Narragansett Bancorp, Inc.

Previous wording

Management estimates the allowance for credit losses on loans using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. For example, an increase of 25 basis points as our adjustment to our lifetime loss rate for qualitative factors for all loan categories at June 30, 2026 would have increased our allowance for credit losses on loans at that date to $30.8 million from $30.3 million.

Current wording

Management estimates the allowance for credit losses on loans using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. For example, an increase of 25 basis points as our adjustment to our lifetime loss rate for qualitative factors for all loan categories at September 30, 2026 would have increased our allowance for credit losses on loans at that date to $32.1 million from $29.8 million.

Previous wording

Represents operating expense divided by the sum of net interest income and other income.

Current wording

Represents operating expenses divided by the sum of net interest income and other income.

Previous wording

Total Assets. Total assets increased $15.9 million, or 0.6%, to $2.87 billion at June 30, 2026, compared to $2.86 billion at December 31, 2025. The increase was due to increases in securities available for sale and cash and cash equivalents, partially offset by a decrease in loans.

Current wording

Total Assets. Total assets increased $103.8 million, or 3.6%, to $2.96 billion at September 30, 2026, compared to $2.86 billion at December 31, 2025. The increase was due to increases in securities available for sale and cash and cash equivalents.

Previous wording

Securities Available for Sale. Securities available for sale, reported at fair value, increased $17.5 million, or 5.1%, to $359.8 million at June 30, 2026, compared to$342.3 million at December 31, 2025. The increase was mainly due to strategically purchasing U.S. Treasury securities.

Current wording

Securities Available for Sale. Securities available for sale, reported at fair value, increased $47.9 million, or 14.0%, to $390.2 million at September 30, 2026, compared to $342.3 million at December 31, 2025. The increase was due primarily to our purchasing U.S. Treasury securities.

Previous wording

Gross Loans. Loans decreased $15.4 million, or 0.7%, to $2.25 billion at June 30, 2026, compared to $2.27 billion at December 31, 2025. Our largest decrease was in residential mortgage loans, which decreased $21.0 million, or 4.3%, to $463.2 million at June 30, 2026, compared to $484.2 million at December 31, 2025, due to two residential real estate loan portfolio sales totaling $45.4 million during the first quarter of 2026 and three residential real estate loan portfolio sales totaling $35.6 million during the second quarter of 2026. Our largest increase was in commercial business loans, which increased $36.2 million, or 18.6%, to $230.9 million at June 30, 2026, compared to $194.6 million at December 31, 2025, due to a $19.2 million construction loan converting to a commercial loan as well as a $15.0 million increase in line of credit balances.

Current wording

Gross Loans. Loans increased $6.2 million, or 0.3%, to $2.28 billion at September 30, 2026, compared to $2.27 billion at December 31, 2025. Our largest increase was in commercial loans, which increased $35.4 million, or 18.2%, to $230.0 million at September 30, 2026, compared to $194.6 million at December 31, 2025. Our largest decrease was in commercial real estate and multi-family loans, which decreased $27.2 million, or 2.5%, to $1.05 billion at September 30, 2026, compared to $1.08 billion at December 31, 2025, due to loan payoffs and a decrease in line of credit balances secured by real estate.

Previous wording

Deposits. Deposits increased $25.2 million, or 1.0%, to $2.45 billion at June 30, 2026 from $2.42 billion at December 31, 2025. Money market deposits increased $52.3 million, or 6.4%, and noninterest-bearing demand deposits increased $41.2 million, or 10.5%. The increase in money market deposits was due to our onboarding larger municipalities as well as customers wanting more liquid deposit products, while the increase in noninterest bearing demand deposits was due to customary daily fluctuations in large business operating accounts. These were partially offset by a decrease in certificates of deposit, which decreased $37.8 million, or 7.2%, to $484.9 million at June 30, 2026 from $522.7 million at December 31, 2025., due to the competitive interest rate environment. All of our deposits are fully insured due to the additional insurance provided under the Depositors Insurance Funds (" DIF").

Current wording

Deposits. Deposits increased $150.8 million, or 6.2%, to $2.57 billion at September 30, 2026 from $2.42 billion at December 31, 2025. Demand deposits increased $146.9 million, or 37.3%, and money market deposits increased $85.0 million, or 10.5%. The increase in demand deposits was due to our proceeds from our minority stock issuance that were being held in escrow pending the completion of the offering, while the increase in money market deposits was due to customers wanting to keep their funds liquid. These were partially offset by a decrease in certificates of deposit, which decreased $60.0 million, or 11.5%, to $462.6 million at September 30, 2026 from $522.7 million at December 31, 2025, due to the competitive interest rate environment. All of our deposits are fully insured due to the additional insurance provided under the Depositors Insurance Fund ("DIF").

