CMTV 10-K & 10-Q changes, risk factors and insider trading

Our results of operations depend substantially on our net interest income, which is the difference between the interest earned on loans, securities and other interest-earning assets and the interest paid on deposits and borrowings. These rates are highly sensitive to many factors beyond our control, including general economic conditions, inflation, recession, unemployment, money supply and the monetary policies of the FRB. If the interest rate we pay on deposits and other borrowings increases or reprices at a faster rate than the interest rate we earn on loans and other investments, our net interest income and therefore earnings, could be adversely affected. Conversely, our earnings could be adversely affected if the interest rate we earn on loans and other investments falls more quickly than the interest rate we pay on deposits and borrowings. While we have taken measures intended to manage the risks of operating in a changing interest rate environment, we cannot provide assurance that these measures will be effective in avoiding undue interest rate risk, particularly in an environment of rapidly changing rates.

We are exposed to the risk that our borrowers may default on their obligations. A borrower's default on its obligations under one or more loans may result in lost principal and interest income and increased operating expenses as a result of the allocation of management time and resources to the collection and work-out of the credit. In certain situations, where collection efforts are unsuccessful or acceptable work-out arrangements cannot be reached, we may have to write off the loan in whole or in part. In loan default situations, we may acquire real estate or other assets, if any, that secure the loan, through foreclosure or other similar available remedies, and the amount owed under the defaulted loan could exceed the value of the collateral acquired.acquired, including the costs associated with liquidating the collateral.

Determining the amount of the ACL inherently involves a high degree of subjectivity and requires us to weigh various quantitative and qualitative factors and to make significant estimates of current credit risks and trends, all of which may undergo material changes. At any time, we are likely to have loans in our portfolio that will result in losses but that have not been identified as nonperforming or potential problem credits. We cannot be certain that we will be able to identify deteriorating credits before they become nonperforming assets or that we will be able to limit or correctly estimate losses on those loans that are identified. The OCC, our subsidiary Bank’s primary federal regulator, reviews the loan portfolio from time to time as part of its regulatory examination and may request that we increase the ACL. Changes in economic conditions or individual business or personal circumstances affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the allowance. In addition, if charge-offs in future periods exceed the ACL, we will need to make additional provisions to restore the allowance. Any provisions to increase or restore the ACL would decrease our net income and, possibly, our capital, and could have an adverse effect on our results of operations and financial condition.

As a holding company, our cash flow typically comes from dividends that our bank subsidiary, Community National Bank, pays to us. Therefore, our ability to pay dividends on our common and preferred stock and to service our subordinated debentures, depends on the dividends we receive from the Bank. Dividend payments from the Bank are subject to federal statutory and regulatory limitations, generally based on net profits and retained earnings and may be subject to additional prudential considerations, such as capital planning needs. In addition, FRB policy, which applies to us as a registered bank holding company, provides that dividends by bank holding companies should generally be paid out of current earnings looking back over a one-year period and should not be paid if regulatory capital levels are deemed insufficient. Further, regulatory capital requirements could curtail our ability to pay dividends in some cases if we do not maintain a required capital conservation buffer. Our failure to pay dividends on our common or preferred stock or our failure to service our debt could have a material adverse effect on the market price of our common stock. Moreover, if sufficient dividend funding from the Bank is not available to cover all our requirements, we would be obligated first to pay interest and, if applicable, principal on our debentures and then to pay dividends on our preferred stock before making any dividend payments on our common stock.

Our investment in tax credit partnerships and other structures may not generate expected or anticipated returns, which could have an adverse impact on our results of operations and financial condition.

We periodically invest in tax credit partnerships and other structures that generate federal income tax credits. The tax benefit of these investments is expected to exceed the amortization expense associated with them, resulting in a positive impact on net income. Such credits are subject to recapture by taxing authorities based on compliance requirements that must be met at the project level. Changes in applicable tax laws, or the inability of the projects to be completed or properly managed, depend on factors that are out of our control and could impact our ability to realize expected or anticipated returns. Should we not be able to realize the tax credits and other benefits associated with such investments, our results of operations and financial condition could be negatively affected

OurAlthough our common stock is notnow exchange-listed andexchange-listed, our trading volume is less than that of larger public companies, which can contribute to volatility in our stock price and adversely affect the price and liquidity of an investment in our common stock.

