Winchester Bancorp swings to $4.4M profit
Winchester Bancorp returned to profitability in 2026 with strong loan growth but carries sizable commercial real estate concentrations and meaningful interest-rate sensitivity.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Winchester Bancorp, Inc. (WSBK), the holding company for Winchester Savings Bank, reports a growing community bank franchise focused on real estate lending in eastern Massachusetts. Following its April 2025 mutual holding company reorganization, the company sold 3,997,012 shares at $10.00 per share and issued additional shares to its mutual holding company and charitable foundation.
At June 30, 2026, Winchester Bancorp had $1.1 billion in total assets, deposits of $809.2 million, and stockholders’ equity of $120.5 million. The company generated net income of $4.4 million for 2026, compared with a net loss of $874,000 in 2025, while total gross loans expanded to $873.8 million, heavily concentrated in residential, commercial, multifamily, and construction credits. Non‑accrual loans declined to $1.6 million, and the allowance for credit losses stood at $4.8 million, or 0.55% of total loans and 300.82% of nonperforming loans. Management highlights elevated concentrations in commercial and multifamily real estate, interest‑rate sensitivity, and a geographically concentrated Massachusetts footprint as key risk factors.
Positive
- Return to profitability: Net income was $4.4 million in fiscal 2026 versus a net loss of $874,000 in 2025, indicating a meaningful turnaround in earnings.
- Loan growth: Total gross loans grew to $873.8 million from $754.1 million year over year, expanding the company’s interest-earning asset base.
- Improved asset quality: Total non-accrual loans declined to $1.6 million from $2.2 million, and reserve coverage reached 300.82% of nonperforming loans.
Negative
- Concentrated commercial exposure: Commercial and multi-family real estate loans totaled $319.2 million, or 36.5% of loans, equaling 320.3% of bank capital and exceeding the 300% regulatory concentration guideline.
- Construction risk: Construction loans were $116.4 million, or 13.3% of loans, largely in commercial projects that depend on successful completion and lease-up or sale.
- Interest-rate sensitivity: A modeled 200 bp rate increase is estimated to reduce economic value of equity by 20.1% and net interest income by 17.9%.
- Geographic and collateral concentration: The loan book is heavily secured by real estate in Middlesex and surrounding Massachusetts counties, heightening exposure to a local real estate downturn.
Filing Explained
The mutual holding company’s required majority ownership remains the key control constraint for existing public holders.
As an audited annual report, this filing updates the ownership baseline: 9,295,376 common shares were outstanding on
The filing says the company may need to raise capital in the future through additional common shares and that this could dilute current stockholders; issuing additional shares increases the total share count and reduces an existing holder’s percentage ownership absent offsetting changes.
Key Figures
Key Terms
mutual holding company reorganization regulatory
allowance for credit losses financial
non-accrual loans financial
community bank leverage ratio regulatory
economic value of equity financial
commercial real estate lending concentrations financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How did Winchester Bancorp (WSBK) perform financially in fiscal 2026?
What is the size and mix of WSBK’s loan portfolio?
How strong are Winchester Bancorp’s asset quality metrics?
What capital and regulatory status does WSBK report?
What are the main risk concentrations for Winchester Bancorp (WSBK)?
How many WSBK shares are outstanding and what is the market value of non-affiliate holdings?
What was the impact of the 2025 mutual holding company reorganization on WSBK’s equity?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO |
Commission File Number
(Exact name of Registrant as specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
|
The |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
|
☐ |
|
Accelerated filer |
|
☐ |
|
|
|
|
|||
|
☒ |
|
Smaller reporting company |
|
||
|
|
|
|
|
|
|
Emerging growth company |
|
|
|
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock as of December 31, 2025, was $
The number of shares of Registrant’s Common Stock outstanding as of September 10, 2026 was
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 2026 Annual Meeting of Shareholders are incorporated by reference in Part III of this Annual Report on Form 10-K.
Table of Contents
|
|
Page |
PART I |
|
|
Item 1. |
Business |
1 |
Item 1A. |
Risk Factors |
20 |
Item 1B. |
Unresolved Staff Comments |
32 |
Item 1C. |
Cybersecurity |
32 |
Item 2. |
Properties |
34 |
Item 3. |
Legal Proceedings |
34 |
Item 4. |
Mine Safety Disclosures |
34 |
|
|
|
PART II |
|
|
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
35 |
Item 6. |
[Reserved] |
35 |
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
36 |
Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk |
47 |
Item 8. |
Financial Statements and Supplementary Data |
47 |
Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
47 |
Item 9A. |
Controls and Procedures |
47 |
Item 9B. |
Other Information |
47 |
Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
47 |
|
|
|
PART III |
|
|
Item 10. |
Directors, Executive Officers and Corporate Governance |
48 |
Item 11. |
Executive Compensation |
48 |
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
48 |
Item 13. |
Certain Relationships and Related Transactions, and Director Independence |
48 |
Item 14. |
Principal Accounting Fees and Services |
48 |
|
|
|
PART IV |
|
|
Item 15. |
Exhibits, Financial Statement Schedules |
49 |
Item 16. |
Form 10-K Summary |
50 |
i
PART I
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which can be identified by the use of words such as “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “estimate,” “expect,” “indicate,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would” and words of similar meaning. These forward-looking statements include, but are not limited to:
These forward-looking statements are based on our current beliefs and expectations and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this report.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
Item 1. Business.
Winchester Bancorp, Inc.
Winchester Bancorp, Inc. (the “Company”, "we", "our", "us") is a Maryland corporation that was incorporated in December 2024 to become the registered bank holding company of Winchester Savings Bank (the “Bank”) as part of the mutual holding company reorganization of the Bank, which was completed on April 30, 2025.
1
In connection with the reorganization, the Company sold 3,997,012 shares of common stock at $10.00 per share for gross proceeds of $39,970,000, and also issued 5,112,457 shares of common stock to Winchester Bancorp, MHC, and 185,907 shares of common stock to the Winchester Savings Bank Charitable Foundation, Inc.
At June 30, 2026, we had total assets of $1.1 billion, total deposits of $809.2 million and total stockholders' equity of $120.5 million. We had net income of $4.4 million and net loss of $874,000, for the years ended June 30, 2026 and 2025, respectively.
The Company's corporate office is located at 661 Main Street, Winchester, Massachusetts 01890, and our telephone number is (781) 729-2130.
The Company's filings with the SEC, including copies of annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these filings, if any, are available, free of charge, as soon as practicable after they are filed with the Securities and Exchange Commission (the “SEC”) under the Investor Relations section of the Company’s website, www.winchestersavings.com and on the SEC website, www.sec.gov. Information on these websites is not and should not be considered a part of this Annual Report on Form 10-K.
Winchester Savings Bank
General
The Bank is a Massachusetts-chartered savings bank headquartered in Winchester, Massachusetts. The Bank was originally chartered in 1871, and operates from its main office and four full-service branch offices in eastern Massachusetts, located in Arlington, Danvers and Woburn.
The Bank's business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family residential real estate loans, multi-family residential real estate loans, construction loans, commercial real estate loans, home equity loans and lines of credit, commercial business loans and consumer loans, as well as in investment securities.
Market Area
The Bank operates from its main office in Winchester, Massachusetts and four full-service branch offices in eastern Massachusetts, located in Arlington, Danvers and Woburn. Its main office and three of its branch offices are located in Middlesex County, Massachusetts, while one of its branch offices is located in Essex County, Massachusetts. Middlesex and Essex Counties are suburbs of Boston, Massachusetts.
We consider Middlesex County and, to a lesser extent, Essex County, as our primary market area for gathering deposits. We consider Middlesex County as well as the surrounding counties located in Massachusetts as our primary market area for lending.
The Boston metropolitan area benefits from a highly diversified economic base, including the presence of numerous institutions of higher learning, medical care and research centers and the corporate headquarters of several significant multinational corporations. Eastern Massachusetts also has many technology companies employing personnel with specialized skills. These factors affect the demand for residential homes, multifamily apartments, office buildings, shopping centers, industrial warehouses and other commercial properties.
Competition
We face significant competition within our market both in making loans and attracting deposits. Our market area has a high concentration of financial institutions, including large money center and regional banks, community banks and credit unions. Some of our competitors offer products and services that we currently do not offer, such as automated wire transfers. Our competition for loans and deposits comes principally from commercial banks, savings institutions, mortgage banking firms, consumer finance companies and credit unions. We face additional competition for deposits from short-term money market funds, brokerage firms, mutual funds and insurance companies. Our ability to compete in our primary market area does not depend on any existing customer relationships.
2
Lending Activities
Our loan portfolio consists primarily of one- to four-family residential real estate loans, multi-family real estate loans, commercial real estate loans and construction loans. To a lesser extent, we originate home equity loans and lines of credit, commercial business loans and consumer loans.
Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated. We had no loans held for sale at any of the dates indicated.
|
|
At June 30, |
|
|
At June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
||||
|
|
(Dollars in thousands) |
|
|||||||||||||
Mortgage loans: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential real estate |
|
$ |
405,326 |
|
|
|
46.5 |
% |
|
$ |
357,748 |
|
|
|
47.4 |
% |
Commercial real estate |
|
|
106,553 |
|
|
|
12.2 |
|
|
|
102,270 |
|
|
|
13.6 |
|
Multi-family real estate |
|
|
212,617 |
|
|
|
24.3 |
|
|
|
166,691 |
|
|
|
22.1 |
|
Construction |
|
|
116,360 |
|
|
|
13.3 |
|
|
|
95,941 |
|
|
|
12.7 |
|
Home equity loans and lines of credit |
|
|
28,954 |
|
|
|
3.3 |
|
|
|
26,786 |
|
|
|
3.6 |
|
Commercial |
|
|
3,866 |
|
|
|
0.4 |
|
|
|
4,335 |
|
|
|
0.6 |
|
Consumer and other |
|
|
166 |
|
|
|
0.1 |
|
|
|
339 |
|
|
|
0.0 |
|
Total gross loans |
|
|
873,842 |
|
|
|
100.0 |
% |
|
|
754,110 |
|
|
|
100.0 |
% |
Net deferred loan origination costs |
|
|
1,714 |
|
|
|
|
|
|
1,261 |
|
|
|
|
||
Allowance for credit losses |
|
|
(4,783 |
) |
|
|
|
|
|
(4,151 |
) |
|
|
|
||
Loans, net |
|
$ |
870,773 |
|
|
|
|
|
$ |
751,220 |
|
|
|
|
||
Contractual Maturities. The following tables set forth the contractual maturities of our total loan portfolio at June 30, 2026. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. The tables present contractual maturities and do not reflect repricing or the effect of prepayments. Actual maturities may differ.
|
|
Residential |
|
|
Commercial |
|
|
Multi-Family |
|
|
Construction |
|
|
Home Equity |
|
|
Commercial |
|
|
Consumer |
|
|
Total |
|
||||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||||||
Amounts due in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
One year or less |
|
$ |
893 |
|
|
$ |
7,113 |
|
|
$ |
24,030 |
|
|
$ |
66,105 |
|
|
$ |
14 |
|
|
$ |
100 |
|
|
$ |
12 |
|
|
$ |
98,267 |
|
After one through |
|
|
6,214 |
|
|
|
29,979 |
|
|
|
13,837 |
|
|
|
50,255 |
|
|
|
166 |
|
|
|
538 |
|
|
|
49 |
|
|
|
101,038 |
|
After five through |
|
|
42,487 |
|
|
|
8,490 |
|
|
|
1,217 |
|
|
|
— |
|
|
|
10,843 |
|
|
|
2,086 |
|
|
|
— |
|
|
|
65,123 |
|
More than 15 |
|
|
355,732 |
|
|
|
60,971 |
|
|
|
173,533 |
|
|
|
— |
|
|
|
17,931 |
|
|
|
1,142 |
|
|
|
105 |
|
|
|
609,414 |
|
Total |
|
$ |
405,326 |
|
|
$ |
106,553 |
|
|
$ |
212,617 |
|
|
$ |
116,360 |
|
|
$ |
28,954 |
|
|
$ |
3,866 |
|
|
$ |
166 |
|
|
$ |
873,842 |
|
3
The following table sets forth our fixed and adjustable-rate loans at June 30, 2026 that are contractually due after June 30, 2027.
|
|
Due After June 30, 2027 |
|
|||||||||
|
|
Fixed |
|
|
Adjustable |
|
|
Total |
|
|||
|
|
(In thousands) |
|
|||||||||
Mortgage loans: |
|
|
|
|
|
|
|
|
|
|||
Residential real estate |
|
$ |
229,935 |
|
|
$ |
174,498 |
|
|
$ |
404,433 |
|
Commercial real estate |
|
|
14,115 |
|
|
|
85,325 |
|
|
|
99,440 |
|
Multi-family real estate |
|
|
3,687 |
|
|
|
184,900 |
|
|
|
188,587 |
|
Construction |
|
|
22,405 |
|
|
|
27,850 |
|
|
|
50,255 |
|
Home equity loans and lines of credit |
|
|
1,169 |
|
|
|
27,771 |
|
|
|
28,940 |
|
Commercial |
|
|
2,624 |
|
|
|
1,142 |
|
|
|
3,766 |
|
Consumer |
|
|
70 |
|
|
|
84 |
|
|
|
154 |
|
Total loans |
|
$ |
274,005 |
|
|
$ |
501,570 |
|
|
$ |
775,575 |
|
One- to Four-Family Residential Real Estate Lending. Our historical primary lending activity has been the origination of one- to four-family, owner-occupied, first mortgage loans, virtually all of which are secured by properties located in our market area. At June 30, 2026, one- to four-family residential real estate loans totaled $405.3 million, or 46.5% of our total loan portfolio. The average principal loan balance of our one- to four-family residential real estate loans was $482,000 at June 30, 2026. At that date, 81.9% of our one- to four-family residential real estate loans were owner-occupied, while 18.1% were rental properties.
We currently offer one- to four-family residential real estate loans with terms of up to 30 years. We retain the significant majority of the one- to four-family residential real estate loans that we originate. We originate fixed-rate and adjustable-rate one- to four-family residential real estate loans. One- to four-family residential real estate loans often remain outstanding for shorter periods than their contractual terms because borrowers refinance or prepay their loans. We generally limit the loan-to-value ratios of our mortgage loans without private mortgage insurance to 80% of market value. Loans where the borrower obtains private mortgage insurance may be made with loan-to-value ratios of up to 95%, while loans for affordable and first-time homebuyer programs may be made with loan-to-value ratios of up to 97%.
Our adjustable-rate one- to four-family residential real estate loans carry terms to maturity ranging from five to 30 years and generally have fixed rates for initial terms of three, five, or seven years, and adjust thereafter for periods of between one and five years, plus a margin, which in recent years has been tied to the one-year U.S. Treasury rate. The maximum amount by which the interest rate may be increased or decreased is generally 2.75% for the first adjustment period and 2% per adjustment period thereafter, with a lifetime interest rate cap of generally 6% over the initial interest rate of the loan and a floor of 2.75%.
We generally require title insurance on all of our one- to four-family residential real estate mortgage loans, and we also require that borrowers maintain fire and extended coverage casualty insurance (and, if appropriate, flood insurance) in an amount at least equal to the lesser of the loan balance or the replacement cost of the improvements. We do not conduct environmental testing on residential real estate mortgage loans unless specific concerns for hazards are identified by the appraiser used in connection with the origination of the loan. If we identify an environmental problem on land that will secure a loan, the environmental hazard must be remediated before the closing of the loan.
When underwriting residential real estate loans, we review and verify each loan applicant’s employment, income and credit history and, if applicable, our experience with the borrower. Our policy is to obtain credit reports and financial statements on all borrowers and guarantors. We require independent appraisals for all one- to four-family residential real estate loans in amounts of $400,000 or greater, as well as for all such loans originated for sale on the secondary market in amounts between $25,000 and $400,000. We use a third party for appraisal review. All appraisals, whether for loans sold on the secondary market or retained, are input into Fannie Mae’s Desktop Underwriter for reasonableness prior to origination. In addition, subsequent to loan origination, our loan quality control process may utilize an independent third party to conduct appraisal reviews.
Commercial Real Estate Lending. At June 30, 2026, we had $106.6 million in commercial real estate loans, representing 12.2% of our total loan portfolio.
4
We originate commercial real estate loans with rates that adjust after an initial fixed-rate period of generally one to five years. We currently originate these loans with the rate tied to Federal Home Loan Bank five-year classic advance rate plus a margin. We also originate commercial real estate loans with fixed rates with terms of three or five years and a balloon payment due at the end of the term. Our commercial real estate loans generally have amortization terms of 30 years. The maximum loan-to-value ratio of our commercial real estate loans is generally 75%. Our commercial real estate loans are typically secured by offices and warehouses, or other commercial properties. Our commercial real estate loans also include loans that were originated as construction loans and have since converted to permanent financing. The majority of our commercial real estate loans are non-owner-occupied. At June 30, 2026, the average principal loan balance of our outstanding commercial real estate loans was $1.3 million, and the largest of such loans was a $8.9 million loan secured by an industrial building. This loan was performing in accordance with its terms at June 30, 2026.
Set forth below is information regarding our commercial real estate loans at June 30, 2026.
|
|
Number of Loans |
|
|
Balance |
|
||
Type of Loan |
|
($ in thousands) |
|
|||||
Office |
|
|
28 |
|
|
$ |
30,687 |
|
Retail |
|
|
18 |
|
|
|
16,862 |
|
Industrial |
|
|
12 |
|
|
|
26,191 |
|
Other commercial real estate |
|
|
22 |
|
|
|
32,813 |
|
Total |
|
|
80 |
|
|
$ |
106,553 |
|
We consider a number of factors in originating commercial real estate loans. We evaluate the qualifications and financial condition of the borrower, including project-level and global cash flows, credit history, and management expertise, as well as the value and condition of the property securing the loan. When evaluating the qualifications of the borrower, we consider the financial resources of the borrower, the borrower’s experience in owning or managing a similar property and the borrower’s payment history with us and other financial institutions. In evaluating the property securing the loan, the factors we consider include the net operating income of the mortgaged property before debt service and depreciation, the ratio of the loan amount to the appraised value of the mortgaged property and the debt service coverage ratio (the ratio of net operating income to debt service). We generally seek a debt service ratio of at least 1.20x. Generally, commercial real estate loans are appraised by outside independent appraisers; however, if the principal balance of the loan is less than $500,000, we may utilize third-party evaluations in lieu of formal appraisals, which are subsequently reviewed by our credit department.
Personal guarantees are generally obtained from the principals of commercial real estate loan borrowers, although this requirement may be waived in limited circumstances depending upon the loan-to-value ratio and the debt service ratio associated with the loan. We require property, casualty and title insurance and flood insurance if the property is in a flood zone area.
Multi-family Residential Real Estate Lending. At June 30, 2026, we had $212.6 million in multi-family residential real estate loans, representing 24.3% of our total loan portfolio. Our multi-family loans are secured primarily by five-or-more unit residential buildings. The terms of and underwriting guidelines for our multi-family residential real estate loans are generally the same as for our commercial real estate loans, described above, including the use of personal guarantees. An immaterial amount of our multi-family residential real estate loans are secured by properties subject to rent control, and, in the future, we do not anticipate originating material amounts of loans secured by properties subject to rent control. At June 30, 2026, the average principal loan balance of our outstanding multi-family residential real estate loans was $2.3 million, and the largest of such loans was a $16.0 million loan secured by a 53-unit property and $16.8 million in cash held in a restricted account. This loan was performing in accordance with its terms at June 30, 2026.
Construction Lending. At June 30, 2026, we had $116.4 million in construction and land loans, representing 13.3% of our total loan portfolio, nearly all of which consisted of commercial construction loans. Our construction loans are structured as straight construction or construction/permanent loans where after the initial construction period the loan converts to a permanent commercial mortgage loan. Our commercial construction loans are underwritten to the same guidelines for commercial mortgage loans, including the use of personal guarantees as well as corporate guarantees.
Commercial construction loans generally can be made with a maximum loan-to-value ratio of 75% of the estimated appraised market value upon completion of the project. Before making a commitment to fund a construction loan, we require an appraisal of the property by an independent licensed appraiser. We also generally require inspections of the property before disbursements of funds during the term of the construction loan.
5
Our construction loans are based upon estimates of costs and values associated with the completed project. Underwriting is focused on the borrowers’ financial strength, credit history and demonstrated ability to produce a quality product and effectively market and manage their operations.
Home equity loans and lines of credit Lending. In addition to one- to four-family residential real estate loans, we offer home equity loans and lines of credit that are secured by the borrower’s primary or secondary residence. At June 30, 2026, we had $29.0 million, or 3.3%, of our total loan portfolio in home equity loans and lines of credit.
Commercial Lending. We make commercial loans and lines of credit primarily to small businesses in our market area. These loans and lines of credit are generally secured by business assets, such as equipment and accounts receivable. Commercial loans and lines of credit are made with both adjustable and fixed-interest rates and for terms generally up to 60 months or on demand. At June 30, 2026, commercial loans were $3.9 million, or 0.4% of total loans.
Consumer Lending. To a much lesser extent, we offer a variety of consumer loans to individuals who reside or work in our market area, including new and used automobile loans, unsecured overdraft lines of credit and loans secured by savings accounts. At June 30, 2026, our consumer loan portfolio totaled $166,000, or less than 0.1%, of our total loan portfolio.
Loan Underwriting Risks
Commercial Real Estate Loans and Multi-Family Real Estate Loans. Loans secured by commercial real estate and multi-family real estate generally have larger balances and involve a greater degree of risk than one- to four-family residential real estate loans. The primary concern with these types of lending is the borrower’s creditworthiness and the feasibility and cash flow potential of the underlying business. Payments on loans secured by income producing properties often depend on the successful operation and management of the properties. As a result, repayment of such loans may be subject, to a greater extent than residential real estate loans, to adverse conditions in the real estate market or the economy. To monitor cash flows on income properties, we require borrowers and loan guarantors to provide quarterly, semi-annual or annual financial statements, depending on the size of the loan. In reaching a decision on whether to make a commercial real estate loan or a multi-family real estate loan, we consider and review a global cash flow analysis of the borrower and consider the net operating income of the property, the borrower’s expertise, credit history and profitability and the value of the underlying property. An environmental phase one report is obtained when the possibility exists that hazardous materials may have existed on the site, or the site may have been impacted by adjoining properties that handled hazardous materials.
If we foreclose on a commercial real estate loan or a multi-family real estate loan, the marketing and liquidation period to convert the real estate asset to cash can be lengthy with substantial holding costs. In addition, vacancies, deferred maintenance, repairs and market stigma can result in prospective buyers expecting sale price concessions to offset their real or perceived economic losses for the time it takes them to return the property to profitability. Changes in economic conditions that are not in the control of the borrower or lender could also affect the value of the collateral for the loan or the future cash flow of the property. Additionally, any decline in real estate values may be more pronounced for commercial or multi-family real estate than single-family residential properties, and we may require additional paydowns or collateral to enhance the loan-to-value position. Depending on the individual circumstances, initial charge-offs and subsequent losses on these types of loans can be unpredictable and substantial.
Construction Loans. Construction lending involves additional risks when compared with permanent lending because funds are advanced upon the security of the project, which is of uncertain value before its completion. Because of the uncertainties in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and the related loan-to-value ratio. In addition, generally during the term of a construction loan, interest may be funded by the borrower or disbursed from an interest reserve set aside from the construction loan budget. These loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest. If the appraised value of a completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction of the project and may incur a loss. Land loans have substantially similar risks.
6
Adjustable-Rate One- to Four-Family Residential Real Estate Loans. Although adjustable-rate mortgage loans may reduce, to an extent, our vulnerability to changes in market interest rates because they periodically re-price, as interest rates increase the required payments due from the borrower also increase (subject to rate caps), increasing the potential for default by the borrower. At the same time, the ability of the borrower to repay the loan and the marketability of the underlying collateral may be adversely affected by higher interest rates. Upward adjustments of the contractual interest rate are also limited by our maximum periodic and lifetime rate adjustments. Moreover, the interest rates on most of our adjustable-rate loans do not adjust for up to five years after origination. As a result, the effectiveness of adjustable-rate mortgage loans in compensating for changes in market interest rates may be limited.
Originations, Sales, Participations and Purchases of Loans
Most of our loan originations are generated by our loan personnel and from referrals from existing customers, real estate brokers, accountants and other professionals. All loans we originate are underwritten pursuant to our policies and procedures. While we originate both fixed-rate and adjustable-rate loans, our ability to generate each type of loan depends upon relative borrower demand, market interest rates and pricing levels established by competing banks, thrifts, credit unions, and mortgage banking companies. Our volume of loan originations is influenced significantly by market interest rates, and, accordingly, the volume of our loan originations can vary from period to period. Historically, we have sold limited amounts of the loans we originate.
From time to time, we purchase loan participations where we are not the lead lender. In this situation, we follow our customary loan underwriting and approval policies. At June 30, 2026, the outstanding balances of our loan participations where we are not the lead lender totaled $59.5 million, or 6.8% of our loan portfolio, and consisted of eight borrower relationships secured by commercial real estate. We purchased one loan during the year ended June 30, 2026 and we did not purchase any loans during the year ended June 30, 2025. At June 30, 2026, all such loans were performing in accordance with their original terms. We occasionally sell participations to remain within our loans-to-one-borrower limits. For the year ended June 30, 2026, we did not participate out any loans. We participated out $2.0 million in loans during the year ended June 30, 2025. We did not purchase any whole loans during these periods.
Loan Approval Procedures and Authority
The maximum amount that the Bank may lend to one borrower and the borrower’s related entities is generally limited, by statute, to 20% of capital, which is defined under Massachusetts law as the sum of capital stock, retained earnings account and undivided profits. At June 30, 2026, this regulatory limit on loans-to-one borrower was $20.5 million for the Bank. We generally establish our internal loans-to-one borrower limits as $2.5 million for residential first mortgage loans, $1.0 million for residential second mortgage loans, and $10.0 million for other extensions of credit. At June 30, 2026, we had two loans outstanding with a principal balance of $10.0 million or above. At June 30, 2026, the Bank's largest loan relationship with one borrower was for $16.0 million and was collateralized by a 53-unit multi-family real estate loan and $16.8 million in cash held in a restricted account. This amount represents our 38.8% participation interest in the entire loan. The second largest loan was for $15.8 million and was collateralized by a 33-unit multi-family real estate loan. These two loans were performing in accordance with their original terms on that date.
The Bank's lending is subject to uniform written underwriting standards and origination procedures. Decisions on loan applications are made on the basis of detailed information submitted by the prospective borrower, credit histories that we obtain, and property valuations (consistent with our appraisal policy) prepared by outside independent licensed appraisers approved by our board of directors or internal evaluations, where permitted by regulations.
Certain of our executive officers can approve unsecured commercial loans up to $200,000, and secured commercial loans up to $2.0 million, while our management loan review committee, consisting of designated executive officers, can approve unsecured commercial loans up to $250,000, and secured commercial loans up to $5.0 million. With respect to residential mortgage loan authority, certain of our executive officers can approve loans in amounts up to $1.3 million, while our management loan review committee can approve such loans up to $1.4 million. Loans in excess of these amounts require approval of a board-level committee that serves as a credit committee.
7
Delinquencies and Non-Performing Assets
Delinquency Procedures. A late notice is sent to a borrower between the 16th and 18th day after a loan is past due. When the loan is 30 days past due, we mail the borrower a letter reminding the borrower of the delinquency, and attempt to contact the borrower to determine the reason for the delinquency. If necessary, at 45 days past due, additional contact will be made with the borrower, which usually includes an in-person meeting and the account will be monitored on a regular basis thereafter. When the loan reaches the 60th day of delinquency, we will send the borrower a letter informing the borrower of their rights and our intent to proceed with further collection efforts, including foreclosure, if the loan default is not cured within 90 days. A property will be inspected between the 30th and 90th day of delinquency. At the end of the 90-day cure period, a decision will be made whether to begin foreclosure proceedings. Loans are charged off when we believe that the recovery of principal is improbable. A summary report of all delinquency ratios and all non-accrual loans is provided to the board of directors each quarter.
