrued interest receivable			16,924			16,924			46			3,806			13,072
Derivative assets			9,921			9,921			—			9,745			176

Financial Liabilities
Non-maturity deposits		$	2,946,904		$	2,763,401		$	—		$	2,763,401		$	—
Time deposits			920,811			917,529			—			917,529			—
Securities sold under agreements to repurchase			3,078			3,078			—			3,078			—
FHLB advances			159,219			159,198			—			159,198			—
Subordinated borrowings			53,420			49,666			—			49,666			—
Accrued interest payable			5,412			5,412			—			5,412			—
Derivative liabilities			7,277			7,277			—			7,277			—


		December 31, 2025
		Carrying			Fair
(in thousands)		Amount			Value			Level 1			Level 2			Level 3
Financial Assets
Cash and cash equivalents		$	80,837		$	80,837		$	80,837		$	—		$	—
Available-for-sale debt securities			597,424			597,424			—			595,221			2,203
FHLB stock			11,308			n/a			n/a			n/a			n/a
Loans held for sale			5,283			5,283			—			5,283			—
Net loans			3,571,807			3,505,278			—			—			3,505,278
Accrued interest receivable			15,047			15,047			13			3,496			11,538
Derivative assets			8,806			8,806			—			8,708			98

Financial Liabilities
Non-maturity deposits		$	2,908,688		$	2,740,925		$	—		$	2,740,925		$	—
Time deposits			912,594			910,213			—			910,213			—
Securities sold under agreements to repurchase			4,801			4,801			—			4,801			—
FHLB advances			212,016			211,988			—			211,756			232
Subordinated borrowings			52,825			49,746			—			49,746			—
Accrued interest payable			6,256			6,256			—			6,256			—
Derivative liabilities			6,684			6,684			—			6,670			14

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NOTE 11. REVENUE FROM CONTRACTS WITH CUSTOMERS

We account for our various non-interest revenue streams and related contracts in accordance with “Revenue from Contracts with Customers” (“ASC 606”). ASC 606 is based on the consideration specified in the contract with a customer and excludes amounts collected on behalf of third parties. Revenue is recognized when we satisfy our performance obligation, which is generally when services are rendered and can be either satisfied at a point in time or over time. We recognize revenue at a point in time that is transactional in nature. We recognize revenue over time that is earned as services are performed and performance obligations are satisfied over time.

A substantial portion of our revenue is specifically excluded from the scope of ASC 606. This exclusion is associated with financial instruments, including interest income on loans and investment securities, in addition to loan derivative income and gains on loan and investment sales.

Disaggregation of Revenue

The following presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606:


		Three Months Ended March 31,
(in thousands)		2026			2025
Non-interest income within the scope of ASC 606:
Trust management fees		$	3,675		$	3,459
Financial services fees			440			457
Interchange fees			2,041			1,921
Customer deposit fees			1,756			1,377
Other customer service fees			311			227
Total non-interest income within the scope of ASC 606			8,223			7,441
Total non-interest income not within the scope of ASC 606			2,191			1,477
Total non-interest income		$	10,414		$	8,918


		Three Months Ended March 31,
(in thousands)		2026			2025
Timing of Revenue Recognition
Products and services transferred at a point in time		$	4,285		$	3,810
Products and services transferred over time			3,938			3,631
Total		$	8,223		$	7,441

Trust Management Fees

The trust management business generates revenue through a range of fiduciary services including trust and estate administration and investment management to individuals, businesses, not-for-profit organizations, and municipalities. These fees are primarily earned over time as we charge our customers on a monthly or quarterly basis in accordance with investment advisory agreements. Fees are generally assessed based on a tiered scale of the average monthly market value of assets under management. Certain fees, such as bill paying fees, distribution fees, real estate sale fees, and supplemental tax service fees, are recorded as revenue at a point in time upon the completion of the service.

Financial Services Fees

Bar Harbor Financial Services is a branch office of Osaic Institutions, Inc. (“Osaic”), a full-service third-party broker-dealer, conducting business under the assumed business name “Bar Harbor Financial Services.” Osaic is an independent registered broker-dealer and is not affiliated with the Company or its subsidiaries. We have a revenue sharing agreement with Osaic for any financial service fee income generated. Financial services fees are recognized at a point in time upon the completion of service requirements.

Interchange Fees

We earn interchange fees from transaction fees that merchants pay whenever a customer uses a debit card to make a purchase from their store. The fees are paid to the card-issuing bank to cover handling costs, fraud, bad debt costs and the

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risk involved in approving the payment. Interchange fees are generally recognized as revenue at a point in time upon the completion of a debit card transaction.

Customer Deposit Fees

The Customer Deposit business offers a variety of deposit accounts with a range of interest rates, fee schedules and other terms, which are designed to meet the customer's financial needs. Additional depositor-related services provided to customers include ATM, bank-by-phone, internet banking, internet bill pay, mobile banking, and other cash management services, which include remote deposit capture, ACH origination, and wire transfers. These customer deposit fees are generally recognized at a point in time upon the completion of the service.

Other Customer Service Fees

We have certain incentive and referral fee arrangements with independent third parties in which fees are earned for new account activity, product sales, or transaction volume generated for the respective third parties. We also earn a percentage of the fees generated from third-party credit card plans promoted through the Bank. Revenue from these incentive and referral fee arrangements are recognized over time using the right to invoice measure of progress.

Contract Balances from Contracts with Customers

The following table provides information about contract assets or receivables and contract liabilities or deferred revenues from contracts with customers:



(in thousands)		March 31, 2026			December 31, 2025
Balances from contracts with customers only:
Other Assets		$	1,573		$	1,541
Other Liabilities			3,206			3,340

The timing of revenue recognition, billings and cash collections results in contract assets or receivables and contract liabilities or deferred revenue on the consolidated balance sheets. For most customer contracts, fees are deducted directly from customer accounts and, therefore, there is no associated impact on the accounts receivable balance. For certain types of service contracts, we have an unconditional right to consideration under the service contract and an accounts receivable balance is recorded for services completed. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met.