Previous wording

Borrowings. Borrowings, which consisted solely of Federal Home Loan Bank of Boston advances, decreased $12.6 million, or 12.8%, to $85.5 million at June 30, 2026, compared to $98.1 million from December 31, 2025. The decrease was due to our improved liquidity position and less reliance on overnight borrowings.

Current wording

Borrowings. Borrowings, which consisted solely of Federal Home Loan Bank of Boston advances, decreased $52.6 million, or 53.6%, to $45.5 million at September 30, 2026, compared to $98.1 million at December 31, 2025. The decrease was due to our improved liquidity position and less reliance on overnight borrowings.

Previous wording

Total Retained Earnings. Total retained earnings increased $2.4 million, or 1.3%, to $189.2 million at June 30, 2026 compared to $186.8 million at December 31, 2025. The increase was due to net income of $4.7 million for the six months ended June 30, 2026, partially offset by a $2.4 million increase in accumulated other comprehensive loss.

Current wording

Total Retained Earnings. Total retained earnings increased $545,000, or 0.3%, to $187.4 million at September 30, 2026 compared to $186.8 million at December 31, 2025. The increase was due to net income of $9.1 million for the nine months ended September 30, 2026, partially offset by a $8.6 million increase in accumulated other comprehensive loss, driven by unrealized losses in the U.S. Treasury portfolio resulting from higher market interest rates during the quarter.

Previous wording

General. We recorded net income of $3.5 million and $2.3 million for the three months ended June 30, 2026 and 2025, respectively. The increase in net income was due to a decrease in interest expense and provision for credit losses, partially offset by a decreases in interest and dividend income and an increase in operating expenses.

Current wording

General. We recorded net income of $4.4 million and $1.1 million for the three months ended September 30, 2026 and 2025, respectively. The increase in net income was due to an increase in interest income, and decreases in interest expense and provision for credit losses, partially offset by a decrease in other income, and increases in operating expenses and provision for income taxes.

Previous wording

Interest and Dividend Income. Interest and dividend income decreased $902,000, or 2.5%, to $35.1 million for the three months ended June 30, 2026, from $36.0 million for the three months ended June 30, 2025. Interest and fees on loans, which is our primary source of interest income, decreased $1.3 million, or 3.9%, to $31.9 million for the three months ended June 30, 2026, from $33.2 million for the three months ended June 30, 2025.

Current wording

Interest and Dividend Income. Interest and dividend income increased $427,000 or 1.2%, to $36.8 million for the three months ended September 30, 2026, from $36.3 million for the three months ended September 30, 2025. Interest and fees on loans, which is our primary source of interest income, was $33.1 million for each of the three months ended September 30, 2026 and 2025.

Previous wording

The average balance of loans decreased by $87.7 million, or 3.7%, to $2.28 billion for the three months ended June 30, 2026 , compared to $2.37 billion for the three months ended June 30, 2025. In addition, the average yield on loans decreased by one basis point to 5.60% for the three months ended June 30, 2026, from 5.61% for the three months ended June 30, 2025. The decrease in average balance of loans was primarily due to private investor residential loan sales.

Current wording

The average balance of loans decreased by $50.2 million, or 2.2%, to $2.27 billion for the three months ended September 30, 2026 , compared to $2.32 billion for the three months ended September 30, 2025, offset by a 12 basis point increase in the average yield on loans to 5.83% for the three months ended September 30, 2026, from 5.71% for the three months ended September 30, 2025. The decrease in average balance of loans was primarily due to private investor residential loan sales.

Previous wording

Interest Expense. Total interest expense decreased $3.6 million, or 20.6%, to $13.8 million for the three months ended June 30, 2026, compared to $17.3 million for the three months ended June 30, 2025. Interest expense on deposits decreased $1.7 million, or 13.5%, to $11.2 million for the three months ended June 30, 2026, from $12.9 million for the three months ended June 30, 2025. We recognized decreases in all categories of deposit interest expense. Our average cost of deposits decreased 39 basis points to 2.22% for the three months ended June 30, 2026, from 2.61% for the three months ended June 30, 2025. The decrease in the average cost of deposits was due to a decrease in money market and term certificate rates and a change in our mix of deposits, reflecting a decrease in certificate of deposit accounts and an increase in money market deposits.

Current wording

Interest Expense. Total interest expense decreased $2.9 million, or 17.0%, to $14.0 million for the three months ended September 30, 2026, compared to $16.8 million for the three months ended September 30, 2025. Interest expense on deposits decreased $1.4 million, or 10.7%, to $11.5 million for the three months ended September 30, 2026, from $12.9 million for the three months ended September 30, 2025. We recognized decreases in all categories of deposit interest expense. Our average cost of deposits decreased 34 basis points to 2.24% for the three months ended September 30, 2026, from 2.58% for the three months ended September 30, 2025. The decrease in the average cost of deposits was due to a decrease in money market and term certificate rates and a change in our mix of deposits, reflecting a decrease in certificate of deposit accounts and an increase in money market deposits.