Loans Past Due and Nonperforming Assets. Loans are reviewed on a regular basis. Management determines that a loan is non-performing when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral dependent. Non-accrual loans are loans for which collectability is questionable and, therefore, interest on such loans will no longer be recognized on an accrual basis. All loans that become 90 days or more delinquent are placed on non-accrual status unless the loan is well secured and is in the process of collection. When loans are placed on non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received on a cash basis or cost recovery method. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (at least six consecutive months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt.
When we acquire real estate as a result of foreclosure, the real estate is classified as real estate owned. The real estate owned is recorded at fair value, less estimated costs to sell. Soon after acquisition, we order a new appraisal, or evaluation when acceptable, to determine the current market value of the property. Any excess of the recorded value of the loan satisfied over the market value of the property is charged against the allowance for credit losses, or, if the existing allowance is inadequate, charged to expense, in either case during the applicable period of such determination. After acquisition, all costs incurred in maintaining the property are expensed. Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell.
Delinquent Loans. The following table sets forth our loan delinquencies by type and amount at the dates indicated.
|
|
At June 30, |
|
At June 30, |
|
|||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
30-59 Days |
|
|
60-89 Days |
|
|
Greater than |
|
|
30-59 Days |
|
|
60-89 Days |
|
|
Greater than |
|
||||||
|
|
(In thousands) |
|
|||||||||||||||||||||
Mortgage loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential real estate |
|
$ |
— |
|
|
$ |
313 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
340 |
|
Commercial real estate |
|
|
— |
|
|
|
— |
|
|
|
1,166 |
|
|
|
— |
|
|
|
— |
|
|
|
1,166 |
|
Multi-family real estate |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Construction |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Home equity loans and lines of credit |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Commercial |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
270 |
|
Consumer |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
— |
|
|
$ |
313 |
|
|
$ |
1,166 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,776 |
|
8
Non-Performing Assets. The following table sets forth information regarding our non-performing assets at the dates indicated.
|
|
At June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
(Dollars in thousands) |
|
||||||
Non-accrual loans: |
|
|
|
|
|
|
||
Mortgage loans: |
|
|
|
|
|
|
||
Residential real estate |
|
$ |
424 |
|
|
$ |
777 |
|
Commercial real estate |
|
|
1,166 |
|
|
|
1,166 |
|
Multi-family real estate |
|
|
— |
|
|
|
— |
|
Construction |
|
|
— |
|
|
|
— |
|
Home equity loans and lines of credit |
|
|
— |
|
|
|
— |
|
Commercial |
|
|
— |
|
|
|
270 |
|
Consumer |
|
|
— |
|
|
|
— |
|
Total non-accrual loans |
|
|
1,590 |
|
|
|
2,213 |
|
Accruing loans past due 90 days or more |
|
|
— |
|
|
|
— |
|
Total non-performing loans |
|
$ |
1,590 |
|
|
$ |
2,213 |
|
Foreclosed assets |
|
|
— |
|
|
|
— |
|
Total non-performing assets |
|
$ |
1,590 |
|
|
$ |
2,213 |
|
Total non-performing loans to total loans |
|
|
0.18 |
% |
|
|
0.29 |
% |
Total non-accrual loans to total loans |
|
|
0.18 |
% |
|
|
0.29 |
% |
Total non-performing assets to total assets |
|
|
0.15 |
% |
|
|
0.23 |
% |
Classified Assets. Federal regulations provide for the classification of loans and other assets, such as debt and equity securities considered by applicable regulations to be of lesser quality, as “substandard,” “doubtful” or “loss.” An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets that do not currently expose the Bank to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as “special mention” by our management.
In accordance with our loan policies, we regularly review the problem loans in our portfolio to determine whether any loans require classification in accordance with applicable regulations. Loans are listed on the “watch list” initially because of emerging financial weaknesses even though the loan is currently performing as agreed, or if the loan possesses weaknesses although currently performing. If a loan deteriorates in asset quality, the classification is changed to “special mention,” “substandard,” “doubtful” or “loss” depending on the circumstances and the evaluation. Generally, loans 90 days or more past due are placed on non-accrual status and classified “substandard.” Management reviews the status of each loan on our watch list on a quarterly basis.
On the basis of this review of our assets, our classified loans and special mention loans at the dates indicated were as follows:
|
|
At June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
(In thousands) |
|
||||||
Substandard loans |
|
$ |
424 |
|
|
$ |
416 |
|
Doubtful loans |
|
|
1,166 |
|
|
|
1,436 |
|
Loss loans |
|
|
— |
|
|
|
— |
|
Total classified loans |
|
$ |
1,590 |
|
|
$ |
1,852 |
|
Special mention loans (watch) |
|
$ |
197 |
|
|
$ |
3,897 |
|
9
Investment Activities
General. The Company and the Bank have established an investment policy that governs our investment activities. The objectives of our investment policy are: (1) to assist in liquidity planning by purchasing and laddering securities that can be converted into liquid funds in times of increased loan demand or deposit outflows; (2) to optimize interest income within our overall asset/liability management; and (3) to assist in reducing our tax liability. All purchase and sale transactions are reviewed and ratified by the board of investments, which is a committee of our board of directors.
Our board of directors reviews our securities activities on a quarterly basis to ensure that such activities are consistent with our investment policy. The board has delegated to our President and Chief Executive Officer and our Chief Financial Officer the authority to engage in single investment transactions up to $3.0 million without prior approval of the board of directors or a committee of the board.
Our current investment policy authorizes us to invest in various types of investment grade investment securities and liquid assets, including U.S. treasury bills, notes, and bonds, U.S. government agency and government-sponsored agency obligations, federally insured certificates of deposit, corporate bonds and notes, government sponsored agency mortgage-backed securities and agency-supported collateralized mortgage obligations, marketable equity securities, mutual funds, managed funds, subordinated debt investment grade securities, U.S. government agency and government-sponsored agency structured notes, federal funds and municipal securities. We do not engage in any investment hedging activities or trading activities, nor do we purchase any high-risk mortgage derivative products, corporate junk bonds, or certain types of structured notes.
Generally Accepted Accounting Principals ("GAAP") require that, at the time of purchase, we designate a debt security as held-to-maturity, available-for-sale, or trading, depending on our ability and intent to hold such security. Debt securities designated as available for sale are reported at fair value, while debt securities designated as held to maturity are reported at amortized cost.
At June 30, 2026, we had allocated no portion of the allowance for credit losses for investment securities.
Portfolio Maturities and Yields. The composition and maturities of the investment securities portfolio at June 30, 2026 are summarized in the following tables. Maturities are based on the final contractual payment dates, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur. The weighted average yield is calculated based on the yield to maturity over the entire portfolio of debt securities weighted for the size of each debt security. No tax-equivalent yield adjustments have been made, as the effects would be immaterial.
|
|
One Year or Less |
|
|
More than One Year |
|
|
More than Five Years |
|
|
More than Ten Years |
|
|
Total |
|
|||||||||||||||||||||||||||||
|
|
Amortized |
|
|
Weighted |
|
|
Amortized |
|
|
Weighted |
|
|
Amortized |
|
|
Weighted |
|
|
Amortized |
|
|
Weighted |
|
|
Amortized |
|
|
Fair |
|
|
Weighted |
|
|||||||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||||||||||||||||||||||
Securities held to maturity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
U.S. government and |
|
$ |
9,226 |
|
|
|
2.44 |
% |
|
$ |
9,500 |
|
|
|
1.71 |
% |
|
$ |
2,998 |
|
|
|
4.91 |
% |
|
$ |
6,994 |
|
|
|
5.22 |
% |
|
$ |
28,718 |
|
|
$ |
27,900 |
|
|
|
3.13 |
% |
U.S. Government agency and |
|
|
8 |
|
|
|
4.25 |
% |
|
|
26 |
|
|
|
6.24 |
% |
|
|
986 |
|
|
|
4.62 |
% |
|
|
14,622 |
|
|
|
4.77 |
% |
|
|
15,642 |
|
|
|
15,529 |
|
|
|
4.76 |
% |
Corporate bonds and obligations |
|
|
— |
|
|
|
— |
% |
|
|
9,217 |
|
|
|
1.87 |
% |
|
|
— |
|
|
|
— |
% |
|
|
— |
|
|
|
— |
% |
|
|
9,217 |
|
|
|
8,417 |
|
|
|
1.87 |
% |
Municipal bonds |
|
|
447 |
|
|
|
0.37 |
% |
|
|
1,450 |
|
|
|
1.87 |
% |
|
|
— |
|
|
|
— |
% |
|
|
754 |
|
|
|
4.50 |
% |
|
|
2,651 |
|
|
|
2,898 |
|
|
|
4.50 |
% |
Total |
|
$ |
9,681 |
|
|
|
2.34 |
% |
|
$ |
20,193 |
|
|
|
1.80 |
% |
|
$ |
3,984 |
|
|
|
4.84 |
% |
|
$ |
22,370 |
|
|
|
4.90 |
% |
|
$ |
56,228 |
|
|
$ |
54,744 |
|
|
|
3.34 |
% |
|
|
One Year or Less |
|
|
More than One Year |
|
|
More than Five Years |
|
|
More than Ten Years |
|
|
Total |
|
|||||||||||||||||||||||||||||
|
|
Amortized |
|
|
Weighted |
|
|
Amortized |
|
|
Weighted |
|
|
Amortized |
|
|
Weighted |
|
|
Amortized |
|
|
Weighted |
|
|
Amortized |
|
|
Fair |
|
|
Weighted |
|
|||||||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||||||||||||||||||||||
Securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
U.S. government and U.S. |
|
$ |
— |
|
|
|
— |
% |
|
$ |
— |
|
|
|
— |
% |
|
$ |
8,989 |
|
|
|
4.83 |
% |
|
$ |
8,771 |
|
|
|
5.17 |
% |
|
$ |
17,760 |
|
|
$ |
17,531 |
|
|
|
5.00 |
% |
U.S. Government agency and |
|
|
— |
|
|
|
— |
% |
|
|
6 |
|
|
|
5.00 |
% |
|
|
2,134 |
|
|
|
4.49 |
% |
|
|
36,909 |
|
|
|
4.39 |
% |
|
|
39,049 |
|
|
|
39,222 |
|
|
|
4.39 |
% |
Corporate bonds and obligations |
|
|
1,007 |
|
|
|
1.98 |
% |
|
|
9,341 |
|
|
|
1.98 |
% |
|
|
2,463 |
|
|
|
6.29 |
% |
|
|
— |
|
|
|
— |
% |
|
|
12,811 |
|
|
|
12,023 |
|
|
|
2.80 |
% |
Total |
|
$ |
1,007 |
|
|
|
1.98 |
% |
|
$ |
9,347 |
|
|
|
1.98 |
% |
|
$ |
13,586 |
|
|
|
5.04 |
% |
|
$ |
45,680 |
|
|
|
4.54 |
% |
|
$ |
69,620 |
|
|
$ |
68,776 |
|
|
|
4.26 |
% |
10
Sources of Funds
General. Deposits have traditionally been our primary source of funds for use in lending and investment activities. We also use borrowings, primarily Federal Home Loan Bank of Boston ("FHLBB") advances, to supplement cash flow needs, lengthen the maturities of liabilities for interest rate risk purposes and to manage the cost of funds. In addition, we receive funds from scheduled loan payments, loan prepayments, maturities, pre-payments and calls of securities, retained earnings and income on earning assets. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and competition.
Deposits. Our deposits are generated primarily from residents within our primary market area. We offer a selection of deposit accounts, including non-interest-bearing checking accounts, interest-bearing checking accounts, money market accounts, savings accounts and certificates of deposit. Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate. At June 30, 2026, our core deposits, which are deposits other than certificates of deposit, were $527.7 million, representing 65.2% of total deposits at that date.
Interest rates, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market rates, liquidity requirements, rates paid by competitors and growth goals. Our ability to gather deposits is impacted by the competitive market in which we operate, which includes numerous financial institutions of varying sizes offering a wide range of products. We believe that deposits are a stable source of funds, but our ability to attract and maintain deposits at favorable rates will be affected by market conditions, including competition and prevailing interest rates.
The following table sets forth the distribution of total deposits by account type at the dates indicated.
|
|
At June 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
Amount |
|
|
Percent |
|
|
Average |
|
|
Amount |
|
|
Percent |
|
|
Average |
|
||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||
Noninterest-bearing demand |
|
$ |
63,168 |
|
|
|
7.8 |
% |
|
|
— |
% |
|
$ |
55,696 |
|
|
|
8.2 |
% |
|
|
— |
% |
NOW and demand deposits |
|
|
53,929 |
|
|
|
6.7 |
|
|
|
0.11 |
% |
|
|
59,410 |
|
|
|
8.7 |
|
|
|
0.04 |
% |
Savings accounts |
|
|
150,007 |
|
|
|
18.5 |
|
|
|
2.31 |
% |
|
|
160,323 |
|
|
|
23.6 |
|
|
|
2.31 |
% |
Money market accounts |
|
|
260,584 |
|
|
|
32.2 |
|
|
|
3.21 |
% |
|
|
120,597 |
|
|
|
17.8 |
|
|
|
3.21 |
% |
Certificates of deposit |
|
|
281,548 |
|
|
|
34.8 |
|
|
|
3.46 |
% |
|
|
283,156 |
|
|
|
41.7 |
|
|
|
3.70 |
% |
Total |
|
$ |
809,236 |
|
|
|
100.0 |
% |
|
|
2.66 |
% |
|
$ |
679,182 |
|
|
|
100.0 |
% |
|
|
2.66 |
% |
As of June 30, 2026 and June 30, 2025, the aggregate amount of deposits we had in excess of $250,000, which is the maximum amount for federal deposit insurance, was $315.4 million and $181.7 million, respectively. In addition, as of June 30, 2026, the aggregate amount of all our certificates of deposit in excess of $250,000 was $131.1 million.
The following table sets forth the maturity of our certificates of deposit in excess of $250,000 as of June 30, 2026.
|
|
At |
|
|
|
|
(In thousands) |
|
|
Maturity Period: |
|
|
|
|
Three months or less |
|
$ |
39,654 |
|
Over three through six months |
|
|
30,638 |
|
Over six through twelve months |
|
|
56,433 |
|
Over twelve months |
|
|
4,384 |
|
Total |
|
$ |
131,109 |
|
The Bank's deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation (the "FDIC") and by the Depositors Insurance Fund (the "MA DIF") for amounts in excess of the FDIC insurance limits. The MA DIF insurance applies to all traditional deposit accounts at member banks, including savings accounts, checking accounts, certificates of deposit, and money market accounts held by individuals, businesses and trusts, as well as government accounts. Coverage is not affected by where a depositor resides.
11
Borrowed Funds. We may obtain advances from the FHLBB upon the security of our capital stock in the FHLBB and certain of our mortgage loans. Such advances may be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities. We use such advances to supplement our deposits. To the extent such borrowings have different terms to repricing than our deposits, they can change our interest rate risk profile. At June 30, 2026, we had $158.2 million outstanding in advances from the FHLBB. On June 30, 2026, we had the ability to borrow $118.8 million in additional FHLBB advances. At June 30, 2026, we also had a $5.3 million line of credit with the FHLBB, which was not drawn at June 30, 2026. Additionally, at June 30, 2026, we had a $102.0 million secured line of credit through the Federal Reserve's Borrower-in-Custody ('BIC') program. At that date, there were no amounts outstanding.
Subsidiary Activities
The Company's sole subsidiary is the Bank. The Bank's subsidiaries are Sachem Holdings, Inc., Aberjona Holdings, Inc., 1871 Company, LLC, and Wedgemere Holdings, LLC. Sachem Holdings, Inc. and Aberjona Holdings, Inc. are Massachusetts security corporations established to hold investment securities. 1871 Company, LLC’s principal activity is the holding of bank premises. Wedgemere Holdings, LLC’s principal activity is the holding of properties acquired in settlement of loans.
Employees
As of June 30, 2026, we had 71 full-time and eight part-time and seasonal employees. Our employees are not represented by any collective bargaining group. Management believes that we have a good working relationship with our employees. The success of our business is highly dependent on our employees, who provide value to our customers and communities.
We believe that our ability to attract and retain top quality employees is a key to our future success. We continue to elevate individuals from within the organization into new roles and we expect to continue to assess our management and staffing needs and are likely to add personnel in the future in order to fully implement our business strategy.
In an effort to continue our investment in our employees and as part of the conversion, the Bank established the Employee Stock Ownership Plan ("ESOP") for its employees. Shares held in the ESOP will be released and allocated to employees on an annual basis based on the ratio of each such participant's annual compensation.
SUPERVISION AND REGULATION
General
Federal and state banking laws impose a comprehensive system of supervision, examination, regulation, and enforcement on the operations of insured banks and their holding companies. Supervision and regulation of banks, their holding companies, and affiliates is intended primarily for the protection of depositors and customers, Deposit Insurance Fund (the “DIF”) of the FDIC, and the U.S. banking and financial system, rather than holders of our capital stock. As a result, our growth, earnings performance, and operations may be affected by the requirements of federal and state statutes and by the regulations and policies of various bank regulatory agencies, including the Massachusetts Division of Banks (the “Division”), the FDIC, the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), and the Consumer Financial Protection Bureau (the “CFPB”). Furthermore, tax laws administered by the Internal Revenue Service (“IRS”) and state taxing authorities, accounting rules developed by the Financial Accounting Standards Board, securities laws administered by the SEC and state securities authorities, anti-money laundering laws enforced by the U.S. Department of the Treasury, and Small Business Administration regulations with respect to small business loans, have an impact on our business. These statutes, regulations, and policies are continually under the review of the United States Congress and state legislatures, as well as federal and state regulatory agencies, and the nature and extent of future legislative, regulatory, or other developments affecting financial institutions are impossible to predict with any certainty. Any change in the statutes, regulations or regulatory policies applicable to us, including changes in their interpretation, expectations or implementation, could have a material effect on our business and operations.
The following is a summary of material elements of the regulatory and supervisory framework applicable to us and the Bank. It does not describe all of the statutes, regulations, and regulatory policies that apply, nor does it provide complete summaries of the statutes, regulations, and policies referenced therein.
12
Supervision and Regulation of the Company
The Company and Winchester Bancorp, MHC are bank holding companies registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). As a result, the Company and Winchester Bancorp, MHC are primarily subject to the supervision, examination, and reporting requirements of the BHC Act, Federal Deposit Insurance Act (the “FDI Act”), and the regulations of the Federal Reserve Board and FDIC.
Federal law subjects bank holding companies, such as the Company and Winchester Bancorp, MHC, to restrictions on the types of activities in which they may engage and to a range of supervisory requirements and activities, including regulatory enforcement actions for violations of laws and regulations. Violations of laws and regulations, or other unsafe and unsound practices, may result in regulatory agencies imposing fines, penalties, or cease and desist orders, or taking other enforcement actions. Under certain circumstances, these agencies may enforce these remedies directly against officers, directors, employees, and other parties participating in the affairs of a bank or bank holding company.
Federal Oversight over Mergers and Acquisitions, Investments, and Activities. The BHC Act requires a bank holding company to obtain the prior approval of the Federal Reserve Board before: (i) it may acquire direct or indirect ownership or control of any voting shares of any bank if, after such acquisition, the bank holding company will directly or indirectly own or control 5% or more of the voting shares of the bank; (ii) it or any of its subsidiaries, other than a bank, may acquire all or substantially all of the assets of any bank; or (iii) it may merge or consolidate with any other bank holding company.
Before approving any such transaction, the Federal Reserve Board is required by the BHC Act to consider a number of factors, including the transaction’s competitive impact, the financial and managerial resources and future prospects of the bank holding companies and banks concerned, the convenience and needs of the community to be served, and the effectiveness of the parties in combating money laundering activities.
Provisions of the FDI Act known as the Bank Merger Act impose similar approval standards for an insured depository institution to merge with another insured depository institution or a non-insured institution.
The BHC Act, as amended by the interstate banking provisions of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the “Riegle-Neal Act”), permits bank holding companies to acquire a bank located in any other state, regardless of state law to the contrary, subject to certain deposit concentration limits, aging requirements, and other restrictions. The Riegle-Neal Act also generally permits national- and state-chartered banks to branch interstate through acquisitions of banks in other states. Bank holding companies must be “well capitalized” and “well managed” to obtain federal bank regulatory approval of an interstate acquisition without regard to state law prohibiting the transaction.
The BHC Act also generally requires Federal Reserve Board approval for a bank holding company’s acquisition of a company that is not an insured depository institution. Bank holding companies generally may engage, directly or indirectly, only in managing or controlling banks, and such other activities as are determined by the Federal Reserve Board to be closely related to banking, and certain other permissible nonbanking activities. Bank holding companies generally must notify the Federal Reserve Board before acquiring a company that is not an insured depository institution or engaging in a permissible nonbanking activity, and the Federal Reserve considers several factors in reviewing such a notice. The Federal Reserve Board may order a bank holding company or its subsidiaries to terminate any of these activities or to terminate its ownership or control of any subsidiary when it has reasonable cause to believe that the bank holding company’s continued ownership, activity, or control constitutes a serious risk to the financial safety, soundness, or stability of it or any of its bank subsidiaries.
The FDIC has the authority to approve applications by state non-member banks to establish de novo branches, including, under the Riegle-Neal Act, in states other than the bank’s home state if the law of the state in which the branch is located, or is to be located, would permit establishment of the branch if the bank were a state bank chartered by that state.
Certain acquisitions of our voting stock may be subject to regulatory approval or notice under federal law. Investors are responsible for ensuring that they do not, directly or indirectly, acquire shares of our stock in excess of the amount that can be acquired without regulatory approval under the Change in Bank Control Act and the BHC Act, which prohibit any person or company from acquiring control of the Company without, in most cases, the prior written approval of the Federal Reserve Board.
Source of Strength. The FDI Act and Federal Reserve Board regulations require a bank holding company to serve as a source of financial and managerial strength to its bank subsidiaries. As a result, a bank holding company may be expected to commit resources to support its bank subsidiary, including at times when the holding company may not be inclined or in a financial position to provide it.
13
Capital Adequacy. Bank holding companies and banks are subject to various regulatory capital requirements administered by federal and state bank regulatory agencies. The Federal Reserve Board, as the primary federal regulator of the Company and Winchester Bancorp, MHC, and the FDIC, as the primary federal regulator of the Bank, have substantially similar generally applicable risk-based capital ratio and leverage ratio requirements.
Under the generally applicable capital requirements of the Federal Reserve Board and the FDIC, bank holding companies and insured depository institutions are generally required to meet a common equity Tier 1 capital to risk-weighted assets ratio of at least 7.0% (a minimum of 4.5% plus a capital conservation buffer of 2.5%), a Tier 1 capital to risk-weighted assets ratio of at least 8.5% (a minimum of 6.0% plus a capital conservation buffer of 2.5%), a total capital to risk-weighted assets ratio of at least 10.5% (a minimum of 8.0% plus a capital conservation buffer of 2.5%), and a Tier 1 leverage ratio of at least 4.0%. Moreover, the failure of an institution that is subject to the federal banking agencies’ generally applicable capital requirements to exceed the capital conservation buffer with common equity Tier 1 capital would result in limitations on the institution’s ability to make capital distributions and discretionary bonus payments. In addition, insured depository institutions, unlike bank holding companies, are subject to further capital requirements to be deemed “well capitalized” under the prompt corrective action provisions of the FDI Act and implementing regulations of the federal banking agencies, as described in the section entitled “—Supervision and Regulation of the Bank—Prompt Corrective Action” below.
The Company and Winchester Bancorp, MHC currently rely on the Federal Reserve’s Small Bank Holding Company Policy Statement, which exempts a bank holding company from the generally applicable capital requirements if it has no more than $3 billion in total consolidated assets, does not engage in significant nonbanking activities, does not conduct significant off-balance sheet activities, and does not have a material amount of debt or equity securities outstanding and registered with the SEC.
Payment of Dividends and Stock Repurchases. Winchester Bancorp, MHC and the Company are limited in their ability to pay dividends or repurchase its stock by the Federal Reserve Board, including if doing so would be an unsafe or unsound banking practice. When a bank holding company intends to declare or pay a dividend that could raise safety and soundness concerns, it generally will be required to inform and consult with the Federal Reserve Board in advance. It is the policy of the Federal Reserve Board that a bank holding company should generally pay dividends on common stock only out of earnings, and only if prospective earnings retention is consistent with the company’s capital needs and overall current and prospective financial condition. Additionally, bank holding companies should inform and consult with the Federal Reserve Board in advance of declaring and paying a dividend that exceeds earnings for the period for which the dividend is being paid.
According to guidance from the Federal Reserve Board, a bank holding company’s dividend policies will be assessed against, among other things, its ability to achieve applicable capital ratio requirements. If a bank holding company does not achieve applicable capital ratio requirements, it may not be able to pay dividends.
A bank holding company is also required to give the Federal Reserve Board prior written notice before purchasing or redeeming its equity securities if the gross consideration for the purchase or redemption, when aggregated with the net consideration paid by the bank holding company for all such purchases or redemptions during the preceding twelve months, is equal to 10% or more of the bank holding company’s consolidated net worth. The Federal Reserve Board may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe or unsound practice or would violate any law, regulation, Federal Reserve Board order, or any condition imposed by or written agreement with the Federal Reserve Board. This prior notice requirement does not apply to any bank holding company that meets certain “well capitalized” and “well managed” standards and is not the subject of any unresolved supervisory issues.
In addition, a bank holding company is required to consult with the Federal Reserve Board before redeeming any equity or other capital instrument included in Tier 1 or Tier 2 capital prior to stated maturity if such redemption could have a material effect on the level or composition of the organization’s capital base.
Under the Federal Reserve Board’s Regulation MM, if the Company pays dividends on its common stock to public stockholders, it is also required to pay dividends to Winchester Bancorp, MHC, unless Winchester Bancorp, MHC elects to waive the receipt of dividends. On July 31, 2026, the Federal Reserve Board issued a notice of proposed rulemaking to revised Regulation MM by, among other things, eliminating certain dividend waiver requirements by mutual holding companies. Management is monitoring the status of the proposed rule.
Examinations. Bank holding companies and banks are subject to regular examination by their respective regulatory agencies, which results in examination reports and ratings that, while not publicly available, can impact the conduct and growth of their businesses. These examinations may consider not only compliance with applicable laws and regulations, but
14
also capital levels, asset quality and risk, management ability and performance, earnings, liquidity, sensitivity to market risk, and various other factors. The regulatory agencies generally have broad authority to impose restrictions and limitations on the operations of a regulated entity when an agency determines, among other things, that such operations are unsafe or unsound, fail to comply with applicable law, or are otherwise inconsistent with laws and regulations or with the supervisory policies of these agencies.
Anti-Money Laundering Initiatives and Sanctions Compliance. The Company, Winchester Bancorp, MHC, and the Bank are subject to extensive regulations aimed at combating money laundering and terrorist financing. The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”) substantially broadened the scope of U.S. anti-money laundering laws and regulations by imposing significant compliance and due diligence obligations, creating new crimes and penalties, and expanding the extra-territorial jurisdiction of the United States. Treasury Department regulations implementing the USA PATRIOT Act impose obligations on financial institutions to maintain appropriate policies, procedures, and controls to detect, prevent, and report money laundering and terrorist financing and to verify the identity of their customers. In addition, the Anti-Money Laundering Act of 2020 (the “AML Act”), enacted in January 2021, includes the most substantial changes to U.S. anti-money laundering law since the USA PATRIOT Act. Among other things, the AML Act creates new beneficial ownership reporting requirements for certain entities doing business in the United States, requires the Treasury Department’s Financial Crimes Enforcement Network to establish national anti-money laundering priorities and combating the financing of terrorism priorities, increases anti-money laundering whistleblower awards and expands whistleblower protections, and enhances penalties for Bank Secrecy Act and anti-money laundering violations. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and financial consequences for the institution.