Costs to Obtain and Fulfill a Contract

We currently expense contract costs for processing and administrative fees for debit card transactions. We also expense custody fees and transactional costs associated with securities transactions as well as third-party tax preparation fees. We have elected the practical expedient in ASC 340-40-25-4, whereby we recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets we otherwise would have recognized is one year or less.

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NOTE 12. GOODWILL AND OTHER INTANGIBLES

The activity impacting goodwill as of March 31, 2026 and December 31, 2025 is as follows:


(in thousands)		March 31, 2026			December 31, 2025
Balance at beginning of year		$	141,819		$	119,477
Acquisition⁽¹⁾			—			22,342
Balance at end of year		$	141,819		$	141,819

(1)	In the third quarter 2025, the Company completed its acquisition of Woodsville and recorded $22.3 million in goodwill. Refer to Note 2 for further details.

The components of other intangible assets as of March 31, 2026 and December 31, 2025 are as follows:


	March 31, 2026
	Gross		Accumulated		Net Intangible
(in thousands)	Intangible Assets		Amortization		Assets
Core deposit intangible (non-maturity deposits) ⁽¹⁾	$	22,691	$	(7,503)	$	15,188
Customer list and other intangibles		2,120		(1,484)		636
Total	$	24,811	$	(8,987)	$	15,824

(1)	In the third quarter 2025, the Company completed its acquisition of Woodsville and recorded $14.0 million in CDI assets that will amortize over a 10 year period. Refer to Note 2 for further details.


	December 31, 2025
	Gross		Accumulated		Net Intangible
(in thousands)	Intangible Assets		Amortization		Assets
Core deposit intangible (non-maturity deposits)	$	22,691	$	(6,969)	$	15,722
Customer list and other intangibles		2,120		(1,435)		685
Total	$	24,811	$	(8,404)	$	16,407

Other intangible assets are amortized on a straight-line basis over their estimated lives, which range from five years to 11 years. Amortization expenses related to intangibles for the three months ended March 31, 2026 and 2025 were $582 thousand and $233 thousand, respectively.

The estimated aggregate future amortization expense for other intangible assets remaining at March 31, 2026 is as follows:


		Other Intangible
(in thousands)		Assets
2026		$	1,747
2027			2,330
2028			2,357
2029			1,583
2030			1,398
2031 and thereafter			6,409
Total		$	15,824

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NOTE 13. LEASES

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Most of our leases are for branches, ATM locations, and office space and have terms extending through 2046. All leases are classified as operating leases, and are recognized on the consolidated balance sheets as a right-of-use (“ROU”) asset with a corresponding lease liability.

The following table presents the consolidated statements of condition classification of the ROU assets and lease liabilities:


(in thousands)	Classification	March 31, 2026			December 31, 2025
Lease Right-of-Use Assets
Operating lease right-of-use assets	Other assets	$	8,875		$	9,251
Lease Liabilities
Operating lease liabilities	Other liabilities		9,642			9,990

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used for the present value of the minimum lease payments. The lease agreements often include one or more options to renew at our discretion. If at lease inception, we consider the exercising of a renewal option to be reasonably certain, we will include the extended term in the calculation of the ROU asset and lease liability.

The following table presents the weighted average lease term and discount rate of the leases:


		March 31, 2026			December 31, 2025
Weighted-average remaining lease term (in years)
Operating leases		10.91			10.94
Weighted-average discount rate
Operating leases		3.12	%		3.15	%

The following table represents lease costs and other lease information. As we have elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as real estate taxes, common area maintenance and utilities.


	Three Months Ended
(in thousands)	March 31, 2026			March 31, 2025
Lease Costs
Operating lease cost	$	435		$	374
Variable lease cost		38			66
Total lease cost	$	473		$	440

Supplemental cash flow information related to leases was as follows:
Cash paid for amounts included in the measurement of operating lease liabilities		411			376
Right-of-use assets obtained in exchange for new operating lease obligations		347			313

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Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2026 are, as follows:


(in thousands)		Payments
Twelve Months Ended:
March 31, 2027		$	1,654
March 31, 2028			1,494
March 31, 2029			1,156
March 31, 2030			887
March 31, 2031			716
Thereafter			4,691
Total future minimum lease payments			10,598
Amounts representing interest			(956)
Present value of net future minimum lease payments		$	9,642

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management’s discussion and analysis of the major factors that influenced our results of operations and financial condition as of and for the three months ended March 31, 2026 and should be read in conjunction with our unaudited consolidated financial statements and condensed notes thereto included elsewhere in this Form 10-Q as well as our audited consolidated financial statements and notes thereto included in our Form 10-K. The following discussion contains "forward-looking statements" that reflect our future plans, estimates, beliefs and expected performance. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Factors that could cause such differences are discussed in the sections titled "Cautionary Statement Regarding Forward-Looking Statements", “Part I, Item 1.A. Risk Factors” in the Form 10-K, and "Part II, Item 1A. Risk Factors" in this Form 10-Q. All amounts, dollars and percentages presented in this Form 10-Q are rounded and therefore approximate.

GENERAL

The Company is a bank holding company headquartered in Maine, providing a broad array of banking and nonbanking products and services to businesses and consumers primarily within our three-state footprint. The Company's primary sources of revenue, through the Bank, are net interest income (predominantly from loans and investment securities) and noninterest income (principally fees and other revenue from financial services provided to customers or ancillary services tied to loans and deposits).