Previous wording

Interest expense on Federal Home Loan Bank advances decreased $1.6 million, or 65.3%, to $873,000 for the three months ended June 30, 2026, from $2.5 million for the three months ended June 30, 2025. The decrease was primarily due to a decrease in the average balance of Federal Home Loan Bank advances ($140.1 million, or 61.2%) for the three months ended June 30, 2026. The decrease in average balance was primarily due to our prepaying $120.0 million of Federal Home Loan Bank advances during the third quarter of 2025.

Current wording

Interest expense on Federal Home Loan Bank advances decreased $1.5 million, or 70.7%, to $601,000 for the three months ended September 30, 2026, from $2.1 million for the three months ended September 30, 2025. The decrease was primarily due to a decrease in the average balance of Federal Home Loan Bank advances ($121.9 million, or 66.9%) for the three months ended September 30, 2026. The decrease in average balance was primarily due to our prepaying $120.0 million of Federal Home Loan Bank advances during the third quarter of 2025.

Previous wording

Interest on subordinated debt was $1.7 million and $1.9 million for the three months ended June 30, 2026 and 2025, respectively, due to our redeeming $15.0 million of our 2017 Debt during the fourth quarter of 2025.

Current wording

Interest on subordinated debt was $1.9 million for the three months ended September 30, 2026 and 2025. The average balance of subordinated debt decreased by $14.7 million, or 13.4%, to $94.8 million for the three months ended September 30, 2026, compared to $109.4 million for the three months ended September 30, 2025, offset by a 94 basis point increase in the average yield on to 7.79% for the three months ended September 30, 2026, from 6.85% for the three months ended September 30, 2025. The decrease in average balance was due to redeeming $15.0 million of debt during the fourth quarter of 2025. The increase in average yield is due to debt that converted to a floating instrument during the second quarter of 2026.

Previous wording

Net Interest Income. Net interest income increased $5.3 million, or 14.7%, to $41.5 million for the six months ended June 30, 2026 compared to $36.2 million for six months ended June 30, 2025, as our interest expense decreased faster than our interest income. Our interest rate spread increased 49 basis points to 2.70% for the six months ended June 30, 2026 from 2.21% for the six months ended June 30, 2025, while our net interest margin increased 46 basis points to 3.11% for the six months ended June 30, 2026 from 2.65% for the six months ended June 30, 2025.

Current wording

Net Interest Income. Net interest income increased $3.3 million, or 16.8%, to $22.8 million for the three months ended September 30, 2026, compared to $19.5 million for the three months ended September 30, 2025, primarily due to a decrease in interest expense. Our interest rate spread increased 59 basis points to 3.03% for the three months ended September 30, 2026 from 2.44% for the three months ended September 30, 2025, while our net interest margin increased 55 basis points to 3.42% for the three months ended September 30, 2026 from 2.87% for the three months ended September 30, 2025.

Previous wording

Provision for Credit Losses. Based on an analysis of the factors described in “—Critical Accounting Policies—Allowance for Credit Losses,” we recorded provisions for credit losses on loans of $800,000 and $2.0 million for the three months ended June 30, 2026 and 2025, respectively. There was no provision recorded for off balance sheet credit exposures for the three months ended June 30, 2026 and a provision of $60,000 for the three months ended June 30, 2025. The allowance for credit losses on loans was $30.3 million at June 30, 2026 and $29.9 million at June 30, 2025 and represented 1.34% and 1.27% of total loans at June 30, 2026 and 2025, respectively. The allowance for credit losses for off balance sheet commitments was $782,000 at June 30, 2026 and $447,000 at June 30, 2025.

Current wording

Provision for Credit Losses. Based on an analysis of the factors described in “—Critical Accounting Policies—Allowance for Credit Losses,” we recorded a (benefit) provision for credit losses on loans of $(250,000) and $1.7 million for the three months ended September 30, 2026 and 2025, respectively. The benefit was recorded due to a decrease in reserves on individually evaluated loans. There was no provision recorded for off balance sheet credit exposures for the three months ended September 30, 2026 and a $160,000 provision recorded for the three months ended September 30, 2025. The allowance for credit losses on loans was $29.8 million at September 30, 2026 and $31.1 million at September 30, 2025 and represented 1.31% and 1.36% of total loans at September 30, 2026 and 2025, respectively. The allowance for credit losses for off balance sheet commitments was $782,000 at September 30, 2026 and $607,000 at September 30, 2025.