The Treasury Department’s Office of Foreign Assets Control (“OFAC”) is responsible for ensuring that U.S. entities do not engage in transactions with certain prohibited parties, as defined by various Executive Orders and Acts of Congress. OFAC publishes lists of persons, organizations, and countries suspected of aiding, harboring, or engaging in terrorist acts, known as Specially Designated Nationals and Blocked Persons. OFAC administers and enforces applicable economic and trade sanctions programs. These sanctions are usually targeted against foreign countries, terrorists, international narcotics traffickers, and those believed to be involved in the proliferation of weapons of mass destruction. These regulations generally require either the blocking of accounts or other property of specified entities or individuals, but they may also require the rejection of certain transactions involving specified entities or individuals. The Company maintains policies, procedures, and other internal controls designed to comply with anti-money laundering requirements and sanctions programs.
Sarbanes-Oxley Act. The Sarbanes-Oxley Act represents a comprehensive revision of laws affecting corporate governance, accounting obligations, and corporate reporting. The Sarbanes-Oxley Act is applicable to all companies with equity securities registered, or that file reports, under the Exchange Act. In particular, the act established: (i) requirements for audit committees, including independence, expertise, and responsibilities; (ii) responsibilities regarding financial statements for the chief executive officer and chief financial officer of the reporting company and new requirements for them to certify the accuracy of periodic reports; (iii) standards for auditors and regulation of audits; (iv) disclosure and reporting obligations for the reporting company and its directors and executive officers; and (v) civil and criminal penalties for violations of the federal securities laws. The legislation also established a new accounting oversight board to enforce auditing standards and restrict the scope of services that accounting firms may provide to their publicly traded company audit clients.
SUPERVISION AND REGULATION OF THE BANK
The Bank is a savings bank chartered under the laws of the state of Massachusetts and is primarily subject to the supervision, examination, and reporting requirements of the FDIC and the Division. Almost every area of the operations and financial condition of the Bank is subject to extensive regulation and supervision and to various requirements and restrictions under federal and state law, including loans, reserves, investments, issuance of securities, establishment of branches, capital adequacy, liquidity, earnings, dividends, management practices, and the provision of services. The FDIC and the Division regularly examine the Bank’s operations and have the authority to approve or disapprove mergers, the establishment of branches, and similar corporate actions. Both regulatory agencies have the power to take enforcement action to prevent the development or continuance of unsafe or unsound banking practices or other violations of law. The Bank is subject to supervision, examination, enforcement, and reporting requirements under the FDI Act, the General Laws of Massachusetts, regulations of the FDIC and the Division, and certain of the requirements imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”). The Bank is also subject to a wide range of consumer protection laws and regulations.
15
Restrictions on Lending, Insider Transactions, and Affiliate Transactions. General Laws of Massachusetts grant broad lending authority. However, with certain limited exceptions, total obligations of one borrower to a Massachusetts savings bank may not exceed 20% of the bank’s total capital, which is defined under Massachusetts law as the sum of capital stock, surplus account, and undivided profits.
Sections 22(g) and 22(h) of the Federal Reserve Act, as implemented by the Federal Reserve Board’s Regulation O, governs and restricts extensions of credit by a member bank to an executive officer, director, or principal shareholder of the bank and its affiliates. By making these provisions applicable to state non-member banks, the FDI Act and FDIC regulations impose these restrictions on the Bank’s purchases or sales of assets from or to insiders of the Bank, the Company, and Winchester Bancorp, MHC. Guidance from the Division likewise provides that a Massachusetts financial institution shall comply with Regulation O. In general, extensions of credit to insiders: (i) may not exceed certain dollar limitations; (ii) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties; and (iii) must not involve more than the normal risk of repayment or present other unfavorable features.
Additionally, Sections 23A and 23B of the Federal Reserve Act, which the FDI Act makes applicable to a state non-member bank such as the Bank in the same manner and to the same extent as if it were a member bank, establish parameters for an insured bank to conduct “covered transactions” with its affiliates, generally: (i) limiting the extent to which the bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount not greater than 10% of the bank’s capital stock and surplus, and limiting the aggregate of all such transactions with all affiliates to an amount not greater than 20% of the bank’s capital stock and surplus; and (ii) requiring that all such transactions be on terms substantially the same, or at least as favorable, to the bank or subsidiary as those that would be provided to a non-affiliate. In addition, an insured bank’s loans to affiliates generally must be fully collateralized. The term “covered transaction” includes the making of loans to the affiliate, purchase of assets from the affiliate, issuance of a guarantee on behalf of the affiliate, and several other types of transactions.
Concentrations in Lending. In 2006, the federal bank regulatory agencies released guidance advising financial institutions of the risks posed by commercial real estate lending concentrations and reinforcing that financial institutions should implement sound risk management processes to identify, monitor, and control risks associated with commercial real estate concentrations. Higher allowances for credit losses and capital levels may also be required. The commercial real estate guidance provides that further supervisory analysis of an institution’s commercial real estate loan concentrations is warranted when its concentrations exceed either: (i) total reported loans for construction, land development, and other land of 100% or more of a bank’s total risk-based capital; or (ii) total reported loans secured by multifamily and non-farm non-residential properties and loans for construction, land development, and other land of 300% or more of a bank’s total risk-based capital, where the outstanding balance of the institution’s commercial real estate portfolio has also increased by 50% or more during the prior 36 months. We have exposures to loans secured by commercial real estate due to the nature of our market and the loan needs of both our retail and commercial customers. We believe that our long-term experience in commercial real estate lending, underwriting policies, internal controls, and other policies currently in place, as well as our loan and credit monitoring and administration procedures, are generally appropriate to managing our concentrations as required under the commercial real estate guidance.
Capital Requirements and Prompt Corrective Action. The FDIC has adopted generally applicable risk-based capital ratio and leverage ratio requirements for state non-member banks that are substantially similar to the generally applicable requirements for bank holding companies.
In addition, the FDI Act identifies five capital categories for insured depository institutions: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized.
Under the banking agencies' prompt corrective action framework, an insured depository institution is subject to differential regulation corresponding to the capital category within which the institution falls. For an insured depository institution to be “well capitalized” under this framework, it generally must have a common equity Tier 1 capital ratio of at least 6.50%, a Tier 1 capital ratio of at least 8.00%, a total capital ratio of at least 10.00%, and a leverage ratio of at least 5.00%, and must not be subject to any written agreement, order or capital directive, or prompt corrective action directive issued by its primary federal or state banking regulator to meet and maintain a specific capital level for any capital measure. These limitations apply to the Bank, and not to the Company and Winchester Bancorp, MHC, on a standalone basis.
The FDI Act requires the federal banking agencies to take prompt corrective action whenever an insured depository institution does not meet minimum capital requirements. Failure to meet the capital guidelines could also subject an insured depository institution to capital raising requirements. In addition, an insured depository institution is generally prohibited
16
from making capital distributions, including paying dividends or paying management fees to a holding company, if the institution would thereafter be undercapitalized. Finally, failure to meet statutorily mandated capital guidelines or more restrictive ratios separately established for an insured depository institution could subject the institution to a variety of enforcement remedies available to federal regulatory authorities, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting or renewing brokered deposits, limitations on the rates of interest that the institution may pay on its deposits, and other restrictions on its business.
The Economic Growth, Regulatory Relief, and Consumer Protection Act permits most banking organizations with $10 billion in total consolidated assets to elect to use an alternative capital framework under which they are deemed to satisfy the federal banking agencies’ generally applicable risk-based and leverage capital rules and the capital conservation buffer, and to be deemed well-capitalized for purposes of prompt corrective action, if they satisfy a “community bank leverage ratio” (“CBLR”) requirement. In order to qualify for the CBLR framework, a banking organization may not have off-balance sheet exposures totaling more than 25% of total consolidated assets or trading assets and liabilities more than 5% of total consolidated assets. A banking organization satisfies the CBLR and is considered “well capitalized” if it maintains a ratio of Tier 1 capital to average total consolidated assets (i.e., a leverage ratio) of more than 8%. At June 30, 2026, the Bank had opted into the CBLR framework, exceeded the CBLR requirement, and was considered “well capitalized.” Payment of Dividends. The principal source of the Company’s and Winchester Bancorp, MHC’s cash flow is dividends from the Bank. There are various legal and regulatory provisions that limit the amount of dividends the Bank can pay to the Company without regulatory approval. Under the General Laws of Massachusetts, a Massachusetts savings bank with outstanding preferred stock may not, without the prior approval of the Massachusetts Commissioner of Banks, declare dividends on the common stock without also declaring dividends on the preferred stock. The approval of the Massachusetts Commissioner of Banks is also required if the total of all dividends declared in any calendar year exceeds the total of its net profits for that year combined with its retained net profits from the preceding two years, less any required transfer to surplus or a fund for the retirement of any preferred stock. For this purpose, net profits means the remainder of all earnings from current operations plus actual recoveries on loans and investments and other assets after deducting current operating expenses, actual losses, accrued dividends on preferred stock, if any, and all federal and state taxes.
In addition, an insured depository institution is generally prohibited from making capital distributions, including paying dividends or paying management fees to a holding company, if the institution would thereafter be undercapitalized. Finally, the FDI Act prohibits an insured depository institution from paying dividends on its capital stock if it is in default of its payment of deposit insurance assessments to the FDIC.
Reserve Requirements. Federal Reserve Board rules require depository institutions, such as the Bank, to maintain reserves against their transaction accounts. In response to the COVID-19 pandemic, the Federal Reserve Board reduced reserve requirement ratios to 0.00% effective March 26, 2020. Increases to the reserve requirement would decrease the amount of the Bank’s assets that it may make available for lending and investment activities. Currently, the Federal Reserve Board has not announced plans to re-impose reserve requirements. However, the Federal Reserve Board may adjust reserve requirement ratios in the future if conditions warrant. Balances maintained by or on behalf of depository institutions in accounts at Federal Reserve Banks continue to receive interest when reserve requirement ratios are set to 0.00%. All balances earned the interest on excess reserves rate through July 28, 2021. Thereafter, all balances earn the Interest on Reserve Balances (the “IORB”) rate. The IORB rate is the rate of interest paid by the Federal Reserve Bank on balances maintained by or on behalf of an eligible institution in an account at a Federal Reserve Bank.
Consumer Protection Laws. We are subject to numerous laws and regulations intended to protect consumers, in addition to those discussed above, when lending or offering deposit products to consumers. These laws include, among others: the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Equal Credit Opportunity Act, the Fair and Accurate Credit Transactions Act, the Fair Housing Act, the Fair Credit Reporting Act, the Fair Debt Collection Act, the GLB Act, the Home Mortgage Disclosure Act, the Right to Financial Privacy Act, the Real Estate Settlement Procedures Act, laws regarding unfair and deceptive acts and practices, and usury and other fair lending laws and regulations, including state laws and regulations.
Because the Bank has assets of not more than $10 billion, its primary federal regulator, the FDIC, examines and enforces the Bank’s compliance with consumer financial protection laws. However, the CFPB has rulemaking authority, including with respect to regulations prohibiting unfair, deceptive, or abusive acts or practices. Additionally, the CFPB may participate in examinations of banks with not more than $10 billion in assets on a “sampling basis” and may refer potential enforcement actions against such banks to their primary federal regulators.
Many states and local jurisdictions have consumer protection laws analogous, and in addition, to those listed above. Violations of applicable consumer protection laws can result in significant potential liability, including actual damages,
17
restitution, and injunctive relief, from litigation brought by customers, state attorneys general, and other plaintiffs, as well as enforcement actions by banking regulators.
Financial Privacy and Data Sharing Laws. The GLB Act imposes requirements related to the privacy of customer financial information. Among other things, the GLB Act requires disclosure of privacy policies to consumers and, in some circumstances, allows consumers to prevent disclosure of certain personal information to a nonaffiliated third party. The privacy provisions of the GLB Act may affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors.
In addition, Massachusetts has adopted regulatory requirements intended to protect personal information, requiring organizations to establish written information security programs. Massachusetts regulations also impose technology system requirements, including for the encryption of personal information sent over wireless or public networks or stored on portable devices.
On October 22, 2024, the CFPB issued a final rule to implement Section 1033 of the Dodd-Frank Act. Under the final rule, financial institutions such as the Bank that offer a consumer product or service covered by the rule would be required, upon request, to make available to a consumer or third party authorized by the consumer certain information the Bank has concerning such a product or service. Industry organizations challenged the final rule in court. On July 29, 2025, the district court granted a motion by the CFPB to stay the proceedings while the CFPB conducts a rulemaking to revise the final rule substantially. On August 22, 2025, the CFPB issued an advance notice of proposed rulemaking to solicit comments and data on several issues as part of a reconsideration of the final rule. On October 29, 2025, the district court issued a preliminary injunction preventing the CFPB from enforcing the final rule until the CFPB has completed its reconsideration of the rule. Branching. Under federal law, the Bank may establish branch offices with the prior approval of the FDIC. Federal law allows a bank to branch into a new state through the establishment of a new branch if, among other factors, the bank is “well managed” and “well capitalized” and, under the laws of the state in which the branch is to be located, a state bank chartered by that state would be permitted to establish the branch. Under Massachusetts law, a bank that has received a rating of “Satisfactory” or higher in its most recent Massachusetts Community Reinvestment Act examination, is adequately capitalized, and has not been notified that it is in troubled condition, may open branch offices throughout Massachusetts by providing prior written notice to the Massachusetts Commissioner of Banks. In addition, with prior approval of the Massachusetts Commissioner of Banks, the Bank may acquire branches of existing banks located in Massachusetts.
Parity. A Massachusetts savings bank may, in accordance with Massachusetts law, exercise any power and engage in any activity that is permissible for federally-chartered banks or state banks chartered in a state other than Massachusetts, provided that the savings bank is subject to the same limitations and restrictions that are applicable to the federal or out-of-state bank and the activity is permitted under federal law. A Massachusetts savings bank may exercise such powers and engage in such activities by providing advance written notice to the Massachusetts Commissioner of Banks.
FDIC Deposit Insurance Assessments. The deposits of the Bank are insured by the DIF as administered by the FDIC and, accordingly, are subject to deposit insurance assessments to maintain the DIF at minimum levels required by statute. The Dodd-Frank Act increased the minimum reserve ratio requirement for the DIF to 1.35% of total estimated insured deposits or the comparable percentage of the deposit assessment base. The DIF reserve ratio fell to below the statutory minimum of 1.35% during the COVID-19 pandemic. The FDIC adopted a restoration plan in September 2020, which it amended in June 2022, to restore the DIF reserve ratio to at least 1.35% by September 30, 2028. On October 18, 2022, the FDIC adopted a final rule to increase initial base deposit insurance assessment rates for insured depository institutions by two basis points, beginning with the first quarterly assessment period of 2023. The increased assessment rate schedules will remain in effect unless and until the reserve ratio of the DIF meets or exceeds 2.00%. As a result of the new rule, the FDIC insurance costs of insured depository institutions, including the Bank, generally increased. The FDIC uses a risk-based assessment system that imposes insurance premiums as determined by multiplying an insured bank’s assessment base by its assessment rate. A bank’s deposit insurance assessment base is generally equal to its total assets minus its average tangible equity during the assessment period. For a depository institution that has been insured for more than five years and that has total consolidated assets of less than $10.0 billion, such as the Bank, the FDIC determines the assessment rate within a range of base assessment rates based on the bank’s CAMELS composite rating, considering other factors and adjustments. The CAMELS rating system is a supervisory rating system developed to classify a bank’s overall condition by considering capital adequacy, assets, management capability, earnings, liquidity, and sensitivity to market and interest rate risk.
On June 25, 2026, the FDIC issued a proposal to revise deposit insurance assessment thresholds, rate schedules, and adjustments. Among other changes, the proposal would reduce initial base assessment rate schedules applicable to small institutions, including the Bank, by two basis points.
18
Insurance of deposits may be terminated by the FDIC upon a finding that a bank has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule order or condition imposed by the bank’s federal regulatory agency. In addition, the FDI Act provides that, in the event of the liquidation or other resolution of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution, including those of its parent bank holding company.
Massachusetts Depositors Insurance Fund Assessments. The Bank is a member of the MA DIF, a corporation that insures Massachusetts savings bank and cooperative bank deposits in excess of federal deposit insurance coverage. The MA DIF is authorized to charge savings banks a risk-based assessment on deposit balances in excess of the amounts insured by the FDIC.
Community Reinvestment Act. The Federal Community Reinvestment Act, or ("CRA") requires that, in connection with examinations of insured depository institutions within their respective jurisdictions, the federal banking agencies must evaluate the record of each financial institution in meeting the credit needs of its entire local community, including low- and moderate-income neighborhoods. The federal banking agencies also consider a bank’s CRA performance when evaluating applications seeking approval for mergers, acquisitions, and new offices or facilities, and a CRA rating of less than “Satisfactory” may adversely affect the ability of a bank or its parent company to engage in such transactions.
On October 24, 2023, the federal banking agencies issued a final rule revising their framework for evaluating banks’ records of community reinvestment under the CRA. On July 16, 2025, these agencies issued a notice of proposed rulemaking to rescind the October 2023 final rule and restore the CRA framework that existed prior to the October 2023 final rule, which was originally adopted in 1995. On July 31, 2026, the FDIC and Office of the Comptroller of the Currency issued a notice of proposed rulemaking to modify the 1995 CRA rules, including by clarifying the product lines that will be subject to evaluation, excluding deposit products from evaluation, and narrowing the criteria for grants and donations to qualify for CRA credit.
In addition, Massachusetts has a Community Reinvestment Act statute that contains similar standards to the federal CRA and requires the Division to examine the community reinvestment performance of Massachusetts state banks. The Bank received a rating of “Satisfactory” at its most recent CRA evaluation, which the FDIC and the Division conducted jointly, with the FDIC applying the 1995 CRA rules.
FHLB Membership. The Bank is a member of the Federal Home Loan Bank of Boston, which is one of 11 regional Federal Home Loan Banks that administer the home financing credit function of banking institutions. Each Federal Home Loan Bank is funded primarily from proceeds derived from the sale of consolidated obligations of the Federal Home Loan Bank system and makes advances to members in accordance with policies and procedures established by the Board of Directors of the Federal Home Loan Bank and subject to the oversight of the Federal Housing Finance Agency. All advances from a Federal Home Loan Bank are required to be fully secured by sufficient collateral as determined by the Federal Home Loan Bank. In addition, all long-term advances are required to provide funds for residential home financing.
Cybersecurity. Federal banking agencies pay close attention to the cybersecurity practices of banks and their holding companies and affiliates. Examinations by the banking agencies include review of an institution’s information technology and its ability to thwart cyber-attacks. The interagency council of the agencies, the FFIEC, has issued several policy statements and other guidance for banks as new cybersecurity threats arise. The FFIEC has focused on such matters as compromised customer credentials and business continuity planning.
Banking organizations are required to notify their primary federal regulator of significant computer security incidents within 36 hours of determining that such an incident has occurred. In addition, SEC rules require public companies to disclose material cybersecurity incidents that they experience on Form 8-K within four business days of determining that a material cybersecurity incident has occurred and to disclose on an annual basis material information regarding their cybersecurity risk management, strategy, and governance.
Emerging Growth Company Status
The Company is an “emerging growth company.” For as long as it continues to be an emerging growth company, it may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including, but not limited to, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding
19
advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As an emerging growth company, the Company. also will not be subject to Section 404(b) of the Sarbanes-Oxley Act, which would require that its independent auditors review and attest as to the effectiveness of its internal control over financial reporting. The Company has also elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Such an election is irrevocable during the period a company is an emerging growth company. Accordingly, its financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.
A company loses emerging growth company status on the earlier of: (1) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.235 billion or more; (2) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933; (3) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (4) the date on which such company is deemed to be a “large accelerated filer” under SEC regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).
Item 1A. Risk Factors.
Risks Related to our Business
Risks Related to our Lending Activities
Our portfolios of commercial real estate and multi-family real estate loans have increased in recent periods, and we intend to continue originating these types of loans. These loans involve credit risks that could adversely affect our financial condition and results of operations.
At June 30, 2026, commercial real estate and multi-family loans totaled $319.2 million, or 36.5% of our total loan portfolio. Given their larger balances and the complexity of the underlying collateral, commercial real estate loans and multi-family real estate loans generally have more risk than the owner-occupied one- to four-family residential real estate loans we originate. Because the repayment of these loans depends on the successful management and operation of the borrower’s properties, and/or related businesses with respect to commercial real estate loans, repayment of such loans can be affected by adverse conditions in the local real estate market or economy. Also, many of our commercial borrowers have more than one loan outstanding with us. Consequently, an adverse development with respect to one loan or one credit relationship can expose us to a significantly greater risk loss compared to an adverse development with respect to a one-to four-family residential real estate loan. If we foreclose on these loans, our holding period for the collateral typically is longer than for a one- to four-family residential property because there are fewer potential purchasers of the collateral. In addition, commercial real estate loans and multifamily real estate loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to one- to four-family residential loans. Accordingly, charge-offs on these types of loans may be larger than those incurred with our one- to four-family residential or consumer loan portfolios.
As our commercial real estate and multi-family real estate loan portfolios increase, the corresponding risks and potential for losses from these loans may also increase, which could adversely affect our business, financial condition and results of operations.
Our construction loans involve credit risks that could adversely affect our financial condition and results of operations.
At June 30, 2026, we had $116.4 million in construction loans, or 13.3% of our total loan portfolio, nearly all of which consisted of commercial construction loans. Construction lending involves additional risks when compared with permanent financing because funds are advanced upon the security of the project, which is of uncertain value before its completion. Because of the uncertainties in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation of real property, it can be difficult to accurately evaluate the total funds required to complete a project and the related loan-to-value ratio. These loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest. If the appraised value of a completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction of the project and may incur a loss. As our construction loan portfolio
20
increases, the corresponding risks and potential for losses from these loans may also increase, which could adversely affect our business, financial condition and results of operations.
Our emphasis on real estate loans exposes us to lending risks.
At June 30, 2026, the overwhelming majority of our loan portfolio was secured by real estate, most of which is located in our primary lending market area of Middlesex County, Massachusetts and surrounding areas. Declines in the real estate values in our primary lending market and surrounding areas could significantly impair the value of the collateral securing our loans and our ability to sell the collateral upon foreclosure for an amount necessary to satisfy the borrower’s obligations to us. This could require increasing our allowance for credit losses to address the decrease in the value of the real estate securing our loans, which could have a material adverse effect on our financial condition and results of operations.
The geographic concentration of our loan portfolio and lending activities makes us vulnerable to a downturn in our local market area.
Unlike larger financial institutions that are more geographically diversified, our profitability depends primarily on the general economic conditions in our primary market area.
A deterioration in economic conditions in our primary market area could result in the following consequences, any of which could have a material adverse effect on our business, financial condition, liquidity and results of operations:
Moreover, a significant decline in general economic conditions, caused by inflation, tariffs and international trade disputes, recession, acts of terrorism, an outbreak of hostilities or other international or domestic calamities, or other factors beyond our control could further impact these local economic conditions and could further negatively affect our financial performance. In addition, deflationary pressures, while possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our business borrowers, and the values of underlying collateral securing loans, which could negatively affect our financial performance.
If our allowance for credit losses is not sufficient to cover actual loan losses, our earnings could decrease.
We periodically make a determination of an allowance for credit losses based on available information, including, but not limited to, the quality of the loan and lease portfolio as indicated by trends in loan risk ratings, payment performance, economic conditions, the value of the underlying collateral and the level of no accruing and criticized loans and leases. Management relies on its loan officers and credit quality reviews, its experience, and its evaluation of economic conditions, among other factors, in determining the amount of provision required for the allowance for credit losses. Provisions to this allowance result in an expense for the period. If, as a result of general economic conditions, previously incorrect assumptions, or an increase in defaulted loans or leases, we determine that additional increases in the allowance for credit losses are necessary, additional expenses may be incurred.
Determining the allowance for credit losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks and trends, all of which may undergo material changes. We cannot be sure that we will be able to limit losses on those loans that are identified. We have in the past, and in the future may be, required to increase our allowance for credit losses. for any of several reasons. State and federal regulators, in reviewing our loan portfolio as part of a regulatory examination, may request that we increase our allowance for credit losses. Any increases in our allowance for credit losses will result in a decrease in our net income and, possibly, our capital, and could have an adverse effect on our financial condition and results of operations.At June 30, 2026, our allowance for credit losses was 0.55% of total loans and 300.82% of nonperforming loans. Material additions to our allowance would materially decrease our net income.
21
Uncertainties associated with increased originations of commercial real estate, construction and multi-family loans may result in errors in judging collectability, which may lead to additional provisions for credit losses or charge-offs, which would negatively affect our operations.
Our recent and intended increases in the level of our commercial real estate, construction and multi-family real estate originations have required and would likely require us to lend to borrowers with which we have limited or no experience. Our commercial real estate, construction and multi-family loans have grown from $364.9 million or 48.4% of the total loan portfolio at June 30, 2025 to $435.5 million or 49.8% of the total loan portfolio at June 30, 2026. While we have not incurred any losses with regard to loans originated during this period, this portion of the loan portfolio is unseasoned and we do not have a significant payment history pattern with which to judge future collectability. Further, newly originated loans have not been subjected to unfavorable economic conditions. As a result, it may be difficult to predict the future performance of newly originated loans. These loans may have delinquency or charge-off levels above our recent historical experience, which could adversely affect our future performance. Further, commercial real estate, construction (in particular commercial construction) and multi-family real estate loans generally have larger balances and involve a greater risk than one- to four-family residential mortgage loans. Accordingly, if we make any errors in judgment in the collectability of these loans, any resulting charge-offs may be larger on a per loan basis than those incurred historically with our single-family residential mortgage loans.
The level of our commercial real estate and multi-family real estate loan portfolio may subject us to additional regulatory scrutiny.
The federal banking agencies have issued joint guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending. Under the guidance, an institution is identified as having potential commercial real estate concentration risk if (i) total reported loans for construction, land acquisition and development, and other land represent 100% or more of the institutions total risk-based capital, or (ii) total reported loans secured by multi-family and non-farm non-residential properties and loans for construction, land development and other land represent 300% or more of the institutions total capital where the outstanding balance of the institution’s commercial real estate loan portfolio has increased 50% or more during the prior 36 months. An institution that is identified as having potential concentrations in commercial real estate lending is expected to employ heightened levels of risk management with respect to its commercial real estate portfolios and may be required to maintain higher levels of capital. As of June 30, 2026, loans secured by multi-family and commercial real estate represented 320.3% of the Bank’s total capital While we believe we have implemented policies and procedures with respect to our commercial and multi-family real estate loan portfolio consistent with this guidance, we could be required to maintain higher levels of capital as a result of our commercial real estate and multi-family real estate lending concentration, which could limit our growth, require us to raise or retain additional capital, and have an adverse effect on our business, financial condition, and results of operations. Additionally, we cannot guarantee that any risk management practices we implement will be effective to prevent losses relating to our commercial real estate portfolio.
The foreclosure process may adversely impact our recoveries on non-performing loans
The judicial foreclosure process is protracted, which delays our ability to resolve non-performing loans through the sale of the underlying collateral. The longer timelines have been the result of many factors, including additional consumer protection initiatives related to the foreclosure process, increased documentary requirements and judicial scrutiny, and, both voluntary and mandatory programs under which lenders may consider loan modifications or other alternatives to foreclosure. These reasons and the legal and regulatory responses have impacted the foreclosure process and completion time of foreclosures for residential mortgage lenders. This may negatively impact collateral values and our ability to minimize losses.
We are subject to environmental liability risk associated with lending activities or properties we own.