NON-GAAP FINANCIAL MEASURES

Our accounting and reporting policies conform to GAAP and the prevailing practices in the financial services industry. However, we also evaluate our performance by reference to certain additional financial measures discussed in this Form 10-Q that we identify as being “non-GAAP financial measures.” In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively either financial measures calculated in accordance with GAAP, operating measures or other measures that are not non-GAAP financial measures or both.

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The non-GAAP financial measures that we discuss in this Form 10-Q should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we discuss in this Form 10-Q may differ from that of other companies reporting measures with similar names. You should understand how such other banking organizations calculate their financial measures similar or with names similar to the non-GAAP financial measures we have discussed in this Form 10-Q when comparing such non-GAAP financial measures.

QUARTERLY PERFORMANCE SUMMARY

Financial Highlights (quarter ended March 31, 2026, compared to the same period of 2025 unless otherwise stated)

●

$13.5 million net income compared to $10.2 million

●

$0.81 diluted earnings per share compared to $0.66

●

3.54% net interest margin compared to 3.17%

●

56.92% efficiency ratio compared to 62.00%

●

$4.7 billion in assets

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2026 AND DECEMBER 31, 2025

Cash and cash equivalents

Total cash and cash equivalents were $82.2 million at the end of the first quarter 2026, compared to $80.8 million at the end of the fourth quarter 2025. Interest-earning deposits with other banks increased to $46.6 million at the end of the first quarter 2026, compared to $35.9 million at the end of the fourth quarter 2025 and yielded 3.90% and 4.53%, respectively. The increase in cash balances was driven primarily by loan payoffs during the quarter.

Available for Sale Debt Securities

Available-for-sale debt securities were $598.0 million compared to $597.4 million at the end of the fourth quarter 2025. Net unrealized losses increased to $52.4 million at quarter-end compared to $47.5 million at the end of the fourth quarter 2025 due to the interest rate environment. The total unrealized losses include $6.7 million in unrealized losses on fair value hedged municipal securities. During the quarter there were purchases of $25.2 million, paydowns and calls of $19.3 million and net accretion of $411 thousand. The quarter-to-date weighted average yield of the securities portfolio was 4.05% compared to 4.03% at the end of the fourth quarter 2025. As of the first quarter 2026 and the fourth quarter 2025, the securities portfolio had an average life of 7.6 years and 7.1 years respectively, with an effective duration of 5.4 years and 5.2 years, respectively. At the end of the first quarter 2026 all securities remain classified as available for sale.

Federal Home Loan Bank Stock

Federal Home Loan Bank stock decreased $1.7 million to $9.6 million at the end of the first quarter 2026 compared to $11.3 million at the end of the fourth quarter 2025 primarily driven by the decrease in wholesale borrowings.

Loans Held for Sale

Loans held for sale were $11.5 million in the first quarter 2026 compared to $5.3 million in the fourth quarter 2025 as we originated $23.6 million in loans held for sale and sold $16.2 million in loans during the quarter.

Loans

Total loans decreased $20.6 million to $3.6 billion in the first quarter 2026 compared to the fourth quarter 2025 driven primarily by commercial real estate payoffs. Commercial real estate loans decreased $30.2 million primarily due to one early payoff of $14.4 million and $24.4 million in loans that matured and paid off during the quarter. Commercial and industrial loans increased 24% on an annualized basis and included $16.6 million of originations during the quarter. Residential real estate loans decreased $8.1 million during the quarter primarily driven by increased prepayment activity and offset in part by a $12.0 million residential loan purchase. Consumer loans remained relatively flat with a decrease of $348 thousand due to paydowns on home equity lines of credit.

Allowance for Credit Losses

The allowance for credit losses (“ACL”) on loans remained stable at $34.3 million at the end of the first quarter 2026 compared to $34.1 million at the end of the fourth quarter 2025. The activity in the ACL is reflective of loan portfolio

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changes and credit quality indicators. The allowance for credit losses to total loans coverage ratio for the first quarter 2026 was in line with the fourth quarter 2025 at 0.96% versus 0.94%.

Other Assets

Premises and equipment increased in the first quarter 2026 to $58.9 million compared to $58.2 million at the end of the fourth quarter 2025 driven by renovation projects. Bank owned life insurance decreased $6.4 million or 7% driven by death benefit pay outs that occurred at the end of the first quarter 2026, partially offset by increases in cash surrender value. Other assets increased $12.7 million primarily due to a non-cash transfer between loans and other assets as the result of the payoff timing of a loan participation which settled within one day of quarter-end.

Deposits

Total deposits were $3.9 billion at the end of the first quarter 2026 compared to $3.8 billion at the end of the fourth quarter of 2025. The increase was driven primarily by $17.2 million in new customer non-maturity deposits. Non-interest bearing demand deposits decreased $19.5 million and was offset by a $15.2 million increase in interest-bearing demand, a $14.0 million increase in savings and a $28.6 million increase in money market deposits. Time deposits increased $8.2 million during the quarter due to $4.8 million in new customer time deposits and an $18.0 million increase in brokered deposits, which was offset in part by maturities.

Borrowings

Total borrowings decreased $53.9 million in the first quarter 2026 to $215.7 million compared to $269.6 million in the fourth quarter 2025. The decrease was driven by cash inflows from loan payoffs and increased deposits.

Equity

The Company's book value per share was $32.13 at the end of the first quarter 2026 compared to $31.88 at the end of the fourth quarter 2025. Tangible book value per share (non-GAAP) was $22.71 at the end of the first quarter 2026, compared to $22.41 at the end of the fourth quarter 2025.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND MARCH 31, 2025

Net Income

First quarter 2026 GAAP net income was $13.5 million, or $0.81 per diluted share, and adjusted earnings (Non-GAAP) was $14.7 million, or $0.88 per diluted share, compared to GAAP net income of $10.2 million, or $0.66 per diluted share, and adjusted earnings (Non-GAAP) of $10.5 million or $0.68 per diluted share in the first quarter of 2025.