Our common stock is subordinate to our existing and future indebtedness and to any preferred stock.stock we may issue in the future.

Shares of our common stock are equity interests and do not constitute indebtedness. As such, our common stock ranks junior to all our customer deposits and other indebtedness, whether now existing or hereafter incurred, and toincluding our subordinated debentures, and other non-equity claims on us, with respect to assets available to satisfy claims. In addition, if we issue preferred stock in the future, our common stock iswould be junior in priority,priority to such preferred shares, including with respect to dividend anddividend, liquidation rights,and/or to our outstanding shares of Series A Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock. Further, the common stock will be subject to the prior liquidationvoting rights of the holders of any debtif we may issue in the future and may be subject to the prior dividend and liquidation rights of any series of preferred stock we may issue in the future.

Channels for marketing and delivering financial products and services to our customers are evolving rapidly, with less reliance on traditional branch facilities and more use of online and mobile banking. We compete with larger providers that have significant resources to dedicate to improved technology and delivery channels. We periodically evaluate the profitability of our branch system and other office and operational facilities to improve efficiencies. However, identification and closure of unprofitable operations and facilities can lead to restructuring charges and introduce the risk of disruptions to revenues and customer relationships.

Our future effective tax rates and tax liabilities could be unfavorably affected by increases in applicable tax rates, such as from the expiration of the 2017 Tax Act rate reductions in 2025 if not reauthorized by Congress,rates and by other changes in federal or state tax laws, regulations and agency interpretations. Our effective tax rates could also be affected by changes in the valuation of our deferred tax assets and liabilities or by the outcomes of any examinations of our income tax returns by the IRS or our state income, franchise, sales and use or other tax returns by the Vermont Department of Taxes. Our results of operations and financial condition could also be adversely affected in the short-term by decreases in applicable tax rates that require us to revalue our deferred tax asset, as occurred in 2017 as a result of passage of the 2017 Tax Act.

Banks, securities firms, and insurance companies canare nowable to combine under a “financial holding company” umbrella. Financial holding companies can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting), and merchant banking. Some of our competitors have elected to become financial holding companies. We offer only traditional banking products and trust and wealth management services indirectly through our affiliate, CFSG.

We maintain an enterprise risk management program that is designed to identify, quantify, monitor, report, and control the risks that the Company faces. These risks include, but are not limited to: strategic, interest-rate, credit, liquidity, operations, pricing, reputation, compliance, litigation, and cybersecurity. While management assesses and improves this program periodically, there can be no assurance that our approach and framework for risk management and related controls will effectively mitigate all risk and limit losses in our business. If conditions or circumstances arise that expose flaws or gaps in our risk-management program, or if our risk management systems or controls break down, our results of operations and financial condition may be adversely affected.

Period Ended MarchJune 31,30, 2026

The following discussion analyzes the consolidated financial condition of Community Bancorp. and its wholly owned subsidiary, Community National Bank, as of MarchJune 31,30, 2026 and December 31, 2025, and its consolidated results of operations for the three-month interim period and onesix-month yearinterim periodperiods presented. The Company is considered a “smaller reporting company” and a “non-accelerated filer” under the disclosure rules of the SEC. Accordingly, the Company has elected to provide its statements of income, comprehensive income, cash flows and changes in shareholders’ equity for a two-year, rather than a three-year, period and provide certain other smaller reporting company scaled disclosures where management deems it appropriate.

The Company’s consolidated assets as of MarchJune 31,30, 2026, were $1.24$1.17 billion compared to $1.29 billion as of December 31, 2025, a decrease of 4.1%.8.9%. Changes in the asset base included an increase in loans of $18.6$5.2 million, which was more than offset by a decrease in federal funds sold and overnight deposits of $61.2$110.4 million, or 52.6%.95.0%. The increase in the loan portfolio was primarily attributable to increases of $4.3$15.9 million in residential first and Jr. lien loans,loans $6.0due to a new residential loan purchase program, and $10.3 million in CREC&I loans, $2.0offset however by a cyclical decrease of $17.5 million in municipal loans consistent with the annual municipal funding cycle, and $7.0decreases of $1.8 million in C&Iconsumer and commercial purchased loans and $1.6 million in CRE loans. While cash funded the increase in the loan portfolio, the decrease in federal funds and overnight deposits reflects typical and expected firstsecond quarter deposit runoff, particularly in government agency and non arbitragenon-arbitrage accounts.