A significant portion of our loan portfolio is secured by real estate, and we could become subject to environmental liabilities with respect to one or more of these properties, or with respect to properties that we own in operating our business. During the ordinary course of business, we may foreclose on and take title to properties securing defaulted loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties, particularly those properties securing commercial real estate lending. If hazardous conditions or toxic substances are found on these properties, we may be liable for remediation costs, as well as for personal injury and property damage, civil fines and criminal penalties regardless of when the hazardous conditions or toxic substances first affected any particular property. Environmental laws may require us to incur substantial expenses to address liabilities and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Our policies, which require us to perform an environmental review before initiating any foreclosure action on non-residential real property, may not be sufficient to detect
22
all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on us.
Risks Related to Market Interest Rates
Future changes in interest rates could negatively affect our operating results and asset values.
Net income is the amount by which net interest income and noninterest income exceed operating expense and the provision for credit losses. Net interest income makes up a majority of our income and is based on the difference between:
The rates we earn on our assets and the rates we pay on our liabilities are generally fixed for a contractual period of time. Like many savings institutions, our liabilities generally have shorter contractual maturities than our assets. This imbalance can create earnings volatility because market interest rates change over time. In a period of rising interest rates, the interest income we earn on our assets may not increase as rapidly as the interest we pay on our liabilities. Furthermore, increases in interest rates may adversely affect the ability of our borrowers to make loan repayments on adjustable-rate loans, as the interest owed on such loans would increase as interest rates increase.
Furthermore, increases in interest rates may adversely affect our ability to originate loans.
In addition, changes in interest rates can affect the average life of loans and mortgage-backed and related securities. A decline in interest rates generally results in increased prepayments of loans and mortgage-backed and related securities as borrowers refinance their debt to reduce their borrowing costs. This creates reinvestment risk, which is the risk that we may not be able to reinvest prepayments at rates that are comparable to the rates we earned on the prepaid loans or securities. Furthermore, an inverted interest rate yield curve, where short-term interest rates (which are usually the rates at which financial institutions borrow funds) are higher than long-term interest rates (which are usually the rates at which financial institutions lend funds for fixed-rate loans) can reduce a financial institution’s net interest margin and create financial risk for financial institutions that originate primarily longer-term, fixed-rate mortgage loans.
As of June 30, 2026 and June 30, 2025, we had $844,000 and $1.2 million in net unrealized losses on available-for-sale investment securities, respectively. In addition, we have experienced a shift in deposits from lower-cost savings and demand accounts to higher-cost certificates of deposit. However, the rates we earn on our loans did not increase as rapidly as those paid on deposits during the years ended June 30, 2026 and June 30, 2025, as we have a significant amount of fixed-rate residential real estate loans where the interest rates did not increase commensurate with the increase in market interest rates. In addition, most of our adjustable-rate loans do not reprice immediately, such that changes in market interest rates take a period of time to affect our portfolio yields.
We monitor interest rate risk through simulation models, including estimates of the amounts by which the fair value of our assets and liabilities (our economic value of equity or “EVE”) and our net interest income would change in the event of a range of assumed changes in market interest rates. As of June 30, 2026, in the event of an instantaneous 200 basis point increase in interest rates, we estimate that we would experience a 20.1% decrease in EVE and a 17.9% decrease in net interest income.
Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition, liquidity and results of operations. Changes in the level of interest rates also may negatively affect the value of our assets and ultimately affect our earnings.
For further discussion of how changes in interest rates could impact us, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Management of Market Risk.”
23
Risks Related to our Business Strategy
Our business strategy includes loan growth, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively. Growing our operations could also cause our expenses to increase faster than our revenues.
Our business strategy primarily focuses on loan growth, primarily funded by deposits. Achieving such growth may require us to attract customers that currently bank at other financial institutions in our market area. Our ability to successfully grow will depend on a variety of factors, including our ability to attract and retain experienced lenders and possibly increase our support staff, the continued availability of desirable business opportunities, the level of competition from other financial institutions in our market area, general economic conditions in our primary market area and our ability to manage our growth. Growth opportunities may not be available or we may not be able to manage our growth successfully. There can be considerable costs involved in opening branches and expanding lending capacity, and generally a period of time is required to generate the necessary revenues to offset these costs. If we do not manage our growth effectively, our financial condition and operating results could be negatively affected.
Our continued pace of growth may require us to raise additional capital in the future, but that capital may not be available when it is needed.
We are required by our bank regulators to maintain adequate levels of capital to support our operations. We may at some point need to raise additional capital to support our growth. If we raise capital through the issuance of additional shares of our common stock or other securities, it would dilute the ownership interests of stockholders and may dilute the per share book value of our common stock. New investors may also have rights, preferences and privileges senior to our current stockholders, which may adversely impact our then current stockholders. Also, the need to raise additional capital may force our management to spend more time in managerial and financing-related activities than in operational activities.
Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside of our control, and on our financial performance. In addition, our ability to raise capital may be limited by our mutual holding company structure, as Winchester Bancorp, MHC is required to own a majority of our outstanding shares of common stock for as long as it is in existence. Accordingly, we may not be able to raise additional capital, if needed, with favorable terms. If we cannot raise additional capital when needed, our ability to expand our operations through internal growth and acquisitions could be materially impaired.
We depend on our management team and other key personnel to implement our business strategy and execute successful operations and we could be harmed by the loss of their services or the inability to hire additional personnel.
We depend on the services of the members of our senior management team who direct our strategy and operations. Our executive officers and lending personnel possess substantial expertise as well as extensive knowledge of our markets and key business relationships. Any one of them could be difficult to replace. Our loss of these persons, or our inability to hire additional qualified personnel, could impact our ability to implement our business strategy and could have a material adverse effect on our results of operations and our ability to compete in our markets.
Risks Related to Competitive Matters
Strong competition within our market areas may limit our growth and profitability.
We compete with community, regional, national, and global banks, non-bank licensed lenders and private equity funds in purchasing or originating loans, attracting deposits, and selling other customer products and services. Many of our primary competitors have substantially greater resources, larger established customer bases, higher lending limits, extensive branch networks, numerous ATMs, and greater advertising and marketing budgets. Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services, as well as better pricing for those products and services than we can. Emerging technologies, such as artificial intelligence (including machine learning and generative artificial intelligence) and quantum computing, have the potential to further intensify competition and accelerate disruption in the financial services industry. In recent years, non-financial services firms, such as financial technology companies, have begun to offer services traditionally provided by financial institutions. These firms attempt to use technology and mobile platforms to enhance the ability of companies and individuals to borrow, save and invest money. Many of these non-financial services competitors have fewer regulatory constraints and may have lower cost structures than we do. Our long-term success depends on our ability to develop and execute strategic plans and initiatives; to develop competitive products and technologies; and to attract, retain and develop a highly skilled employee workforce. We may not be as timely or successful in assessing the evolving competitive landscape and developing or introducing new products and services as our competitors. Our business may be negatively impacted if we, or our third-party providers, do not
24
timely develop and apply emerging technologies, or if our initiatives in these areas are deficient or fail. Our, or our third-party providers’, inability, or resistance to timely innovate or adapt operations, products and services to evolving regulatory and market environments, industry standards and consumer preferences could result in service disruptions, harm our business, and adversely affect our results of operations and reputation. For additional information see “Business of Winchester Savings Bank—Market Area” and “—Competition.”
Risks Related to Laws and Regulations
Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect our operations and/or increase our costs of operations.
The banking industry is highly regulated and supervised under both federal and state laws and regulations that are intended primarily for the protection of depositors, customers, the public, the banking system as a whole, and/or the FDIC’s DIF, not for the protection of our shareholders and creditors. Winchester Bancorp, MHC and the Company are subject to regulation and supervision by the Federal Reserve Board, and the Bank is subject to regulation and supervision by the FDIC and the Division. Compliance with applicable laws and regulations can be difficult and costly, and changes to laws and regulations can impose additional compliance costs.
Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets, and determination of the level of our allowance for credit losses. Banking laws and regulations, along with existing tax, accounting, securities, insurance and monetary laws, rules, standards, policies, and interpretations, control the methods by which financial institutions conduct business, implement strategic initiatives and tax compliance, and govern financial reporting and disclosures. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation, or supervisory action, may have a material impact on our operations. Further, changes in accounting standards can be both difficult to predict and involve judgment and discretion in their interpretation by us and our independent registered public accounting firm. These changes could materially impact, potentially even retroactively, how we report our business, financial condition, and results of operations.
Applicable laws, regulations, interpretations, enforcement policies, and accounting principles have been subject to significant changes in recent years and may be subject to significant future changes. Additionally, federal and state regulatory agencies may change the manner in which existing regulations are applied. Further, changes in accounting standards can be both difficult to predict and involve judgment and discretion in their interpretation by us and our independent registered public accounting firm. These changes could materially impact, potentially even retroactively, how we report our financial condition and results of operations. We cannot predict the substance or effect of pending or future legislative, regulatory, or accounting developments, or changes to the application of laws and regulations to us. Future changes may have an effect on our business, financial condition, and results of operations.
Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions.
The USA PATRIOT Act and Bank Secrecy Act, and other laws and regulations require financial institutions to establish and maintain an effective anti-money laundering program and to file reports such as suspicious activity reports and currency transaction reports, among other obligations. These rules also require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts. We are required to comply with these laws and other anti-money laundering requirements. Our federal and state banking regulators, the Treasury Department’s Financial Crimes Enforcement Network, and other governmental agencies are authorized to impose significant civil money penalties for violations of anti-money laundering requirements, in addition to restrictions on pursuing acquisitions or establishing new branches. The policies and procedures we have adopted that are designed to assist in compliance with these laws and regulations may not be effective in preventing violations of these laws and regulations.
We are also subject to increased scrutiny of compliance with the regulations issued and enforced by the Treasury Department’s Office of Foreign Assets Control, which is responsible for helping to ensure that U.S. entities do not engage in transactions with certain prohibited parties, as defined by various Executive Orders and Acts of Congress. If our program is deemed deficient, we could be subject to liability, including fines, civil money penalties, and other regulatory actions, which may include restrictions on our business operations, our ability to pay dividends, mergers and acquisitions and other forms of expansion, and entry into new business lines. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have significant reputational consequences for us. Any of these circumstances could have an adverse effect on our business, financial condition, and results of operations.
25
We are subject to stringent capital requirements, which may adversely impact our return on equity, require us to raise additional capital, or limit our ability to pay dividends or repurchase shares.
Federal regulations establish minimum capital requirements for insured depository institutions, including minimum risk-based capital and leverage ratios, and define different forms of“capital” for calculating these ratios. See “Regulation and Supervision—Supervision and Regulation of the Company—Capital Adequacy.” Banking organizations with less than $10 billion in total consolidated assets, such as the Bank, may elect to use an alternative capital framework under which they are deemed to satisfy the federal banking agencies’ generally applicable risk-based and leverage capital rules and the capital conservation buffer, and to be deemed well capitalized for purposes of prompt corrective action, if they satisfy a CBLR requirement by maintaining a ratio of Tier 1 capital to average total consolidated assets (i.e., a leverage ratio) of more than 8%. At June 30, 2026, the Bank had opted into the CBLR framework, exceeded the CBLR requirement, and was considered “well capitalized.”
In addition, the Company and Winchester Bancorp, MHC currently rely on the Federal Reserve’s Small Bank Holding Company Policy Statement, which exempts a bank holding company from the generally applicable capital requirements if it has no more than $3 billion in total consolidated assets and meets other criteria, including not having a material amount of debt or equity securities outstanding and registered with the SEC.
If the Bank were no longer eligible for the CBLR, or the Company and Winchester Bancorp, MHC were no longer eligible to rely on the Small Bank Holding Company Policy Statement, we may become subject to more costly, complex, or stringent capital requirements.
The application of the CBLR or these other capital requirements could, among other things, result in lower returns on equity and regulatory actions if we are unable to comply with such requirements.
Any new or revised standards adopted in the future may require us to maintain materially more capital, with common equity as a more predominant component, or manage the configuration of our assets and liabilities to comply with formulaic capital requirements. We may not be able to raise additional capital at all, or on terms acceptable to us. Failure to maintain capital to meet current or future regulatory requirements could have an adverse effect on our business, financial condition, and results of operations.
The Federal Reserve Board may require us to commit capital resources to support the Bank, and we may not have sufficient access to such capital resources.
The FDI Act and Federal Reserve Board regulations require a bank holding company to serve as a source of financial and managerial strength to its bank subsidiaries. Under the “source of strength” doctrine, the Federal Reserve Board may require a bank holding company to make capital injections into a subsidiary bank, including at times when the bank holding company may not be inclined to do so, and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank. Accordingly, we could be required to provide financial assistance to the Bank if it experiences financial distress.
A capital injection may be required at a time when our resources are limited and we may be required to borrow the funds or raise capital to make the required capital injection. Any loan by a bank holding company to its subsidiary bank is subordinate in right of payment to deposits and certain other indebtedness of such subsidiary bank. In the event of a bank holding company’s bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of the holding company’s general unsecured creditors, including the holders of any note obligations. Thus, any borrowing by a bank holding company for the purpose of making a capital injection to a subsidiary bank may become more difficult and expensive relative to other corporate borrowings and could have an adverse effect on our business, financial condition, and results of operations. Moreover, it is possible that we will be unable to borrow funds or otherwise raise capital when we need to do so.
We are an emerging growth company, and our decision to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.
We are an emerging growth company, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding
26
advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As an emerging growth company, we also will not be subject to Section 404(b) of the Sarbanes-Oxley Act, which would require that our independent auditors review and attest as to the effectiveness of our internal control over financial reporting. We have also elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.
We could remain an “emerging growth company” for up to five years, or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1.235 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period.
As a result, our stockholders may not have access to certain information they may deem important, and investors may find our common stock less attractive if we choose to rely on these exemptions. This could result in a less active trading market for our common stock and the price of our common stock may be more volatile.
We qualify as a smaller reporting company, and our decision to comply only with certain reduced reporting and disclosure requirements applicable to smaller reporting companies could make our common stock less attractive to investors.
We are a smaller reporting company, and, for as long as we continue to qualify as a smaller reporting company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to smaller reporting companies, including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and two years of audited financial statements in our annual report instead of three years. As long as we are a smaller reporting company that is also not an accelerated filer, we will not be subject to Section 404(b) of the Sarbanes-Oxley Act, which requires that our independent registered public accounting firm review and attest as to the effectiveness of our internal control over financial reporting. In addition, as a non-accelerated filer, we will have longer deadlines to file our periodic reports with the Securities and Exchange Commission.
We would remain a smaller reporting company and a non-accelerated filer for so long as our voting and non-voting equity held by non-affiliates (“public float”) is less than $250 million or our annual revenues are less than $100 million and our public float is less than $700 million. Public float is determined each year as of the end of a company’s second fiscal quarter applicable at the end of the fiscal year involved.
As a result of our smaller reporting company status and non-accelerated filer status, our stockholders may not have access to certain information they may deem important, and investors may find our common stock less attractive if we choose to rely on these exemptions. This could result in a less active trading market for our common stock and the price of our common stock may be more volatile.
Risks Related to Economic Conditions
Inflation can have an adverse impact on our business and on our customers.
The future of inflation and other economic factors remain uncertain, and the Federal Reserve Board may increase or decrease interest rates faster or slower than anticipated. With an increase in inflation rates, small- to medium-sized businesses may be impacted by higher costs, as they are not able to leverage economies of scale to mitigate cost pressures compared to larger businesses. Sustained higher interest rates by the Federal Reserve Board, changes to fiscal policy, including the expansion of U.S. federal deficit spending and resultant debt issuance, could also affect market interest rates, push down asset prices, and weaken economic activity. Consequently, the ability of our customers to repay their loans may deteriorate, and in some cases this deterioration may occur quickly, which would adversely impact our results of operations and financial condition. Furthermore, a prolonged period of inflation could cause wages and other costs to increase, which could adversely affect our results of operations and financial condition.
Changes to trade policies and tariffs can have an adverse impact on our business and our customers.
Changes in trade policies, including the imposition of tariffs or the escalation of a trade war, could negatively impact the economic conditions in the markets we serve. Our customers may face higher costs for imported goods and materials,
27
reduced export demand, and supply chain disruptions due to increased tariffs. These challenges could lead to lower revenues, reduced profitability, and potential layoffs, all of which may impair our customers’ ability to meet their financial obligations. Furthermore, prolonged trade tensions and economic uncertainty could lead to market volatility, declining asset values, and weakened consumer confidence. If our customers experience financial stress, we could see an increase in loan delinquencies and credit losses, negatively affecting our asset quality and overall financial performance. Additionally, any decline in local economic activity could reduce loan demand and deposit growth, which are critical to our long-term success. While we actively monitor economic and policy developments, we cannot predict the outcome of trade negotiations or the full impact of tariffs and trade restrictions on our business, customers, and the broader economy. Any adverse effects from tariffs or a trade war could materially and negatively impact our financial condition, results of operations, and future growth prospects.
Risks Related to Operational Matters
Our funding sources may prove insufficient to replace deposits at maturity and support our growth. A lack of liquidity could adversely affect our financial condition and results of operations and result in regulatory limits being placed on us.
We must maintain sufficient funds to respond to the needs of depositors and borrowers. As a part of our liquidity management, we use a number of funding sources in addition to core deposit growth and repayments and maturities of loans and investments. As we grow, we are likely to depend more on these sources, which may include FHLBB advances, federal funds purchased and brokered certificates of deposit. While we emphasize the generation of low-cost core deposits as a source of funding, there is strong competition for such deposits in our market area. Additionally, deposit balances can decrease if customers perceive alternative investments as providing a better risk/return tradeoff. Adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources. Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates.
Further, if we are required to rely more heavily on more expensive funding sources to support liquidity and growth, our revenues may not increase proportionately to cover our increased costs. In this case, our operating margins and profitability would be adversely affected. Alternatively, we may need to sell a portion of our investment and/or loan portfolio to raise funds, which, depending upon market conditions, could result in us realizing a loss on the sale of such assets.
A lack of liquidity could also attract increased regulatory scrutiny and potential restraints imposed on us by regulators. Depending on the capitalization status and regulatory treatment of depository institutions, including whether an institution is subject to a supervisory prompt corrective action directive, certain additional regulatory restrictions and prohibitions may apply, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on payment of dividends and restrictions on the acceptance of brokered deposits.
At June 30, 2026, we had $158.2 million outstanding in advances from the FHLBB. At June 30, 2026, we had the ability to borrow $118.8 million in additional FHLBB advances. At June 30, 2026, we also had a $5.3 million line of credit with the FHLBB, which was not drawn at June 30, 2026. Additionally, at June 30, 2026, we had a $102.0 million secured line of credit through the BIC program. We could significantly increase our borrowing capacity from the FHLBB and the Federal Reserve Bank, if we pledged additional assets as security. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained.
For further information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”
We hold a relatively large level of certificates of deposit, which has and may continue to significantly increase our cost of funds.
At June 30, 2026, certificates of deposit totaled $281.5 million, or 34.8% of our total deposits. Our increased levels of certificates of deposit in recent years have resulted in a higher cost of funds than would otherwise be the case if we had a higher percentage of demand deposits and savings deposits. In addition, if our certificates of deposit do not remain with us, we may be required to access other sources of funds, including loan sales, other types of deposits, advances from the FHLBB and other borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or borrowings than we currently pay on our certificates of deposit.
28
We face significant operational risks because of our reliance on technology. Our information technology systems may be subject to failure, interruption or security breaches.
Information technology systems are critical to our business. Our business requires us to collect, process, transmit and store significant amounts of confidential information regarding our customers, employees and our own business, operations, plans and business strategies. We use various technology systems to manage our customer relationships, general ledger, investments, deposits, and loans. Our computer systems, data management and internal processes, as well as those of third parties, are integral to our performance. Our operational risks include the risk of malfeasance by employees or persons outside our company, errors relating to transaction processing and technology, systems failures or interruptions, breaches of our internal control systems and compliance requirements, and business continuation and disaster recovery. There have been increasing efforts by third parties to breach data security at financial institutions. Such attacks include computer viruses, malicious or destructive code, phishing attacks, denial of service or information or other security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary and other information, damages to systems, or other material disruptions to network access or business operations. Although we take protective measures and believe that we have not experienced any of the types of data breaches described above, the security of our computer systems, software, and networks may be vulnerable to breaches, unauthorized access, misuse, computer viruses, or other malicious code and cyber-attacks that could have an impact on information security. Because the techniques used to cause security breaches change frequently, we may be unable to proactively address these techniques or to implement adequate preventative measures.
In the event of a breakdown in our internal control systems, improper operation of our systems or improper employee actions, or a breach of our security systems, including if confidential or proprietary information were to be mishandled, misused or lost, we could suffer financial loss, loss of customers and damage to our reputation, and face regulatory action or civil litigation. Any of these events could have a material adverse effect on our financial condition and results of operations. Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits.
We rely on third-party vendors, which could expose us to additional cybersecurity risks.
Third-party vendors provide key components of our business infrastructure, including certain data processing and information services. Accordingly, our operations are exposed to risk that these vendors will not perform in accordance with our contractual agreements with them, or we also could be adversely affected if such an agreement is not renewed by the third-party vendor or is renewed on terms less favorable to us. If our third-party providers encounter difficulties, or if we have difficulty communicating with those service providers, our ability to adequately process and account for transactions could be affected, and our business operations could be adversely affected, which could have a material adverse effect on our financial condition and results of operations. Threats to information security also exist in the processing of customer information through various other vendors and their personnel. To our knowledge, the services and programs provided to us by third parties have not experienced any material security breaches. However, the existence of cyber-attacks or security breaches at third parties with access to our data, such as vendors, may not be disclosed to us in a timely manner.
We may be subject to risks and losses resulting from fraudulent activities that could adversely impact our financial performance and results of operations.
As a bank, we are susceptible to fraudulent activity that may be committed against us or our clients, which may result in financial losses or increased costs to us or our clients, disclosure or misuse of our information or our client information, misappropriation of assets, privacy breaches against our clients, litigation or damage to our reputation. We are most subject to fraud and compliance risk in connection with the origination of loans, ACH transactions, wire transactions, ATM transactions, checking transactions, and debit cards that we have issued to our customers and through our online banking portals.
We maintain a system of internal controls and insurance coverage to mitigate against such risks, including data processing system failures and errors, and customer fraud. If our internal controls fail to prevent or detect any such occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse effect on our business, financial condition and results of operations.
29
We had a defined pension benefit plan for the benefit of a portion of our employees that was terminated effective February 1, 2026. We could incur an expense in connection with the termination, which could negatively affect our income in the upcoming year.
We maintain a defined pension benefit plan for the benefit of employees of the Bank who were employees prior to November 1, 2022. This plan was frozen effective October 31, 2024. We have chosen and applied to terminate the plan. The cost to terminate the plan is primarily dependent on the value of the plan’s assets and applicable interest rates at the time such termination is finalized. We cannot estimate the actual costs associated with potential termination from the plan until the date of the termination, but if these costs were material, it would negatively impact future earnings in the year of termination.
Risks Related to Accounting Matters
Our financial statements are based in part on estimates and assumptions, which, if wrong, could cause unexpected losses in the future.
In preparing periodic reports we are required to file under the Exchange Act, including our consolidated financial statements, our management is and will be required under applicable rules and regulations to make estimates and assumptions as of a specified date. These estimates and assumptions are based on management’s best estimates and experience as of that date and are subject to substantial risk and uncertainty. Materially different results may occur as circumstances change and additional information becomes known. The most significant area requiring significant estimates and assumptions by management include our evaluation of the adequacy of our allowance for credit losses.
Changes in accounting standards could affect reported earnings.
The bodies responsible for establishing accounting standards, including the Financial Accounting Standards Board, the Securities and Exchange Commission and other regulatory bodies, periodically change the financial accounting and reporting guidance that governs the preparation of our financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively.
Other Risks Related to Our Business
Legal and regulatory proceedings and related matters could adversely affect us.
We have been and may in the future become involved in legal and regulatory proceedings. We consider most of the proceedings to be in the normal course of our business or typical for the industry; however, it is difficult to assess the outcome of these matters, and we may not prevail in any proceedings or litigation. There could be substantial costs and management diversion in such litigation and proceedings, and any adverse determination could have a materially adverse effect on our business, reputation, brand or image, or our financial condition and results of our operations.
We are a community bank and our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our performance.
We are a community bank, and our reputation is one of the most valuable components of our business. A key component of our business strategy is to rely on our reputation for customer service and knowledge of local markets to expand our presence by capturing new business opportunities from existing and prospective customers in our market area and contiguous areas. As such, we strive to conduct our business in a manner that enhances our reputation. This is done, in part, by recruiting, hiring and retaining employees or by retaining, appointing or electing directors who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and caring about our customers and employees. If our reputation is negatively affected by the actions of our employees or directors, by our inability to conduct our operations in a manner that is appealing to current or prospective customers, or otherwise, our business and, therefore, our operating results may be materially adversely affected.
Severe weather, natural disasters and other external events could significantly affect our operations and results.
Severe weather or natural disasters, such as tornados, drought and other adverse external events, could have a significant effect on our ability to conduct business. Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause us to incur additional expenses. Accordingly, the occurrence of any such
30
severe weather or natural disaster event could have a material adverse effect on our business, which, in turn, could adversely affect our financial condition and results of operations.
If our deposits grow too large, we may lose the benefits of excess deposit insurance provided by the MA DIF.
The Bank’s deposits are insured in full beyond federal deposit insurance coverage limits by the MA DIF, a private excess deposit insurer created under Massachusetts law. We believe providing deposit insurance in excess of FDIC insurance limits gives us a competitive advantage for individual, corporate and municipal depositors having deposit balances. However, the MA DIF may require member institutions that pose greater than normal loss exposure risk to the MA DIF to take certain risk-mitigating measures or withdraw from the MA DIF. In such an event, an institution may be required to reduce its level of excess deposits, pay for the reinsurance of excess deposits, make an additional capital contribution to the MA DIF, provide collateral or take other risk-mitigating measures that the MA DIF may require, which may include entering into reciprocal deposit programs with other financial institutions or reciprocal deposit services. Any of the above measures may reduce our overall level of deposits and increase our reliance on other, more expensive or less stable sources for funding, including FHLB advances, which would reduce net income.
Our articles of incorporation provide that, subject to limited exceptions, state and federal courts in Maryland are the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, and other employees.
Our articles of incorporation provide that, unless the Company consents in writing, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Maryland General Corporation Law, or (iv) any action asserting a claim governed by the internal affairs doctrine will be conducted in a state or federal court located within Maryland, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. This exclusive forum provision does not apply to claims arising under the federal securities laws. This exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum it finds favorable for disputes with the Company and its directors, officers, and other employees, or may cause a stockholder to incur additional expense by having to bring a claim in a judicial forum that is distant from where the stockholder resides, or both. In addition, if a court were to find this exclusive forum provision to be inapplicable or unenforceable in a particular action, we may incur additional costs associated with resolving the action in another jurisdiction, which could have a material adverse effect on our financial condition and results of operations.
Various factors may make takeover attempts more difficult to achieve.
Stock banks or their holding companies, as well as individuals, may not acquire control of a company organized in the mutual holding company structure, such as the Company. As a result, the only entities that may acquire control of a mutual holding company are other mutual savings institutions or mutual holding companies. Accordingly, it is very unlikely that the Company would be subject to any takeover attempt by activist stockholders or other financial institutions.
Under applicable regulations, for a period of three years following completion of the reorganization, no person may acquire beneficial ownership of more than 10% of our common stock without prior approval of the Federal Reserve Board and the Massachusetts Commissioner of Banks. Under federal law, subject to certain exemptions, a person, entity or group must notify the Federal Reserve Board before acquiring control of a bank holding company. Also, a bank holding company must obtain the prior approval of the Federal Reserve Board before, among other things, acquiring direct or indirect ownership or control of more than 5% of any class of voting shares of any bank, including the Bank.
There also are provisions in our articles of incorporation that may be used to delay or block a takeover attempt, including a provision that prohibits any person from voting more than 10% of the shares of common stock outstanding. Furthermore, shares of restricted stock and stock options that we may grant to employees and directors, stock ownership by our management and directors, employment and change in control agreements that we have entered into with our executive officers and other factors may make it more difficult for companies or persons to acquire control of the Company without the consent of our board of directors. Taken as a whole, these statutory provisions and provisions in our articles of incorporation could result in our being less attractive to a potential acquirer and thus could adversely affect the market price of our common stock.
31
Risks Related to Our Organizational Structure
Our stockholders own a minority of our common stock and will not be able to exercise voting control over most matters put to a vote of stockholders.
Public stockholders own a minority of the outstanding shares of our common stock. As a result, stockholders other than Winchester Bancorp, MHC will not be able to exercise voting control over most matters put to a vote of stockholders. Winchester Bancorp, MHC may take action that the public stockholders believe to be contrary to their interests. For example, Winchester Bancorp, MHC may exercise its voting control to defeat a stockholder nominee for election to the board of directors of the Company.
In addition, stockholders will not be able to force a merger or second-step conversion transaction without the consent of Winchester Bancorp, MHC since such a transaction requires the approval of the holders of a majority of the outstanding voting stock of the Company, which can only be achieved if Winchester Bancorp, MHC votes to approve such transactions. Some stockholders may desire a sale or merger transaction, since stockholders typically receive a premium for their shares, or a second-step conversion transaction, since, on a fully converted basis, most full stock institutions tend to trade at higher multiples than mutual holding companies. Stockholders could, however, prevent a second-step conversion or the implementation of equity incentive plans because under current regulations and policies, such matters also require the separate approval of the stockholders other than Winchester Bancorp, MHC.
If we declare dividends on our common stock, Winchester Bancorp, MHC will be prohibited from waiving the receipt of dividends.
Our board of directors will have the authority to declare dividends on our common stock, subject to statutory and regulatory requirements. If we pay dividends to our stockholders, we also will be required to pay dividends to Winchester Bancorp, MHC, unless Winchester Bancorp, MHC is permitted by the Federal Reserve Board to waive the receipt of dividends. The Federal Reserve Board’s current position is to not permit a bank holding company to waive dividends declared by its subsidiary. In addition, Massachusetts banking regulations prohibit Winchester Bancorp, MHC from waiving dividends declared and paid by us unless the Massachusetts Commissioner of Banks does not object to the waiver and provided the waiver is not detrimental to the safe and sound operation of the Bank. Accordingly, because dividends will be required to be paid to Winchester Bancorp, MHC along with all other stockholders, the amount of dividends available for all other stockholders will be less than if Winchester Bancorp, MHC were permitted to waive the receipt of dividends.
Item 1B. Unresolved Staff Comments.
None
Item 1C. Cybersecurity.
Risk Management & Strategy (Scope)
On a periodic basis, but not less than annually, the Information Security Officer ("ISO"), in conjunction with the Information Technology department, identifies and documents internal and external vulnerabilities that could result in unauthorized disclosure, misuse, alteration or destruction of customer information or customer records. Based on the results of the risk assessment, the Company’s Information Security Program may be revised to protect against any anticipated threats or hazards to the security or integrity of such information. The ISO, CIO and IT Department regularly meet to review, monitor and address technology related threats and emerging risks.
Additionally, the Company engages third parties to aid in the identification of risks and controls related to technology and technology driven product delivery channels, allowing for an independent opinion.
32
the Company and with trusted third parties to ensure that data is protected and able to be recovered in the event of a breach or failure (technical or other disaster).
Risk Assessments (Detail)
On a periodic basis, but not less than annually,
Response to Security Vulnerabilities
In response to identified risks, management may take certain steps to correct and respond to security vulnerabilities, which may include:
Internal Controls, Audit and Testing
Regular internal monitoring is integral to the Company’s risk assessment process, which includes regular testing of key controls, systems and procedures. In addition, independent third party penetration testing to test the effectiveness of security controls and preparedness measures is conducted at least annually. Management determines the scope and objectives of the penetration analysis.
Aspects of the Information Security program are audited by the Company’s Internal Audit provider(s) to ensure aspects are aligned with regulatory expectations.
Employee Training
Employees are an integral part in the line of defense against cybersecurity risks. Every employee is responsible for protecting Company and client information. Accordingly, employees complete formal training, including regular simulated phishing assessments designed to sharpen threat detection and reporting capabilities.
Service Providers
The company relies on third party vendor services and solutions to support its operations. Many of these vendors have access to sensitive and proprietary information. Third party vendors continue to be a notable source of operational and informational risk. Accordingly, the Company has implemented a third party management program, which includes a detailed onboarding process and periodic reviews of vendors with access to sensitive Company data. The program is audited as part of the Company’s internal audit program.
33
Program Adjustments
The ISO monitors, evaluates and adjusts the Information Security Program considering any relevant changes in technology, the sensitivity of its customer information, internal or external threats to information and changing business arrangements, such as mergers and acquisitions, alliances and joint ventures, outsourcing arrangements and changes to customer information systems.
Incident Response Plan
The Company has implemented an Incident Response Plan ("IRP") to provide structure and a systematic incident response process for information security incidents that may affect any of the information technology systems, network or data. The Company’s business continuity program provides a coordinated response when responding to incidents.
The IRP includes:
Governance & Reporting
The Board of Directors has designated the Vice President of Information Security as ISO. The ISO reports directly to the First Vice President of Risk & Compliance and works in tandem with the Chief Information Officer.
On a quarterly basis, the ISO presents risks and metrics related to cyber and information security efforts to the IT Steering Committee and then to the Board’s Audit Committee.
At least annually,
Item 2. Properties.
The Bank operates from its main office in Winchester, Massachusetts and four full-service branch offices in eastern Massachusetts, located in Arlington, Danvers and Woburn. As of June 30, 2026, the net book value of our real properties, including land buildings and building improvements, was $5.6 million.
Item 3. Legal Proceedings.
From time to time, the Company and Bank may be party to various claims and lawsuits arising in the ordinary course of the normal business activities. Although the ultimate outcome of these suits, if any, cannot be ascertained at this time, it is in the opinion of management that none of these matters, even if it resolved adversely to the Bank, will have a material adverse effect on the Company's consolidated financial position. The Company is not currently party to any material pending legal proceedings.
Item 4. Mine Safety Disclosures.
Not applicable.
34
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
The Company's common stock is traded on the Nasdaq Stock Market under the symbol “WSBK”. Trading of our common stock commenced May 2, 2025. Prior to that time, there was no established public trading market for our common stock.
Stockholders
As of September 10, 2026, there were 334 stockholders of record of our common stock. This number does not include beneficial owners whose shares are held in street name.
Dividends
The Company does not currently pay cash dividends on its common stock.
Unregistered Securities and Share Repurchases
There were no sales of unregistered securities or repurchase of shares of common stock during the year ended June 30, 2026.
Item 6. [Reserved]
35
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This discussion and analysis reflects our consolidated financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations. The information in this section has been derived from the consolidated financial statements, which appear elsewhere in this Annual Report.
Overview
Total assets increased $146.6 million, or 15.4%, to $1.1 billion at June 30, 2026, from $949.4 million at June 30, 2025. The growth was primarily driven by increases in loans, deposits, investments, and cash and cash equivalents. Net income for the year ended June 30, 2026 was $4.4 million, an increase of $5.3 million, compared to net loss of $874,000 for the year ended June 30, 2025. The prior year loss was due in part to a one-time donation of $400,000 in cash and 185,907 shares of common stock to the Winchester Savings Bank Charitable Foundation at a total market value of $2.3 million, resulting in an after-tax charge of $1.6 million in connection with the reorganization and stock offering.
Selected Financial Data (dollars in thousands except per share data)
|
|
Year Ended |
|
|||||
|
|
June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Earnings Data |
|
|
|
|
|
|
||
Net interest income |
|
$ |
24,993 |
|
|
$ |
17,522 |
|
Non-interest income |
|
|
1,268 |
|
|
|
1,792 |
|
Total net interest income and non-interest income |
|
|
26,261 |
|
|
|
19,314 |
|
Provision for credit losses |
|
|
789 |
|
|
|
2,066 |
|
Non-interest expense |
|
|
19,752 |
|
|
|
18,778 |
|
Pre-tax income (loss) |
|
|
5,720 |
|
|
|
(1,530 |
) |
Net income (loss) |
|
|
4,421 |
|
|
|
(874 |
) |
|
|
|
|
|
|
|
||
Per share Data |
|
|
|
|
|
|
||
Basic and diluted earnings per share |
|
$ |
0.49 |
|
|
$ |
(0.10 |
) |
Book value per share |
|
$ |
12.96 |
|
|
$ |
12.41 |
|
|
|
|
|
|
|
|
||
Earnings |
|
|
|
|
|
|
||
Return on average assets |
|
|
0.43 |
% |
|
|
(0.10 |
)% |
Return on average stockholders' equity |
|
|
3.74 |
% |
|
|
(1.08 |
)% |
Net interest margin |
|
|
2.55 |
% |
|
|
2.05 |
% |
Cost of deposits |
|
|
2.88 |
% |
|
|
3.17 |
% |
Efficiency ratio |
|
|
75.21 |
% |
|
|
97.22 |
% |
|
|
|
|
|
|
|
||
Balance Sheet |
|
|
|
|
|
|
||
Total assets |
|
$ |
1,095,936 |
|
|
$ |
949,378 |
|
Loans, net |
|
$ |
870,773 |
|
|
$ |
751,220 |
|
Total stockholders' equity |
|
$ |
120,513 |
|
|
$ |
115,352 |
|
|
|
|
|
|
|
|
||
Asset quality |
|
|
|
|
|
|
||
Allowance for credit losses (ACL) |
|
$ |
4,783 |
|
|
$ |
4,151 |
|
ACL/Total loans |
|
|
0.55 |
% |
|
|
0.55 |
% |
ACL/Total nonperforming loans (NPLs) |
|
|
300.82 |
% |
|
|
187.57 |
% |
Net charge-offs/average total loans |
|
|
(0.07 |
)% |
|
|
(0.19 |
)% |
Capital Ratios |
|
|
|
|
|
|
||
Stockholders' equity/total assets |
|
|
11.00 |
% |
|
|
12.15 |
% |
|
|
|
|
|
|
|
||
Critical Accounting Policies
The discussion and analysis of the financial condition and results of operations are based on our financial statements, which are prepared in conformity with GAAP. The preparation of these financial statements requires management to make
36
estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policy discussed below to be a critical accounting policy. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.
The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company,” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards.
The following represents our critical accounting policy.
Allowance for Credit Losses on Loans. The allowance for credit losses is established based upon the Company's current estimate of expected lifetime credit losses on loans measured at amortized cost. Credit losses are charged against the allowance when management's assessments confirm that the Company will not collect the full amortized cost basis of a loan. Subsequent recoveries, if any, are credited to the allowance. The Company estimates credit losses for financial assets on a collective basis for loans sharing similar risk characteristics. The Company segments financial assets with similar risk characteristics and has elected to segment its loans based on Federal Call Report codes used for reporting loans to the Federal Deposit Insurance Corporation as part of the Call Report process. These segments are collectively evaluated for expected credit losses using a quantitative discounted cash flow ("DCF") model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output. The Company has elected to use this approach because DCF models allow for effective incorporation of a reasonable and supportable forecast in a directionally consistent and objective manner and peer data is available for certain inputs such as the probability of default and the loss given default. The quantitative model utilizes a loss factor based approach to estimate expected credit losses, which are derived from industry peer loss experience. The model estimates expected credit losses using loan level data over the estimated life of the exposure, considering the effect of prepayments. Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period, beyond which is a reversion to the historical long-run average using the straight-line reversion method. Management periodically evaluates a reasonable and supportable forecast period and a reversion period to be appropriate for purposes of estimating expected credit losses. The qualitative risk factors impacting the expected risk of loss within the portfolio include the following:
The allowance for credit losses on loans is evaluated on a regular basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. For example, an increase of 25 basis points as 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 $6.9 million from $4.8 million.
Loans that do not share similar risk characteristics with any pools of assets are subject to individual evaluation and are removed from the collectively assessed pools to avoid double counting. This includes loans on non-accrual and loans that are 90 days or greater past due. For the loans that will be individually evaluated, the Company will use either a DCF approach or a fair value of collateral approach. The latter approach will be used for loans that are collateral dependent, that is, when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or
37
sale of the collateral, expected credit losses are based on fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.
An unallocated component may be maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated portion of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating collectively and individually evaluated loans in the portfolio.
The following table sets forth activity in our allowance for credit losses for the periods indicated.
|
|
For the Years Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
(Dollars in thousands) |
|
||||||
Allowance for credit losses at beginning of year |
|
$ |
4,151 |
|
|
$ |
3,451 |
|
Provision for credit losses |
|
|
1,229 |
|
|
|
2,068 |
|
Charge-offs: |
|
|
|
|
|
|
||
Mortgage loans: |
|
|
|
|
|
|
||
Residential real estate |
|
|
— |
|
|
|
— |
|
Commercial real estate |
|
|
— |
|
|
|
(85 |
) |
Multi-family real estate |
|
|
— |
|
|
|
— |
|
Construction |
|
|
(322 |
) |
|
|
— |
|
Home equity loans and lines of credit |
|
|
— |
|
|
|
— |
|
Commercial |
|
|
(270 |
) |
|
|
(1,330 |
) |
Consumer |
|
|
(5 |
) |
|
|
— |
|
Total charge-offs |
|
|
(597 |
) |
|
|
(1,415 |
) |
Total recoveries |
|
|
— |
|
|
|
47 |
|
Net (charge-offs) recoveries |
|
|
(597 |
) |
|
|
(1,368 |
) |
Allowance at end of year |
|
$ |
4,783 |
|
|
$ |
4,151 |
|
Allowance to non-performing loans |
|
|
300.82 |
% |
|
|
187.57 |
% |
Allowance to total loans outstanding at the end of the |
|
|
0.55 |
% |
|
|
0.55 |
% |
Net (charge-offs) recoveries to average loans |
|
|
(0.07 |
)% |
|
|
(0.19 |
)% |
The decrease in charge-offs for the year ended June 30, 2026 was primarily due to lower commercial loan charge-offs, partially offset by an increase in charge-offs within the construction portfolio.
The following table sets forth additional information with respect to charge-offs by category for the years indicated.
|
|
For the Years Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net (charge-offs) recoveries to average loans |
|
|
|
|
|
|
||
Mortgage loans: |
|
|
|
|
|
|
||
Residential real estate |
|
|
— |
% |
|
|
— |
% |
Commercial real estate |
|
|
— |
% |
|
|
(0.00 |
)% |
Multi-family real estate |
|
|
— |
% |
|
|
— |
% |
Construction |
|
|
(0.00 |
)% |
|
|
— |
% |
Home equity loans and lines of credit |
|
|
— |
% |
|
|
— |
% |
Commercial |
|
|
(0.01 |
)% |
|
|
(0.02 |
)% |
Consumer |
|
|
(0.00 |
)% |
|
|
— |
% |
38
Allocation of Allowance for Credit Losses. The following table sets forth the allowance for credit losses allocated by loan category and the percent of the allowance in each category to the total allocated allowance at the dates indicated. The allowance for credit losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.
|
|
At June 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
Allowance |
|
|
Percent of |
|
|
Percent |
|
|
Allowance |
|
|
Percent of |
|
|
Percent of |
|
||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||
Mortgage loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential real estate |
|
$ |
1,721 |
|
|
|
36.3 |
% |
|
|
46.5 |
% |
|
$ |
1,510 |
|
|
|
36.5 |
% |
|
|
47.4 |
% |
Commercial real estate |
|
|
736 |
|
|
|
15.6 |
|
|
|
12.2 |
|
|
|
579 |
|
|
|
13.9 |
|
|
|
13.6 |
|
Multi-family real estate |
|
|
1,292 |
|
|
|
27.3 |
|
|
|
24.3 |
|
|
|
944 |
|
|
|
22.7 |
|
|
|
22.1 |
|
Construction |
|
|
839 |
|
|
|
17.7 |
|
|
|
13.3 |
|
|
|
705 |
|
|
|
17.0 |
|
|
|
12.7 |
|
Home equity loans and lines of credit |
|
|
108 |
|
|
|
2.3 |
|
|
|
3.3 |
|
|
|
113 |
|
|
|
2.7 |
|
|
|
3.6 |
|
Commercial |
|
|
36 |
|
|
|
0.8 |
|
|
|
0.4 |
|
|
|
298 |
|
|
|
7.2 |
|
|
|
0.6 |
|
Consumer |
|
|
1 |
|
|
|
0.0 |
|
|
|
0.1 |
|
|
|
2 |
|
|
|
0.0 |
|
|
|
0.0 |
|
Total allocated allowance |
|
$ |
4,733 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
$ |
4,151 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
Unallocated |
|
|
50 |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Total |
|
$ |
4,783 |
|
|
|
|
|
|
|
|
$ |
4,151 |
|
|
|
|
|
|
|
||||
For more information on our critical accounting policies, see Note 2 of the notes to our consolidated financial statements.
Comparison of Financial Condition at June 30, 2026 and June 30, 2025
Total Assets. Total assets increased $146.6 million, or 15.4%, to $1.1 billion at June 30, 2026, from $949.4 million at June 30, 2025. The increase was primarily due to increases in loans, securities and cash and cash equivalents.
Cash and Cash Equivalents. Cash and cash equivalents increased $4.8 million, or 8.7%, to $60.0 million at June 30, 2026 from $55.2 million at June 30, 2025 as a result of current year cash flows.
Investment Securities. Investment securities, comprised of both available for sale and held to maturity securities, aggregated $125.0 million at June 30, 2026 compared to $104.5 million at June 30, 2025, as excess cash from the stock offering was invested in securities.
Gross Loans. Loans increased $119.7 million, or 15.9%, to $873.8 million at June 30, 2026 compared to $754.1 million at June 30, 2025. The growth was primary driven by increases in one- to four-family residential real estate loans, of $47.6 million, or 13.3%, multi-family real estate loans of $45.9 million, or 27.6%, and construction real estate loans of $20.4 million, or 21.3%. The increase in the loan portfolios reflects our strategy of maintaining a well balanced mix of residential and commercial real estate loans. The recent increase in one- to four-family residential real estate loans was largely attributable to the expansion of our broker channel. The allowance for credit losses on loans was $4.8 million at June 30, 2026 and $4.2 million at June 30, 2025, which represented 0.55% of total loans at both June 30, 2026 and June 30, 2025. The allowance for credit losses for off balance sheet commitments at June 30, 2026 and June 30, 2025, was $746,000 and $1.2 million, respectively.
Total nonaccrual loans declined to $1.6 million at June 30, 2026, from $2.2 million at June 30, 2025. The decrease was primarily due to a decrease in non-accrual residential real estate and commercial loans. Total loans past due 30 days or greater were $1.5 million at June 30, 2026 compared to $1.8 million at June 30, 2025. As a result, the ratio of allowance for credit losses on loans to nonaccrual loans increased to 300.8% at June 30, 2026 from 187.6% at June 30, 2025.
39
Deposits. Deposits increased $130.1 million, or 19.1%, to $809.2 million at June 30, 2026 from $679.2 million at June 30, 2025. The increase was due primarily to an increase in money market accounts, which rose $140.0 million, or 116.1%, to $260.6 million at June 30, 2026 from $120.6 million at June 30, 2025, largely due to the strong performance of our newly established municipal deposit channel. Partially offsetting this growth were decreases of $10.3 million, or 6.4% in savings accounts and $1.6 million or 0.6% in certificates of deposit. Within certificates of deposit, balances greater than $250,000 increased $32.1 million, or 32.5%, while balances less than $250,000 decreased $33.7 million, or 18.3%. All of our deposits are fully insured under the DIF.
Borrowings. Borrowings, which consisted solely of FHLBB advances, increased $11.2 million, or 7.6%, to $158.2 million at June 30, 2026, compared to $147.0 million from June 30, 2025, as funds were used to support loan growth.
Total stockholders' equity. Total stockholders' equity increased $5.2 million, to $120.5 million at June 30, 2026 from $115.4 million at June 30, 2025. The increase in total stockholders' equity was primarily driven by a $4.4 million increase in retained earnings and a lower accumulated other comprehensive loss at June 30, 2026 compared to the prior year end.
Comparison of Operating Results for the years ended June 30, 2026 and 2025
General. We recorded net income of $4.4 million and net loss of $874,000, for the years ended June 30, 2026 and 2025, respectively. The increase in net income was due primarily to margin improvements and lower provision for credit losses. The prior year loss was partially attributable to a one-time donation of $400,000 in cash and 185,907 shares of common stock to the Winchester Savings Bank Charitable Foundation at a total market value of $2.3 million, resulting in an after-tax charge of $1.6 million in connection with the reorganization and stock offering.
Interest and Dividend Income. Interest and dividend income increased $7.7 million, or 18.0%, to $50.4 million for the year ended June 30, 2026, from $42.7 million for the year ended June 30, 2025. Interest and fees on loans, which is our primary source of interest income, increased $6.3 million, or 16.7%, to $43.8 million for the year ended June 30, 2026, from $37.5 million for the year ended June 30, 2025.
The average balance of loans increased by $88.5 million, or 12.2%, to $814.2 million for the year ended June 30, 2026, over the average balance for the year ended June 30, 2025, while the average yield on loans increased by 19 basis points to 5.38% for the year ended June 30, 2026, from 5.17% for the year ended June 30, 2025. The increase in the average yield was due to increases in market interest rates as well as changes in the composition of our loan portfolio to include a higher percentage of higher-yielding multi-family residential real estate loans. The increase in average balance was due to our continuing to pursue new commercial and residential broker relationships.
Interest Expense. Total interest expense increased $0.2 million, or 0.8%, to $25.4 million for the year ended June 30, 2026, compared to $25.2 million for the year ended June 30, 2025. Interest expense on deposits increased $0.6 million, or 3.4%, to $19.8 million for the year ended June 30, 2026, from $19.1 million for the year ended June 30, 2025. Our average balance of interest-bearing deposits increased $83.2 million, or 13.8%, to $686.6 million, while our average cost of deposits decreased 29 basis points to 2.88% for the year ended June 30, 2026, from 3.17% for the year ended June 30, 2025. The decrease in the average cost of deposits was due to lower market interest rates.
Interest expense on Federal Home Loan Bank advances decreased $0.5 million, or 7.5%, to $5.6 million for the year ended June 30, 2026, from $6.1 million for the year ended June 30, 2025. The decrease was due lower average balance of Federal Home Loan Bank advances and a decrease in the average cost of borrowings (23 basis points to 4.13% for the year ended June 30, 2026, from 4.36% for the year ended June 30, 2025).
Net Interest Income. Net interest income was $25.0 million for the year ended June 30, 2026, compared to $17.5 million for the year ended June 30, 2025, as our interest income increased faster than our interest expense. Our interest rate spread increased to 2.05% for the year ended June 30, 2026 from 1.60% for the year ended June 30, 2025, as well as our net interest margin to 2.55% for the year ended June 30, 2026 from 2.05% for the year ended June 30, 2025. The interest rate spread and net interest margin were both positively impacted by the addition of new higher yielding loans and investments.
Provision for Credit Losses. Based on an analysis of the factors described in “Critical Accounting Policies—Allowance for Credit Losses,” we recorded a provision for credit losses of $789,000 for the year ended June 30, 2026, compared to a provision of $2.1 million for the year ended June 30, 2025. The provision for credit losses on loans was $1.2 million while a benefit of $440,000 was recorded for off balance sheet commitments. The decrease in the provision for credit losses on loans for the year ended June 30, 2026 was primarily due to lower charge offs offset by increases in the loan portfolio.
40
Our estimates and assumptions used in the determination of the adequacy of the allowance could be proven incorrect in the future, and the actual amount of future provisions may exceed the amount of past provisions. Any such increase in future provisions that may be required may adversely impact our financial condition and results of operations.
Other Income. Other income information is as follows.
|
|
Year Ended |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
Percent |
|
||||
|
|
(Dollars in thousands) |
|
|||||||||||||
Customer service fees |
|
$ |
773 |
|
|
$ |
728 |
|
|
$ |
45 |
|
|
|
6.2 |
% |
Bank owned life insurance |
|
|
472 |
|
|
|
466 |
|
|
|
6 |
|
|
|
1.3 |
% |
Gain on marketable equity securities, net |
|
|
— |
|
|
|
374 |
|
|
|
(374 |
) |
|
|
100.0 |
% |
Loss on sale of securities |
|
|
(317 |
) |
|
|
— |
|
|
|
(317 |
) |
|
|
— |
|
Gain on sale of loans |
|
|
8 |
|
|
|
— |
|
|
|
8 |
|
|
|
— |
|
Miscellaneous |
|
|
332 |
|
|
|
224 |
|
|
|
108 |
|
|
|
48.2 |
% |
Total other income |
|
$ |
1,268 |
|
|
$ |
1,792 |
|
|
$ |
(524 |
) |
|
|
(29.2 |
)% |
The increase in miscellaneous income represents higher construction release fees recorded in the current period compared to the prior period.
Operating Expense. Operating expense information is as follows.
|
|
Year Ended |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
Percent |
|
||||
|
|
(Dollars in thousands) |
|
|||||||||||||
Salaries and employee benefits |
|
$ |
11,748 |
|
|
$ |
9,688 |
|
|
$ |
2,060 |
|
|
|
21.3 |
% |
Occupancy and equipment, net |
|
|
1,819 |
|
|
|
1,579 |
|
|
|
240 |
|
|
|
15.3 |
% |
Data processing |
|
|
1,749 |
|
|
|
1,368 |
|
|
|
381 |
|
|
|
27.9 |
% |
Deposit insurance |
|
|
715 |
|
|
|
848 |
|
|
|
(133 |
) |
|
|
(15.7 |
)% |
Marketing and advertising |
|
|
734 |
|
|
|
462 |
|
|
|
272 |
|
|
|
58.9 |
% |
Net periodic pension and post-retirement cost |
|
|
(697 |
) |
|
|
(73 |
) |
|
|
(624 |
) |
|
|
854.8 |
% |
Other |
|
|
3,684 |
|
|
|
4,906 |
|
|
|
(1,222 |
) |
|
|
(24.9 |
)% |
Total operating expense |
|
$ |
19,752 |
|
|
$ |
18,778 |
|
|
$ |
974 |
|
|
|
5.2 |
% |
The increase in salaries and employee benefits was driven by the addition of key staff in commercial lending and accounting, as well as the implementation of a new bonus plan. Data processing expense increased due to implementation of new software across several areas, including cash management, allowance for credit loss, and commercial credit. Other expenses decreased as a result of a one-time contribution of $2.3 million to the Winchester Savings Bank Charitable Foundation that was recorded in the prior year.
Income Taxes. Income taxes expense was $1.3 million for the year ended June 30, 2026, compared to a benefit of $656,000 for the year ended June 30, 2025. The increase in income tax provision was due primarily to a $7.3 million year over year increase in pre-tax income.
41
Average Balances and Yields
The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances, and the average balance of loans includes non-accrual loans. The yields set forth below include the effect of deferred fees/costs, discounts, and premiums that are amortized or accreted to interest income. Deferred loan fees for the years ended June 30, 2026 and 2025 were not material.
|
|
For the Year Ended June 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
Average |
|
|
Interest |
|
|
Average |
|
|
Average |
|
|
Interest |
|
|
Average |
|
||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans |
|
$ |
814,169 |
|
|
$ |
43,783 |
|
|
|
5.38 |
% |
|
$ |
725,618 |
|
|
$ |
37,528 |
|
|
|
5.17 |
% |
Securities |
|
|
118,400 |
|
|
|
4,678 |
|
|
|
3.95 |
% |
|
|
87,850 |
|
|
|
3,128 |
|
|
|
3.56 |
% |
Interest-bearing deposits |
|
|
46,666 |
|
|
|
1,919 |
|
|
|
4.11 |
% |
|
|
42,473 |
|
|
|
2,057 |
|
|
|
4.84 |
% |
Total interest-earning assets |
|
|
979,235 |
|
|
|
50,380 |
|
|
|
5.14 |
% |
|
|
855,941 |
|
|
|
42,713 |
|
|
|
4.99 |
% |
Non-interest-earning assets |
|
|
43,143 |
|
|
|
|
|
|
|
|
|
39,045 |
|
|
|
|
|
|
|
||||
Allowance for credit losses on loans |
|
|
(4,437 |
) |
|
|
|
|
|
|
|
|
(3,575 |
) |
|
|
|
|
|
|
||||
Total assets |
|
$ |
1,017,941 |
|
|
|
|
|
|
|
|
$ |
891,411 |
|
|
|
|
|
|
|
||||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
NOW and demand deposits |
|
$ |
55,838 |
|
|
|
34 |
|
|
|
0.06 |
% |
|
$ |
55,520 |
|
|
|
137 |
|
|
|
0.25 |
% |
Savings accounts |
|
|
154,627 |
|
|
|
3,263 |
|
|
|
2.11 |
% |
|
|
163,597 |
|
|
|
3,871 |
|
|
|
2.37 |
% |
Money market accounts |
|
|
197,836 |
|
|
|
6,337 |
|
|
|
3.20 |
% |
|
|
104,832 |
|
|
|
3,460 |
|
|
|
3.30 |
% |
Certificates of deposit |
|
|
278,312 |
|
|
|
10,130 |
|
|
|
3.64 |
% |
|
|
279,500 |
|
|
|
11,647 |
|
|
|
4.17 |
% |
Total interest-bearing deposits |
|
|
686,613 |
|
|
|
19,764 |
|
|
|
2.88 |
% |
|
|
603,449 |
|
|
|
19,115 |
|
|
|
3.17 |
% |
Borrowings |
|
|
136,236 |
|
|
|
5,623 |
|
|
|
4.13 |
% |
|
|
139,207 |
|
|
|
6,076 |
|
|
|
4.36 |
% |
Total interest-bearing liabilities |
|
|
822,849 |
|
|
|
25,387 |
|
|
|
3.09 |
% |
|
|
742,656 |
|
|
|
25,191 |
|
|
|
3.39 |
% |
Other non-interest-bearing liabilities |
|
|
76,756 |
|
|
|
|
|
|
|
|
|
67,710 |
|
|
|
|
|
|
|
||||
Total liabilities |
|
|
899,605 |
|
|
|
|
|
|
|
|
|
810,366 |
|
|
|
|
|
|
|
||||
Stockholders' equity |
|
|
118,336 |
|
|
|
|
|
|
|
|
|
81,045 |
|
|
|
|
|
|
|
||||
Total liabilities and stockholders' equity |
|
$ |
1,017,941 |
|
|
|
|
|
|
|
|
$ |
891,411 |
|
|
|
|
|
|
|
||||
Net interest income |
|
|
|
|
$ |
24,993 |
|
|
|
|
|
|
|
|
$ |
17,522 |
|
|
|
|
||||
Net interest rate spread (1) |
|
|
|
|
|
|
|
|
2.05 |
% |
|
|
|
|
|
|
|
|
1.60 |
% |
||||
Net interest-earning assets (2) |
|
$ |
156,386 |
|
|
|
|
|
|
|
|
$ |
113,285 |
|
|
|
|
|
|
|
||||
Net interest margin (3) |
|
|
|
|
|
|
|
|
2.55 |
% |
|
|
|
|
|
|
|
|
2.05 |
% |
||||
Average interest-earning assets to |
|
|
119.01 |
% |
|
|
|
|
|
|
|
|
115.25 |
% |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
(1) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the |
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. |
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
(3) Net interest margin represents net interest income divided by average total interest-earning assets. |
|
|||||||||||||||||||||||
42
Rate/Volume Analysis
The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the table below.
|
|
Year Ended |
|
|||||||||
|
|
Increase (Decrease) Due to |
|
|
Total |
|
||||||
|
|
Volume |
|
|
Rate |
|
|
(Decrease) |
|
|||
|
|
(In thousands) |
|
|||||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|||
Loans |
|
$ |
4,717 |
|
|
$ |
1,537 |
|
|
$ |
6,254 |
|
Securities |
|
|
1,178 |
|
|
|
372 |
|
|
|
1,550 |
|
Interest-bearing deposits |
|
|
262 |
|
|
|
(399 |
) |
|
|
(137 |
) |
Total interest-earning assets |
|
|
6,157 |
|
|
|
1,510 |
|
|
|
7,667 |
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|||
NOW and demand deposits |
|
|
2 |
|
|
|
(105 |
) |
|
|
(103 |
) |
Savings accounts |
|
|
(212 |
) |
|
|
(396 |
) |
|
|
(608 |
) |
Money market accounts |
|
|
2,979 |
|
|
|
(102 |
) |
|
|
2,877 |
|
Certificates of deposit |
|
|
(50 |
) |
|
|
(1,467 |
) |
|
|
(1,517 |
) |
Borrowings |
|
|
(130 |
) |
|
|
(323 |
) |
|
|
(453 |
) |
Total interest-bearing liabilities |
|
|
2,589 |
|
|
|
(2,393 |
) |
|
|
196 |
|
Change in net interest income |
|
$ |
3,568 |
|
|
$ |
3,903 |
|
|
$ |
7,471 |
|
Management of Market Risk
General. The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk. Our assets, consisting primarily of mortgage loans, have longer maturities than our liabilities, consisting primarily of deposits. As a result, a principal part of our business strategy is to manage the impact of changes in market interest rates on net interest income and capital. We have an Asset/Liability Committee that is responsible for evaluating the interest rate risk in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors. The committee establishes and monitors the amount, maturities, pricing and mix of assets and funding sources with the objective of managing assets and funding sources to provide results that are consistent with liquidity, growth, risk limits and profitability goals.
As part of our ongoing asset-liability management, we use the following strategies to manage our interest rate risk:
43
Net Interest Income. We analyze our sensitivity to changes in interest rates through a net interest income model. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings. We estimate what our net interest income would be for a 12-month period. We then calculate what the net interest income would be for the same period under the assumptions that the U.S. Treasury yield curve increases or decreases instantaneously by up to 300 basis points, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.
The tables below sets forth, as of June 30, 2026 and June 30, 2025, the calculation of the estimated changes in our net interest income that would result from the designated instantaneous changes in the U.S. Treasury yield curve.
At June 30, 2026 |
|
|||||||
Change in Interest Rates |
|
Net Interest Income |
|
|
Year 1 Change |
|
||
|
|
(Dollars in thousands) |
|
|
|
|
||
+300 |
|
$ |
20,567 |
|
|
|
(27.8 |
)% |
+200 |
|
|
23,369 |
|
|
|
(17.9 |
)% |
+100 |
|
|
26,022 |
|
|
|
(8.6 |
)% |
Level |
|
|
28,481 |
|
|
|
— |
|
-100 |
|
|
29,641 |
|
|
|
4.1 |
% |
-200 |
|
|
30,438 |
|
|
|
6.9 |
% |
-300 |
|
|
31,024 |
|
|
|
8.9 |
% |
At June 30, 2025 |
|
|||||||
Change in Interest Rates |
|
Net Interest Income |
|
|
Year 1 Change |
|
||
|
|
(Dollars in thousands) |
|
|
|
|
||
+300 |
|
$ |
17,784 |
|
|
|
(22.6 |
)% |
+200 |
|
|
19,687 |
|
|
|
(14.3 |
)% |
+100 |
|
|
21,522 |
|
|
|
(6.3 |
)% |
Level |
|
|
22,972 |
|
|
|
— |
|
-100 |
|
|
23,403 |
|
|
|
1.9 |
% |
-200 |
|
|
23,363 |
|
|
|
1.7 |
% |
-300 |
|
|
23,098 |
|
|
|
0.6 |
% |
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 17.9% 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 6.9% increase in net interest income and at June 30, 2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 14.3% decrease in net interest income, and in the event of an instantaneous parallel 200 basis point decrease in interest rates, we would have experienced an 1.7% increase in net interest income.
Economic Value of Equity. We also compute amounts by which the net present value of our assets and liabilities (economic value of equity, or “EVE”) would change in the event of a range of assumed changes in market interest rates. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability and off-balance sheet contract under the assumptions that the U.S. Treasury yield curve increases or decreases instantaneously by up to 300 basis points, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.
44
The tables below sets forth, as of June 30, 2026 and June 30, 2025, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the U.S. Treasury yield curve.
At June 30, 2026 |
|
|||||||||||||||||||
|
|
|
|
|
Estimated Increase (Decrease) in |
|
|
EVE as a Percentage of Present |
|
|||||||||||
Change in Interest |
|
Estimated |
|
|
Amount |
|
|
Percent |
|
|
EVE |
|
|
Increase |
|
|||||
|
|
|
|
|
(Dollars in thousands) |
|
|
|
|
|
|
|
||||||||
+300 |
|
$ |
99,341 |
|
|
$ |
(49,170 |
) |
|
|
(33.1 |
)% |
|
|
9.9 |
% |
|
|
(27.5 |
)% |
+200 |
|
|
118,697 |
|
|
|
(29,813 |
) |
|
|
(20.1 |
)% |
|
|
11.5 |
% |
|
|
(15.8 |
)% |
+100 |
|
|
135,100 |
|
|
|
(13,411 |
) |
|
|
(9.0 |
)% |
|
|
12.8 |
% |
|
|
(6.7 |
)% |
— |
|
|
148,511 |
|
|
|
— |
|
|
|
— |
|
|
|
13.7 |
% |
|
|
— |
|
-100 |
|
|
155,241 |
|
|
|
6,730 |
|
|
|
4.5 |
% |
|
|
14.0 |
% |
|
|
2.2 |
% |
-200 |
|
|
155,674 |
|
|
|
7,164 |
|
|
|
4.8 |
% |
|
|
13.8 |
% |
|
|
0.4 |
% |
-300 |
|
|
149,504 |
|
|
|
993 |
|
|
|
0.7 |
% |
|
|
13.0 |
% |
|
|
(5.1 |
)% |
At June 30, 2025 |
|
|||||||||||||||||||
|
|
|
|
|
Estimated Increase (Decrease) in |
|
|
EVE as a Percentage of Present |
|
|||||||||||
Change in Interest |
|
Estimated. |
|
|
Amount |
|
|
Percent |
|
|
EVE |
|
|
Increase |
|
|||||
|
|
|
|
|
(Dollars in thousands) |
|
|
|
|
|
|
|
||||||||
+300 |
|
$ |
74,858 |
|
|
$ |
(41,822 |
) |
|
|
(35.8 |
)% |
|
|
8.9 |
% |
|
|
(30.1 |
)% |
+200 |
|
|
91,058 |
|
|
|
(25,622 |
) |
|
|
(22.0 |
)% |
|
|
10.5 |
% |
|
|
(17.4 |
)% |
+100 |
|
|
105,459 |
|
|
|
(11,221 |
) |
|
|
(9.6 |
)% |
|
|
11.8 |
% |
|
|
(7.1 |
)% |
— |
|
|
116,680 |
|
|
|
— |
|
|
|
— |
|
|
|
12.7 |
% |
|
|
— |
|
-100 |
|
|
125,288 |
|
|
|
8,608 |
|
|
|
7.4 |
% |
|
|
13.3 |
% |
|
|
4.2 |
% |
-200 |
|
|
124,997 |
|
|
|
8,317 |
|
|
|
7.1 |
% |
|
|
13.0 |
% |
|
|
1.7 |
% |
-300 |
|
|
123,747 |
|
|
|
7,067 |
|
|
|
6.1 |
% |
|
|
12.6 |
% |
|
|
(1.3 |
)% |
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 20.1% decrease in EVE, and in the event of an instantaneous parallel 200 basis point decrease in interest rates, we would have experienced a 4.8% increase in EVE, and at June 30, 2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 22.0% decrease in EVE, and in the event of an instantaneous parallel 200 basis point decrease in interest rates, we would have experienced a 7.1% increase in EVE.
At June 30, 2026, all estimated changes described above with respect to net interest income and EVE with respect to potential increases in market interest rates were not in compliance with the current policy limits established by the board of directors. We have determined that selling assets to comply with our internal policies would result in a significant loss that would deplete capital and, as a result, restrict future growth, while providing limited benefit during a period of declining
45
market interest rates, as began in the latter half of 2025, and, therefore, the committee voted to permit the exceptions to policy.
Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the changes in net interest income and net economic value tables presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remain constant over the period being measured and assume that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates, and actual results may differ. Furthermore, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Additionally, certain assets, such as adjustable-rate loans, have features that restrict changes in interest rates both on a short-term basis and over the life of the asset. In the event of changes in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the tables.
Interest rate risk calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, deposits and borrowings.
Liquidity and Capital Resources
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 FHLBB. At June 30, 2026, we had $158.2 million outstanding in advances from the FHLBB. At June 30, 2026, we had the ability to borrow $118.8 million in additional FHLBB advances. At June 30, 2026, we had a $5.3 million line of credit with the FHLBB, which was not drawn at June 30, 2026. Additionally, at June 30, 2026, we had a $102.0 million secured line of credit through the BIC program. At that date, there were no amounts outstanding.
While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and cash equivalents. The levels of these assets depend on our operating, financing, lending, and investing activities during any given period.
We test the level of our liquidity monthly and quarterly. Our monthly liquidity test is the ratio of basic surplus (deficit) divided by total assets, with basic surplus/deficit consisting of liquid assets (cash and due from banks, federal funds sold, securities available for sale, loans held for sale, total equities and securities maturities and payment) divided by investment commitments (loan commitments, 10% of certificates of deposit maturing within 30 days and 5% of non-maturing deposits). Our key quarterly test is the Primary Liquidity ratio, is total liquid assets (cash and due from banks, federal funds sold and all securities that are not pledged to secure borrowing) as a percentage of total assets.
We seek to maintain a minimum monthly liquidity ratio of 4% to 6% of assets, and a minimum quarterly primary liquidity ratio of 15%. At June 30, 2026 and June 30, 2025, we were in compliance with both of these guidelines.
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 $5.4 million and $2.5 million for the years ended June 30, 2026 and 2025, respectively. Net cash used 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 $141.9 million and $86.7 million for the years ended June 30, 2026 and 2025, respectively. Net cash provided by financing activities was $141.3 million and $95.4 million for the years ended June 30, 2026 and 2025, respectively.
We are committed to maintaining a strong liquidity position. We consistently monitor our liquidity position. We anticipate that we will have sufficient funds to meet our current funding commitments based on our current strategy to increase loans with an increase in core deposits and the continued use of FHLBB advances, as needed.
At June 30, 2026, the Bank exceeded its applicable regulatory capital requirement, and was considered “well capitalized” under regulatory guidelines.
46
Recent Accounting Pronouncements
There are no recent accounting pronouncements issued, but not yet adopted, that are expected to have a significant impact on our financial statements. As an emerging growth company, we have elected to use the extended transition period to delay the adoption of new or re-issued accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies.
Impact of Inflation and Changing Prices
The financial statements and related data presented herein have been prepared in accordance with GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates, generally, have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
See Item 7, above.
Item 8. Financial Statements and Supplementary Data.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by the quarterly report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.
There has been no change in our internal control over financial reporting during the most recent fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
Item 9B. Other Information.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
47
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this item will be included in the Company’s definitive proxy statement for the 2026 Annual Meeting of Stockholders (the “Proxy Statement”) and is incorporated herein by reference.
Item 11. Executive Compensation.
The information required by this item will be included in the Company’s Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item will be included in the Company's Proxy Statement and is incorporated herein by reference, except as to information disclosed therein pursuant to Item 402(v) of Regulation S-K relating to pay versus performance.
The Company does not currently maintain any equity compensation plans.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item will be included in the Company’s Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
The information required by this item will be included in the Company’s Proxy Statement and is incorporated herein by reference.
48
PART IV
Item 15. Exhibits, Financial Statement Schedules.
The following financial statements are included in Part II, Item 8 of this Form 10-K:
All financial statement schedules have been omitted as the required information is inapplicable or has been included in the Notes to Consolidated Financial Statements.
49
Exhibit Index
Exhibit Number |
|
Description |
|
|
|
3.1 |
|
Articles of Incorporation of Winchester Bancorp, Inc.(1) |
3.2 |
|
Bylaws of Winchester Bancorp, Inc.(1) |
3.3 |
|
Amendment to Bylaws(2) |
4.0 |
|
Form of Common Stock Certificate of Winchester Bancorp, Inc.(1) |
4.1* |
|
Description of Winchester Bancorp, Inc. Securities(3) |
10.1** |
|
Employment Agreement, dated December 6, 2024, by and among Winchester Savings Bank, Winchester Bancorp, Inc. and John A. Carroll(1) |
10.2** |
|
Employment Agreement, dated December 6, 2024, by and among Winchester Savings Bank, Winchester Bancorp, Inc. and Elda Heller(1) |
10.3** |
|
Change in Control Agreement, dated December 6, 2024, by and among Winchester Savings Bank, Winchester Bancorp, Inc. and Paul Cheremka(1) |
10.4** |
|
Amended and Restated Executive Deferred Compensation Agreement, dated January 1, 2025, by and between Winchester Savings Bank and John A. Carroll(1) |
10.5** |
|
Amended and Restated Executive Deferred Compensation Agreement, dated January 1, 2025, by and between Winchester Savings Bank and Elda Heller(1) |
10.6** |
|
Winchester Savings Bank Amended and Restated Endorsement Split Dollar Life Insurance Plan(1) |
10.7** |
|
Winchester Savings Bank Annual Incentive Plan Effective 2025 Calendar Year |
19.1 |
|
Winchester Bancorp, Inc. Policy Regarding Insider Trading |
21 |
|
Subsidiaries of Winchester Bancorp, Inc.(1) |
31.1* |
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* |
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1* |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2* |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
97* |
|
Clawback Policy of Winchester Bancorp, Inc.(1) |
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
** Management contract or compensatory plan or arrangement.
(1) Incorporated herein by reference to the Exhibits to the Registration Statement on Form S-1 (File No. 333-283752) as filed with the Securities and Exchange Commission on February 12, 2025.
(2) Incorporated herein by reference to the Exhibits to the Current Report on Form 8-K as filed with the Securities and Exchange Commission on July 30, 2026.
(3) Incorporated herein by reference to the Exhibits to the Annual Report on Form 10-K as filed with the Securities and Exchange Commission on September 17, 2025.
Item 16. Form 10-K Summary
None.
50
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm |
F-2 |
Consolidated Balance Sheets as of June 30, 2026 and 2025 |
F-3 |
Consolidated Statements of Operations for the Years ended June 30, 2026 and 2025 |
F-4 |
Consolidated Statements of Comprehensive Income (Loss) for the Years ended June 30, 2026 and 2025 |
F-5 |
Consolidated Statements of Stockholders’ Equity for the Years ended June 30, 2026, 2025 |
F-6 |
Consolidated Statements of Cash Flows for the Years ended June 30, 2026 and 2025 |
F-7 |
Notes to Consolidated Financial Statements |
F-8 |
F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Winchester Bancorp, Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Winchester Bancorp, Inc. and subsidiaries (the Company) as of June 30, 2026 and 2025, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and 2025, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company's auditor since 2000.
/s/ Wolf & Company, P.C
September 15, 2026
F-2
Winchester Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
As of June 30, 2026 and 2025
|
|
June 30, |
|
|
June 30, |
|
||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands, except share data) |
|
|||||
Assets |
|
|
|
|
|
|
||
Cash and due from banks |
|
$ |
|
|
$ |
|
||
Interest-bearing deposits |
|
|
|
|
|
|
||
Total cash and cash equivalents |
|
|
|
|
|
|
||
Securities available for sale, at fair value (amortized cost of $ |
|
|
|
|
|
|
||
Securities held to maturity, at amortized cost |
|
|
|
|
|
|
||
Federal Home Loan Bank stock, at cost |
|
|
|
|
|
|
||
Loans, net of allowance for credit losses of $ |
|
|
|
|
|
|
||
Bank owned life insurance |
|
|
|
|
|
|
||
Premises and equipment, net |
|
|
|
|
|
|
||
Accrued interest receivable |
|
|
|
|
|
|
||
Net deferred tax asset |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
Liabilities and stockholders' equity |
|
|
|
|
|
|
||
Non-interest-bearing deposits |
|
$ |
|
|
$ |
|
||
Interest-bearing deposits |
|
|
|
|
|
|
||
Federal Home Loan Bank advances |
|
|
|
|
|
|
||
Mortgagors’ escrow accounts |
|
|
|
|
|
|
||
Accrued expenses and other liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
Commitments and contingencies |
|
|
|
|
|
|
||
Preferred stock, $ |
|
|
|
|
|
|
||
Common stock, $ |
|
|
|
|
|
|
||
Additional paid-in capital |
|
|
|
|
|
|
||
Unearned compensation (ESOP) |
|
|
( |
) |
|
|
( |
) |
Retained earnings |
|
|
|
|
|
|
||
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Total stockholders' equity |
|
|
|
|
|
|
||
Total liabilities and stockholders' equity |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Winchester Bancorp, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Years Ended June 30, 2026 and 2025
|
|
Year ended |
|
|||||
|
|
June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
(In thousands, except share data) |
|
||||||
Interest and dividend income: |
|
|
|
|
|
|
||
Interest and fees on loans |
|
$ |
|
|
$ |
|
||
Interest and dividends on securities |
|
|
|
|
|
|
||
Interest on federal funds sold and other interest-bearing deposits |
|
|
|
|
|
|
||
Total interest and dividend income |
|
|
|
|
|
|
||
Interest expense: |
|
|
|
|
|
|
||
Interest on deposits |
|
|
|
|
|
|
||
Interest on Federal Home Loan Bank advances |
|
|
|
|
|
|
||
Total interest expense |
|
|
|
|
|
|
||
Net interest income |
|
|
|
|
|
|
||
Provision for credit losses |
|
|
|
|
|
|
||
Net interest income, after provision for credit losses |
|
|
|
|
|
|
||
Non-interest income: |
|
|
|
|
|
|
||
Customer service fees |
|
|
|
|
|
|
||
Income on bank owned life insurance |
|
|
|
|
|
|
||
Loss on available for sale securities, net |
|
|
( |
) |
|
|
— |
|
Gain (loss) on marketable equity securities, net |
|
|
— |
|
|
|
|
|
Gain on sale of loans |
|
|
|
|
|
— |
|
|
Miscellaneous |
|
|
|
|
|
|
||
Total non-interest income |
|
|
|
|
|
|
||
Non-interest expense: |
|
|
|
|
|
|
||
Salaries and employee benefits |
|
|
|
|
|
|
||
Occupancy and equipment, net |
|
|
|
|
|
|
||
Data processing |
|
|
|
|
|
|
||
Deposit insurance |
|
|
|
|
|
|
||
Marketing and advertising |
|
|
|
|
|
|
||
Net periodic pension and post retirement benefit, less service costs |
|
|
( |
) |
|
|
( |
) |
Other general and administrative |
|
|
|
|
|
|
||
Total non-interest expense |
|
|
|
|
|
|
||
Income (loss) before income taxes |
|
|
|
|
|
( |
) |
|
Provision (benefit) for income taxes |
|
|
|
|
|
( |
) |
|
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
Share Data: |
|
|
|
|
|
|
||
Average common shares outstanding, basic and diluted |
|
|
|
|
|
|
||
Basic and diluted net income (loss) per share |
|
$ |
|
|
$ |
( |
) |
|
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Winchester Bancorp, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
For the Years Ended June 30, 2026 and 2025
|
|
Year ended |
|
|||||
|
|
June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
Other comprehensive income: |
|
|
|
|
|
|
||
Securities available for sale: |
|
|
|
|
|
|
||
Unrealized holding gains |
|
|
|
|
|
|
||
Reclassification adjustment for losses realized in income (1) |
|
|
|
|
|
|
||
Net unrealized gains |
|
|
|
|
|
|
||
Tax effect |
|
|
( |
) |
|
|
( |
) |
Net-of-tax amount |
|
|
|
|
|
|
||
Defined benefit pension plan: |
|
|
|
|
|
|
||
Actuarial gain arising during the year |
|
|
|
|
|
|
||
Prior service cost |
|
|
|
|
|
( |
) |
|
Curtailment loss |
|
|
|
|
|
|
||
Settlement Cost |
|
|
|
|
|
|
||
Amortization of prior service cost (2) |
|
|
|
|
|
( |
) |
|
Net unrealized gain (loss) |
|
|
|
|
|
( |
) |
|
Tax effect |
|
|
( |
) |
|
|
|
|
Net-of-tax amount |
|
|
|
|
|
( |
) |
|
Post-retirement benefit plan: |
|
|
|
|
|
|
||
Actuarial gain arising during the year |
|
|
|
|
|
|
||
Reclassification adjustment for actuarial loss amortized through expense (2) |
|
|
|
|
|
|
||
Reclassification adjustment for amortization of prior service cost (2) |
|
|
|
|
|
( |
) |
|
Net unrealized gains |
|
|
|
|
|
( |
) |
|
Tax effect |
|
|
( |
) |
|
|
|
|
Net-of-tax amount |
|
|
|
|
|
( |
) |
|
Total other comprehensive income |
|
|
|
|
|
|
||
Comprehensive income (loss) |
|
$ |
|
|
$ |
( |
) |
|
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Winchester Bancorp, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
For the Years Ended June 30, 2026 and 2025
|
|
Shares of Common Stock |
|
|
Common Stock |
|
|
Additional Paid in Capital |
|
|
Retained Earnings |
|
|
Accumulated |
|
|
Unearned Compensation ESOP |
|
|
Total |
|
|||||||
|
|
(In thousands, except share data) |
|
|||||||||||||||||||||||||
Balance at June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
Comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
ESOP shares released and committed to be released |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Balance at June 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
|
|
Shares of Common Stock |
|
|
Common Stock |
|
|
Additional Paid in Capital |
|
|
Retained Earnings |
|
|
Accumulated |
|
|
Unearned Compensation ESOP |
|
|
Total |
|
|||||||
|
|
(In thousands, except share data) |
|
|||||||||||||||||||||||||
Balance at June 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
Comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
( |
) |
|
Transfer of Cash from Winchester Savings Bank to |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Issuance of Shares to Mutual Holding Company |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance and Contribution of Shares to the |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Issuance of Shares in Initial Public Offering, |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Purchase of |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Winchester Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended June 30, 2026 and 2025
|
|
Year ended |
|
|||||
|
|
June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Provision for credit losses |
|
|
|
|
|
|
||
Net amortization of premiums and discounts on securities |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Increase in cash surrender value of bank owned life insurance |
|
|
( |
) |
|
|
( |
) |
Amortization (accretion) of net deferred loan origination costs/fees |
|
|
|
|
|
( |
) |
|
Losses on sale of securities available for sale, net |
|
|
|
|
|
|
||
Gain on marketable equity securities, net |
|
|
|
|
|
( |
) |
|
Contribution of stock to charitable foundation |
|
|
|
|
|
|
||
Deferred tax provision (benefit) |
|
|
( |
) |
|
|
( |
) |
Net change in: |
|
|
|
|
|
|
||
Accrued interest receivable |
|
|
( |
) |
|
|
( |
) |
Other assets |
|
|
( |
) |
|
|
|
|
Accrued expenses and other liabilities |
|
|
|
|
|
( |
) |
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Activity in securities available for sale: |
|
|
|
|
|
|
||
Maturities, calls and prepayments |
|
|
|
|
|
|
||
Sales |
|
|
|
|
|
|
||
Purchases |
|
|
( |
) |
|
|
( |
) |
Activity in securities held to maturity: |
|
|
|
|
|
|
||
Maturities, calls and prepayments |
|
|
|
|
|
|
||
Purchases |
|
|
( |
) |
|
|
( |
) |
Purchase of Federal Home Loan Bank stock |
|
|
( |
) |
|
|
( |
) |
Loan originations, net of principal payments |
|
|
( |
) |
|
|
( |
) |
Purchase of premises and equipment, net |
|
|
( |
) |
|
|
( |
) |
Net cash used by investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Net increase in deposits |
|
|
|
|
|
|
||
Net change in short-term Federal Home Loan Bank advances |
|
|
( |
) |
|
|
|
|
Proceeds from long-term Federal Home Loan Bank advances |
|
|
|
|
|
|
||
Repayment of long-term Federal Home Loan Bank advances |
|
|
( |
) |
|
|
( |
) |
Net proceeds from stock offering and issuance of common shares |
|
|
|
|
|
|
||
Purchase of common shares by the ESOP |
|
|
|
|
|
( |
) |
|
Contribution of cash to the MHC |
|
|
|
|
|
( |
) |
|
Net increase in mortgagors’ escrow accounts |
|
|
|
|
|
|
||
Net cash provided by financing activities |
|
|
|
|
|
|
||
Net change in cash and cash equivalents |
|
|
|
|
|
|
||
Cash and cash equivalents at beginning of year |
|
|
|
|
|
|
||
Cash and cash equivalents at end of year |
|
$ |
|
|
$ |
|
||
Supplemental cash flow information: |
|
|
|
|
|
|
||
Interest paid on deposits |
|
$ |
|
|
$ |
|
||
Interest paid on Federal Home Loan Bank advances |
|
|
|
|
|
|
||
Income taxes paid, net of (refunds) |
|
|
|
|
|
( |
) |
|
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Winchester Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Reorganization
On December 4, 2024, The Board of Trustees of Winchester Savings Bank (the "Bank") adopted a plan of reorganization from a Mutual Savings Bank to a Mutual Holding Company and Plan of Stock Issuance (the "Plan"). The Plan received the required approvals of various regulatory agencies. The Bank’s reorganization and the related stock offering of Winchester Bancorp, Inc. (the "Company") were consummated on April 30, 2025. The Company sold
A liquidation account by the Company for the benefit of eligible account holders has been set up in an amount equal to the percentage of the shares of common stock issued in the offering to persons other than Winchester Bancorp, MHC multiplied by the net worth of the Bank as of September 30, 2024.