Interest and Dividend Income

Total interest and dividend income increased by 16%, or $7.7 million, to $55.3 million in the first quarter 2026 compared to $47.5 million in the prior year. Yields on earning assets grew to 5.27% in the first quarter 2026 compared to 5.16% in the first quarter 2025. The increase was driven by year-over-year loan yield expansion primarily due to the acquisition of $413.4 million in loans from the acquisition of Woodsville. The yield on commercial real estate loans grew to 5.68% in the first quarter 2026 from 5.58% in the first quarter 2025. The residential loan yield increased to 4.64% for the first quarter 2026 from 4.22% in the first quarter of 2025. Total loan yield growth was partially offset by a decrease in the commercial and industrial yield to 6.13% for the first quarter 2026 from 6.57% in the first quarter 2025 driven by the decrease in rates of adjustable-rate loans.

Net Interest Income and Net Interest Margin

The net interest margin was 3.54% in the first quarter 2026 compared to 3.17% in the same quarter 2025. As loan balances grew year-over-year the yield on loans expanded 8 basis points to 5.50% compared to 5.42% in the same period of 2025. Interest-bearing deposit costs decreased year-over-year to 2.19% compared to 2.52% in the same period of 2025.

Total interest expense decreased $153 thousand in the first quarter 2026 compared to the first quarter 2025. Deposit costs were down $623 thousand year-over-year. Borrowing costs increased $470 thousand, or 16% year-over-year, driven by the subordinated debt acquired from Woodsville.

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Provision for Credit Losses

The provision for credit losses on loans in the first quarter 2026 was $305 thousand compared to a recapture of $57 thousand in the same period of 2025. The provision reflects minimal net charge-offs of $42 thousand, portfolio changes and credit quality indicators. There was no provision for investment losses in the current year compared to a $636 thousand provision in the first quarter 2025. We had a loss on available-for-sale debt securities of $1.0 million during the first quarter 2026. The loss relates to a write-down on a previously identified corporate bond with continued deteriorated credit quality.

Non-Interest Income

Non-interest income increased $1.5 million in the first quarter 2026 to $10.4 million compared to $8.9 million in the same quarter 2025 primarily driven by a $1.3 million gain on death benefit from bank owned life insurance. Trust management fee income increased $199 thousand driven by the 7%, or $183.5 million, increase in assets under management compared to the same period of 2025. Customer service fees increased $577 thousand or 16% compared to the same period of 2025. The increase was offset in part by the previously noted additional write-down on one corporate debt security resulting in a loss on available-for-sale debt securities of $1.0 million during the first quarter 2026

Non-Interest Expense

Non-interest expenses increased $5.2 million to $29.8 million in the first quarter 2026 compared to $24.7 million in the first quarter 2025 driven by $1.5 million in expenses related to the Woodsville acquisition. Salaries and benefits increased $2.0 million to $15.8 million in the first quarter 2026 compared to $13.7 million in the first quarter 2025 primarily due to additional salary costs associated with the retained Woodsville personnel. Occupancy and equipment increased $711 thousand driven primarily by higher maintenance contract costs from the acquisition of Woodsville. Amortization of intangibles increased $349 thousand due to the acquisition of Woodsville. Other expenses increased $854 thousand for the first quarter 2026 compared to the first quarter 2025 primarily due to increases in software expenses. Loss on sale of premises and equipment was $134 thousand in the first quarter 2026 driven by a building sale.

Income Tax Expense

Income tax expense was $3.6 million for the first quarter 2026 compared to $2.5 million for the first quarter of 2025, respectively. Our GAAP effective tax rate for the first quarter 2026 was 21.09% and 19.57% in the first quarter 2025 and the effective tax rate on adjusted earnings (Non-GAAP) was 21.89% and 22.98%, respectively.

Liquidity and Cash Flows

Liquidity is measured by our ability to meet short-term cash needs at a reasonable cost or minimal loss. We seek to obtain favorable sources of liabilities and to maintain prudent levels of liquid assets to satisfy varied liquidity demands. Besides serving as a funding source for maturing obligations, liquidity provides flexibility in responding to customer-initiated needs. Many factors affect our ability to meet liquidity needs, including variations in the markets served by our network of offices, mix of assets and liabilities, reputation and credit standing in the marketplace, and general economic conditions.

The Bank actively manages its liquidity position through target ratios established under its Asset-Liability Management Policy. Continual monitoring of these ratios, by using historical data and through forecasts under multiple rate and stress scenarios, allows the Bank to employ strategies necessary to maintain adequate liquidity. The Bank's policy is to maintain a liquidity position of at least 8% of total assets. A portion of the Bank’s deposit base has been historically seasonal in nature, with balances typically declining in the winter months through late spring, during which period the Bank’s liquidity position tightens.

As of March 31, 2026, available same-day liquidity totaled approximately $1.0 billion, including cash, borrowing capacity at FHLB and the Federal Reserve Discount Window and various lines of credit. Additional sources of liquidity include cash flows from operations, wholesale deposits, cash flow from our amortizing securities and loan portfolios. As of March 31, 2026, we had unused borrowing capacity at the FHLB of $451.5 million, unused borrowing capacity at the Reserve Bank of $94.5 million and unused lines of credit totaling $41.0 million, in addition to $82.2 million in cash.

The Bank maintains a liquidity contingency plan approved by the Bank’s Board of Directors. This plan addresses the steps that would be taken in the event of a liquidity crisis, and identifies other sources of liquidity available to us. Our management believes the level of liquidity is sufficient to meet current and future funding requirements. However, changes

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in economic conditions, including consumer savings habits and availability or access to the brokered deposit market could potentially have a significant impact on our liquidity position.