Previous wording

Total non-accrual loans were $42.7 million at June 30, 2026, compared to $6.6 million at June 30, 2025. The increase reflected four commercial real estate loans and one commercial loan, with total balances of $35.8 million, being placed on non-accrual status. Total loans past due 30 days or greater were $10.3 million at June 30, 2026 compared to $5.3 million at June 30, 2025. As a percentage of nonperforming loans, the allowance for credit losses on loans was 70.78% at June 30, 2026 compared to 456.06% at June 30, 2025.

Current wording

Total non-accrual loans were $35.2 million at September 30, 2026, compared to $6.5 million at September 30, 2025. The increase reflected three commercial real estate loans, with total balances of $28.4 million, being placed on non-accrual status. Total loans past due 30 days or greater were $7.1 million at September 30, 2026 compared to $8.3 million at September 30, 2025. As a percentage of nonperforming loans, the allowance for credit losses on loans was 84.85% at September 30, 2026 compared to 480.80% at September 30, 2025.

Previous wording

The increase in trust department fees was due primarily to a $130.2 million, or 12.7%, increase in the market value of assets under management to $1.16 billion as of June 30, 2026, compared to $1.03 billion as of June 30, 2025. The decrease in insurance and brokerage commissions was due to a decrease in profit sharing income as well as a decrease in non-deposit product commission income. The decrease in mortgage banking income was due to a decrease in the derivative gain, partially offset by an increase in residential mortgage sales volume, as we sold $140.5 million of residential mortgage loans during the three months ended June 30, 2026 compared to $112.9 million of such sales during the three months ended June 30, 2025. The increase in bank owned life insurance was due to market value fluctuations of the underlying assets in our non-qualified deferred compensation plan. The decrease in miscellaneous income was due to interest received from an employee retention tax credit in 2025. For a further discussion of our non-interest income producing subsidiaries, see “Business of BayCoast Bank—Subsidiary Activities.”

Current wording

The increase in trust department fees was due primarily to a $28.0 million, or 2.6%, increase in the market value of assets under management to $1.10 billion as of September 30, 2026, compared to $1.07 billion as of September 30, 2025. The increase in insurance and brokerage commissions was due to an increase in insurance commission income. The decrease in mortgage banking income was due to a derivative loss, a decrease in pricing and a decrease in loan sale volume, as we sold $134.6 million of non-portfolio residential and manufactured loans during the three months ended September 30, 2026 compared to $136.3 million of such sales during the three months ended September 30, 2025. The increase in gain (loss) on portfolio loans was due to more favorable pricing partially offset by a decrease in loan volume as we sold $21.8 million of portfolio loans during the three months ended September 30, 2026 compared to $64.0 million for the three months ended September 30, 2025. The decrease in bank-owned life insurance was due to market value fluctuations of the underlying assets in our non-qualified deferred compensation plan. The decrease in miscellaneous income was due to interest received from an employee retention tax credit in 2025.

Previous wording

The increase in salaries and employee benefits expense was due to cost-of-living adjustments and incentive compensation tied to higher loan volume. The increase in occupancy and equipment expense was due to higher snow removal costs. The increase in data processing expense was due to a 2.9% increase in core processing fees. The decrease in other expenses was due to a write-down of an investment in 2025 based on our redirecting the funds to a downpayment assistance program.

Current wording

The increase in salaries and employee benefits expense was due to cost-of-living adjustments and bonus expense, partially offset by a decrease in deferred compensation due to market value fluctuations of the underlying assets in our non-qualified deferred compensation plan. The increase in occupancy and equipment expense was due to equipment, maintenance and repairs contracts. The decrease in other expenses was due to borrowing prepayment penalties for the three months ended September 30, 2025 partially offset by a significant one-time charitable contribution for the three months ended September 30, 2026

Previous wording

Income Taxes. Income tax expense decreased by $22,000 to $500,000 for the three months ended June 30, 2026, compared to $522,000 for the three months ended June 30, 2025. The decrease in the income tax provision was due to increases in tax exempt income as well as tax credits. The effective tax rates were 12.6% and 18.9% for the three months ended June 30, 2026 and 2025, respectively. Our effective tax rate for each period was below the statutory rate due to tax exempt income.

Current wording

Income Taxes. Income tax expense increased by $1.3 million to $1.4 million for the three months ended September 30, 2026, compared to $122,000 for the three months ended September 30, 2025. The increase in the income tax provision was due to higher pre-tax income and a decrease in tax exempt income. The effective tax rates were 24.4% and 10.4% for the three months ended September 30, 2026 and 2025, respectively. Our effective tax rate for each period was below the statutory rate due to tax exempt income.

Previous wording

Comparison of Operating Results for the Six Months Ended June 30, 2026 and 2025

Current wording

Comparison of Operating Results for the Nine Months Ended September 30, 2026 and 2025

Previous wording

General. Net income for the six months ended June 30, 2026 was $4.7 million, an increase of $2.6, or 121.4%, compared to net income of $2.1 million for the six months ended June 30, 2025. The increase was due to decreases in interest expense and provision for credit losses, partially offset by a decrease in interest income and an increase in operating expenses.