Total deposits as of MarchJune 31,30, 2026, were $1.02$982 billionmillion compared to $1.07 billion as of December 31, 2025, a decrease of $52.9$89.0 million, or 4.9%.8.3%. Year to date, time deposits increased $7.9$4.1 million, or 3.6%1.8% and savings accounts increased $5.4$3.5 million, or 3.8%,2.5%, while demand and interest-bearing transaction accounts collectively decreased $28.1$35.2 million, or 5.4%,6.8%, and money market funds decreased $38.2$61.5 million, or 20.4%.32.9%. A decrease in deposit balances is typical in the first and second quarters of the calendar year, due in part to the timing of customers income tax obligations and the spend down of deposited funds by Vermont municipal customers prior to their June 30 fiscal year end. Borrowed funds remaineddecreased level$25 million from December 31, 2025.

Total interest income increased $1.5$1.2 million, or 10.3%,8.0%, for the second quarter of 2026, and increased $2.7 million, or 9.2%, for the first quartersix months of 2026, compared to the samerespective periodperiods in 2025. The growth in the volume of the loan portfolio and origination of loans at higher interest rates, as well as adjustable-rate loans repricing to current market rates, helped to support the increase in interest income inbetween the comparison period.periods.

Total interest expense decreased $7 thousand,$161,274, or 0.1%,3.3%, for the second quarter of 2026, and decreased $168,505, or 1.7%, for the first quartersix months of 2026, compared to the samerespective periodperiods in 2025. TheContributing to the lower interest expense was the year-over-year increasedecrease of $15 thousand,$127,786, or 4%,15.7%, in interest expense on the Company’s borrowed fundsfunds, which was more than offset by a decrease of $21 thousand, or 8.5% in interest expense on junior subordinated debenturesmainly due to athe decreasepayoff inof long-term borrowings during the floatingsecond ratequarter associatedof with these funds.2026. Please refer to the interest rate sensitivity discussion in the Interest Rate Risk and Asset and Liability Management section of this Management’s Discussion and Analysis for more information on the impact that the actions of the FRB’s FOMC in regulating interest rates, and changes in the yield curve, could have on our net interest income.

The credit loss expense for the firstsecond quarter of 2026 was $391,505$720,967 compared to $325,054$407,046 for the same period in 2025, and $1.1 million for the first six months of 2026 compared to $732,100 for the same period in 2025, resulting in anincreases between periods of $313,921, or 77.1% and $380,373, or 52.0%, respectively. The increase ofwas $66,451,partially ordue 20.4%,to betweenan periods.additional $127,000 added to ensure adequate coverage for a commercial loan relationship in individually analyzed. In determining the current period credit loss expense management considers a number of factors, including loan growth and changes in balances of the loan categories within the current portfolio, changes in forecasts, historical loss rates and various qualitative factors, which management reviews and adjusts, as appropriate, in its ACL calculation to better reflect expected credit losses in the loan portfolio. Please refer to Note 5 of the unaudited consolidated financial statements as well as the ACL and credit loss expense discussion in the Credit Risk section of this MD&A.

Consolidated net income for the firstsecond quarter of 2026 increased $844 thousand,$628,008, or 23.9%,15.5%, to $4.4$4.7 million compared to $3.5$4.1 million for the same quarter of 2025, and increased $1.5 million, or 19.4%, to $9.1 million for the first six months of 2026 compared to $7.6 million for the same period in 2025,2025. primarilyThe dueincreases toafter thecredit increaseloss expense in net interest income of $1.4 million after credit loss expense.expense of $1.0 million for the second quarter of 2026 and $2.5 million for the first six months of 2026, compared to the respective periods in 2025, were contributing factors to the increases in net income. This change, along with significant changes in non-interest income and non-interest expense, are discussed in the appropriate sections of this Management’s Discussion and Analysis.

Equity capital increased to $116.8$120.1 million, with a book value per share of $20.88$21.58 as of MarchJune 31,30, 2026, compared to $113.7 million and a book value per share of $20.36 as of December 31, 2025. Please refer to the section of this Management’s Discussion and Analysis titled “LIQUIDITY AND CAPITAL RESOURCES” for a discussion in of the changes in the Company’s equity capital for the threesix months ended MarchJune 31,30, 2026.

On MarchJune 18,17, 2026, the Company's Board of Directors declared a quarterly cash dividend of $0.25 per common share, payable on MayAugust 1, 2026, to shareholders of record on April 26, 2026 (as adjusted on AprilJuly 15, 2026).2026.

As described in more detail below under “LIQUIDITY AND CAPITAL RESOURCES” as of MarchJune 31,30, 2026, the Company’s capital ratios, and those of our subsidiary Bank, were in excess of applicable regulatory requirements.

These policies are described in the Company’s 2025 Annual Report on Form 10-K in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” and in Note 1 (Significant Accounting Policies) to the audited consolidated financial statements. Aside from adjustments in qualitative factors and other economic indicators in the calculation of the ACL, there were no material changes during the first threesix months of 2026 in the Company’s critical accounting policies.

The Company’s net income for the firstsecond quarter of 2026 was $4.4$4.7 million, or $0.78$0.84 per common share, compared to $3.5$4.1 million, or $0.62$0.72 per common share for the same quarter of 2025, and for the first six months of 2026 was $9.1 million, or $1.62 per common share, compared to $7.6 million, or $1.34 per common share, for the same period in 2025. Core earnings (NII) before credit loss expense were $10.9$11.2 million for the second quarter of 2026, compared to $9.9 million for the same period of 2025 and $22.2 million for the first threesix months of 2026, compared to $9.4$19.3 million for the same period in 2025. Interest and fees on loans, the major component of interest income, increased $1.2$1.1 million, or 9.2%7.7% for the second quarter of 2026 compared to the same period of 2025 and increased $2.3 million, or 8.5% for the first quartersix months of 2026 compared to the same period in 2025. Interest paid on deposits, which is the major component of total interest expense, decreasedincreased $9$38 thousand, or 0.2%0.9% for the second quarter of 2026 and increased $28 thousand, or 0.4% for the first six months of 2026, compared to the respective periods in 2025, driven primarily by increased deposit balances. Interest on borrowed funds decreased $143 thousand, or 32.1%, for the second quarter of 2026 compared to the same quarter of 2025 and decreased $128 thousand, or 15.7%, for the first six months of 2026 compared to the same period in 2025, driven primarily by adjustments to relationship pricing on deposits. Interest on borrowed funds increased $15 thousand, or 4.0%, for the first quarter of 2026 compared to the same quarter of 2025, due to ana increasedecrease in the average volume of borrowed funds betweenin periodsboth despitecomparison periods. Market pressure on deposit rates has stabilized and a decrease in thewholesale averagefunding ratehas paid.resulted in an improved net interest margin and net interest spread.

The Company’s tax-exempt interest income of $718,134$726,540 and $727,753$827,746 for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $1.4 million and $1.6 million for the six months ended June 30, 2026 and 2025, respectively, was derived from loans to local municipalities of $64.1$44.6 million and $70.4$42.4 million, and tax-exempt municipal investment securities of $10.2$10.3 million and $10.1$9.9 million, as of MarchJune 31,30, 2026 and 2025, respectively.

The average volume of interest-earning assets for the three-monththree-and periodsix-month periods ended MarchJune 31,30, 2026 increased 5.4%4.2% and 4.8%, respectively, compared to the same periodperiods last year, and the average yield on interest-earning assets increased 2318 bps.bps and 20 bps, respectively.

The average volume of loans increased over the three-monththree- and six-month comparison periodperiods of 2026 versus 2025 by 4.0% and 3.9%, respectively, and the average yield on loans increased 2819 bps.bps and 24 bps, respectively, versus the same period in 2025. Loans accounted for 81.6%84.3% and 82.9% of the average interest-earning asset portfolio for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, compared to 82.8%84.5% and 83.7%, respectively, for the same periodperiods last year. Interest earned on the loan portfolio as a percentage of total interest income was 90.0%91.9% and 90.9%, respectively, for the three-monththree- periodand six-month periods in 2026 compared to 91.0%92.2% and 91.6%, respectively, for the same periodperiods in 2025.

The average volume of the taxable investment portfolio (classified as AFS) decreased 12.1%19.5% and 15.9%, respectively, during the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, compared to the same periodperiods last year, while the average yield decreased 6 bps and increased 154 bpsbps, respectively, between periods.

The average volume of the tax-exempt investment portfolio (classified as AFS) for the three-monththree- periodand six-month periods ended MarchJune 31,30, 20252026 increased 0.1%0.2% andin both periods, while the tax equivalent yield decreased six13 bps.bps and 10 bps, respectively. There were no tax-exempt bond purchases during the first threesix months of 2026, however the fair value of the portfolio has increased, accounting for the increase in average volume in this portfolio.2026.

The average volume of sweep and interest-earning accounts, which consists primarily of an interest-bearing account at the FRBB, increased 141.5%636.1% and 225.9%, respectively, for the three-monththree- periodand six-months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025. The average volume grew steadily throughoutduring the last half of 2025 with the influx of customer deposit accounts, primarily municipal deposit accounts. The average yield on these funds decreased 6792 bps and 69 bps, respectively, for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, versus the same periodperiods in 2025.

The average volume of interest-bearing liabilities for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026 increased 4.1%2.6% and 3.4%, respectively, compared to the same periodperiods in 2025, andwhile the average rate paid on interest-bearing liabilities decreased 1013 bps.bps and 11 bps, respectively.

The average volume of interest-bearing transaction accounts decreasedincreased 0.1%4.6% and 2.2%, respectively, for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, compared to the same periodperiods inof 2025, whilereflecting themoderate growth year over year. The average rate paid on these accounts decreased three8 bps and 6 bps, respectively, between comparison periods. Interest-bearing transaction accounts comprised 31.9%32.6% and 32.3% of the average interest-bearing liabilities portfolio for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026,2025, compared to 33.3%32.0% and 32.6%, respectively, for the same periodperiods last year. Interest paid on these funds accounted for 26.7%27.1% and 26.9%, respectively, of total interest expense for the three-monththree- periodand six-month periods of 2026 compared to 27.2%26.2% and 26.7%, respectively, for the same periodperiods in 2025.

The average volume of repurchasemoney agreementsmarket accounts decreased 8.9%4.0% and 2.7%, respectively, for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, andwhile the average rate paid increasedon 32these deposits decreased 42 bps betweenfor comparisonboth periods.

As deposit accounts decreased during 2025, the need for borrowed funds increased, accounting for the 9.9% increase inThe average volume of borrowedsavings fundsaccounts duringincreased 2.5% and 2.3%, respectively, for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025. The average rate paid on borrowedthese fundsaccounts decreased by 21 bps forin the three-month period ended MarchJune 31,30, 2026,2026 decreased 1 bp compared to 2025, while there was no change in the sameaverage rate paid on these accounts in the six-month period inended June 30, 2026 compared to 2025.

In summary, between the three-monththree- and six-month periods ended MarchJune 31,30, 2026 and 2025, the average yield on interest-earning assets increased 2318 bps and 20 bps, respectively, and the average rate paid on interest-bearing liabilities decreased 1013 bps.bps and 11 bps, respectively. Net interest spread increased 3331 bps for the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026 versus the same periodperiods in 2025, and the net interest margin increased 3231 bps betweenand comparison32 periods.bps, respectively.

Total non-interest income increased $166,731,$254,036, or 10.6%,12.3%, and $420,767 or 11.6%, respectively, for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, with significant changes noted in the following:

Total non-interest expense increased $553,748,$497,838, or 8.5%7.5%, and $1.1 million or 8.0%, for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, with significant changes noted in the following:

The provision for income taxes increased $212,441,$167,533, or 32.1%,20.5%, for the second quarter of 2026 and $379,974, or 25.6%, for the first quartersix months of 2026 compared to the same periodperiods in 2025, which is the consistent with the increase in income before income taxes. Tax credits, which consist of credits from affordable housing investments and NMTC, amounted to $249,612 for the first quarter of 2026 and 2025 and remained level at $998,448, for the first six months of 2026 and 2025.

Amortization expense related to the affordable housing investments and NMTC is included as a component of income tax expense and amounted to $257,433 and $148,890, respectively, for the first quarter of 2026 and 2025 and $514,866 and $148,890, respectively, for the first six months of 2026 and 2025. These investments provide tax benefits, including tax credits, and are designed to provide a targeted effective annual yield between 5% and 7%.

The increase in the loan portfolio during the first threesix months of 2026 was primarily attributable to increases in CREC&I loans,loans and residential real estate 1st lien loans, as well as municipal loans.

The decrease in the securities AFS portfolio at MarchJune 31,30, 2026 is attributable to the combined effect during the first threesix months of the year of anpurchases increasetotaling $153 thousand and a decrease of $208$301 thousand in unrealized losses reflected in OCI, aswhich wellwas asmore than offset by maturities of $2.1$4.5 million and principal payments on MBS, ABS and CMO investments totaling $4.5$12.3 million. The cash flow resulting from maturities and other principal payments was used to fund loan growth. In management’s view, the size of the AFS securities portfolio is appropriate and proportional to the overall asset base, as this portfolio serves a significant role in the Company’s liquidity position.

The decrease in interest-bearing transactions accounts at MarchJune 31,30, 2026 from year end 2025 is attributable to a cyclical decrease of $5.9$4.9 million, or 13.9%15.8% in government agency accounts for our municipal customers, a CFSGdecrease depositof account,$19.3 million or 15.8%, in ICS accounts, and a decrease of $4.9$35.2 millionmillion, or 4.0%,6.8% in ICSretail deposit accounts. The decrease in money market accounts was primarily driven by a decrease of $20.8$41.9 million, or 42.7%85.8%, in ICS accounts.accounts, and a decrease in retail money market accounts of $6.9 million, or 6.0%, as well as a decrease in municipal money market deposits of $12.7 million, or 55.5%.

Estimated deposits in excess of the FDIC insurance level amounted to $234.5$229.8 million as of MarchJune 31,30, 2026 and $261.7 million as of December 31, 2025. The estimated balance of $51.9$48.2 million of uninsured time deposits as of MarchJune 31,30, 2026 was made up of time CDs of $47.7$43.6 million and retirement accounts of $4.2$4.6 million. Increments of maturity of these time deposits are summarized as follows:

The following table summarizes the estimated impact on the Company's NII over a twelve-month period, assuming a gradual parallel shift of the yield curve beginning MarchJune 31,30, 2026:

As of MarchJune 31,30, 2026, the Company had $12,887,000 in principal amount of Junior Subordinated Debentures due December 15, 2037, which bear interest at a quarterly floating rate equal to 3-month CME SOFR, as adjusted by a spread adjustment factor of 0.26161, plus 2.85%. The quarterly floating rate in effect on the debentures was 6.83%6.79% for the MarchJune 2026 payment, compared to a floating rate of 7.47%7.41% for the MarchJune 2025 payment.

Residential mortgage loans represented 29.2%30.8% of the Company’s loan balances as of MarchJune 31,30, 2026, compared to 29.3% as of December 31, 2025. The Company maintains a residential mortgage loan portfolio of traditional mortgage products and does not offer higher risk loan products, such as option adjustable-rate mortgage products, high loan-to-value products, interest only mortgages, subprime loans and products with deeply discounted teaser rates. Residential mortgages with loan-to-value ratios exceeding 80% are generally covered by PMI. A 90% loan-to-value residential mortgage product without PMI is only available to borrowers with excellent credit and low debt-to-income ratios and has not been widely originated. As of MarchJune 31,30, 2026, junior lien home equity products made up 15.9% of the residential mortgage portfolio with maximum loan-to-value ratios (including prior liens) of 80%. The Company also originates some home equity loans with loan-to-value ratios greater than 80% under an insured loan program with stringent underwriting criteria.

The following tables show the estimated maturities within the Company’s loan portfolio as of MarchJune 31,30, 2026.

The Company experienced solid growth in the CRE loan portfolio, which is consistent with its strategic focus on commercial lending. Commercial & industrial, purchased, CRE and municipal loans collectively comprised 69.3%68.9% of the Company’s loan portfolio as of MarchJune 31,30, 2026, compared to 71.7%70.4% as of December 31, 2025. The largest components of the CRE portfolio were $142.0$152.0 million in owner-occupied CRE and $181.9$170.6 million in non-owner occupied CRE as of MarchJune 31,30, 2026, compared to $125.5$138.1 million and $154.6$184.0 million, respectively, as of December 31, 2025.

Risk in the Company’s commercial & industrial and CRE loan portfolios is mitigated in part by government guarantees issued by federal agencies such as the SBA and RD. As of MarchJune 31,30, 2026, the Company had $24.4$25.9 million in guaranteed loans with guaranteed balances of $16.9$17.7 million, compared to $24.2 million in guaranteed loans with guaranteed balances of $16.7 million as of December 31, 2025. PPP loans with outstanding balances of $0 as of MarchJune 31,30, 2026, and $8 thousand as of December 31, 2025, are included in these totals, which carried a 100% guarantee through the SBA, subject to borrower eligibility requirements.

The firstsecond quarter ACL analysis indicated that the reserve balance of $11.3$11.9 million as of MarchJune 31,30, 2026, was sufficient to cover expected credit losses that are probable and estimable as of the measurement date. As discussed in Note 5 of the accompanying unaudited interim consolidated financial statements, there were no adjustments made to the risk status of any qualitative factors included in the ACL calculation for the firstsecond quarter of 2026 was an adjustment made by management to increase the risk status of the qualitative factor for criticized & classified in the commercial and CRE segments to reflect increases in criticized & classified loans in these segments.2026.

Net charge-offs during the periods presented to average loans outstanding in the respective loan segments were as follows:

The Company is a party to financial instruments with OBS risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit andcredit, risk-sharing commitments on certain sold loans.loans, and risk participation agreements with financial institution counter parties. Such instruments involve, to varying degrees, elements of credit and interest rate risk more than the amount recognized in the balance sheet. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. During the first threesix months of 2026, the Company did not engage in any activity that created any additional types of OBS risk.

The Company recognizes that, at times, when loan demand exceeds deposit growth or the Company has other liquidity demands, or when the Company experiences deposit outflows; it may be desirable to utilize alternative sources of deposit funding to augment retail deposits and borrowings. One-way deposits acquired through the CDARS and/or ICS programs provide an alternative funding source when needed. As of MarchJune 31,30, 2026, and December 31, 2025, the Company had no one-way CDARS deposits, and no one-way ICS deposits outstanding at either period end. In addition, two-way (reciprocal) CDARS deposits, as well as reciprocal ICS money market and demand deposits, enhance the Company’s ability to retain larger deposit balances by allowing the Company to provide FDIC deposit insurance to its customers in excess of account coverage limits through the exchange of deposits with other participating FDIC-insured financial institutions. As of MarchJune 31,30, 2026 and December 31, 2025, the Company reported $4.8$4.9 million and $4.7 million, respectively, in reciprocal CDARS deposits. The balance in ICS reciprocal money market deposits was $27.9$6.9 million as of MarchJune 31,30, 2026, compared to $48.8 million as of December 31, 2025, and the balance in ICS reciprocal demand deposits as of those dates was $117.2$102.7 million and $122.0 million, respectively.

Additionally, the Company had brokered deposits from other sources totaling approximately $29.8 million as of MarchJune 31,30, 2026 and $30.5 million as of December 31, 2025. These relationships have provided convenient and timely access to short-term funding that is easily accessible without any detrimental effect on the pricing of the core deposit base.

As of MarchJune 31,30, 2026 and December 31, 2025, borrowing capacity of $140.2$140.9 million and $137.6 million, respectively, was available through the FHLBB, secured by the Company's qualifying loan portfolio (generally, residential mortgage and commercial loans), reduced by outstanding advances of $35.9$10.9 million forand both$35.9 periods.million, respectively.