Capital Resources

Please refer to “Comparison of Financial Condition at March 31, 2026 and December 31, 2025- Equity” for a discussion of shareholders’ equity together with Note 7 - “Capital Ratios and Shareholders’ Equity” in the unaudited consolidated financial statements. Additional information about regulatory capital is contained in the notes to the consolidated financial statements and in our most recent Form 10-K.

We expect to continue our current practice of paying quarterly cash dividends with respect to our common stock subject to our Board of Directors’ discretion to modify or terminate this practice at any time and for any reason without prior notice. We believe our quarterly dividend rate per share as approved by our Board of Directors, enables us to balance our multiple objectives of managing our business and returning a portion of our earnings to our shareholders. Historically, and a practice we intend to continue, our principal cash expenditure is the payment of dividends on our common stock, if as and when declared by our Board of Directors. Dividends were paid to our shareholders in the aggregate amount of $5.4 million and $4.6 million for the three months ended March 31, 2026 and 2025, respectively. All dividends declared and distributed by us will be in compliance with applicable state corporate law and regulatory requirements.

Off-Balance Sheet Arrangements

We are, from time to time, a party to certain off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that may be material to investors.

Our off-balance sheet arrangements are limited to standby letters of credit whereby the Bank guarantees the obligations or performance of certain customers. These letters of credit are sometimes issued in support of third-party debt. The risk involved in issuing standby letters of credit is essentially the same as the credit risk involved in extending loan facilities to customers, and such letters of credit are subject to the same origination, portfolio maintenance and management procedures in effect to monitor other credit products. The amount of collateral obtained, if deemed necessary by the Bank upon issuance of a standby letter of credit, is based upon management's credit evaluation of the customer.

Our off-balance sheet arrangements have not changed materially since previously reported in our Form 10-K.

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

Please refer to Note 1 – “Basis of Presentation - Recent Accounting Pronouncements” of the Consolidated Financial Statements in this Form 10-Q and Note 1 - “Summary of Significant Accounting Policies” of the Consolidated Financial Statements to our Form 10-K.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our Consolidated Financial Statements were prepared in accordance with GAAP and follow general practices within the industries in which we operate. The most significant accounting policies we follow are presented in Note 1—“Summary of Significant Accounting Policies” of the Consolidated Financial Statements to our Form 10-K. Application of these principles requires us to make estimates, assumptions, and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Most accounting policies are not considered by management to be critical accounting policies. Several factors are considered in determining whether or not a policy is critical in the preparation of the Consolidated Financial Statements. These factors include among other things, whether the policy requires management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. The accounting policies which we believe to be most critical in preparing our Consolidated Financial Statements are presented in the section titled “Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” included in our Form 10-K. There have been no significant changes in our application of critical accounting policies and estimates since December 31, 2025. Refer to Note 1 – “Basis of Presentation - Recent Accounting Pronouncements” of the consolidated financial statements for discussion of accounting pronouncements issued but yet to be adopted and implemented.

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SELECTED FINANCIAL DATA

The following summary data is based in part on the unaudited consolidated financial statements and accompanying notes and other information appearing elsewhere in this Form 10-Q or prior SEC filings.


		Three Months Ended
		March 31,
		2026			2025
PER SHARE DATA
Net earnings, diluted		$	0.81		$	0.66
Adjusted earnings, diluted⁽¹⁾			0.88			0.68
Total book value			32.13			30.51
Tangible book value per share⁽¹⁾			22.71			22.47
Market price at period end			32.45			29.50
Dividends			0.32			0.30

PERFORMANCE RATIOS⁽²⁾
Return on assets			1.18	%		1.02	%
Adjusted return on assets⁽¹⁾			1.28			1.04
Pre-tax, pre-provision return on assets			1.52			1.32
Adjusted pre-tax, pre-provision return on assets ⁽¹⁾			1.65			1.35
Return on equity			10.13			8.88
Adjusted return on equity⁽¹⁾			11.03			9.09
Return on tangible equity			14.77			12.27
Adjusted return on tangible equity⁽¹⁾			16.03			12.57
Net interest margin, fully taxable equivalent^{(1) (3)}			3.54			3.17
Efficiency ratio⁽¹⁾			56.92			62.00

FINANCIAL DATA (In millions)
Total assets		$	4,676		$	4,063
Total earning assets⁽⁴⁾			4,297			3,761
Total available-for-sale debt securities			598			514
Total loans			3,585			3,124
Total allowance for credit losses			34			30
Total goodwill and intangible assets			158			123
Total deposits			3,868			3,297
Total shareholders' equity			538			466
Net income			14			10
Adjusted income⁽¹⁾			15			10

ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (recoveries)⁽⁵⁾/average loans			—	%		0.01	%
Allowance for credit losses/total loans			0.96			0.92
Loans/deposits			93			95
Shareholders' equity to total assets			11.50			11.50
Tangible shareholders' equity to total tangible assets⁽¹⁾			8.42			8.73

(1)	Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures section of the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in this Form 10-Q for additional information.

(2)	All performance ratios are annualized and are based on average balance sheet amounts, where applicable.

(3)	Fully taxable equivalent considers the impact of tax-advantaged investment securities and loans.

(4)	Earning assets includes non-accruing loans and interest-bearing deposit with other banks. Securities are valued at amortized cost.

(5)	Current quarter annualized.