Current wording

General. Net income for the nine months ended September 30, 2026 was $9.1 million, an increase of $6.0 million, or 186.9%, compared to net income of $3.2 million for the nine months ended September 30, 2025. The increase was due to decreases in interest expense and provision for credit losses, partially offset by a decrease in interest income and increases in operating expenses and provision for income taxes.

Previous wording

Interest and Dividend Income. Interest and dividend income decreased $1.7 million, or 2.4%, to $69.6 million for the six months ended June 30, 2026, from $71.2 million for the six months ended June 30, 2025. Interest and fees on loans, which is our primary source of interest income, decreased $2.3 million, or 3.5%, to $63.4 million for the six months ended June 30, 2026, from $65.6 million for the six months ended June 30, 2025.

Current wording

Interest and Dividend Income. Interest and dividend income decreased $1.2 million, or 1.2%, to $106.3 million for the nine months ended September 30, 2026, from $107.6 million for the nine months ended September 30, 2025. Interest and fees on loans, which is our primary source of interest income, decreased $2.3 million, or 2.3%, to $96.4 million for the nine months ended September 30, 2026, from $98.9 million for the nine months ended September 30, 2025.

Previous wording

The average balance of loans decreased by $72.6 million, or 3.1%, to $2.29 billion for the six months ended June 30, 2026, compared to $2.37 billion for the six months ended June 30, 2025. In addition, the average yield on loans decreased by three basis points to 5.52% for the six months ended June 30, 2026, from 5.55% for the six months ended June 30, 2025. The decrease in average balance of loans was primarily due to private investor residential loan sales.

Current wording

The average balance of loans decreased by $65.0 million, or 2.8%, to $2.28 billion for the nine months ended September 30, 2026, compared to $2.35 billion for the nine months ended September 30, 2025. In addition, the average yield on loans increase by three basis points to 5.63% for the nine months ended September 30, 2026, from 5.60% for the nine months ended September 30, 2025. The decrease in average balance of loans was primarily due to private investor residential loan sales.

Previous wording

Interest and fees on debt securities increased $1.5 million, or 34.4%, to $5.8 million for the six months ended June 30, 2026, from $4.3 million for the six months ended June 30, 2025. The average balance of debt securities increased by $40.3 million, or 13.0%, to $350.7 million for the six months ended June 30, 2026, compared to $310.3 million for the six months ended June 30, 2025, as we used excess cash provided by an increase in deposits and a decrease in loans to invest in securities. In addition, the average yield on debt securities increased by 52 basis points to 3.30% for the six months ended June 30, 2026, from 2.78% for the six months ended June 30, 2025, due to changes in market interest rates.

Current wording

Interest and fees on debt securities increased $2.4 million, or 35.6%, to $9.2 million for the nine months ended September 30, 2026, from $6.8 million for the nine months ended September 30, 2025. The average balance of debt securities increased by $44.0 million, or 13.9%, to $360.5 million for the nine months ended September 30, 2026, compared to $316.5 million for the nine months ended September 30, 2025, as we used excess cash provided by an increase in deposits and a decrease in loans to invest in securities. In addition, the average yield on debt securities increased by 55 basis points to 3.41% for the nine months ended September 30, 2026, from 2.86% for the nine months ended September 30, 2025, due to changes in market interest rates.

Previous wording

Interest Expense. Total interest expense decreased $7.0 million, or 19.9%, to $28.0 million for the six months ended June 30, 2026, compared to $35.0 million for the six months ended June 30, 2025, reflecting decreases in all categories of interest expense.

Current wording

Interest Expense. Total interest expense decreased $9.8 million, or 19.0%, to $42.0 million for the nine months ended September 30, 2026, compared to $51.8 million for the nine months ended September 30, 2025, reflecting decreases in all categories of interest expense.

Previous wording

Interest expense on deposits decreased $3.3 million, or 12.9%, to $22.6 million for the six months ended June 30, 2026, from $25.9 million for the six months ended June 30, 2025. The decrease in interest expense deposits was due to a decrease in money market and term certificate rates and a change in our mix of deposits, reflecting a decrease in certificate of deposit accounts and an increase in money market deposits. Our average cost of interest-bearing deposits decreased 40 basis points to 2.25% for the six months ended June 30, 2026 from 2.65% for the six months ended June 30, 2025.

Current wording

Interest expense on deposits decreased $4.7 million, or 12.2%, to $34.1 million for the nine months ended September 30, 2026, from $38.8 million for the nine months ended September 30, 2025. The decrease in interest expense on deposits was due to a decrease in money market and term certificate rates and a change in our mix of deposits, reflecting a decrease in certificate of deposit accounts and an increase in money market deposits. Our average cost of interest-bearing deposits decreased 39 basis points to 2.24% for the nine months ended September 30, 2026 from 2.63% for the nine months ended September 30, 2025.

Previous wording

Interest expense on Federal Home Loan Bank advances decreased $3.1 million, or 59.2%, to $2.2 million for the six months ended June 30, 2026 from $5.3 million for the six months ended June 30, 2025. The decrease was primarily due to a decrease in our average balance of Federal Home Loan Bank advances of $138.7 million, or 56.8%, to $105.3 million for the six months ended June 30, 2026 compared to $244.0 million for the six months ended June 30, 2025, due to our prepaying $120.0 million of Federal Home Loan Bank advances during the third quarter of 2025.

Current wording

Interest expense on Federal Home Loan Bank advances decreased $4.6 million, or 62.4%, to $2.8 million for the nine months ended September 30, 2026 from $7.3 million for the nine months ended September 30, 2025. The decrease was primarily due to a decrease in our average balance of Federal Home Loan Bank advances of $133.1 million, or 59.6%, to $90.2 million for the nine months ended September 30, 2026 compared to $223.3 million for the nine months ended September 30, 2025, due to our prepaying $120.0 million of Federal Home Loan Bank advances during the third quarter of 2025.

Previous wording

Net Interest Income. Net interest income increased $2.7 million, or 14.3%, to $21.4 million for the three months ended June 30, 2026, compared to $18.7 million for the three months ended June 30, 2025, as our interest expense decreased faster than our interest income. Our interest rate spread increased 50 basis points to 2.80% for the three months ended June 30, 2026 from 2.30% for the three months ended June 30, 2025, while our net interest margin increased 48 basis points to 3.21% for the three months ended June 30, 2026 from 2.73% for the three months ended June 30, 2025.

Current wording

Net Interest Income. Net interest income increased $8.6 million, or 15.4%, to $64.3 million for the nine months ended September 30, 2026 compared to $55.7 million for nine months ended September 30, 2025, as our interest expense decreased faster than our interest income. Our interest rate spread increased 50 basis points to 2.79% for the nine months ended September 30, 2026 from 2.29% for the nine months ended September 30, 2025, while our net interest margin increased 48 basis points to 3.20% for the nine months ended September 30, 2026 from 2.72% for the nine months ended September 30, 2025.

Previous wording

Provision for Credit Losses. Based on an analysis of the factors described in “—Critical Accounting Policies—Allowance for Credit Losses,” we recorded provisions for credit losses on loans of $2.5 million and $3.9 million for thesix months ended June 30, 2026 and 2025, respectively. There was no provision recorded for off balance sheet credit exposures for the six months ended June 30, 2026 and 2025. The allowance for credit losses on loans was $30.3 million at June 30, 2026 and $29.1 million at December 31, 2025, and represented 1.34% and 1.28% of total loans at June 30, 2026 and December 31, 2025, respectively. The allowance for credit losses for off balance sheet credit exposures was $782,000 at June 30, 2026 and December 31, 2025, respectively.

Current wording

Provision for Credit Losses. Based on an analysis of the factors described in “—Critical Accounting Policies—Allowance for Credit Losses,” we recorded provisions for credit losses on loans of $2.3 million and $5.6 million for the nine months ended September 30, 2026 and 2025, respectively. There was no provision recorded for off balance sheet credit exposures for the nine months ended September 30, 2026. There was a provision of $160,000 recorded for the nine months ended September 30, 2025. The allowance for credit losses on loans was $29.8 million at September 30, 2026 and $31.1 million at September 30, 2025, and represented 1.31% and

Previous wording

Total non-accrual loans were $42.7 million at June 30, 2026, compared to $6.6 million at June 30, 2025. The increase reflected four commercial real estate loans and one commercial loan, with total balances of $35.8 million, being placed on non-accrual status. Total loans past due 30 days or greater were $10.3 million at June 30, 2026 compared to $5.3 million at June 30, 2025. As a percentage of nonperforming loans, the allowance for credit losses on loans was 70.78% at June 30, 2026 compared to 456.06% at June 30, 2025.

Current wording

Total non-accrual loans were $35.2 million at September 30, 2026, compared to $6.5 million at September 30, 2025. The increase reflected three commercial real estate loans, with total balances of $28.4 million, being placed on non-accrual status. Total loans past due 30 days or greater were $7.1 million at September 30, 2026 compared to $5.3 million at September 30, 2025. As a percentage of nonperforming loans, the allowance for credit losses on loans was 84.9% at September 30, 2026 compared to 480.8% at September 30, 2025.

