Financial Performance - Provident Bancorp, Inc. reported net income of $2.7 million for Q3 2025, a decrease of 3.6% from $2.8 million in Q2 2025, but an increase from $716,000 in Q3 2024[1]. - Noninterest income for Q3 2025 was $1.6 million, a decrease of 27.3% from Q2 2025, but an increase of 5.9% from Q3 2024[9]. - The company reported a net income of $2,670,000 for the three months ended September 30, 2025, down from $2,824,000 in the previous quarter but up from $716,000 a year ago[23]. - The earnings per share (EPS) for the three months ended September 30, 2025, was $0.16, consistent with the previous quarter and up from $0.04 a year ago[23]. Income and Expenses - Net interest and dividend income for Q3 2025 was $13.2 million, a decrease of 2.5% from Q2 2025, but an increase of 6.3% from Q3 2024[3]. - Total interest expense was $8.1 million for Q3 2025, an increase of 4.5% from Q2 2025, but a decrease of 18.9% from Q3 2024[5]. - Total interest and dividend income for the three months ended September 30, 2025, was $21,310,000, slightly up from $21,300,000 in the previous quarter but down from $22,429,000 a year ago[23]. - Total interest expense for the three months ended September 30, 2025, was $8,124,000, compared to $7,773,000 in the previous quarter and $10,020,000 a year ago[23]. Assets and Liabilities - Total assets decreased by $49.3 million, or 3.2%, to $1.49 billion at September 30, 2025, compared to $1.54 billion at June 30, 2025[12]. - Total loans decreased to $1,271,378,000 as of September 30, 2025, from $1,314,265,000 as of June 30, 2025, representing a decline of approximately 3.2%[21]. - Total deposits were $1.23 billion at September 30, 2025, a decrease of 2.0% from $1.26 billion at June 30, 2025[14]. - The company reported a decrease in noninterest-bearing demand deposits to $280,288,000 as of September 30, 2025, from $287,927,000 as of June 30, 2025[21]. Credit and Allowances - The allowance for credit losses for loans was $20.4 million, or 1.61% of total loans, as of September 30, 2025, compared to $20.8 million, or 1.58% of total loans, as of June 30, 2025[13]. - The company recognized a credit loss benefit of $418,000 for Q3 2025, compared to a credit loss expense of $1.7 million for Q3 2024[7]. - Non-performing loans as a percentage of total loans stood at 2.71% as of September 30, 2025, compared to 1.57% a year earlier[30]. - The allowance for credit losses for loans as a percentage of total loans was 1.61% as of September 30, 2025, slightly up from 1.59% a year earlier[30]. Shareholders' Equity - Shareholders' equity totaled $241.0 million at September 30, 2025, an increase of 1.5% from June 30, 2025[15]. - Shareholders' equity increased to $241,029,000 as of September 30, 2025, compared to $237,371,000 as of June 30, 2025[21]. - Total equity increased to $236,769 thousand as of September 30, 2025, compared to $225,695 thousand a year earlier[30]. - Book value per share increased to $13.55 as of September 30, 2025, from $12.99 a year earlier[30]. Strategic Outlook - The company has a forward-looking statement regarding potential impacts from economic conditions, including interest rates and inflation, which may affect future performance[18]. - The company is in the process of a proposed merger with NB Bancorp, Inc., which may influence its strategic direction and market position[18]. Ratios and Margins - The return on average assets was 0.70% for Q3 2025, down from 0.74% in Q2 2025, and up from 0.18% in Q3 2024[2]. - The interest rate spread for the three months ended September 30, 2025, was 2.63%, down from 2.79% in the previous quarter and up from 2.19% a year ago[25]. - The net interest margin for the three months ended September 30, 2025, was 3.67%, compared to 3.77% in the previous quarter and 3.38% a year ago[25]. - The efficiency ratio improved to 78.10% for the nine months ended September 30, 2025, down from 86.65% in the same period of 2024[30].

Core Insights - Provident Bancorp, Inc. reported a net income of $2.7 million for Q3 2025, a slight decrease from $2.8 million in Q2 2025, but a significant increase from $716,000 in Q3 2024 [1] - For the nine months ended September 30, 2025, net income was $7.7 million, compared to $2.4 million for the same period in 2024, indicating strong year-over-year growth [1] Financial Performance - Net interest and dividend income for Q3 2025 was $13.2 million, down 2.5% from Q2 2025 but up 6.3% from Q3 2024 [2] - The interest rate spread and net interest margin were 2.63% and 3.67% for Q3 2025, respectively, compared to 2.79% and 3.77% in Q2 2025 [2] - Total interest expense for Q3 2025 was $8.1 million, an increase of 4.5% from Q2 2025 but a decrease of 18.9% from Q3 2024 [3] Credit Losses - The company recognized a credit loss benefit of $418,000 for Q3 2025, compared to a benefit of $378,000 in Q2 2025 and a loss of $1.7 million in Q3 2024 [5] - For the nine months ended September 30, 2025, the company recognized an $808,000 credit loss benefit, a significant improvement from a credit loss expense of $2.6 million for the same period in 2024 [5] Noninterest Income and Expenses - Noninterest income for Q3 2025 was $1.6 million, down from $2.2 million in Q2 2025 but up from $1.7 million in Q3 2024 [7] - Noninterest expense decreased to $11.4 million in Q3 2025, a reduction of 5.4% from Q2 2025 and 1.2% from Q3 2024 [8] Balance Sheet Highlights - Total assets were $1.49 billion as of September 30, 2025, a decrease of 3.2% from $1.54 billion at June 30, 2025 [11] - Total deposits were $1.23 billion, down 2.0% from $1.26 billion at June 30, 2025 [13] - Shareholders' equity increased to $241.0 million, up 1.5% from June 30, 2025, and 4.3% from December 31, 2024 [14]

Part I. Financial Information This section provides the Company's comprehensive financial data, including statements, notes, management's analysis, and market risk disclosures [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents the Company's unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive income, changes in shareholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial items [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the Company's assets, liabilities, and shareholders' equity at specific points in time **Consolidated Balance Sheet Highlights (in thousands):** | Item | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | Total Assets | $1,540,881 | $1,593,170 | $(52,289) | (3.3%) | | Cash and cash equivalents | $128,909 | $169,142 | $(40,233) | (23.8%) | | Net loans | $1,293,469 | $1,305,508 | $(12,039) | (0.9%) | | Total deposits | $1,257,978 | $1,308,960 | $(50,982) | (3.9%) | | Total borrowings | $34,495 | $44,563 | $(10,068) | (22.6%) | | Total shareholders' equity | $237,371 | $231,087 | $6,284 | 2.7% | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This statement details the Company's revenues, expenses, and net income or loss over specific reporting periods **Consolidated Statements of Operations Highlights (in thousands, except per share data):** | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest and dividend income | $21,300 | $21,872 | $41,880 | $43,907 | | Total interest expense | $7,773 | $9,919 | $15,478 | $19,468 | | Net interest and dividend income | $13,527 | $11,953 | $26,402 | $24,439 | | Total credit loss (benefit) expense | $(378) | $6,458 | $(390) | $877 | | Total noninterest income | $2,231 | $1,523 | $3,611 | $2,879 | | Total noninterest expense | $12,091 | $11,594 | $23,523 | $24,329 | | Net income (loss) | $2,824 | $(3,308) | $4,994 | $1,673 | | Basic earnings (loss) per share | $0.17 | $(0.20) | $0.30 | $0.10 | | Diluted earnings (loss) per share | $0.17 | $(0.20) | $0.29 | $0.10 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income items, reflecting the total change in equity from non-owner sources **Consolidated Statements of Comprehensive Income Highlights (in thousands):** | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $2,824 | $(3,308) | $4,994 | $1,673 | | Total other comprehensive (loss) gain | $(102) | $(35) | $47 | $(141) | | Comprehensive income (loss) | $2,722 | $(3,343) | $5,041 | $1,532 | [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This statement outlines the changes in the Company's equity accounts, including net income, other comprehensive income, and stock-based compensation **Changes in Shareholders' Equity (Six Months Ended June 30, 2025, in thousands):** | Item | Amount | | :------------------------------------ | :----- | | Balance, December 31, 2024 | $231,087 | | Net income | $4,994 | | Other comprehensive income | $47 | | Stock-based compensation expense, net | $730 | | ESOP shares earned | $518 | | Balance, June 30, 2025 | $237,371 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement categorizes cash inflows and outflows from operating, investing, and financing activities over a period **Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands):** | Cash Flow Activity | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Net cash provided by operating activities | $6,563 | $3,796 | | Net cash provided by (used in) investing activities | $14,259 | $(28,822) | | Net cash used in financing activities | $(61,055) | $(23,689) | | Net decrease in cash and cash equivalents | $(40,233) | $(48,715) | | Cash and cash equivalents at end of period | $128,909 | $171,617 | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the consolidated financial statements, clarifying accounting policies and specific financial items [Note 1. Basis of Presentation](index=9&type=section&id=Note%201.%20Basis%20of%20Presentation) This note describes the accounting principles and entities included in the consolidated financial statements - The unaudited financial statements are prepared in accordance with Form 10-Q and Regulation S-X, not full U.S. GAAP, and include normal recurring adjustments[19](index=19&type=chunk) - The consolidated financial statements include Provident Bancorp, Inc., its wholly owned subsidiary BankProv, and BankProv's wholly owned subsidiaries, Provident Security Corporation and 5 Market Street Security Corporation[20](index=20&type=chunk) [Note 2. Merger](index=9&type=section&id=Note%202.%20Merger) This note details the Company's merger agreement with NB Bancorp, Inc., including terms and conditions - On June 5, 2025, Provident Bancorp, Inc. entered into a Merger Agreement with NB Bancorp, Inc. and Needham Bank[21](index=21&type=chunk) - Shareholders can elect to receive either **0.691 shares of Buyer's common stock** or **$13.00 in cash** for each share of Company common stock, subject to proration to ensure **50% stock consideration**[22](index=22&type=chunk) - The merger is subject to various closing conditions, including shareholder and regulatory approvals[23](index=23&type=chunk) [Note 3. Corporate Structure](index=9&type=section&id=Note%203.%20Corporate%20Structure) This note outlines the Company's legal structure and the business activities of its subsidiaries - Provident Bancorp, Inc. is a Maryland corporation acting as the holding company for BankProv, a Massachusetts-chartered stock savings bank[24](index=24&type=chunk) - BankProv offers traditional and innovative banking solutions, with primary deposit products including checking, savings, and term certificates, and primary lending products including commercial real estate, commercial, and mortgage warehouse loans[24](index=24&type=chunk) [Note 4. Recent Accounting Pronouncements](index=10&type=section&id=Note%204.%20Recent%20Accounting%20Pronouncements) This note discusses recently issued accounting standards and their potential impact on the Company's financial statements - ASU No. 2023-09, 'Improvements to Income Tax Disclosures,' was issued in December 2023, effective for fiscal years beginning after December 15, 2024[26](index=26&type=chunk) - The ASU aims to enhance transparency of income tax disclosures by requiring specific categories in the rate reconciliation table and disaggregated income taxes paid[26](index=26&type=chunk) - The Company is currently evaluating the impact of this Accounting Standard Update on its consolidated financial statements[26](index=26&type=chunk) [Note 5. Debt Securities](index=10&type=section&id=Note%205.%20Debt%20Securities) This note provides details on the Company's debt securities portfolio, including fair value and credit loss assessment **Debt Securities Available-for-Sale (in thousands):** | Item | June 30, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :--------------------------------- | :------------------------- | :------------------------- | | State and municipal securities | $10,170 | $10,551 | | Asset-backed securities | $7,013 | $7,216 | | Government mortgage-backed securities | $7,351 | $7,926 | | **Total debt securities available-for-sale** | **$24,534** | **$25,693** | - Total debt securities available-for-sale decreased by **$1.16 million (4.5%)** from December 31, 2024, to June 30, 2025[28](index=28&type=chunk) - The Company determined that no allowance for credit loss for investment securities was required as of June 30, 2025, as it expects to recover its amortized cost basis and does not intend to sell securities in an unrealized loss position[32](index=32&type=chunk)[33](index=33&type=chunk) [Note 6. Loans and Allowance for Credit Losses for Loans](index=13&type=section&id=Note%206.%20Loans%20and%20Allowance%20for%20Credit%20Losses%20for%20Loans) This note details the Company's loan portfolio, non-accrual loans, and activity in the allowance for credit losses **Loan Portfolio Summary (in thousands):** | Loan Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Commercial real estate | $580,750 | $559,325 | | Construction and land development | $37,362 | $28,097 | | Residential real estate | $4,936 | $6,008 | | Mortgage warehouse | $284,154 | $259,181 | | Commercial | $160,596 | $163,927 | | Enterprise value | $246,382 | $309,786 | | Consumer | $85 | $271 | | **Total loans** | **$1,314,265** | **$1,326,595** | | Allowance for credit losses for loans | $(20,796) | $(21,087) | | **Net loans** | **$1,293,469** | **$1,305,508** | - Total loans decreased by **$12.3 million (0.9%)** from December 31, 2024, to June 30, 2025, primarily due to a **$63.4 million decrease** in enterprise value loans, partially offset by growth in commercial real estate, construction, and mortgage warehouse portfolios[40](index=40&type=chunk) **Non-accrual Loans (in thousands):** | Loan Type | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Commercial real estate | $54 | $57 | | Residential real estate | $420 | $366 | | Commercial | $1,536 | $1,543 | | Enterprise value | $32,430 | $18,920 | | Consumer | $0 | $1 | | **Total non-accrual loans** | **$34,440** | **$20,887** | - Non-accrual loans increased by **$13.6 million (64.9%)** from December 31, 2024, to June 30, 2025, primarily driven by two enterprise value relationships[59](index=59&type=chunk) **Allowance for Credit Losses for Loans Activity (Six Months Ended June 30, in thousands):** | Item | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Allowance at beginning of period | $21,087 | $21,571 | | Credit loss (benefit) expense for loans | $(314) | $924 | | Total charge-offs | $22 | $2,158 | | Total recoveries | $45 | $4 | | **Allowance at end of period** | **$20,796** | **$20,341** | | Allowance to total loans outstanding | 1.58% | 1.49% | [Note 7. Deposits](index=27&type=section&id=Note%207.%20Deposits) This note provides a breakdown of the Company's deposit balances by type and changes over the period **Deposit Balances by Type (in thousands):** | Deposit Type | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Noninterest-bearing demand | $287,927 | $351,528 | | Interest-bearing NOW | $103,115 | $83,270 | | Interest-bearing regular savings | $105,123 | $132,198 | | Interest-bearing money market deposits | $463,100 | $463,687 | | Interest-bearing certificates of deposit | $298,713 | $278,277 | | **Total deposits** | **$1,257,978** | **$1,308,960** | - Total deposits decreased by **$51.0 million (3.9%)** from December 31, 2024, to June 30, 2025, primarily due to a **$63.6 million decrease** in noninterest-bearing demand deposits and a **$27.1 million decrease** in regular savings, partially offset by increases in NOW accounts and certificates of deposit[77](index=77&type=chunk) - Brokered certificates of deposit increased by **$14.8 million** to **$165.0 million** at June 30, 2025, while listing service deposits decreased by **$23.5 million** to **$24.1 million**[77](index=77&type=chunk) [Note 8. Borrowings](index=27&type=section&id=Note%208.%20Borrowings) This note outlines the Company's short-term and long-term borrowings and available borrowing capacity **Borrowings Summary (in thousands):** | Item | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Short-term borrowings | $25,000 | $35,000 | | Long-term borrowings | $9,495 | $9,563 | | **Total borrowings** | **$34,495** | **$44,563** | - Total borrowings decreased by **$10.1 million (22.6%)** from December 31, 2024, to June 30, 2025, primarily due to the maturity of a short-term advance from the Federal Home Loan Bank (FHLB)[78](index=78&type=chunk)[150](index=150&type=chunk) - At June 30, 2025, the Company had an available borrowing capacity of **$154.1 million** from the FHLB (**$34.5 million** outstanding) and **$319.8 million** from the FRB Borrower-in-Custody program (none outstanding)[78](index=78&type=chunk)[79](index=79&type=chunk) [Note 9. Fair Value Measurements](index=28&type=section&id=Note%209.%20Fair%20Value%20Measurements) This note explains the Company's fair value hierarchy and provides measurements for financial instruments - The Company classifies fair value measurements into a three-level hierarchy: Level 1 (unadjusted quoted prices in active markets), Level 2 (observable inputs), and Level 3 (significant unobservable inputs)[85](index=85&type=chunk) **Fair Value Measurements on a Recurring Basis (June 30, 2025, in thousands):** | Item | Total | Level 1 | Level 2 | Level 3 | | :--------------------------------- | :---- | :------ | :------ | :------ | | State and municipal securities | $10,170 | $0 | $10,170 | $0 | | Asset-backed securities | $7,013 | $0 | $7,013 | $0 | | Government mortgage-backed securities | $7,351 | $0 | $7,351 | $0 | | **Total** | **$24,534** | **$0** | **$24,534** | **$0** | **Fair Value Measurements on a Non-Recurring Basis (June 30, 2025, in thousands):** | Item | Total | Level 1 | Level 2 | Level 3 | | :--------------- | :---- | :------ | :------ | :------ | | Enterprise value loans | $6,806 | $0 | $0 | $6,806 | | **Total** | **$6,806** | **$0** | **$0** | **$6,806** | - Non-recurring fair value measurements for enterprise value loans (Level 3) are based on business valuations using market assumptions with a range of **0% to 5%**[86](index=86&type=chunk) [Note 10. Regulatory Capital](index=30&type=section&id=Note%2010.%20Regulatory%20Capital) This note details BankProv's regulatory capital ratios and its 'well capitalized' status under FDIC guidelines - BankProv is subject to various regulatory capital requirements and has elected to be subject to the Community Bank Leverage Ratio (CBLR) framework[89](index=89&type=chunk)[91](index=91&type=chunk) **BankProv Regulatory Capital Ratios (in thousands):** | Item | June 30, 2025 (Actual) | December 31, 2024 (Actual) | Well Capitalized Threshold | | :-------------------------- | :--------------------- | :------------------------- | :------------------------- | | Community Bank Leverage Ratio | 13.91% | 12.74% | > 9.0% | - As of June 30, 2025, BankProv was categorized by the FDIC as **'well capitalized'** under the regulatory framework for prompt corrective action[91](index=91&type=chunk) - The Company's principal source of funds for dividend payments is dividends received from the Bank, which are restricted by federal and state banking regulations[94](index=94&type=chunk) [Note 11. Employee Stock Ownership Plan](index=31&type=section&id=Note%2011.%20Employee%20Stock%20Ownership%20Plan) This note describes the Company's ESOP, including compensation expense and unallocated share value - The Bank maintains an Employee Stock Ownership Plan (ESOP) to provide eligible employees the opportunity to own Company stock[96](index=96&type=chunk) **ESOP Compensation Expense (in thousands):** | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30 | $255 | $208 | | Six Months Ended June 30 | $518 | $433 | - The fair value of unallocated ESOP shares was approximately **$9.5 million** at June 30, 2025[98](index=98&type=chunk) [Note 12. Earnings (Loss) Per Common Share](index=32&type=section&id=Note%2012.%20Earnings%20%28Loss%29%20Per%20Common%20Share) This note presents basic and diluted earnings per common share calculations for the reporting periods **Earnings (Loss) Per Common Share:** | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic | $0.17 | $(0.20) | $0.30 | $0.10 | | Diluted | $0.17 | $(0.20) | $0.29 | $0.10 | - For periods with net loss, diluted loss per share is the same as basic net loss per share because dilutive common shares are not assumed if their effect is anti-dilutive[100](index=100&type=chunk) [Note 13. Share-Based Compensation](index=33&type=section&id=Note%2013.%20Share-Based%20Compensation) This note outlines the Company's equity incentive plans and the associated share-based compensation expense - The Company maintains the 2020 and 2016 Equity Incentive Plans, granting options, restricted stock, restricted units, or performance awards to directors, officers, and employees[102](index=102&type=chunk) **Share-Based Compensation Expense (in thousands):** | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Stock options expense | $173 | $131 | $347 | $261 | | Restricted stock awards expense | $191 | $131 | $383 | $262 | - No stock options were granted during the six months ended June 30, 2025[104](index=104&type=chunk) [Note 14. Leases](index=35&type=section&id=Note%2014.%20Leases) This note details the Company's lease arrangements, including a sale and leaseback transaction and related balances - During Q2 2025, the Bank executed a sale and leaseback transaction for its main office building, resulting in a **$745,000 gain** (other income) and a **$2.1 million ROU asset** and operating lease liability[110](index=110&type=chunk) **Operating Lease Balances (in thousands):** | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Operating lease ROU assets | $5,488 | $3,429 | | Operating lease liabilities | $5,939 | $3,862 | **Operating Lease Expense (in thousands):** | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Rent expense | $95 | $86 | $191 | $173 | [Note 15. Revenue Recognition](index=35&type=section&id=Note%2015.%20Revenue%20Recognition) This note describes the Company's policies for recognizing revenue from contracts with customers and transactional services - Revenue from contracts with customers is measured based on the consideration specified in the contract and recognized when performance obligations are satisfied, generally as services are rendered[114](index=114&type=chunk)[115](index=115&type=chunk) - Transactional revenue, such as card interchange fees, ATM fees, wire transfer fees, overdraft charges, and loan fees, is recognized at the point in time the transactions occur or services are provided[116](index=116&type=chunk) [Note 16. Qualified Affordable Housing Project Investments](index=37&type=section&id=Note%2016.%20Qualified%20Affordable%20Housing%20Project%20Investments) This note provides information on the Bank's investments in affordable housing projects, including amortization and tax credits - The Bank invests in qualified affordable housing projects, with an investment balance of **$5.0 million** at June 30, 2025[117](index=117&type=chunk) **Affordable Housing Project Financials (Six Months Ended June 30, in thousands):** | Item | 2025 | 2024 | | :----------------- | :--- | :--- | | Amortization expense | $358 | $356 | | Tax credits | $415 | $437 | [Note 17. Segment Information](index=37&type=section&id=Note%2017.%20Segment%20Information) This note clarifies that the Company operates as a single reportable segment for financial reporting purposes - The Company's sole reportable segment is determined by the Chief Financial Officer, who evaluates revenue streams and significant expenses to assess performance and allocate resources[118](index=118&type=chunk)[119](index=119&type=chunk) [Note 18. Commitments and Contingencies](index=37&type=section&id=Note%2018.%20Commitments%20and%20Contingencies) This note discloses significant commitments and potential liabilities, including a Wells Notice from the SEC - On October 24, 2024, the Company received a Wells Notice from the SEC regarding disclosures related to loans made to cryptocurrency mining companies[120](index=120&type=chunk) - As of June 30, 2025, the Bank recorded a contingency of **$350,000** in connection with this matter, but the ultimate outcome, including potential remedies like injunctions, disgorgement, and civil penalties, remains uncertain[121](index=121&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operation) This section provides management's perspective on the Company's financial performance and condition, highlighting key trends, changes, and future outlook. It covers balance sheet and income statement analysis, credit risk management, market risk, and liquidity, emphasizing the impact of recent events like the proposed merger and strategic portfolio adjustments [Forward-Looking Statements](index=38&type=section&id=Forward-Looking%20Statements) This section cautions readers about inherent uncertainties and risks associated with future-oriented information presented in the report - The report contains forward-looking statements regarding the Company's goals, business plans, loan and investment portfolio quality, and estimates of future costs and benefits[124](index=124&type=chunk) - These statements are subject to significant business, economic, and competitive uncertainties, including risks related to the proposed merger, general economic conditions, interest rate fluctuations, and regulatory changes[125](index=125&type=chunk) [Critical Accounting Policies](index=40&type=section&id=Critical%20Accounting%20Policies) This section identifies and explains the accounting policies requiring significant judgment and estimation, such as the Allowance for Credit Losses for Loans - The Allowance for Credit Losses for Loans (ACLL) is identified as the most critical accounting policy, requiring significant judgment due to inherent uncertainties in economic conditions and forecasts[128](index=128&type=chunk) - Changes in macroeconomic forecasts, particularly for the national unemployment rate, can significantly impact the calculated estimated credit losses[129](index=129&type=chunk) [Recent Events](index=40&type=section&id=Recent%20Events) This section highlights significant corporate developments, including the proposed merger and recent legislative changes - On June 5, 2025, the Company entered into a Merger Agreement with NB Bancorp, Inc. and Needham Bank, with shareholders having the right to elect stock or cash consideration, subject to proration and regulatory approvals[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - President Trump signed the 'One Big Beautiful Bill' on July 4, 2025; the Company is evaluating its income tax implications but does not expect a material impact[134](index=134&type=chunk) [Balance Sheet Analysis](index=40&type=section&id=Balance%20Sheet%20Analysis) This section analyzes key changes in the Company's assets, liabilities, and equity over the reporting period - Total assets decreased by **$52.3 million (3.3%)** to **$1.54 billion** at June 30, 2025, from **$1.59 billion** at December 31, 2024[135](index=135&type=chunk) - Cash and cash equivalents decreased by **$40.2 million (23.8%)** to **$128.9 million**, primarily due to a decrease in deposits[135](index=135&type=chunk) - Net loans decreased by **$12.0 million (0.9%)** to **$1.29 billion**, driven by a **$63.4 million (20.5%) decrease** in enterprise value loans, partially offset by growth in commercial real estate, construction, and mortgage warehouse portfolios[136](index=136&type=chunk)[137](index=137&type=chunk) [Loan Portfolio Concentrations](index=41&type=section&id=Loan%20Portfolio%20Concentrations) This section details the distribution of the Company's loan portfolio across various categories and their relative proportions **Loan Portfolio Concentrations:** | Loan Type | June 30, 2025 (Amount in thousands) | June 30, 2025 (% of total loans) | December 31, 2024 (Amount in thousands) | December 31, 2024 (% of total loans) | | :-------------------------------- | :-------------------------------- | :------------------------------- | :-------------------------------- | :------------------------------- | | Commercial real estate | $580,750 | 44.19% | $559,325 | 42.16% | | Mortgage warehouse | $284,154 | 21.62% | $259,181 | 19.54% | | Enterprise value | $246,382 | 18.75% | $309,786 | 23.35% | | Commercial | $160,596 | 12.22% | $163,927 | 12.36% | | Construction and land development | $37,362 | 2.84% | $28,097 | 2.12% | | Residential real estate | $4,936 | 0.37% | $6,008 | 0.45% | | Consumer | $85 | 0.01% | $271 | 0.02% | | **Total loans** | **$1,314,265** | **100.00%** | **$1,326,595** | **100.00%** | - Commercial real estate increased its concentration to **44.19%** of total loans, while enterprise value decreased to **18.75%** due to strategic runoff[137](index=137&type=chunk) [Commercial Real Estate Concentrations](index=42&type=section&id=Commercial%20Real%20Estate%20Concentrations) This section provides a detailed breakdown of the Company's commercial real estate loan portfolio by property type **Commercial Real Estate Concentrations (June 30, 2025):** | Segment | Amortized cost (in thousands) | Percent of commercial real estate | | :-------------------------------- | :---------------------------- | :-------------------------------- | | Industrial/manufacturing/warehouse | $91,848 | 15.81% | | Self-storage facility | $79,364 | 13.67% | | Multifamily | $72,510 | 12.49% | | Office | $61,151 | 10.53% | | Mixed use | $43,459 | 7.48% | | Mobile home park | $40,770 | 7.02% | | Hotel/motel/inn | $36,521 | 6.29% | | Campground/RV park | $34,469 | 5.93% | | Retail | $28,721 | 4.95% | | Residential one-to-four family | $27,448 | 4.73% | | Other commercial real estate | $64,489 | 11.10% | | **Total** | **$580,750** | **100.00%** | [Enterprise Value Concentrations](index=42&type=section&id=Enterprise%20Value%20Concentrations) This section outlines the distribution of enterprise value loans across different industry segments **Enterprise Value Concentrations (June 30, 2025):** | Segment | Amortized cost (in thousands) | Percent of enterprise value | | :-------------------------------- | :---------------------------- | :-------------------------- | | Consulting services | $50,104 | 20.34% | | Healthcare and social assistance | $35,192 | 14.28% | | Professional services | $32,467 | 13.18% | | Advertising | $27,201 | 11.04% | | Construction | $24,846 | 10.08% | | Personal services | $23,751 | 9.64% | | Industrial/manufacturing/warehouse | $19,724 | 8.00% | | Real estate services | $17,732 | 7.20% | | Other | $15,365 | 6.24% | | **Total** | **$246,382** | **100.00%** | - The 'Other' category was re-classified during Q1 2025 to improve reporting of concentrations and industry diversification within the enterprise value portfolio[138](index=138&type=chunk) [Credit Risk Management](index=42&type=section&id=Credit%20Risk%20Management) This section describes the Company's strategies and processes for identifying, measuring, monitoring, and controlling credit risk - The Company's credit risk management strategy focuses on well-defined credit policies, uniform underwriting criteria, and prompt attention to potential problem loans[138](index=138&type=chunk) - Asset quality is managed through strong internal controls, monitoring of key risk indicators, and both internal and independent third-party loan reviews[138](index=138&type=chunk) - Commercial real estate, enterprise value, construction, and commercial loans are assigned a risk rating and formally reviewed annually[138](index=138&type=chunk) [Delinquencies](index=44&type=section&id=Delinquencies) This section reports on the Company's past due loans and the factors contributing to changes in delinquency levels - Total past due loans increased by **$5.1 million** to **$7.3 million** at June 30, 2025, from **$2.2 million** at December 31, 2024[141](index=141&type=chunk) - The increase was primarily driven by a **$5.6 million** enterprise value relationship that became 90+ days past due and went on non-accrual status during Q2 2025[141](index=141&type=chunk) [Non-performing Assets](index=44&type=section&id=Non-performing%20Assets) This section provides an overview of the Company's non-accrual loans and other non-performing assets **Non-performing Assets (in thousands):** | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------ | :---------------- | | Total non-accrual loans | $34,440 | $20,887 | | **Total non-performing assets** | **$34,440** | **$20,887** | | Allowance for credit losses for loans as % of non-performing loans | 60.38% | 100.96% | | Non-performing loans as % of total loans | 2.62% | 1.57% | | Non-performing loans as % of total assets | 2.24% | 1.31% | - Non-accrual loans increased by **$13.6 million (64.9%)** to **$34.4 million** at June 30, 2025, primarily due to a **$10.5 million** enterprise value relationship and a **$5.6 million** enterprise value relationship being placed on non-accrual status[145](index=145&type=chunk) [Activity in the Allowance for Credit Losses for Loans](index=45&type=section&id=Activity%20in%20the%20Allowance%20for%20Credit%20Losses%20for%20Loans) This section details the changes in the allowance for credit losses, including provisions, charge-offs, and recoveries **Allowance for Credit Losses for Loans Activity (Six Months Ended June 30, in thousands):** | Item | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Allowance at beginning of period | $21,087 | $21,571 | | Credit loss (benefit) expense for loans | $(314) | $924 | | Total charge-offs | $22 | $2,158 | | Total recoveries | $45 | $4 | | **Allowance at end of period** | **$20,796** | **$20,341** | | Allowance to total loans outstanding | 1.58% | 1.49% | | Net charge-offs to average loans outstanding (annualized) | —% | 0.32% | - The Company recognized a **$314,000 credit loss benefit** for the six months ended June 30, 2025, compared to a **$924,000 provision** in the prior year[147](index=147&type=chunk) - The increase in the allowance from June 30, 2024, was primarily due to an additional **$3.7 million** in individually analyzed reserves for one enterprise value relationship, partially offset by an **$880,000 recovery** and reductions in the general allowance due to updated loss rates and changes in loan portfolio mix[147](index=147&type=chunk) [Deposits](index=46&type=section&id=Deposits) This section analyzes the Company's deposit trends, including changes in balances and distribution by type - Total deposits decreased by **$51.0 million (3.9%)** to **$1.26 billion** at June 30, 2025, from **$1.31 billion** at December 31, 2024[149](index=149&type=chunk) - This decrease was primarily due to a **$42.3 million decrease** in retail deposits and a **$23.5 million decrease** in listing service deposits, partially offset by a **$14.8 million increase** in brokered deposits[149](index=149&type=chunk) **Deposit Distribution by Account Type (June 30, 2025):** | Account Type | Amount (in thousands) | Percent | | :-------------------------- | :-------------------- | :------ | | Noninterest-bearing demand | $287,927 | 22.89% | | Interest-bearing NOW | $103,115 | 8.20% | | Interest-bearing regular savings | $81,020 | 6.44% | | Interest-bearing money market deposits | $463,099 | 36.81% | | Interest-bearing certificates of deposit | $133,713 | 10.63% | | Brokered certificates of deposit | $165,000 | 13.12% | | Listing service regular savings | $24,103 | 1.91% | | **Total** | **$1,257,978** | **100.00%** | [Borrowings](index=46&type=section&id=Borrowings) This section discusses the Company's borrowing activities, including changes in outstanding balances and available capacity - Total borrowings decreased by **$10.1 million (22.6%)** to **$34.5 million** at June 30, 2025, from **$44.6 million** at December 31, 2024, due to the maturity of a short-term advance from the FHLB[150](index=150&type=chunk) [Shareholders' Equity](index=46&type=section&id=Shareholders'%20Equity) This section examines the changes in the Company's shareholders' equity, including net income and book value per share - Shareholders' equity totaled **$237.4 million** at June 30, 2025, an increase of **$6.3 million (2.7%)** from December 31, 2024, primarily due to the Company's net income[151](index=151&type=chunk) - Shareholders' equity to total assets improved to **15.4%** at June 30, 2025, from **14.5%** at December 31, 2024[151](index=151&type=chunk) - Book value per share increased to **$13.35** at June 30, 2025, from **$12.99** at December 31, 2024[151](index=151&type=chunk) [Results of Operations for the Three Months Ended June 30, 2025 and 2024](index=47&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section analyzes the Company's financial performance for the three-month period, comparing current and prior year results - The Company reported net income of **$2.8 million** for Q2 2025, a significant turnaround from a net loss of **$3.3 million** in Q2 2024[153](index=153&type=chunk) **Key Performance Ratios (Three Months Ended June 30):** | Item | 2025 | 2024 | | :-------------------------- | :----- | :------- | | Return on average assets | 0.74% | (0.85%) | | Return on average equity | 4.77% | (5.80%) | [Net Interest and Dividend Income](index=47&type=section&id=Net%20Interest%20and%20Dividend%20Income%20%28Three%20Months%29) This section analyzes the Company's net interest and dividend income, interest rate spread, and net interest margin for the three-month period - Net interest and dividend income increased by **$1.6 million (13.2%)** to **$13.5 million** for Q2 2025[154](index=154&type=chunk) **Net Interest Metrics (Three Months Ended June 30):** | Item | 2025 | 2024 | | :------------------ | :----- | :----- | | Interest rate spread | 2.79% | 2.10% | | Net interest margin | 3.77% | 3.27% | [Average Balance Sheet and Related Yields and Rates](index=47&type=section&id=Average%20Balance%20Sheet%20and%20Related%20Yields%20and%20Rates%20%28Three%20Months%29) This section presents the average balances of interest-earning assets and interest-bearing liabilities, along with their respective yields and rates for the three-month period **Average Balance Sheet and Yields/Rates (Three Months Ended June 30, in thousands):** | Item | 2025 Average Balance | 2025 Yield/Rate | 2024 Average Balance | 2024 Yield/Rate | | :-------------------------------- | :------------------- | :-------------- | :------------------- | :-------------- | | Total interest-earning assets | $1,435,469 | 5.94% | $1,460,395 | 5.99% | | Total interest-bearing liabilities | $985,984 | 3.15% | $1,020,089 | 3.89% | [Rate/Volume Analysis](index=49&type=section&id=Rate%2FVolume%20Analysis%20%28Three%20Months%29) This section quantifies the impact of changes in interest rates and volumes on net interest income for the three-month period **Change in Net Interest Income Due to Rate/Volume (Three Months Ended June 30, in thousands):** | Item | Rate | Volume | Total | | :-------------------------------- | :----- | :----- | :---- | | Total interest-earning assets | $(263) | $(309) | $(572) | | Total interest-bearing liabilities | $(2,287) | $141 | $(2,146) | | **Change in net interest income** | **$2,024** | **$(450)** | **$1,574** | [Interest and Dividend Income](index=49&type=section&id=Interest%20and%20Dividend%20Income%20%28Three%20Months%29) This section analyzes the components of the Company's interest and dividend income and their respective yields for the three-month period - Total interest and dividend income decreased by **$572,000 (2.6%)** to **$21.3 million** for Q2 2025, with the yield on interest-earning assets decreasing by **5 basis points** to **5.94%**[160](index=160&type=chunk) - Interest on short-term investments decreased by **$334,000 (25.3%)** due to lower average balance and yield, and interest and fees on loans decreased by **$226,000 (1.1%)** due to lower average balance and yield[160](index=160&type=chunk) [Interest Expense](index=49&type=section&id=Interest%20Expense%20%28Three%20Months%29) This section details the Company's interest expense on deposits and borrowings, along with their average costs for the three-month period - Total interest expense decreased by **$2.1 million (21.6%)** to **$7.8 million** for Q2 2025, primarily due to a **$2.3 million (24.4%) decrease** in interest on deposits[161](index=161&type=chunk) - The cost of interest-bearing deposits decreased by **76 basis points** to **3.11%**, and the total cost of interest-bearing liabilities decreased by **74 basis points** to **3.15%**[161](index=161&type=chunk) [Provision for Credit Losses](index=49&type=section&id=Provision%20for%20Credit%20Losses%20%28Three%20Months%29) This section discusses the Company's provision or benefit for credit losses and the factors influencing these changes for the three-month period - The Company recognized a **$378,000 credit loss benefit** for Q2 2025, a significant change from a **$6.5 million provision** in Q2 2024[162](index=162&type=chunk) - The benefit was primarily driven by a reduction in pooled reserves, reflecting a decline in the higher-reserve enterprise value portfolio[162](index=162&type=chunk) [Noninterest Income](index=49&type=section&id=Noninterest%20Income%20%28Three%20Months%29) This section analyzes the various sources of the Company's noninterest income, including significant gains or losses for the three-month period - Noninterest income increased by **$708,000 (46.5%)** to **$2.2 million** for Q2 2025, primarily due to a **$745,000 gain** on a sale/leaseback transaction for the Bank's main office building[163](index=163&type=chunk) [Noninterest Expense](index=49&type=section&id=Noninterest%20Expense%20%28Three%20Months%29) This section details the Company's noninterest expenses, highlighting key drivers of changes for the three-month period - Noninterest expense increased by **$497,000 (4.3%)** to **$12.1 million** for Q2 2025[164](index=164&type=chunk) - This increase was primarily attributable to **$543,000** of merger-related expenses and a contingency related to the SEC Wells Notice, partially offset by improvements in organizational efficiency and operating cost reductions[164](index=164&type=chunk)[165](index=165&type=chunk) [Income Tax Expense](index=50&type=section&id=Income%20Tax%20Expense%20%28Three%20Months%29) This section discusses the Company's income tax provision or benefit and the effective tax rate for the three-month period - The Company recorded an income tax provision of **$1.2 million** for Q2 2025, reflecting an effective tax rate of **30.2%**, compared to a **$1.3 million benefit (27.7% effective tax rate)** in Q2 2024[166](index=166&type=chunk) - The increase in the effective tax rate was primarily attributable to non-deductible merger-related expenses and higher pre-tax income[166](index=166&type=chunk) [Results of Operations for the Six Months Ended June 30, 2025 and 2024](index=51&type=section&id=Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section analyzes the Company's financial performance for the six-month period, comparing current and prior year results - The Company reported net income of **$5.0 million** for the six months ended June 30, 2025, a substantial increase from **$1.7 million** in the prior year[167](index=167&type=chunk) **Key Performance Ratios (Six Months Ended June 30):** | Item | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Return on average assets | 0.66% | 0.21% | | Return on average equity | 4.25% | 1.48% | [Net Interest and Dividend Income](index=51&type=section&id=Net%20Interest%20and%20Dividend%20Income%20%28Six%20Months%29) This section analyzes the Company's net interest and dividend income, interest rate spread, and net interest margin for the six-month period - Net interest and dividend income increased by **$2.0 million (8.0%)** to **$26.4 million** for the six months ended June 30, 2025[168](index=168&type=chunk) **Net Interest Metrics (Six Months Ended June 30):** | Item | 2025 | 2024 | | :------------------ | :----- | :----- | | Interest rate spread | 2.70% | 2.19% | | Net interest margin | 3.71% | 3.33% | [Average Balance Sheet and Related Yields and Rates](index=51&type=section&id=Average%20Balance%20Sheet%20and%20Related%20Yields%20and%20Rates%20%28Six%20Months%29) This section presents the average balances of interest-earning assets and interest-bearing liabilities, along with their respective yields and rates for the six-month period **Average Balance Sheet and Yields/Rates (Six Months Ended June 30, in thousands):** | Item | 2025 Average Balance | 2025 Yield/Rate | 2024 Average Balance | 2024 Yield/Rate | | :-------------------------------- | :------------------- | :-------------- | :------------------- | :-------------- | | Total interest-earning assets | $1,422,840 | 5.89% | $1,468,609 | 5.98% | | Total interest-bearing liabilities | $970,946 | 3.19% | $1,027,212 | 3.79% | [Rate/Volume Analysis](index=53&type=section&id=Rate%2FVolume%20Analysis%20%28Six%20Months%29) This section quantifies the impact of changes in interest rates and volumes on net interest income for the six-month period **Change in Net Interest Income Due to Rate/Volume (Six Months Ended June 30, in thousands):** | Item | Rate | Volume | Total | | :-------------------------------- | :----- | :------- | :---- | | Total interest-earning assets | $(833) | $(1,194) | $(2,027) | | Total interest-bearing liabilities | $(4,013) | $23 | $(3,990) | | **Change in net interest income** | **$3,180** | **$(1,217)** | **$1,963** | [Interest and Dividend Income](index=53&type=section&id=Interest%20and%20Dividend%20Income%20%28Six%20Months%29) This section analyzes the components of the Company's interest and dividend income and their respective yields for the six-month period - Total interest and dividend income decreased by **$2.0 million (4.6%)** to **$41.9 million** for the six months ended June 30, 2025, with the yield on interest-earning assets decreasing by **9 basis points** to **5.89%**[174](index=174&type=chunk) - Interest on short-term investments decreased by **$1.1 million (34.5%)** and interest and fees on loans decreased by **$988,000 (2.4%)**, both due to lower average balances and yields[174](index=174&type=chunk) [Interest Expense](index=53&type=section&id=Interest%20Expense%20%28Six%20Months%29) This section details the Company's interest expense on deposits and borrowings, along with their average costs for the six-month period - Total interest expense decreased by **$4.0 million (20.5%)** to **$15.5 million** for the six months ended June 30, 2025[175](index=175&type=chunk) - Interest expense on deposits decreased by **$4.3 million (22.8%)** due to a **60 basis point decrease** in the average cost of interest-bearing deposits and lower average deposit balances[175](index=175&type=chunk) - Interest expense on borrowings increased by **$327,000 (62.8%)** due to a **$26.0 million increase** in the average balance of borrowings, partially offset by a **90 basis point decrease** in the average cost[175](index=175&type=chunk) [Provision for Credit Losses](index=53&type=section&id=Provision%20for%20Credit%20Losses%20%28Six%20Months%29) This section discusses the Company's provision or benefit for credit losses and the factors influencing these changes for the six-month period - The Company recognized a **$390,000 credit loss benefit** for the six months ended June 30, 2025, compared to an **$877,000 provision** in the prior year[176](index=176&type=chunk) - This benefit was primarily driven by a reduction in pooled reserves, reflecting a decline in the enterprise value portfolio, partially offset by a **$662,000 increase** in individually analyzed reserves[176](index=176&type=chunk) [Noninterest Income](index=54&type=section&id=Noninterest%20Income%20%28Six%20Months%29) This section analyzes the various sources of the Company's noninterest income, including significant gains or losses for the six-month period - Noninterest income increased by **$732,000 (25.4%)** to **$3.6 million** for the six months ended June 30, 2025, primarily due to a **$745,000 gain** on a sale/leaseback transaction for the Bank's main office building[177](index=177&type=chunk)[178](index=178&type=chunk) [Noninterest Expense](index=54&type=section&id=Noninterest%20Expense%20%28Six%20Months%29) This section details the Company's noninterest expenses, highlighting key drivers of changes for the six-month period - Noninterest expense decreased by **$806,000 (3.3%)** to **$23.5 million** for the six months ended June 30, 2025[179](index=179&type=chunk) - This decrease was primarily due to decreases in professional fees (**$605,000, 26.3%**) and salaries and employee benefits (**$524,000, 3.4%**), partially offset by a **$343,000 (26.2%) increase** in other expenses, including a contingency related to the SEC Wells Notice[179](index=179&type=chunk) [Income Tax Expense](index=54&type=section&id=Income%20Tax%20Expense%20%28Six%20Months%29) This section discusses the Company's income tax provision or benefit and the effective tax rate for the six-month period - The Company recorded an income tax provision of **$1.9 million** for the six months ended June 30, 2025, reflecting an effective tax rate of **27.4%**, compared to **$439,000 (20.8% effective tax rate)** in the prior year[180](index=180&type=chunk) - The increase in the effective tax rate is primarily attributable to non-deductible merger-related expenses and higher pre-tax income[180](index=180&type=chunk) [Management of Market Risk](index=54&type=section&id=Management%20of%20Market%20Risk) This section describes the Company's approach to identifying, measuring, and managing market risks, primarily interest rate risk - The Company analyzes its sensitivity to changes in interest rates through net interest income and economic value of equity (EVE) simulation models[181](index=181&type=chunk)[184](index=184&type=chunk) [Net Interest Income Simulation](index=54&type=section&id=Net%20Interest%20Income%20Simulation) This section presents the estimated impact of various interest rate scenarios on the Company's net interest income - The simulation estimates changes in net interest income over a 12-month period, assuming immediate and permanent, parallel shifts in the yield curve[181](index=181&type=chunk) **Estimated Changes in Net Interest Income (June 30, 2025):** | Changes in Interest Rates (Basis Points) | Change | | :------------------------------------ | :----- | | 300 | (6.90)% | | 200 | (4.40)% | | 100 | (2.10)% | | 0 | — | | (100) | (0.20)% | | (200) | (1.10)% | | (300) | (3.20)% | [Economic Value of Equity Simulation](index=55&type=section&id=Economic%20Value%20of%20Equity%20Simulation) This section quantifies the estimated changes in the Company's economic value of equity under different interest rate environments - The EVE model quantifies the Company's economic value (present value of assets less liabilities) under various interest rate scenarios[184](index=184&type=chunk) **Estimated Changes in Economic Value of Equity (June 30, 2025):** | Changes in Interest Rates (Basis Points) | Change | | :------------------------------------ | :----- | | 300 | (6.20)% | | 200 | (4.30)% | | 100 | (2.00)% | | 0 | — | | (100) | (0.50)% | | (200) | (2.40)% | | (300) | (6.40)% | [Liquidity and Capital Resources](index=56&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's sources and uses of funds, liquid assets, borrowing capacity, and regulatory capital position - The Company's primary sources of funds include deposit inflows, borrowings, and loan repayments and maturities[186](index=186&type=chunk) - At June 30, 2025, liquid assets included **$128.9 million** in cash and cash equivalents, **$24.5 million** in available-for-sale debt securities, and **$251.0 million** in short-term warehouse loans[188](index=188&type=chunk) - The Company had significant unused borrowing capacity of **$119.6 million** with the FHLB and **$319.8 million** with the FRB Borrower-in-Custody program at June 30, 2025[189](index=189&type=chunk) - BankProv exceeded all applicable regulatory capital requirements and was considered **'well capitalized'** at June 30, 2025[194](index=194&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item refers to the 'Management of Market Risk' section within Item 2 for detailed quantitative and qualitative disclosures regarding the Company's exposure to market risks, particularly interest rate risk - Disclosures about market risk are incorporated by reference to Item 2, 'Management's Discussion and Analysis of Financial Condition and Results of Operations – Management Market Risk'[195](index=195&type=chunk) [Item 4. Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the President and CEO and the Executive Vice President and CFO, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025. No material changes in internal control over financial reporting occurred during the quarter - The Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[196](index=196&type=chunk)[197](index=197&type=chunk) - No changes in the Company's internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended June 30, 2025[197](index=197&type=chunk) Part II. Other Information This section provides additional disclosures not covered in the financial statements, including legal proceedings, risk factors, and equity sales [Item 1. Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) The Company received a Wells Notice from the SEC on October 24, 2024, regarding disclosures related to cryptocurrency mining loans. A $350,000 contingency has been recorded, but the ultimate outcome and potential remedies remain uncertain - The Company received a Wells Notice from the SEC on October 24, 2024, concerning disclosures regarding loans made to cryptocurrency mining companies[198](index=198&type=chunk) - A contingency of **$350,000** has been recorded as of June 30, 2025, in connection with this matter[199](index=199&type=chunk) - The ultimate outcome, including potential remedies such as injunctions, disgorgement, and civil money penalties, remains uncertain[199](index=199&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, and the Proxy Statement/Prospectus filed by NB Bancorp, Inc. on July 30, 2025 - No material changes in risk factors applicable to the Company from those disclosed in its Annual Report on Form 10-K for December 31, 2024, and NB Bancorp, Inc.'s Proxy Statement/Prospectus filed on July 30, 2025[200](index=200&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company did not repurchase any common stock under its authorized program during the six months ended June 30, 2025, and suspended the program following its entry into the Merger Agreement on June 5, 2025 - The Company did not repurchase any common stock under its authorized program during the six months ended June 30, 2025[205](index=205&type=chunk) - The stock repurchase program was suspended following the Company's entry into the Merger Agreement on June 5, 2025[205](index=205&type=chunk) [Item 3. Defaults upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) No defaults upon senior securities were reported by the Company - No defaults upon senior securities were reported[202](index=202&type=chunk) [Item 4. Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - This item is not applicable to the registrant[203](index=203&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) No director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No director or officer of the Company adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[204](index=204&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the 10-Q report, including the Merger Agreement, corporate organizational documents, CEO/CFO certifications, and iXBRL financial statements - Key exhibits include the Agreement and Plan of Merger (2.1), Articles of Incorporation (3.1), Bylaws (3.2, 3.3, 3.4), Certifications of Chief Executive Officer and Chief Financial Officer (31.1, 31.2, 32), and iXBRL formatted financial statements (101, 104)[208](index=208&type=chunk) Signatures This section contains the official signatures of the Company's principal executive and financial officers, attesting to the report's accuracy - The report was signed on August 14, 2025, by Joseph B. Reilly, President and Chief Executive Officer, and Kenneth R. Fisher, Executive Vice President and Chief Financial Officer[210](index=210&type=chunk)

Exhibit 99.1 Provident Bancorp, Inc. Reports Net Income of $2.8 Million for the Quarter Ended June 30, 2025 Company Release 07/24/2025 Amesbury, Massachusetts — Provident Bancorp, Inc. (the "Company") (NasdaqCM: PVBC), the holding company for BankProv (the "Bank"), reported net income for the quarter ended June 30, 2025 of $2.8 million, or $0.17 per diluted share, compared to net income of $2.2 million, or $0.13 per diluted share, for the quarter ended March 31, 2025, and a net loss of $3.3 million, or $0.2 ...

Core Viewpoint - Provident Bancorp, Inc. reported improved financial performance for the second quarter of 2025, including a net income of $2.8 million, driven by increased net interest income and a proposed merger with Needham Bank [1][3]. Financial Performance - Net income for Q2 2025 was $2.8 million, or $0.17 per diluted share, compared to $2.2 million, or $0.13 per diluted share in Q1 2025, and a net loss of $3.3 million in Q2 2024 [1]. - For the first half of 2025, net income was $5.0 million, or $0.29 per diluted share, compared to $1.7 million, or $0.10 per diluted share for the same period in 2024 [1]. Return Ratios - Return on average assets was 0.74% for Q2 2025, up from 0.58% in Q1 2025, and a loss of 0.85% in Q2 2024 [2]. - Return on average equity was 4.77% for Q2 2025, compared to 3.71% in Q1 2025 and a loss of 5.80% in Q2 2024 [2]. Interest Income - Net interest and dividend income for Q2 2025 was $13.5 million, an increase of $652,000, or 5.1%, from Q1 2025, and $1.6 million, or 13.2%, from Q2 2024 [3]. - Total interest and dividend income for Q2 2025 was $21.3 million, a 3.5% increase from Q1 2025, but a 2.6% decrease from Q2 2024 [4]. Interest Expense - Total interest expense for Q2 2025 was $7.8 million, a slight increase of 0.9% from Q1 2025, but a significant decrease of 21.6% from Q2 2024 [5]. - Interest expense on deposits was $7.3 million for Q2 2025, down 1.5% from Q1 2025, and down 24.4% from Q2 2024 [5]. Credit Losses - The company recognized a credit loss benefit of $378,000 for Q2 2025, compared to a benefit of $12,000 in Q1 2025, and a credit loss expense of $6.5 million in Q2 2024 [7]. - For the first half of 2025, the company recognized a credit loss benefit of $390,000, compared to a credit loss expense of $877,000 for the same period in 2024 [7]. Noninterest Income and Expenses - Noninterest income for Q2 2025 was $2.2 million, an increase from $1.4 million in Q1 2025 and $1.5 million in Q2 2024 [9]. - Noninterest expense for Q2 2025 was $12.1 million, an increase of 5.8% from Q1 2025, and an increase of 4.3% from Q2 2024 [11]. Tax Provision - The company recorded an income tax provision of $1.2 million for Q2 2025, reflecting an effective tax rate of 30.2%, compared to $665,000 and a 23.5% rate in Q1 2025 [12]. Balance Sheet Highlights - Total assets were $1.54 billion at June 30, 2025, a decrease of 0.8% from March 31, 2025, and a decrease of 3.3% from December 31, 2024 [13]. - Total deposits increased to $1.26 billion at June 30, 2025, a 6.2% increase from March 31, 2025, but a decrease of 3.9% from December 31, 2024 [15]. - Shareholders' equity totaled $237.4 million at June 30, 2025, an increase of 1.4% from March 31, 2025 [16].

Core Viewpoint - Halper Sadeh LLC is investigating several companies for potential violations of federal securities laws and breaches of fiduciary duties to shareholders related to their proposed sales [1][2][3] Group 1: Provident Bancorp, Inc. - Provident Bancorp, Inc. is set to be sold to NB Bancorp, Inc., with shareholders receiving either 0.691 shares of NB Bancorp common stock or $13.00 in cash for each share of Provident common stock [1] Group 2: Know Labs, Inc. - Know Labs, Inc. is in the process of being sold to Goldeneye 1995 LLC, and shareholders are encouraged to explore their legal rights and options [2] Group 3: Heliogen, Inc. - Heliogen, Inc. is proposed to be sold to Zeo Energy Corp., with securityholders expected to receive shares of Zeo's Class A common stock valued at approximately $10 million, based on a price of $1.5859 per share [3] Group 4: Legal Representation - Halper Sadeh LLC may seek increased consideration for shareholders and additional disclosures regarding the proposed transactions, operating on a contingent fee basis [4]

Core Viewpoint - Halper Sadeh LLC is investigating the fairness of the proposed sale of Provident Bancorp, Inc. to NB Bancorp, Inc. for Provident shareholders [1][3] Group 1: Transaction Details - Provident shareholders will receive either 0.691 shares of NB Bancorp common stock or $13.00 in cash for each share of Provident common stock [1] - The investigation focuses on whether the board of directors of Provident acted in the best interest of shareholders during the transaction [3] Group 2: Legal Considerations - The investigation questions if Provident and its board violated federal securities laws or breached fiduciary duties by not obtaining the best possible consideration for shareholders [3] - Halper Sadeh LLC may seek increased consideration, additional disclosures, and other benefits for Provident shareholders [4]

Core Viewpoint - NB Bancorp, Inc. and Provident Bancorp, Inc. have entered into a definitive merger agreement, with Provident merging into Needham in a stock and cash transaction valued at approximately $211.8 million [2][3] Summary by Sections Merger Agreement - The merger agreement was unanimously approved by both boards, allowing Provident stockholders to choose between receiving 0.691 shares of Needham common stock or $13.00 in cash for each share of Provident common stock [2] - The transaction is structured to qualify as a tax-free reorganization for federal income tax purposes [2] Financial Implications - Needham anticipates issuing approximately 5.9 million shares of its common stock as part of the merger [2] - The transaction is expected to dilute Needham's tangible book value by approximately 6.1% and has an earn back period of about 2.7 years [2] - The merger is projected to be approximately 19% accretive to NB Bancorp's earnings per share in 2026, assuming full phase-in of cost savings [6] Operational Impact - The combined organization will operate 18 branches across Metrowest, Greater Boston, the North Shore in Massachusetts, and Southern New Hampshire [4] - Total assets at transaction close are expected to be around $7.1 billion, with $5.9 billion in total deposits and $6.1 billion in total loans [4] Leadership and Governance - Joseph B. Reilly, President and CEO of Provident, will join the board of directors of Needham and Needham Bank [3] - All Provident directors and executive officers have agreed to vote in favor of the merger [3] Market Position - The pro forma company is expected to be the sixth largest Massachusetts-based bank in the Boston MSA based on deposit market share [4] - Needham will maintain significant liquidity and exceed regulatory minimums to be considered well-capitalized after the merger [4]

Financial Performance - Net income for the quarter ended March 31, 2025, was $2.2 million, or $0.13 per diluted share, compared to $5.0 million, or $0.30 per diluted share, for the same quarter in 2024[149]. - Net interest and dividend income increased by $389,000, or 3.1%, to $12.9 million for the quarter ended March 31, 2025[150]. - Total interest and dividend income for Q1 2025 was $20.6 million, a decrease of $1.5 million, or 6.6%, from Q1 2024[156]. - Net interest income for Q1 2025 was $12.875 million, compared to $12.486 million in Q1 2024, reflecting an increase[157]. - Interest expense decreased to $7.7 million in Q1 2025, down $1.8 million, or 19.3%, from Q1 2024[157]. - The provision for credit losses was a benefit of $12,000 in Q1 2025, compared to a benefit of $5.6 million in Q1 2024[158]. - Noninterest expense decreased to $11.4 million in Q1 2025, a reduction of $1.3 million, or 10.2%, from Q1 2024[159]. - The effective tax rate for Q1 2025 was 23.5%, down from 25.5% in Q1 2024[160]. - The yield on interest-earning assets was 5.84% for Q1 2025, a decrease of 13 basis points from Q1 2024[156]. - The estimated net interest income for the next 12 months at current rates is projected to be $55.235 million[163]. Asset and Loan Management - Total assets decreased by $39.2 million, or 2.5%, to $1.55 billion as of March 31, 2025, from $1.59 billion at December 31, 2024[128]. - Cash and cash equivalents decreased by $44.2 million, or 26.1%, to $125.0 million at March 31, 2025, primarily due to a decrease in deposits[129]. - Net loans increased by $5.7 million, or 0.4%, to $1.31 billion at March 31, 2025, driven by commercial loan growth of $36.7 million, or 4.9%[131]. - Commercial real estate loans increased to $587.5 million, representing 44.1% of total loans, up from 42.2% at December 31, 2024[132]. - The enterprise value loan segment decreased by $47.3 million, or 15.3%, bringing it below 20.0% of the Bank's loan portfolio[131]. - Total past due loans increased by $15.3 million to $17.5 million at March 31, 2025, from $2.2 million at December 31, 2024[137]. - Non-accrual loans rose by $10.5 million, or 50.4%, to $31.4 million, representing 2.36% of total loans outstanding at March 31, 2025[141]. - Non-performing loans as a percent of total loans increased to 2.36% at March 31, 2025, from 1.57% at December 31, 2024[140]. - The allowance for credit losses for loans was $21.16 million as of March 31, 2025, compared to $21.09 million at December 31, 2024[132]. - The allowance for credit losses for loans increased to $21.16 million at the end of the period, representing 1.59% of total loans outstanding[143]. Deposits and Funding - Total deposits decreased by $124.4 million, or 9.5%, to $1.18 billion at March 31, 2025, from $1.31 billion at December 31, 2024[145]. - Total borrowings increased by $83.0 million, or 186.2%, to $127.5 million at March 31, 2025, due to a decrease in deposits[145]. - A significant decrease in deposits could lead the Company to seek alternative funding sources, potentially increasing funding costs[172]. - The Company maintains access to multiple liquidity sources, but elevated funding costs could adversely affect its net interest margin[173]. - Warehouse loans, totaling $235.1 million as of March 31, 2025, provide an additional source of liquidity[168]. - The Company had a borrowing capacity of $157.2 million with the Federal Home Loan Bank of Boston, with $35.0 million in short-term advances outstanding[169]. - The Company had $140.7 million in unadvanced funds to borrowers as of March 31, 2025, down from $156.5 million at December 31, 2024[171]. Capital and Risk Management - Shareholders' equity totaled $234.0 million, an increase of $2.9 million, or 1.3%, from December 31, 2024, with a book value per share of $13.16[147]. - The Bank's strategy to transform its balance sheet to that of a traditional community bank has positively impacted earnings power while reducing exposure to riskier segments[127]. - The Bank's credit risk management strategy includes well-defined credit policies and prompt attention to potential problem loans[133]. - The macroeconomic forecast, particularly the national unemployment rate, significantly impacts the calculated estimated credit losses[125]. - As of March 31, 2025, the Economic Value of Equity (EVE) is $289,559,000, with a decrease of 7.60% if interest rates rise by 300 basis points[164]. - The Company is considered "well capitalized" under regulatory guidelines, exceeding all applicable regulatory capital requirements as of March 31, 2025[174]. - The Company regularly reviews its investments in liquid assets based on expected loan demand and deposit flows[167].

Financial Performance - Net income for Q1 2025 was $2.2 million, down 55.7% from $4.9 million in Q4 2024 and down 56.0% from $5.0 million in Q1 2024[1] - Net income for the first quarter of 2025 was $2,170 thousand, a significant decline from $4,882 thousand in the previous quarter, representing a decrease of about 55.6%[19] - Basic earnings per share decreased to $0.13 for the three months ended March 31, 2025, down from $0.29 in the previous quarter, a decline of approximately 55.2%[19] Income and Revenue - Net interest and dividend income decreased by $768,000, or 5.6%, from Q4 2024 to $12.9 million, but increased by $389,000, or 3.1%, compared to Q1 2024[2] - Total interest and dividend income was $20.6 million, a decrease of $2.5 million, or 11.0%, from Q4 2024 and a decrease of $1.5 million, or 6.6%, from Q1 2024[3] - Net interest and dividend income after credit loss benefit was $12,887 thousand for the three months ended March 31, 2025, down from $15,210 thousand in the previous quarter, a decrease of approximately 15.4%[19] - Interest and dividend income totaled $20,580 thousand for the three months ended March 31, 2025, down from $23,121 thousand in the previous quarter, a decrease of about 11.1%[19] Assets and Liabilities - Total assets decreased by $39.2 million, or 2.5%, to $1.55 billion from Q4 2024[9] - Total assets as of March 31, 2025, were $1,502,348,000, a decrease from $1,601,905,000 at December 31, 2024, and an increase from $1,575,713,000 at March 31, 2024[21] - Total deposits decreased by $124.4 million, or 9.5%, to $1.18 billion from Q4 2024, primarily in specialty deposits and enterprise value portfolio[11] - Total deposits decreased to $1,184,522 thousand as of March 31, 2025, down from $1,308,960 thousand at December 31, 2024, a decline of about 9.5%[17] - Total loans increased slightly to $1,332,355 thousand, compared to $1,326,595 thousand at the end of 2024, reflecting a growth of about 0.4%[17] - Total borrowings increased significantly to $127,529 thousand as of March 31, 2025, compared to $44,563 thousand at December 31, 2024, an increase of approximately 186.5%[17] Credit Quality - Non-accrual loans increased to $31.4 million, or 2.02% of total assets, from $20.9 million, or 1.31% of total assets, in Q4 2024[10] - Non-performing loans as a percentage of total loans increased to 2.36% from 1.57% in the previous quarter and 0.91% a year ago[24] - Total non-accrual loans rose to $31,419,000, compared to $20,887,000 in the previous quarter and $12,352,000 a year ago[24] - The allowance for credit losses for loans was $21.2 million, or 1.59% of total loans, unchanged from Q4 2024[10] - The allowance for credit losses for loans remained relatively stable at $21,160 thousand as of March 31, 2025, compared to $21,087 thousand at the end of 2024[17] - The allowance for credit losses for loans as a percentage of total loans was 1.59%, unchanged from the previous quarter but up from 1.18% a year ago[24] Expenses - Noninterest expense increased by $1.3 million, or 12.5%, from Q4 2024 to $11.4 million, primarily due to a management fee reversal[7] - Noninterest expense increased to $11,432 thousand for the first quarter of 2025, compared to $10,114 thousand in the previous quarter, an increase of approximately 13.0%[19] Tax and Equity - The effective tax rate for Q1 2025 was 23.5%, compared to 24.0% in Q4 2024[8] - Shareholders' equity increased by $2.9 million, or 1.3%, to $234.0 million, with a book value per share of $13.16[12] - Book value per share increased to $13.16 from $12.99 in the previous quarter and $12.87 a year ago[24] - Market value per share was $11.48, slightly up from $11.40 in the previous quarter and significantly higher than $9.10 a year ago[24] Efficiency and Ratios - The efficiency ratio for the current quarter was 80.20%, significantly higher than 67.57% in the previous quarter and 92.00% a year ago[24] - Average interest-earning assets to average interest-bearing liabilities ratio improved to 147.54% from 143.37% in the previous quarter and 142.78% a year ago[24] - The interest rate spread increased to 2.62% for the current quarter, up from 2.53% in the previous quarter and 2.28% a year ago[24]