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CONSOLIDATED LOAN AND DEPOSIT ANALYSIS (UNAUDITED)

The following tables present the quarterly trend in loans by collateral type and deposits and accompanying growth rates as of March 31, 2026 on an annualized basis:

LOAN ANALYSIS


																		Annualized
																		Growth %
									Acquired WGSB									Quarter
(in thousands, except ratios)		Mar 31, 2026		Dec 31, 2025			Sept 30, 2025		Balances⁽¹⁾			Jun 30, 2025			Mar 31, 2025			to Date
Commercial real estate		$	1,968,403	$	1,998,603		$	1,942,659	$	117,832		$	1,767,206		$	1,762,132		(6)	%
Commercial and industrial			417,657		393,851			405,759		25,651			400,908			370,683		24
Total commercial loans			2,386,060		2,392,454			2,348,418		143,483			2,168,114			2,132,815		(1)

Residential real estate			993,636		1,001,769			1,025,266		248,484			796,184			807,514		(3)
Consumer			127,681		128,029			126,345		16,215			111,036			105,404		(1)
Tax exempt and other			77,871		83,607			83,687		5,226			77,330			78,507		(27)
Total loans		$	3,585,248	$	3,605,859		$	3,583,716	$	413,408		$	3,152,664		$	3,124,240		(2)	%

DEPOSIT ANALYSIS


																		Annualized
																		Growth %
									Acquired WGSB									Quarter
(in thousands, except ratios)		Mar 31, 2026		Dec 31, 2025			Sept 30, 2025		Balances⁽¹⁾			Jun 30, 2025			Mar 31, 2025			to Date
Non-interest bearing demand		$	651,282	$	670,786		$	692,780	$	89,274		$	552,074		$	547,401		(12)	%
Interest-bearing demand			1,152,888		1,137,730			1,137,362		185,802			931,854			930,031		5
Savings			649,302		635,329			647,428		104,792			542,579			551,280		9
Money market			493,432		464,843			488,633		52,470			370,709			405,326		25
Total non-maturity deposits			2,946,904		2,908,688			2,966,203		432,338			2,397,216			2,434,038		5
Time			920,811		912,594			981,993		98,951			894,772			862,773		4
Total deposits		$	3,867,715	$	3,821,282		$	3,948,196	$	531,289		$	3,291,988		$	3,296,811		5	%

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AVERAGE BALANCES AND AVERAGE YIELDS/RATES (UNAUDITED)

The following tables present average balances and average yields and rates on an annualized fully taxable equivalent basis for the periods included:


		Three Months Ended March 31,
		2026								2025
		Average						Yield/		Average						Yield/
(in thousands, except ratios)		Balance			Interest⁽³⁾			Rate⁽³⁾		Balance			Interest⁽³⁾			Rate⁽³⁾
Assets
Interest-earning deposits with other banks		$	24,230		$	233		3.90	%	$	27,999		$	314		4.55	%
Available-for-sale debt securities			643,647			6,434		4.05			587,878			5,507		3.80
FHLB stock			11,062			155		5.68			11,623			137		4.78
Loans:
Commercial real estate			2,001,851			28,042		5.68			1,759,321			24,203		5.58
Commercial and industrial			486,295			7,347		6.13			469,331			7,598		6.57
Residential			998,862			11,420		4.64			820,837			8,539		4.22
Consumer			127,693			2,173		6.90			104,413			1,809		7.03
Total loans ⁽¹⁾			3,614,701			48,982		5.50			3,153,902			42,149		5.42
Total earning assets			4,293,640			55,804		5.27	%		3,781,402			48,107		5.16	%
Cash and due from banks			36,278								29,972
Allowance for credit losses			(34,195)								(29,143)
Goodwill and other intangible assets			157,921								123,295
Other assets			215,852								171,477
Total assets		$	4,669,496							$	4,077,003

Liabilities
Interest-bearing demand		$	1,121,021		$	3,589		1.30	%	$	916,129		$	3,178		1.41	%
Savings			642,717			893		0.56			547,672			955		0.71
Money market			469,496			2,645		2.28			401,268			2,737		2.77
Time			922,180			7,762		3.41			853,105			8,642		4.11
Total interest bearing deposits			3,155,414			14,889		1.91			2,718,174			15,512		2.31
Borrowings			251,985			3,489		5.62			265,780			3,019		4.61
Total interest bearing liabilities			3,407,399			18,378		2.19	%		2,983,954			18,531		2.52	%
Non-interest bearing demand deposits			659,506								560,310
Other liabilities			60,814								66,589
Total liabilities			4,127,719								3,610,853

Total shareholders' equity			541,777								466,150

Total liabilities and shareholders' equity		$	4,669,496							$	4,077,003

Net interest spread								3.08	%							2.64	%
Net interest margin								3.54								3.17

(1)	The average balances of loans include non-accrual loans and unamortized deferred fees and costs.

(2)	The average balance for securities available for sale is based on amortized cost.

(3)	Fully taxable equivalent considers the impact of tax-advantaged securities and loans.

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

The following reconciliation table provides a more detailed analysis of these, and reconciliation for, each of non-GAAP financial measures:


				Three Months Ended March 31,
(in thousands)		Calculations		2026			2025
Net income		(R)		$	13,537		$	10,211
Non-recurring items:
Gain on sale of premises and equipment, net					134			90
Acquisition, conversion and other expenses					1,455			239
Income tax expense ⁽¹⁾					(392)			(80)
Total non-recurring items					1,197			249
Total adjusted income⁽²⁾		(A)		$	14,734		$	10,460

Net interest income		(B)		$	36,872		$	29,007
Plus: Non-interest income					10,414			8,918
Total Revenue					47,286			37,925
Loss (gain) on available-for-sale debt securities					—			—
Total adjusted revenue⁽²⁾		(C)		$	47,286		$	37,925

Total non-interest expense				$	29,827		$	24,651
Non-recurring expenses:
Gain on sale of premises and equipment, net					(134)			(90)
Acquisition, conversion and other expenses					(1,455)			(239)
Total non-recurring expenses					(1,589)			(329)
Adjusted non-interest expense⁽²⁾		(D)		$	28,238		$	24,322

Total revenue					47,286			37,925
Total non-interest expense					29,827			24,651
Pre-tax, pre-provision net revenue⁽²⁾		(S)		$	17,459		$	13,274