Previous wording

The increase in trust department fees was due primarily to a $130.2 million, or 12.7%, increase in the market value of assets under management to $1.16 billion as of June 30, 2026, compared to $1.03 billion as of June 30, 2025. The decrease in insurance and brokerage commissions was due to a decrease in profit sharing income as well as a decrease in non-deposit product commission income. The increase in mortgage banking income was due to an increase in residential mortgage sales volume due to the current interest rate environment, as we sold $319.2 million of residential mortgage loans during the six months ended June 30, 2026, compared to $212.7 million of such sales during the six months ended June 30, 2025. The increase in customer service fees was due to increases in overdraft fees, ATM interchange fees and credit card interchange fees. The increase in bank owned life insurance income was due to market value fluctuations of the underlying assets in our non-qualified deferred compensation plan. The decrease in net loan servicing fees was due to an increase in loan prepayment speeds resulting in accelerated mortgage servicing asset amortization as well as an increase in the mortgage servicing asset valuation reserve. The decrease in miscellaneous income was due to interest received from an employee retention tax credit in 2025. For a further discussion of our non-interest income producing subsidiaries, see “Business of BayCoast Bank—Subsidiary Activities.”

Current wording

The increase in customer service fees was due to increases in overdraft fees, ATM interchange fees and credit card interchange fees. The increase in trust department fees was due primarily to a $28.0 million, or 2.6%, increase in the market value of assets under management to $1.10 billion as of September 30, 2026, compared to $1.07 billion as of September 30, 2025. The increase in insurance and brokerage commissions was due to insurance commission income partially offset by a decrease in profit sharing income and non-deposit product commission income. The decrease in mortgage banking income was due to a derivative loss, partially offset by an increase in residential and manufactured non-portfolio loan sale volume due to the current interest rate environment, as we sold $427.8 million of residential and manufactured non-portfolio loans during the nine months ended September 30, 2026, compared to $354.6 million of such sales during the nine months ended September 30, 2025. The decrease in loss on sales of portfolio loans was due to more favorable pricing, offset by a decrease in volume as we sold $102.8 million in portfolio loans for the nine months ended September 30, 2026 compared to $118.4 million for the nine months ended September 30, 2025. The decrease in bank-owned life insurance income was due to market value fluctuations of the underlying assets in our non-qualified deferred compensation plan. The decrease in net loan servicing fees was due to an increase in loan prepayment speeds resulting in accelerated mortgage servicing asset amortization. The decrease in miscellaneous income was due to interest received from an employee retention tax credit in 2025.

Previous wording

The increase in salaries and employee benefits expense was due to cost-of-living adjustments, incentive compensation tied to higher loan volume and increased deferred compensation. The increase in occupancy and equipment expense was due to higher snow removal costs. The increase in professional fees was due to an increase in legal fees. The increase in data processing was due to a 2.9% increase in core processing fees. The decrease in amortization of intangible assets was due to an intangible asset becoming fully amortized. The decrease in other expenses was due to a write-down of an investment in 2025 based on our redirecting the funds to a downpayment assistance program

Current wording

The increase in salaries and employee benefits expense was due to cost-of-living adjustments, incentive compensation tied to higher loan volume and bonus expense. The increase in occupancy and equipment expense was due to higher snow removal costs. The increase in data processing was due to a 2.9% increase in core processing fees. The decrease in amortization of intangible assets was due to an intangible asset becoming fully amortized. The decrease in other expenses was due to a write-down of an investment based on our redirecting the funds to a downpayment assistance program as well as borrowing prepayment penalties for the nine months ended September 30, 2025, partially offset by a significant one-time charitable contribution for the nine months ended September 30, 2026.

Previous wording

Income Taxes. Income tax expense increased by $349,000, or 83.7%, to $766,000 for the six months ended June 30, 2026, compared to $417,000 for the six months ended June 30, 2025. The increase in the income tax provision was due to higher operating income and offset by an increase in tax exempt income. The effective tax rates were 14.0% and 16.0% for the six months ended six months ended June 30, 2026 and 2025, respectively. Our effective tax rate for each period was below the statutory rate due to tax exempt income.

Current wording

Income Taxes. Income tax expense increased by $1.6 million, or 307.2%, to $2.2 million for the nine months ended September 30, 2026, compared to $539,000 for the nine months ended September 30, 2025. The increase in the income tax provision was due to higher pre-tax income and a decrease in tax exempt income. The effective tax rates were 19.4% and 14.5% for the nine months ended September 30, 2026 and 2025, respectively. Our effective tax rate for each period was below the statutory rate due to tax exempt income.

Previous wording

The tables above indicate that at June 30, 2026, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 2.5% year-one decrease in net interest income, and in the event of an instantaneous parallel 200 basis point decrease in interest rates, we would have experienced a 1.5% year-one increase in net interest income and at January 31, 2026, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 3.9% year-one decrease in net interest income, and in the event of an instantaneous parallel 200 basis point decrease in interest rates, we would have experienced a 3.0% year-one increase in net interest income.

Current wording

The tables above indicate that at September 30, 2026, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 1.9% year-one decrease in net interest income, and in the event of an instantaneous parallel 200 basis point decrease in interest rates, we would have experienced a 0.9% year-one increase in net interest income and at June 30, 2026, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 2.5% year-one decrease in net interest income, and in the event of an instantaneous parallel 200 basis point decrease in interest rates, we would have experienced a 1.5% year-one increase in net interest income.

Previous wording

Liquidity is our ability to meet current and future financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from maturities and calls of securities. We also have the ability to borrow from the Federal Home Loan Bank of Boston. At June 30, 2026, we had $85.5 million outstanding in advances from the Federal Home Loan Bank of Boston. At June 30, 2026, we had the ability to borrow $477.7 million in additional Federal Home Loan Bank of Boston advances. At June 30, 2026, we also had a $7.0 million line of credit with the Federal Home Loan Bank of Boston, none of which was drawn at that date. Additionally, at June 30, 2026, we had a $165.7 million secured line of credit through the Federal Reserve Borrower in Custody program. We also have available unsecured lines of credit with correspondent banks at interest rates that adjust daily, with borrowing capacity of $25.0 million at June 30, 2026. In addition, we have an agreement with AFX that provides us access to unsecured overnight borrowings with various counterparties. At June 30, 2026, we had a credit limit of $400.0 million. At June 30, 2026, no advances were outstanding under these lines of credit of the agreement with AFX. Lastly, as of June 30, 2026, we can access $266.3 million in funding through Intrafi One-Way-Buy, which enables banks to purchase wholesale funding at fixed or floating rates without collateralization requirements.

Current wording

Liquidity is our ability to meet current and future financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from maturities and calls of securities. We also have the ability to borrow from the Federal Home Loan Bank of Boston. At September 30, 2026, we had $45.5 million outstanding in advances from the Federal Home Loan Bank of Boston. At September 30, 2026, we had the ability to borrow $496.3 million in additional Federal Home Loan Bank of Boston advances. At September 30, 2026, we also had a $7.0 million line of credit with the Federal Home Loan Bank of Boston, none of which was drawn at that date. Additionally, at September 30, 2026, we had a $159.6 million secured line of credit through the Federal Reserve Borrower-in-Custody program. We also have available unsecured lines of credit with correspondent banks at interest rates that adjust daily, with borrowing capacity of $25.0 million at September 30, 2026. In addition, we have an agreement with AFX that provides us access to unsecured overnight borrowings with various counterparties. At September 30, 2026, we had a credit limit of $400.0 million. At September 30, 2026, no advances were outstanding under these lines of credit of the agreement with AFX. Lastly, as of September 30, 2026, we could access $263.9 million in funding through IntraFi One-Way-Buy, which enables banks to purchase wholesale funding at fixed or floating rates without collateralization requirements.

Previous wording

We target a Tier 1 basic surplus (calculated as (A) liquid assets (generally overnight funds, short-term investments and unpledged securities) minus (B) a percentage of short-term/potentially volatile liabilities (generally maturing short-term liabilities and a percentage of certificates of deposit and other deposits) divided by (C) total assets), of 5%. As of June 30, 2026, our Tier 1 basic surplus was 5.3%.

Current wording

We target a Tier 1 basic surplus (calculated as (A) liquid assets (generally overnight funds, short-term investments and unpledged securities) minus (B) a percentage of short-term/potentially volatile liabilities (generally maturing short-term liabilities and a percentage of certificates of deposit and other deposits) divided by (C) total assets), of 5%. As of September 30, 2026, our Tier 1 basic surplus was 8.0%.

Previous wording

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by (used in) operating activities was $11.1 million and ($47,000) for the six months ended June 30, 2026 and 2025, respectively. Net cash used in investing activities, which consists primarily of disbursements for loan originations and the purchase of investment securities, offset by principal collections on loans and proceeds from maturing securities and pay downs on securities, was $9.4 million and $24.9 million for the six months ended June 30, 2026 and 2025, respectively. Net cash provided by financing activities was $12.6 million and $47.3 million for the six months ended June 30, 2026 and 2025, respectively.

Current wording

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $30.3 million and $7.9 million for the nine months ended September 30, 2026 and 2025, respectively. Net cash (used in) provided by investing activities, which consists primarily of disbursements for loan originations and the purchase of investment securities, offset by principal collections on loans and proceeds from maturing securities and pay downs on securities, was $(69.0) million and $37.7 million for the nine months ended September 30, 2026 and 2025, respectively. Net cash provided by (used in) financing activities was $98.2 million and $(65.7) million for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

At June 30, 2026, BayCoast Bank exceeded its applicable regulatory capital requirement, and was considered “well capitalized” under regulatory guidelines.

Current wording

At September 30, 2026, BayCoast Bank exceeded its applicable regulatory capital requirements, and was considered “well capitalized” under regulatory guidelines.