In the unlikely event of a complete liquidation of (i) the Bank or (ii) the Bank and the Company, all claims of creditors, including those of depositors, will be paid first. However, except with respect to the liquidation account to be established, a depositor’s claim would be solely for the principal amount of his or her deposit accounts plus accrued interest. Depositors generally would not have an interest in the value of the assets of the Bank or the Company above that amount.
After two years from the date of the offering and upon the written request of the Federal Reserve Board and, if necessary, the FDIC and the Massachusetts Commissioner of Banks, the Company will transfer the liquidation account and the depositors’ interests in such account to the Bank.
Each eligible account holder would have an initial pro-rata interest in the liquidation account for each deposit account, including savings accounts, transaction accounts such as negotiable order of withdrawal accounts, money market deposit accounts, and certificates of deposit, with a balance of $
If, however, on any June 30 annual closing date, the amount in any such deposit account is less than the amount in the deposit account as of the close of business on November 30, 2023, or any other annual closing date, then the liquidation account as well as the interest in the liquidation account relating to such deposit account would be reduced from time to time by the proportion of any such reduction, and such interest will cease to exist if such deposit account is closed. In addition, no interest in the liquidation account would ever be increased despite any subsequent increase in the related deposit account. Payment pursuant to liquidation rights of eligible account holders would be separate and apart from the payment of any insured deposit accounts to such depositor. Any assets remaining after the above liquidation rights of eligible account holders are satisfied would be available for distribution to stockholders.
The Bank may not declare or pay a cash dividend on its outstanding capital stock if the effect thereof would cause its regulatory capital to be reduced below the amount required to maintain the Liquidation Account and under FDIC rules and regulations.
Fiscal Year End Change
On July 29, 2026, the Company’s Board of Directors approved a change in the Company’s fiscal year end from June 30 to December 31 of each year.
F-8
The accounting and reporting policies of the Company and the Bank conform to accounting principles generally accepted in the United States of America (U.S. GAAP) and predominant practices within the banking industry. The consolidated financial statements are prepared using the accrual basis of accounting. The significant accounting policies are summarized below to assist the reader in better understanding the consolidated financial statements and other data contained herein.
Certain previously reported amounts have been reclassified to conform with current period's presentation.
Basis of consolidation and presentation
The consolidated financial statements include the accounts of the Company, the Bank and the Bank's wholly owned subsidiaries, Sachem Holdings, Inc., Aberjona Holdings, Inc., 1871 Company, LLC, and Wedgemere Holdings, LLC. Sachem Holdings, Inc. and Aberjona Holdings, Inc. function as Massachusetts security corporations that buy, sell and hold securities. 1871 Company, LLC's principal activity is holding of bank premises.
Wedgemere Holdings, LLC's principal activity is the holding of properties acquired in settlement of loans. All significant intercompany balances and transactions have been eliminated in consolidation.
Business
The Company is a Maryland corporation whose primary purpose is to act as the holding company for the Bank. The Bank provides a variety of financial services to individuals and small businesses through its offices in Winchester, Woburn, Danvers and Arlington, Massachusetts. Its primary deposit products are checking, savings and term certificate accounts and its primary lending products are residential, commercial and multi-family real estate and construction loans.
Use of estimates
In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses.
Fair value hierarchy
The Company groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value.
Level 1 – Valuation is based on quoted prices in active markets for identical assets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets.
Level 2 – Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets.
Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. Level 3 assets include financial instruments whose value is determined using unobservable inputs to pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
Defined benefit pension plan investments in hedge funds are measured using the net asset value per share (or its equivalent) as a practical expedient and have not been classified in the fair value hierarchy.
Cash and cash equivalents
For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash and balances due from banks, interest-bearing deposits and federal funds sold which mature within ninety days. The Bank may from time to
F-9
time have deposits in financial institutions which exceed the federally insured limits. At June 30, 2026 and 2025, the Bank had cash on deposit at the Federal Reserve Bank amounting to $
Securities
Debt securities that management has the positive intent and ability to hold to maturity are classified as “held to maturity” and recorded at amortized cost. Debt securities not classified as held to maturity are classified as “available for sale” and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss), net of tax effects.
Marketable equity securities are measured at fair value with changes in fair value reported on the Company’s consolidated statements of operations as a component of other non-interest income, regardless of whether such gains and losses are realized.
Purchase premiums and discounts are amortized to income using the interest method over the terms of the securities, with the exception of callable debt securities, whose premiums are amortized to the earliest call date. Gains and losses on securities available for sale are recorded on the trade date and are determined using the specific identification method.
Each reporting period, the Bank evaluates all securities available for sale with a decline in fair value below the amortized cost of the investment, to determine whether an allowance for credit losses should be recorded. The Bank first assesses if there’s intent to sell, or if it more likely than not the Bank will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through a provision for credit losses charged to earnings. For debt securities available for sale that the Bank intends to hold, management evaluates whether the decline in fair value has resulted from credit losses or other factors. The Bank considers both qualitative and quantitative factors in making this assessment. Credit loss is measured based on discounted cash flow analysis and recorded in a valuation allowance. The allowance is limited by the amount that the fair value is less than the amortized cost basis. Impairment that has not been recorded through an allowance for credit losses is recorded through other comprehensive income, net of applicable taxes. Changes in allowance are recorded in the period of the change as a credit loss expense (or reversal of the credit loss expense).
The Bank measures expected credit losses on held to maturity securities on a collective basis by major security type in accordance with the Current Expected Credit Loss ("CECL") methodology and any credit losses are recognized as part of an allowance for credit losses.
Debt securities are placed on nonaccrual status at the time any principal or interest payments become 90 days delinquent. Interest accrued but not received for a security placed on nonaccrual is reversed against interest income.
Dividends are recorded in income when declared. Gains and losses on the sale of marketable equity securities are recorded on the trade date and are determined using the specific identification method.
Federal Home Loan Bank Stock
The Bank, as a member of the Federal Home Loan Bank (the “FHLB”) system, is required to maintain an investment in capital stock of the FHLB of Boston. Based on the redemption provisions of the FHLB, the stock has no quoted market value and is carried at cost. At its discretion, the FHLB may declare dividends on the stock. The Bank reviews the stock for impairment based on the likelihood of the ultimate recoverability of the cost basis in the FHLB stock. As of June 30, 2026 and 2025,
Accrued Interest Receivable
The Bank elected not to measure an allowance for credit losses for accrued interest receivable and instead elected to reverse interest income on loans or securities that are placed on nonaccrual status, which is generally when the instrument is 90 days past due, or earlier if the Bank believes the collection of interest is doubtful. The Bank has concluded that this policy results in the timely reversal of uncollectible interest.
F-10
Loans
The Bank’s loan portfolio includes residential real estate, commercial and multi-family real estate, construction, home equity and lines of credit, commercial and consumer segments.
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for credit losses, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.
The accrual of interest on all loans is discontinued at the time a loan is 90 days past due. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual if collection of principal or interest is considered doubtful.
All interest accrued but not collected for loans that are placed on nonaccrual is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
Allowance for Credit Losses-Loans
The allowance for credit losses is evaluated on a regular basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
For the year ended June 30, 2025, the Company measured the allowance for credit losses using the Scaled CECL Allowance for Losses Estimator (“SCALE”) which has asset size limitations for institutions to use the methodology. Effective July 1, 2025 the Company could no longer use SCALE and changed its Allowance for Credit Loss methodology to use a quantitative Discounted Cash Flow (“DCF”) model combined with the assessment of certain qualitative factors. The transition from SCALE methodology to the DCF resulted in an immaterial change to the allowance for credit losses.
For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts back to a historical loss rate over four quarters on a straight-line basis. Other internal and external indicators of economic forecasts are also considered by management when developing the forecast metrics.
Collectively evaluated loans
The allowance for credit losses is established based upon the Company's current estimate of expected lifetime credit losses on loans measured at amortized cost. Credit losses are charged against the allowance when management's assessments confirm that the Company will not collect the full amortized cost basis of a loan. Subsequent recoveries, if any, are credited to the allowance. The Company estimates credit losses for financial assets on a collective basis for loans sharing similar risk characteristics. The Company segments financial assets with similar risk characteristics and has elected to segment its loans based on Federal Call codes used for reporting loans to the Federal Deposit Insurance Corporation as part of the Call Report process. These segments are collectively evaluated for expected credit losses using a quantitative DCF model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output. The Company has elected to use this approach because DCF models allow for effective incorporation of a reasonable and supportable forecast in a directionally consistent and objective manner and peer data is available for certain inputs such as the probability of default and the loss given default. The quantitative model utilizes a loss factor based approach to estimate expected credit losses, which are derived from industry peer loss experience. The model estimates expected credit losses using loan level data over the estimated life of the exposure, considering the effect of prepayments. Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period, beyond which is a reversion to the historical long-run average using the straight-line reversion method. Management periodically evaluates a reasonable and supportable forecast period and a reversion period to be appropriate for purposes of estimating expected credit losses. The qualitative risk factors impacting the expected risk of loss within the portfolio include the following:
F-11
Individually Evaluated Loans
Loans that do not share similar risk characteristics with any pools of assets are subject to individual evaluation and are removed from the collectively assessed pools to avoid double counting. This includes loans on non-accrual and loans that are 90 days or greater past due. For the loans that will be individually evaluated, the Company will use either a DCF approach or a fair value of collateral approach. The latter approach will be used for loans that are collateral dependent, that is, when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.
Unallocated component
An unallocated component may be maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated portion of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating collectively and individually evaluated loans in the portfolio.
Allowance for Credit Losses- Off-Balance Sheet Credit Exposures
The Company has off-balance sheet financial instruments, which include commitments to extend credit, standby letters of credit and commercial letters of credit. The Company estimates expected credit losses over the contractual period in which the Company is exposed to risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company.
The Company’s allowance for credit losses on off-balance sheet credit exposures is recognized as a liability in accrued expenses and other liabilities on the consolidated balance sheets, with adjustments to the reserve recognized in the provision for credit losses in the consolidated statements of operations. The credit risk associated with these commitments is evaluated in a manner similar to the allowance for credit losses on loans with an additional assumption of probability of funding.
Bank-Owned Life Insurance
Bank-owned life insurance policies are reflected on the consolidated balance sheets at cash surrender value. Changes in the net cash surrender value of the policies, as well as insurance proceeds received (in excess of cash surrender value), are reflected in other income on the consolidated statement of operations and are not subject to income taxes.
Premises and equipment
Land is carried at cost. Buildings, leasehold improvements and furniture and equipment are carried at cost, less accumulated depreciation and amortization, computed on the straight-line method over the estimated useful lives of the assets, or the expected terms of the leases, if shorter. Expected terms include lease option periods to the extent that the exercise of such options is reasonably assured. It is general practice to charge the cost of maintenance and repairs to earnings when incurred; major expenditures for betterments are capitalized and amortized.
F-12
Leases
The Bank determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets are included in other assets and operating lease liabilities are included in accrued expenses and other liabilities in the consolidated balance sheets. The Bank does not have any finance leases.
ROU assets represent the Bank’s right to use the underlying asset for the lease term and lease liabilities represent the Bank’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. As most of the Bank’s leases do not provide an implicit rate, the Bank’s incremental borrowing rate, which is generally the Federal Home Loan Bank advance rate, is used to determine the present value of lease payments. The operating lease ROU asset is net of lease incentives. The Bank’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Bank will exercise that option. For operating leases, lease expense is recognized on a straight-line basis over the lease term.
The Bank has lease agreements with lease and non-lease components, which are generally accounted for separately. The Bank has not elected the practical expedient to account for lease and non-lease components as one lease component.
Transfers of financial assets
Operating Segments
The Company's revenue is primarily derived from the business of banking. The Company's financial performance is monitored on consolidated basis by Mr. John Carroll, CEO, who is considered to be the
All of the Company’s financial results are similar and considered by management to be aggregated into
Advertising Costs
Advertising costs are expensed as incurred.
Defined benefit plan
The compensation cost of an employee’s defined pension benefit is recognized on the net periodic pension cost method over the employee’s approximate service period. The aggregate cost method is utilized for funding purposes.
The Bank accounts for its defined benefit pension plan using an actuarial model that allocates pension costs over the service period of employees in the plan. The Bank accounts for the over-funded or under-funded status of its defined benefit plan as an asset or liability in its consolidated balance sheets and recognizes changes in the funded status in the year in which the changes occur through other comprehensive income (loss).
F-13
The Bank uses the “10% corridor” method for amortization of actuarial gains and losses within its defined benefit pension plan. Amortization of actuarial gains and losses are only recorded when the amount recorded in accumulated other comprehensive income (loss) is greater than
The Bank reports the service cost component of net periodic pension cost and net periodic postretirement benefit cost within salaries and employee benefits on the consolidated statements of operations, which is the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic pension cost and net periodic postretirement benefit cost are reported separately from the service cost component, and included within net periodic pension and postretirement benefit, less service costs in the consolidated statements of operations.
Employee Stock Ownership Plan ("ESOP")
ESOP shares are shown as a reduction of equity and are presented in the consolidated statements of changes in stockholders’ equity as unearned compensation ESOP. Compensation expense for the Company’s ESOP is recorded at an amount equal to the shares committed to be allocated by the ESOP multiplied by the average fair market value of the shares during the period. The Company recognizes compensation expense ratably over the period based upon the Company’s estimate of the number of shares committed to be allocated by the ESOP. When the shares are released, unallocated common stock held by ESOP is reduced by the cost of the ESOP shares released and the difference between the average fair market value and the cost of the shares committed to be allocated by the ESOP is recorded as an adjustment to additional paid-in capital.
The loan receivable from the ESOP is not reported as an asset nor is the Company’s guarantee to fund the ESOP reported as a liability on the Company’s consolidated balance sheet. The employees of the Bank are the participants in the ESOP. Dividends paid on unallocated shares are used to repay the loan to the Company.
Income taxes
Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws in the period of the enactment.
A valuation allowance is established against deferred tax assets when, based upon the available evidence including historical and projected taxable income, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Bank does not have any uncertain tax positions at June 30, 2026 or 2025 which require accrual or disclosure. The Bank accounts for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes. The Bank has
Derivatives and Hedging
The Company follows Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging, with regard to disclosure requirements for derivatives and hedging activities, with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position and performance. Qualitative disclosures explain the Company’s objectives and strategies for using derivatives, and quantitative disclosures are made regarding the fair value of, and gains and losses on, derivative instruments, and about credit-risk-related contingent features in derivative instruments.
As required by ASC 815, the Company reports all derivatives on its balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.
F-14
Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. In a fair value hedge, hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
Earnings per Share
Basic earnings per share represent income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Unallocated ESOP shares are not deemed outstanding for earnings per share calculations. ESOP shares committed to be released are considered to be outstanding for purposes of the earnings per share computation. ESOP shares that have not been legally released, but that relate to employee services rendered during an accounting period (interim or annual) ending before the related debt service payment is made, are considered committed to be released. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustments to income that would result from the assumed issuance.
Revenue Recognition
The Bank recognizes revenue from contracts with customers when it satisfies its performance obligations. The Bank’s performance obligations are generally satisfied as services are rendered and can either be satisfied at a point in time or over time. The majority of the Bank’s revenue generating transactions are not subject to Accounting Standard Codification (ASC) 606, including revenue generated from financial instruments such as loans or investments securities, as these activities are subject to other GAAP.
Revenues for the Bank subject to ASC 606 include customer service fees in the consolidated statements of operations. These fees are made up of service charges and fees on deposit accounts that are recognized at a point in time, including non-sufficient fund fees, overdraft charge fees and stop-payment fees. Such revenue is derived from transactional information and
is recognized as revenue immediately as the transactions occur or upon providing the service to complete the customer’s transaction. Payment is generally received at the time the performance obligations are satisfied.
F-15
Comprehensive income/(loss)
Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on securities available for sale and unrecognized pension costs and credits, are reported as a separate component of the stockholders' equity section of the consolidated balance sheet, such items, along with net income, are components of comprehensive income (loss).
|
|
June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Securities available for sale: |
|
|
|
|
|
|
||
Net unrealized loss |
|
$ |
( |
) |
|
$ |
( |
) |
Tax effect |
|
|
|
|
|
|
||
Net-of-tax amount |
|
|
( |
) |
|
|
( |
) |
Defined benefit pension plan: |
|
|
|
|
|
|
||
Unrecognized net actuarial loss |
|
|
( |
) |
|
|
( |
) |
Tax effect |
|
|
|
|
|
|
||
Net-of-tax amount |
|
|
( |
) |
|
|
( |
) |
Post-retirement benefit plan: |
|
|
|
|
|
|
||
Unrecognized net actuarial loss |
|
|
( |
) |
|
|
( |
) |
Unrecognized prior service credit |
|
|
|
|
|
|
||
|
|
|
( |
) |
|
|
( |
) |
Tax effect |
|
|
|
|
|
|
||
Net-of-tax amount |
|
|
( |
) |
|
|
( |
) |
|
|
$ |
( |
) |
|
$ |
( |
) |
From time to time, the Bank is required to maintain average balances on hand or with the Federal Reserve Bank. There were
F-16
The amortized cost and fair value of available for sale and held to maturity securities, at June 30, 2026 and June 30, 2025, with gross unrealized gains and losses, follows:
|
|
June 30, 2026 |
|
|||||||||||||
|
|
Amortized |
|
|
Gross |
|
|
Gross |
|
|
Fair |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Securities Available for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government agency and U.S. Government- |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
U.S. Government agency and U.S. Government- |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Corporate bonds and obligations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total securities available for sale |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Securities Held to Maturity |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and U.S. Government-sponsored |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
U.S. Government agency and U.S. Government- |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Corporate bonds and obligations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Municipal bonds |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total securities held to maturity |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
June 30, 2025 |
|
|||||||||||||
|
|
Amortized |
|
|
Gross |
|
|
Gross |
|
|
Fair |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Securities Available for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government agency and U.S. Government- |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
U.S. Government agency and U.S. Government- |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Corporate bonds and obligations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total securities available for sale |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Securities Held to Maturity |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and U.S. Government-sponsored |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
U.S. Government agency and U.S. Government- |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Corporate bonds and obligations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Municipal bonds |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total securities held to maturity |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
F-17
|
|
Available for Sale |
|
|
Held to Maturity |
|
||||||||||
|
|
Amortized |
|
|
Fair |
|
|
Amortized |
|
|
Fair |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Within 1 year |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Over 1 year through 5 years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Over 5 years through 10 years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Over 10 years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government agency and U.S. Government- |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
There was $
Allowance for Credit Losses-Securities
Available for sale (AFS) and held to maturity (HTM) securities, which are issued by the U.S. Treasury or are guaranteed by government agencies do not currently have an allowance for credit loss as the Company determined these securities are either backed by the full faith and credit of the U.S. government and/or there is an unconditional commitment to make interest payments and to return the principal investment in full to investors when a debt security reaches maturity. In assessing the Company’s investments in government-sponsored and U.S. government guaranteed mortgage-backed securities and government-sponsored enterprise obligations, the contractual cash flows of these investments are guaranteed by the respective government-sponsored enterprise. Accordingly, it is expected that the securities would not be settled at a price less than the par value of the Company’s investments. The Company will evaluate the securities portfolio no less than annually, however, certain items which may cause the Company to change this methodology include legislative changes that reduce or eliminate the U.S. government’s implicit guarantee on such securities. Any expected credit losses would be presented as an allowance for credit loss. For corporate and municipal bonds, whether they are AFS or HTM, a probability of default and a loss given default analysis is performed to determine whether an allowance for credit losses is needed. There was
F-18
Information pertaining to securities with gross unrealized losses at June 30, 2026 and June 30, 2025, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:
|
|
Less Than Twelve Months |
|
|
Twelve Months or Over |
|
||||||||||
|
|
Gross |
|
|
Fair |
|
|
Gross |
|
|
Fair |
|
||||
|
|
|
|
|
(In thousands) |
|
|
|
|
|||||||
June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Securities Available for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and U.S. Government- |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. Government agency and U.S. Government- |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds and obligations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total securities available for sale |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Securities Held to Maturity |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and U.S. Government-sponsored |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. Government agency and U.S. Government- |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds and obligations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Municipal bonds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total securities held to maturity |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Less Than Twelve Months |
|
|
Twelve Months or Over |
|
||||||||||
|
|
Gross |
|
|
Fair |
|
|
Gross |
|
|
Fair |
|
||||
|
|
|
|
|
(In thousands) |
|
|
|
|
|||||||
June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Securities Available for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and U.S. Government- |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. Government agency and U.S. Government- |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds and obligations |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total securities available for sale |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Securities Held to Maturity |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and U.S. Government-sponsored |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. Government agency and U.S. Government- |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate bonds and obligations |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Municipal bonds |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total securities held to maturity |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company monitors the credit quality of securities through the use of credit ratings. Management evaluates debt securities for impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. For municipal securities and corporate bonds, the Company uses credit rating as the primary indicator of credit quality along side the geographic and sector distribution for municipal securities and key financial metrics for each corporate holding for the probability of default.
F-19
At June 30, 2026,
Accrued Interest Receivable
There were
Marketable equity securities
During the year ended June 30, 2025, the Company liquidated its marketable equity securities portfolio which consisted of common stock securities in industry sectors related to technology, consumer staples, financial services, aerospace and other. Net realized and unrealized gains recognized in earnings during the year ended June 30, 2025 were $
A summary of the balances of loans follows:
|
|
June 30, |
|
|
June 30, |
|
||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Mortgage loans: |
|
|
|
|
|
|
||
Residential real estate |
|
$ |
|
|
$ |
|
||
Commercial real estate |
|
|
|
|
|
|
||
Multi-family |
|
|
|
|
|
|
||
Construction |
|
|
|
|
|
|
||
Home equity loans and lines-of-credit |
|
|
|
|
|
|
||
Total mortgage loans |
|
|
|
|
|
|
||
Commercial loans |
|
|
|
|
|
|
||
Consumer loans |
|
|
|
|
|
|
||
Total loans |
|
|
|
|
|
|
||
Allowance for credit losses |
|
|
( |
) |
|
|
( |
) |
Net deferred loan origination costs |
|
|
|
|
|
|
||
Loans, net |
|
$ |
|
|
$ |
|
||
The Company has sold mortgage loans in the secondary mortgage market and has retained the servicing responsibility and receives fees for the services provided. Total loans serviced for others at June 30, 2026 and June 30, 2025 amounted to $
F-20
Activity in the allowance for credit losses for the year ended June 30, 2026 follows:
|
|
Residential |
|
|
Commercial |
|
|
Multi-family |
|
|
Construction |
|
|
Home Equity |
|
|
Commercial |
|
|
Consumer |
|
|
Unallocated |
|
|
Total |
|
|||||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||||||||||
Allowance for credit losses-loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||||
Provision (benefit) for credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loans charged-off |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Recoveries |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Balance at June 30, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
Residential |
|
|
Commercial |
|
|
Multi-family |
|
|
Construction |
|
|
Home Equity |
|
|
Commercial |
|
|
Consumer |
|
|
Unallocated |
|
|
Total |
|
|||||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||||||||||
Allowance for off balance sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||||||
Provision (benefit) for credit |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Balance at June 30, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||||||
The increase in the allowance for credit losses during the year ended June 30, 2026 was due to overall growth in the loan portfolio.
The allowance for credit losses, by loan segment, at June 30, 2026 and June 30, 2025 follows:
|
|
Residential |
|
|
Commercial |
|
|
Multi-family |
|
|
Construction |
|
|
Home Equity |
|
|
Commercial |
|
|
Consumer |
|
|
Unallocated |
|
|
Total |
|
|||||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||||||||||
June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Allowance for individually |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Allowance for collectively |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total allowance for credit losses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||||
Individually evaluated loans |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
|
|
|
$ |
|
|||||
Collectively evaluated loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total loans |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|||||||||
|
|
Residential |
|
|
Commercial |
|
|
Multi-family |
|
|
Construction |
|
|
Home Equity |
|
|
Commercial |
|
|
Consumer |
|
|
Unallocated |
|
|
Total |
|
|||||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||||||||||
June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Allowance for individually |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Allowance for collectively |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||||
Total allowance for credit losses |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||||
Individually evaluated loans |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
|
|
|
$ |
|
|||||
Collectively evaluated loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total loans |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|||||||||
F-21
Activity in the allowance for credit losses for the year ended June 30, 2025 follows:
|
|
Residential |
|
|
Commercial |
|
|
Multi-family |
|
|
Construction |
|
|
Home Equity |
|
|
Commercial |
|
|
Consumer |
|
|
Unallocated |
|
|
Total |
|
|||||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||||||||||
Allowance for credit losses-loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at June 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||||
Provision (benefit) for credit |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||||||
Loans charged-off |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Recoveries |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance at June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
Residential |
|
|
Commercial |
|
|
Multi-family |
|
|
Construction |
|
|
Home Equity |
|
|
Commercial |
|
|
Consumer |
|
|
Unallocated |
|
|
Total |
|
|||||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||||||||||
Allowance for off balance sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at June 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||||||||
Provision (benefit) for credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
||||
Balance at June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||||||
The increase in the allowance for credit losses on loans during the year ended June 30, 2025 was primarily due to loan portfolio growth.
The following is a summary of past due and non-accrual loans at June 30, 2026 and June 30, 2025:
|
|
30-59 Days |
|
|
60-89 Days |
|
|
90 Days |
|
|
Total |
|
|
Loans on |
|
|||||
|
|
(In thousands) |
|
|||||||||||||||||
June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Residential real estate |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||
Commercial real estate |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
30-59 Days |
|
|
60-89 Days |
|
|
90 Days |
|
|
Total |
|
|
Loans on |
|
|||||
|
|
(In thousands) |
|
|||||||||||||||||
June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Residential real estate |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Commercial real estate |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Commercial |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
There were
Interest income recognized on non-accrual loans totaled $
F-22
Credit quality information
The Company has a ten-grade internal loan rating system for commercial real estate, multi-family, commercial, and construction loans as follows:
On a periodic basis, management formally reviews the ratings on all commercial real estate, multi-family, commercial, and construction loans. Annually, the Company engages an independent third party to review a significant portion of the loans within these segments. Management uses the results of these reviews as part of its internal review process.
Credit quality for residential real estate, home equity loans and lines-of-credit, and consumer loans is determined by monitoring delinquency reports and loan payment history, and through on-going communication with customers.
F-23
The following table presents the Company’s risk rated loans by year of origination and gross write-offs for the year ended June 30, 2026:
|
|
As of June 30, 2026 |
|
|||||||||||||||||||||||||
|
|
Loans amortized cost basis by origination year |
|
|||||||||||||||||||||||||
Rating: |
|
2026 |
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
Prior |
|
|
Total |
|
|||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||
Residential Real Estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Performing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Watch |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Substandard |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Doubtful |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Current-period gross write-offs |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Commercial Real Estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
1-6 (Pass) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
7 (Watch) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
8 (Substandard) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
9 (Doubtful) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
10 (Loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Current-period gross write-offs |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Multi-family: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
1-6 (Pass) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
7 (Watch) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
8 (Substandard) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
9 (Doubtful) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
10 (Loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Current-period gross write-offs |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Construction: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
1-6 (Pass) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||||||
7 (Watch) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
8 (Substandard) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
9 (Doubtful) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
10 (Loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||||||
Current-period gross write-offs |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Home equity loans and lines-of-credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Performing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Watch |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Substandard |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Doubtful |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Current-period gross write-offs |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
1-6 (Pass) |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
7 (Watch) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
8 (Substandard) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
9 (Doubtful) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
10 (Loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Current-period gross write-offs |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Performing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Watch |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Substandard |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Doubtful |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Current-period gross write-offs |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
F-24
|
|
As of June 30, 2025 |
|
|||||||||||||||||||||||||
|
|
Loans amortized cost basis by origination year |
|
|||||||||||||||||||||||||
Rating: |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
Prior |
|
|
Total |
|
|||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||
Residential Real Estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Performing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Watch |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Substandard |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Doubtful |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Current-period gross write-offs |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Commercial Real Estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
1-6 (Pass) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
7 (Watch) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
8 (Substandard) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
9 (Doubtful) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
10 (Loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Current-period gross write-offs |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Multi-family: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
1-6 (Pass) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
7 (Watch) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
8 (Substandard) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
9 (Doubtful) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
10 (Loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Current-period gross write-offs |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Construction: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
1-6 (Pass) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||||
7 (Watch) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
8 (Substandard) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
9 (Doubtful) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
10 (Loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||||
Current-period gross write-offs |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Home equity loans and lines-of-credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Performing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Watch |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Substandard |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Doubtful |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Current-period gross write-offs |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
1-6 (Pass) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||||
7 (Watch) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
8 (Substandard) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
9 (Doubtful) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
10 (Loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||||
Current-period gross write-offs |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Performing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Watch |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Substandard |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Doubtful |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Current-period gross write-offs |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
F-25
A summary of the cost and accumulated depreciation and amortization of premises and equipment follows:
|
|
June 30, |
|
|
June 30, |
|
|
Estimated |
||
|
|
2026 |
|
|
2025 |
|
|
Useful Life |
||
|
|
(In thousands) |
|
|
|
|||||
Premises: |
|
|
|
|
|
|
|
|
||
Land |
|
$ |
|
|
$ |
|
|
N/A |
||
Bank buildings |
|
|
|
|
|
|
|
|||
Leasehold improvements |
|
|
|
|
|
|
|
|||
Furniture and equipment |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||
Less accumulated depreciation and amortization |
|
|
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
|
|
||
Depreciation and amortization expense for the years ended June 30, 2026 and 2025 amounted to $
A summary of deposit balances, by type, is as follows:
|
|
June 30, |
|
|
June 30, |
|
||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
NOW and Demand deposits |
|
$ |
|
|
$ |
|
||
Savings accounts |
|
|
|
|
|
|
||
Money market accounts |
|
|
|
|
|
|
||
Total non-certificate accounts |
|
|
|
|
|
|
||
Term certificates $250,000 |
|
|
|
|
|
|
||
Term certificates greater than $250,000 |
|
|
|
|
|
|
||
Total term certificate accounts |
|
|
|
|
|
|
||
Total deposits |
|
$ |
|
|
$ |
|
||
A summary of term certificate accounts, by maturity, is as follows:
|
|
June 30, 2026 |
|
|
June 30, 2025 |
|
||||||||||
|
|
Amount |
|
|
Weighted |
|
|
Amount |
|
|
Weighted |
|
||||
|
|
(Dollars in thousands) |
|
|||||||||||||
Within 1 year |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
Over 1 to 2 years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Over 2 to 3 years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Over 3 to 4 years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Over 4 to 5 years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Over 5 years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
At June 30, 2026 and 2025 the Company had $
F-26
A summary of FHLB of Boston advances, by maturity, is as follows:
|
|
June 30, |
|
|
Weighted Average Rate |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(In thousands) |
|
|
|
|
|
|
|
|||||||
2026 |
|
$ |
|
|
$ |
|
|
|
% |
|
|
% |
||||
2027 (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2028 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2029 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2030 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2031 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2032 |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
2033 |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total FHLB advances |
|
$ |
|
|
$ |
|
|
|
% |
|
|
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(1) Includes a $ |
|
|
|
|
|
|
|
|
|
|
|
|
||||
At June 30, 2026, advances totaling $
The Company also has a $
Allocation of federal and state income taxes between current and deferred portions is as follows:
|
|
Years Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Current tax provision: |
|
|
|
|
|
|
||
Federal |
|
$ |
|
|
$ |
|
||
State |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Deferred tax provision (benefit): |
|
|
|
|
|
|
||
Federal |
|
|
( |
) |
|
|
( |
) |
State |
|
|
|
|
|
( |
) |
|
|
|
|
( |
) |
|
|
( |
) |
Total benefit for income taxes |
|
$ |
|
|
$ |
( |
) |
|
F-27
The following table presents income taxes paid (net of refunds received) disaggregated by federal and state jurisdictions for the year ended June 30, 2026:
|
|
June 30, |
|
|
|
|
2026 |
|
|
|
|
(In thousands) |
|
|
Income taxes paid: |
|
|
|
|
Federal |
|
$ |
|
|
State |
|
|
|
|
Massachusetts |
|
|
|
|
Total |
|
$ |
|
|
The reasons for the differences between the statutory corporate federal income tax rate and the Company’s effective tax rate are summarized as follows:
|
|
Years Ended June 30, |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||
|
|
Amount |
|
|
Rate |
|
|
Amount |
|
|
Rate |
|
||||
Statutory federal income tax rate |
|
$ |
|
|
|
% |
|
$ |
( |
) |
|
|
% |
|||
Increase (decrease) resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
State taxes, net of federal tax benefit(1) |
|
|
|
|
|
% |
|
|
( |
) |
|
|
% |
|||
Municipal income |
|
|
( |
) |
|
|
- |
% |
|
|
( |
) |
|
|
% |
|
Bank owned life insurance income |
|
|
( |
) |
|
|
- |
% |
|
|
( |
) |
|
|
% |
|
Dividends received deduction |
|
|
|
|
|
|
|
|
( |
) |
|
|
% |
|||
Other, net |
|
|
|
|
|
% |
|
|
|
|
|
- |
% |
|||
Effective tax rate |
|
$ |
|
|
|
% |
|
$ |
( |
) |
|
|
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(1) |
|
|||||||||||||||
The tax effects of each item that give rise to deferred taxes are as follows:
|
|
June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Deferred tax assets: |
|
|
|
|
|
|
||
Allowance for credit losses |
|
$ |
|
|
$ |
|
||
Employee benefit plan liabilities recorded in |
|
|
|
|
|
|
||
Net unrealized loss on securities available for sale |
|
|
|
|
|
|
||
Non-accrual interest |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Accrued expenses |
|
|
|
|
|
|
||
Charitable Contribution |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Deferred tax liabilities: |
|
|
|
|
|
|
||
Other employee benefit plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
|
( |
) |
|
|
( |
) |
Net deferred tax asset |
|
$ |
|
|
$ |
|
||
F-28
A summary of the change in the net deferred tax asset (liability) is as follows:
|
|
Years Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Balance at beginning of year |
|
$ |
|
|
$ |
( |
) |
|
Deferred tax benefit |
|
|
|
|
|
|
||
Deferred tax effect on net unrealized gain/loss on |
|
|
( |
) |
|
|
( |
) |
Deferred tax effects of pension and post-retirement |
|
|
( |
) |
|
|
|
|
Balance at end of year |
|
$ |
|
|
$ |
|
||
At June 30, 2026, the Company had a charitable contribution carryover of $
The federal income tax reserve for loan losses at the Company’s base year amounted to $
The Company’s income tax returns are subject to review and examination by federal and state taxing authorities. The Company is currently open to audit under the applicable statutes of limitations by the Internal Revenue Service for the years ended June 30, 2023 through 2026. The years open to examination by state taxing authorities vary by jurisdiction; no years prior to 2023 are open.
Effective January 1, 2020, the Bank elected to comply with the community bank leverage ratio framework issued by the federal banking agencies. The framework provides for a simple measure of capital adequacy, calculated as Tier 1 capital divided by average total consolidated assets, which is consistent with how the Company currently calculates its leverage ratio. Under this framework, a bank that maintains a community bank leverage ratio of greater than
Effective July 1, 2026, the federal banking agencies amended the CBLR framework by lowering the minimum CBLR requirement from
Defined benefit pension plan
F-29
Information pertaining to the activity in the plan is as follows:
|
|
Years Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Change in plan assets: |
|
|
|
|
|
|
||
Fair value of plan assets at beginning of year |
|
$ |
|
|
$ |
|
||
Actual return on plan assets |
|
|
|
|
|
|
||
Employer contribution |
|
|
|
|
|
|
||
Benefits paid |
|
|
( |
) |
|
|
( |
) |
Fair value of plan assets at end of year |
|
|
|
|
|
|
||
Change in benefit obligation: |
|
|
|
|
|
|
||
Benefit obligation at beginning of year |
|
|
|
|
|
|
||
Service cost |
|
|
|
|
|
|
||
Interest cost |
|
|
|
|
|
|
||
Amendments |
|
|
|
|
|
|
||
Actuarial loss (gain) |
|
|
( |
) |
|
|
|
|
Benefits paid |
|
|
( |
) |
|
|
( |
) |
Benefit obligation at end of year |
|
|
|
|
|
|
||
Funded status and prepaid pension cost at end of year |
|
$ |
|
|
$ |
|
||
Accumulated benefit obligation at end of year |
|
$ |
|
|
$ |
|
||
For the year ended June 30, 2026, the actuarial loss was minimal at $
The assumptions used to determine the benefit obligation are as follows:
|
|
June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Discount rate |
|
|
% |
|
|
% |
||
Rate of compensation increase |
|
n/a |
|
|
|
|
||
Expected long-term rate of return on plan assets |
|
|
|
|
|
|
||
The components of net periodic pension cost are as follows:
|
|
Years Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Interest cost |
|
$ |
|
|
$ |
|
||
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
Amortization of prior service credit |
|
|
|
|
|
( |
) |
|
Amortization of net loss |
|
|
|
|
|
|
||
Curtailment loss |
|
|
|
|
|
|
||
Net periodic pension benefit, excluding |
|
|
( |
) |
|
|
( |
) |
Settlement cost |
|
|
|
|
|
|
||
Net periodic pension benefit |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
Years Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Discount rate |
|
|
% |
|
|
% |
||
Rate of compensation increase |
|
n/a |
|
|
|
|
||
Expected long-term rate of return on plan assets |
|
|
|
|
|
|
||
F-30
The Company has selected its assumption with respect to the expected long-term rate of return based on prevailing yields on high-quality fixed-income investments increased by a premium for equity return expectations. The decrease in expected long-term rate in the current year, is due to the plan termination.
The following table sets forth by level, within the fair value hierarchy, the plan’s assets at fair value. Classification within the fair value hierarchy table is based upon the lowest level of any input that is significant to fair value measurement.
|
|
June 30, 2026 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Plan assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Collective funds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Equity securities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Mutual funds |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total investments measured in the fair value hierarchy |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
||
Investments measured at net asset value (a) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
June 30, 2025 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Plan assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Collective funds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Equity securities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Mutual Funds |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total investments measured in the fair value hierarchy |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
||
Investments measured at net asset value (a) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
All plan assets are measured at fair value in Level 1 based on quoted market prices in an active exchange market, with the exception of those plan assets that are measured at net asset value.
F-31
The following table summarizes investments for which fair value is measured using the net asset value per share practical expedient:
|
|
June 30, |
|
|
|
|
2025 |
|
|
|
(In thousands) |
|
||
Collective Funds by Category: |
|
|
|
|
Equity |
|
$ |
|
|
U.S. debt securities |
|
|
|
|
International equities |
|
|
|
|
Hedge Funds by Category: |
|
|
|
|
Multi-strategy |
|
|
|
|
Global opportunities |
|
|
|
|
Private investment entities and/or separately |
|
|
|
|
|
|
$ |
|
|
The defined benefit plan offers a common and collective trust as the underlying investment structure for the pension plan. The target allocation mix for the common and collective trust portfolio calls for an equity-based investment deployment range from
The Company did not make any contributions to its pension plan during fiscal year 2026 and does not expect to make any contribution during fiscal year 2027.
Estimated future benefit payments, assuming employees retire at age 65 and take lump-sum payments, are as follows:
Year Ending June 30, |
|
Amount |
|
|
|
|
(In thousands) |
|
|
2027 |
|
$ |
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
2031 |
|
|
|
|
2032 – 2036 |
|
|
|
|
Post-retirement benefits other than pensions
The actuarial liability for these post-retirement benefits, none of which has been funded, is as follows:
|
|
June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Accumulated post-retirement benefit obligation: |
|
|
|
|
|
|
||
Cost for retirees |
|
$ |
|
|
$ |
|
||
Fully eligible active plan participants |
|
|
|
|
|
|
||
Other active plan participants |
|
|
|
|
|
|
||
Accrued liability |
|
$ |
|
|
$ |
|
||
F-32
Actuarial assumptions, using the projected unit credit funding method with service pro-ration, include a discount rate of
The components of the periodic expense for these post-retirement benefits are as follows:
|
|
Years Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Interest cost |
|
$ |
|
|
$ |
|
||
Prior service credit amortization |
|
|
|
|
|
( |
) |
|
Actuarial loss amortization |
|
|
|
|
|
|
||
Net periodic post-retirement cost, excluding |
|
|
|
|
|
( |
) |
|
Service cost |
|
|
|
|
|
|
||
Net periodic post-retirement cost |
|
$ |
|
|
$ |
( |
) |
|
Estimated future benefit payments are as follows:
Year Ending June 30, |
|
Amount |
|
|
|
|
(In thousands) |
|
|
2027 |
|
$ |
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
2031 |
|
|
|
|
2032 - 2036 |
|
|
|
|
401(k) plan
The Bank has a 401(k) Plan (the “Plan”) whereby each employee 21 years of age or older and having completed at least three months of service, beginning with their date of employment, automatically becomes a participant in the Plan. Employees may contribute up to the amount allowed by law. For employees hired prior to November 1, 2022, the Bank makes matching contributions equal to
Employees Stock Option Plan ("ESOP")
As part of the Initial Public Offering ("IPO") completed on April 30, 2025, the Bank established a tax-qualified ESOP to provide eligible employees the opportunity to own Company shares. The ESOP borrowed $
The Company accounts for its ESOP in accordance with FASB ASC 718-40, Compensation – Stock Compensation. Under this guidance, unreleased shares are deducted from stockholders’ equity as unearned ESOP shares on the accompanying consolidated balance sheets.
The Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they are committed to be released. To the extent that the fair value of the Company’s ESOP shares differs from the cost of such shares, the difference will be allocated to additional paid in capital. As the loan is internally leveraged, the loan
F-33
receivable from the ESOP to the Company is not reported as an asset nor is the debt of the ESOP shown as a liability on the Company’s consolidated balance sheets.
The Company recognized compensation expense related to the ESOP in the amount of $
Bonus plans
The Bank has discretionary bonus plans which provide for a bonus based on Bank and/or individual performance. Expense related to the bonus plans amounted to $
Supplemental executive retirement plan
During the year ended June 30, 2023, the Bank entered into supplemental compensation agreements with certain executive officers which provide for specified payments upon retirement subject to certain limitations as set forth in the agreements. At June 30, 2026 and 2025, accrued expenses related to these agreements were $
In the normal course of business, there are outstanding commitments and contingencies which are not reflected in the accompanying consolidated balance sheets.
Loan commitments
The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, which involve elements of credit and interest rate risk in excess of the amount recognized in the accompanying consolidated balance sheets. The contract amount of these instruments reflects the extent of involvement the Bank has in these particular classes of financial instruments.
At June 30, 2026 and 2025, off-balance sheet financial instruments whose contract amounts represent credit risk consisted of:
|
|
June 30, |
|
|
June 30, |
|
||
|
|
2026 |
|
|
2025 |
|
||
|
|
(In thousands) |
|
|||||
Commitments to originate loans |
|
$ |
|
|
$ |
|
||
Unused lines of credit |
|
|
|
|
|
|
||
Unadvanced funds on construction loans |
|
|
|
|
|
|
||
Letters of credit |
|
|
|
|
|
|
||
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Unadvanced funds on lines-of-credit have fixed expiration dates and may expire without being drawn upon. Therefore, the total commitment amount does not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. Except for commercial lines-of-credit amounting to $
F-34
Loans sold with recourse obligations
The Bank sells certain loans on a servicing-retained basis to the FHLB pursuant to contracts which include limited recourse provisions in the event a loss is incurred on the loan. At June 30, 2026 and 2025, the maximum contingent liability associated with loans sold with recourse to the FHLB was $
Operating lease commitments
Pursuant to the terms of noncancelable lease agreements in effect at June 30, 2026, pertaining to premises, future minimum rent commitments were as follows:
|
|
Rental |
|
|
Year Ending June 30, |
|
Expense |
|
|
|
|
(In thousands) |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total lease commitments |
|
|
|
|
Less imputed interest |
|
|
( |
) |
Total lease liability |
|
$ |
|
|
The leases contain options to extend for periods from one to
Legal contingencies
Various legal claims may arise from time to time and, in the opinion of management, these claims will have no material effect on the Bank’s consolidated financial statements.
The Bank has granted loans to its directors and executive officers and at June 30, 2026 and 2025, the amount of such loans was $
Determination of fair value
The Company uses fair value measurements to record fair value adjustments to certain assets. Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in some instances, quoted market prices may not be available. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques, including collateral value. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the assets.
The following methods and assumptions were used by the Company in estimating fair value:
Cash and Cash Equivalents – For these financial instruments, which have original maturities of 90 days or less, their carrying amounts reported in the Consolidated Balance Sheets approximate fair value.
F-35
Available for sale and held to maturity securities – The Company’s investment in debt securities is generally classified within Level 2 of the fair value hierarchy. For those securities, the Company obtains fair value measurements from independent pricing services which are not adjusted by management. The fair value measurements consider observable data that considers standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data.
FHLB Stock – The fair value of FHLB stock approximates the carrying amount based on the redemption provisions of the FHLB. These assets were classified as Level 3.
Loans–The fair value of loans is measured on an exit price basis incorporating discounts for credit, liquidity and marketability factors. Loans were classified as Level 3 since the valuation methodology utilizes significant unobservable inputs.
Accrued Interest Receivable – For these financial instruments, which have original maturities of 90 days or less, their carrying amounts reported in the Consolidated Balance Sheets approximate fair value. These assets were classified as Level 2.
Deposits – The fair value of deposits is valued using a replacement cost of funds approach and discounted to the market rates and based on weighted remaining maturity for maturing deposits. Deposits were classified as Level 3 since the valuation methodology utilizes significant unobservable inputs.
FHLB Advances – The fair value of the FHLB Advances approximates carrying amount of these liabilities were classified as Level 3.
Accrued Interest Payable and Mortgagor's escrow accounts – For these financial instruments, which have original maturities of 90 days or less, their carrying amounts reported in the Consolidated Balance Sheets approximate fair value. These liabilities were classified as Level 2.
Derivative Instruments – The fair value of derivative instruments are estimated using a third-party derivative valuation expert who relies on Level 2 inputs mainly interest cash flow models to determine value by calculation a settlement termination value with the counterparty.
Assets measured at fair value on a recurring basis
Assets measured at fair value on a recurring basis are summarized below. There are
|
|
June 30, 2026 |
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Total |
|
||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt securities available for sale |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Derivative assets |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
June 30, 2025 |
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Total |
|
||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt securities available for sale |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Total |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
F-36
Assets measured at fair value on a non-recurring basis
The Company may also be required, from time to time, to measure certain other assets and liabilities at fair value on a non-recurring basis in accordance with generally accepted accounting principles.
These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. There were
Fair value of financial instruments
The estimated fair values, and related carrying amounts, of the Bank’s financial instruments are as follows. Certain financial instruments and all nonfinancial instruments are exempt from disclosure requirements. Accordingly, the aggregate fair value amounts presented herein do not represent the underlying fair value of the Bank.
|
|
Carrying |
|
|
Fair Value |
|
||||||||||
|
|
Amount |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Securities available for sale |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Securities held to maturity |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Federal Home Loan Bank stock |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Derivative assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loans, net |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Accrued interest receivable |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deposits |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Federal Home Loan Bank advances |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Mortgagors’ escrow accounts |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Accrued interest payable |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Securities available for sale |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Securities held to maturity |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Federal Home Loan Bank stock |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Loans, net |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Accrued interest receivable |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deposits |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Federal Home Loan Bank advances |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Mortgagors’ escrow accounts |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Accrued interest payable |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
The Company is exposed to changes in the fair value of certain of its pools of fixed-rate assets due to changes in benchmark interest rates. In the prior quarter, the Company entered into an interest rate swap agreement to manage its exposure to changes in the fair value of these instruments attributable to changes in the designated benchmark interest rate. The interest rate swap agreement is designated as a fair value hedge and involves the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreement without the exchange of the underlying notional amount. For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.
F-37
Interest Rate Swaps
An interest rate swap is an agreement whereby one party agrees to pay a floating rate of interest on a notional principal amount in exchange for receiving a fixed rate of interest on the same notional amount, for a predetermined period of time, from a second party. The amounts relating to the notional principal amount are not actually exchanged. The Company has entered into an interest rate swap in which it pays fixed and receives floating rate interest in order to manage its interest rate risk exposure to the changes in fair value on certain fixed-rate investments. For interest rate swaps that are accounted for as fair value hedges, changes in fair value are included in net income.
|
|
|
|
|
|
|
Weighted Average Rate |
|
|
|
|
|||||||
|
|
Notional Amount |
|
|
Weighted Average Maturity |
|
Fixed Rate Paid |
|
|
Current SOFR Rate Received |
|
|
Fair Value |
|
||||
|
|
(In thousands) |
|
|
(In years) |
|
|
|
|
|
|
|
(In thousands) |
|
||||
Interest rate swap on investments |
|
$ |
|
|
|
|
% |
|
|
% |
|
$ |
|
|||||
The table below presents the fair value of the Company’s derivative financial instrument, as well as the classification on the Consolidated Balance Sheet as of June 30, 2026:
|
|
Asset Derivatives |
|
|
Liability Derivatives |
|
||||||
|
|
Balance Sheet |
|
Fair Value at |
|
|
Balance Sheet |
|
Fair Value at |
|
||
|
|
Location |
|
June 30, 2026 |
|
|
Location |
|
June 30, 2026 |
|
||
|
|
(In thousands) |
|
|||||||||
Interest rate swap on investments |
|
Other Assets |
|
$ |
|
|
Securities |
|
$ |
( |
) |
|
The Company has an agreement with its derivative counterparty that contains a provision where if the Company defaults (or is capable of being declared in default) on any of its indebtedness, then the Company could also be declared in default on its derivative obligations, and it could be required to terminate its derivative positions with the counterparty. In order to mitigate counterparty default risk in conjunction with its derivative contract, the Company was required to maintain $
Should a counterparty fail to perform under the terms of a derivative contract, the Company’s credit exposure on interest rate swaps is limited to the net positive fair value and accrued interest of the swap plus any initial margin collateral posted. The Company seeks to minimize counterparty credit risk through credit approvals, limits, monitoring procedures, and obtaining collateral, where appropriate. As such, management believes the risk of incurring credit losses on the derivative contract with the counterparty is remote.
Basic EPS represents net income available to common stockholders divided by the weighted-average number of common shares outstanding during the year.
Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares (such as stock options) were exercised or converted into additional common shares that would then share in the earnings of the Company. Diluted EPS is computed by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding for the year, plus the effect of potential dilutive common share equivalents computed using the treasury stock method.
F-38
There were
|
|
For the Year Ended |
|
|||||
|
|
June 30, |
|
|
June 30, |
|
||
|
|
2026 |
|
|
2025 |
|
||
|
|
(Dollars in thousands) |
|
|||||
Net income (loss) applicable to common shares |
|
$ |
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
||
Average number of common shares outstanding |
|
|
|
|
|
|
||
Less: average unallocated ESOP shares |
|
|
|
|
|
|
||
Average number of common shares outstanding |
|
|
|
|
|
|
||
Net income (loss) per common share: |
|
|
|
|
|
|
||
Basic and diluted |
|
$ |
|
|
$ |
( |
) |
|
F-39
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
WINCHESTER BANCORP, INC. |
|
|
|
|
|
Date: September 15, 2026 |
|
By: |
/s/ John A. Carroll |
|
|
|
John A. Carroll |
|
|
|
President and Chief Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Name |
|
Title |
|
Date |
|
|
|
|
|
/s/ John A. Carroll |
|
President, Chief Executive Officer and Director |
|
September 15, 2026 |
John A. Carroll |
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ Elda Heller |
|
Executive Vice President and Chief Financial Officer |
|
September 15, 2026 |
Elda Heller |
|
(Principal Financial and Accounting Officer) |
|
|
|
|
|
|
|
/s/ Stephen H. Boodakian |
|
Director |
|
September 15, 2026 |
Stephen H. Boodakian |
|
|
|
|
|
|
|
|
|
/s/ Deborah A Carson |
|
Chairperson of the Board |
|
September 15, 2026 |
Deborah A. Carson |
|
|
|
|
|
|
|
|
|
/s/ Carole A. Pierce Connolly |
|
Director |
|
September 15, 2026 |
Carole A. Pierce Connolly |
|
|
|
|
|
|
|
|
|
/s/ Paula M. Cotter |
|
Director |
|
September 15, 2026 |
Paula M. Cotter |
|
|
|
|
|
|
|
|
|
/s/ Geoffrey A. Curtis |
|
Director |
|
September 15, 2026 |
Geoffrey A. Curtis |
|
|
|
|
|
|
|
|
|
/s/ Neal J. Harte |
|
Director |
|
September 15, 2026 |
Neal J. Harte |
|
|
|
|
|
|
|
|
|
/s/ David P. Hood |
|
Director |
|
September 15, 2026 |
David P. Hood |
|
|
|
|
|
|
|
|
|
/s/ William P. Hood |
|
Director |
|
September 15, 2026 |
William P. Hood |
|
|
|
|
|
|
|
|
|
/s/ Alan G. Macdonald |
|
Director |
|
September 15, 2026 |
Alan G. Macdonald |
|
|
|
|
|
|
|
|
|
/s/ Edward Merritt |
|
Director |
|
September 15, 2026 |
Edward Merritt |
|
|
|
|
|
|
|
|
|
/s/ Sara Perkins Salehpour |
|
Director |
|
September 15, 2026 |
Sara Perkins Salehpour |
|
|
|
|
|
|
|
|
|
/s/ John I Snow, III |
|
Director |
|
September 15, 2026 |
John I. Snow III |
|
|
|
|
F-40