Adjusted revenue⁽²⁾					47,286			37,925
Adjusted non-interest expense⁽²⁾					28,238			24,322
Adjusted pre-tax, pre-provision net revenue⁽²⁾		(U)		$	19,048		$	13,603

(in millions)
Average earning assets		(E)		$	4,294		$	3,781
Average assets		(F)			4,669			4,077
Average shareholders' equity		(G)			542			466
Average tangible shareholders' equity⁽²⁾⁽³⁾		(H)			384			343
Tangible shareholders' equity, period-end⁽²⁾⁽³⁾		(I)			380			343
Tangible assets, period-end⁽²⁾⁽³⁾		(J)			4,519			3,940

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		Three Months Ended March 31,
	Calculations	2026			2025
(in thousands)
Common shares outstanding, period-end	(K)		16,742			15,317
Average diluted shares outstanding	(L)		16,804			15,393

Adjusted earnings per share, diluted⁽²⁾	(A/L)	$	0.88		$	0.68
Tangible book value per share, period-end⁽²⁾	(I/K)		22.71			22.47
Total tangible shareholders' equity/total tangible assets⁽²⁾	(I/J)		8.42			8.73

Performance ratios⁽⁴⁾
Return on assets			1.18	%		1.02	%
Adjusted return on assets⁽²⁾	(A/F)		1.28			1.04
Pre-tax, pre-provision return on assets⁽²⁾	(S/F)		1.52			1.32
Adjusted pre-tax, pre-provision return on assets⁽²⁾	(U/F)		1.65			1.35
Return on equity			10.13			8.88
Adjusted return on equity⁽²⁾	(A/G)		11.03			9.09
Return on tangible equity⁽¹⁾ ⁽²⁾	(R+Q)/H		14.77			12.27
Adjusted return on tangible equity⁽¹⁾⁽²⁾	(A+Q)/H		16.03			12.57
Efficiency ratio^(1)(2)(5)	(D-O-Q)/(C+N)		56.92			62.00
Net interest margin, fully taxable equivalent⁽²⁾	(B+P)/E		3.54			3.17

Supplementary data (in thousands)
Taxable equivalent adjustment for efficiency ratio	(N)	$	1,044		$	717
Franchise taxes included in non-interest expense	(O)		146			131
Tax equivalent adjustment for net interest margin	(P)		554			568
Intangible amortization	(Q)		582			233

(1)	Assumes a marginal tax rate of 24.65% in the first quarter of 2026 and 24.26% in the first quarter of 2025.

(2)	Non-GAAP financial measure.

(3)	Tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Tangible assets is computed by taking total assets less the intangible assets at period-end.

(4)	All performance ratios are based on average balance sheet amounts, where applicable.

(5)	Efficiency ratio is computed by dividing adjusted non-interest expense net of franchise taxes and intangible amortization divided by adjusted revenue on a fully taxable equivalent basis.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates/prices, such as interest rates, foreign currency exchange rates, commodity prices and equity prices. The most significant market risk that affects us is interest rate risk. Other types of market risk do not arise in the normal course of our business activities.

The responsibility for interest rate risk management oversight is the function of the Bank’s Asset and Liability Committee, or ALCO, chaired by the Bank’s Chief Financial Officer and composed of various members of the Bank’s senior management. ALCO meets regularly to review balance sheet structure, formulate strategies in light of current and expected economic conditions, adjust product prices as necessary, implement policy, monitor liquidity, and review performance against guidelines established to control exposure to the various types of inherent risk.

Interest Rate Risk

Interest rate risk can be defined as an exposure to movement in interest rates that could have an adverse impact on the Bank's net interest income. Interest rate risk arises from the imbalance in the re-pricing, maturity and/or cash flow characteristics of assets and liabilities. Management’s objectives are to measure, monitor and develop strategies in response to the interest rate risk profile inherent in the Bank’s balance sheet. The objectives in managing the Bank's balance sheet are to preserve the sensitivity of net interest income to actual or potential changes in interest rates, and to enhance profitability through strategies that promote sufficient reward for understood and controlled risk.

The Bank’s interest rate risk measurement and management techniques incorporate the re-pricing and cash flow attributes of balance sheet and off-balance sheet instruments as each relate to current and potential changes in interest rates. The level of interest rate risk, measured in terms of the potential future effect on net interest income, is determined through the use of modeling and other techniques under multiple interest rate scenarios. Interest rate risk is evaluated in depth on a quarterly basis and reviewed by ALCO and the Bank’s Board of Directors.

The Bank's Asset Liability Management Policy, approved annually by the Bank’s Board of Directors, establishes interest rate risk limits in terms of variability of net interest income under rising, flat, and decreasing rate scenarios. It is the role of the ALCO to evaluate the overall risk profile and to determine actions to maintain and achieve a posture consistent with policy guidelines.

Interest Rate Sensitivity Modeling:

The Bank utilizes an interest rate risk model widely recognized in the financial industry to monitor and measure interest rate risk. The model simulates the behavior of interest income and expense for all balance sheet and off-balance sheet instruments, under different interest rate scenarios together with a dynamic future balance sheet. Interest rate risk is measured in terms of potential changes in net interest income based upon shifts in the yield curve.

The interest rate risk sensitivity model requires that assets and liabilities be broken down into components as to fixed, variable, and adjustable interest rates, as well as other homogeneous groupings, which are segregated as to maturity and type of instrument. The model includes assumptions about how the balance sheet is likely to evolve through time and in different interest rate environments. The model uses contractual re-pricing dates for variable products, contractual maturities for fixed rate products, and product-specific assumptions for deposit accounts, such as money market accounts, that are subject to re-pricing based on current market conditions. Re-pricing margins are also determined for adjustable-rate assets and incorporated in the model. Investment securities and borrowings with option provisions are examined on an individual basis in each rate environment to estimate the likelihood of exercise. Prepayment assumptions for mortgage loans are calibrated using specific Bank experience while mortgage-backed securities are developed from industry standard models of prepayment speeds, based upon similar coupon ranges and degree of seasoning. Cash flows and maturities are then determined, and for certain assets, prepayment assumptions are estimated under different interest rate scenarios. Interest income and interest expense are then simulated under several hypothetical interest rate conditions.

The simulation models a parallel and pro rata shift in rates over a 12-month period. Using this approach, we are able to produce simulation results that illustrate the effect that both a gradual “rate ramp” and a “rate shock” have on earnings expectations. Our net interest income sensitivity analysis reflects changes to net interest income assuming no balance sheet

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growth and a parallel shift in interest rates. All rate changes were “ramped” over the first 12-month period and then maintained at those levels over the remainder of the simulation horizon. Changes in net interest income based upon these simulations are measured against the flat interest rate scenario.

As of March 31, 2026, interest rate sensitivity modeling results indicate that the Bank’s balance sheet was asset sensitive over the one- and two-year horizons.

The following table presents the changes in sensitivities on net interest income for the periods ended March 31, 2026 and 2025:


Change in Interest Rates-Basis Points (Rate Ramp)	1 - 12 Months				13 - 24 Months
(in thousands, except ratios)	$ Change		% Change		$ Change		% Change
At March 31, 2026
-200	$	(8,991)	(5.5)	%	$	(21,936)	(12.8)	%
-100		(4,791)	(2.9)			(10,759)	(6.3)
+100		4,971	3.0			9,910	5.8
+200		9,375	5.7			19,187	11.2
At March 31, 2025
-200	$	(7,070)	(5.6)	%	$	(16,840)	(12.2)	%
-100		(3,827)	(3.0)			(8,265)	(6.0)
+100		2,736	2.2			6,405	4.6
+200		5,375	4.3			12,364	9.0

Assuming short-term and long-term interest rates decline 200 basis points from current levels (i.e., a parallel yield curve shift) over the next twelve months and the Bank’s balance sheet structure and size remain at current levels, management believes net interest income will deteriorate over the one-year horizon while deteriorating further from that level over the two-year horizon.

Assuming short-term and long-term interest rates increase 200 basis points from current levels (i.e., a parallel yield curve shift) over the next twelve months and the Bank’s balance sheet structure and size remain at current levels, management believes net interest income will improve over the one-year horizon while improving further from that level over the two-year horizon.

As compared to March 31, 2025, asset sensitivity in year one is higher in up rate scenarios but slightly lower in down rate scenarios, while in year two, sensitives are higher in both up and down rate scenarios.

The preceding sensitivity analysis does not represent a forecast and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions including: the nature and timing of interest rate levels and yield curve shape, prepayment speeds on loans and securities, deposit rates, pricing decisions on loans and deposits, reinvestment or replacement of asset and liability cash flows, and renegotiated loan terms with borrowers. While assumptions are developed based upon current economic and local market conditions, we cannot make any assurances as to the predictive nature of these assumptions including how customer preferences or competitor influences might change.

As market conditions vary from those assumed in the sensitivity analysis, actual results may also differ due to: prepayment and refinancing levels deviating from those assumed; the impact of interest rate changes, caps or floors on adjustable-rate assets; the potential effect of changing debt service levels on customers with adjustable-rate loans; depositor early withdrawals and product preference changes; and other such variables. The sensitivity analysis also does not reflect additional actions that the Bank’s Senior Executive Team and Board of Directors might take in responding to or anticipating changes in interest rates, and the anticipated impact on the Bank’s net interest income.

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ITEM 4. CONTROLS AND PROCEDURES

(a)	Disclosure controls and procedures.

Under the supervision and with the participation of our senior management, consisting of our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Form 10-Q. Based on this evaluation, our management, including our principal executive officer and principal financial officer, concluded that as of March 31, 2026, our disclosure controls and procedures were effective to ensure that information required to be disclosed by the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by using our Exchange Act reports is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

(b)	Changes in internal control over financial reporting.

There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We and our subsidiaries are parties to certain ordinary routine litigation incidental to the normal conduct of their respective businesses. Although the Company is not able to predict the outcome of such actions, at this time, in the opinion of management, the likelihood is remote that the impact of such proceedings, either individually or in the aggregate, would have a material adverse effect on the Company’s consolidated financial position as a whole. However, one or more unfavorable outcomes in any claim or litigation against us could have a material adverse effect for the period in which they are resolved. In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially adversely affect our reputation, even if resolved in our favor.

ITEM 1A. RISK FACTORS

There were no material changes to the risk factors discussed in Part I, Item 1A. “Risk Factors” of our Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

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During the quarter ended March 31, 2026, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated any "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" as such terms are defined in Item 408(a) of Regulation S-K.

ITEM 6. EXHIBITS




31.1*	Certification of Chief Executive Officer under Rule 13a-14(a)/15d-14(a)

31.2*	Certification of Chief Financial Officer under Rule 13a-14(a)/15d-14(a)

32.1**	Certification of Chief Executive Officer under 18 U.S.C. Sec. 1350

32.2**	Certification of Chief Financial Officer under 18 U.S.C. Sec. 1350

101*	The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 is formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Consolidated Statements of Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Changes in Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) Condensed Notes to the Consolidated Financial Statements

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Filed herewith

**Furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	BAR HARBOR BANKSHARES


Dated: May 5, 2026	By:	/s/ Curtis C. Simard
		Curtis C. Simard
		President & Chief Executive Officer (Principal Executive Officer)


Dated: May 5, 2026		/s/ Josephine Iannelli
		Josephine Iannelli
		Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer)