Western New England Bancorp, Inc. (WNEB)

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

Overview.

We strive to remain a leader in meeting the financial
service needs of the local community and to provide quality service to the individuals and businesses in the market areas that we have
served since 1853. Historically, we have been a community-oriented provider of traditional banking products and services to business organizations
and individuals, including products such as residential and commercial real estate loans, commercial and industrial loans, consumer loans,
and a variety of deposit products. We meet the needs of our local community through a community-based and service-oriented approach to
banking.

The Company has adopted a growth-oriented strategy
that continues to focus on increasing commercial lending and residential lending. Our strategy also calls for increasing deposit relationships,
specifically core deposits, which the Company defines as all deposits except for time deposits, and broadening our product lines and services.
We believe that this business strategy is best for our long-term success and viability and complements our existing commitment to high-quality
customer service.

In connection with our overall growth strategy,
we seek to:

You should read the following financial results
for the three months ended March 31, 2026 in the context of this strategy.

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CRITICAL ACCOUNTING POLICIES.

Our consolidated financial statements are prepared
in accordance with GAAP and practices within the banking industry. Application of these principles requires management to make estimates,
assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions,
and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes,
the financial statements could reflect different estimates, assumptions, and judgments. Actual results could differ from those estimates.

Critical accounting estimates are necessary in
the application of certain accounting policies and procedures, and are particularly susceptible to significant change. Critical accounting
policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially
different results under different assumptions and conditions.

There have been no material changes to our critical
accounting policies during the three months ended March 31, 2026. For additional information on our critical accounting policies, please
refer to the information contained in Note 1 of the accompanying unaudited consolidated financial statements and Note 1 of the consolidated
financial statements included in our 2025 Annual Report.

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

At March 31, 2026, total assets were $2.8 billion,
an increase of $28.0 million, or 1.0%, from December 31, 2025. The increase in total assets was primarily due to an increase in total
loans of $17.2 million, or 0.8%, and an increase in cash and cash equivalents of $15.8 million, or 39.0%.

At March 31, 2026, the investment securities portfolio
totaled $359.2 million, or 13.0% of total assets, compared to $365.2 million, or 13.3% of total assets, at December 31, 2025. At March
31, 2026, the Company’s available-for-sale securities portfolio, recorded at fair market value, was $173.2 million, a decrease of
$2.6 million, or 1.5%, from $175.8 million at December 31, 2025. The held-to-maturity securities portfolio, recorded at amortized cost,
decreased $3.4 million, or 1.8%, from $188.8 million at December 31, 2025 to $185.4 million at March 31, 2026.

At March 31, 2026, the Company reported net unrealized
losses on the available-for-sale securities portfolio of $23.0 million, or 11.7% of the amortized cost basis of the available-for-sale
securities portfolio, compared to net unrealized losses of $22.4 million, or 11.3% of the amortized cost basis of the available-for-sale
securities at December 31, 2025. At March 31, 2026, the Company reported net unrealized losses on the held-to-maturity securities portfolio
of $30.6 million, or 16.5% of the amortized cost basis of the held-to-maturity securities portfolio, compared to $30.3 million, or 16.1%
of the amortized cost basis of the held-to-maturity securities portfolio at December 31, 2025.

The securities in which the Company may
invest are limited by regulation. Federally chartered savings banks have authority to invest in various types of assets, including
U.S. Treasury obligations, securities of various government-sponsored enterprises, mortgage-backed securities, certain certificates
of deposit of insured financial institutions, repurchase agreements, overnight and short-term loans to other banks, corporate debt
instruments, and marketable equity securities. The securities, with the exception of $11.0 million in corporate bonds, are issued by
the United States government or government-sponsored enterprises and are therefore either explicitly or implicitly guaranteed as to
the timely payment of contractual principal and interest. These positions are deemed to have no credit impairment, therefore, the
disclosed unrealized losses with the securities portfolio relate primarily to changes in prevailing interest rates. In all cases,
price improvement in future periods will be realized as the issuances approach maturity.

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Management regularly reviews the portfolio for
securities in an unrealized loss position. At March 31, 2026 and December 31, 2025, the Company did not record any credit impairment
charges on its securities portfolio and attributed the unrealized losses primarily due to fluctuations in general interest rates or changes
in expected prepayments and not due to credit quality. The primary objective of the Company’s investment portfolio is to provide
liquidity and to secure municipal deposit accounts while preserving the safety of principal. The available-for-sale and held-to-maturity
portfolios are both eligible for pledging to the Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”)
as collateral for borrowings. The portfolios are comprised of high-credit quality investments and both portfolios generated cash flows
monthly from interest, principal amortization, and payoffs, which supports the Bank’s objective to provide liquidity.

Total loans increased $17.2 million, or 0.8%,
from $2.2 billion, or 79.7% of total assets, at December 31, 2025 to $2.2 billion, or 79.5% of total assets, at March 31, 2026. The increase
in total loans was primarily driven by an increase in residential real estate loans, including home equity loans, of $9.6 million, or
1.1%, an increase in commercial and industrial loans of $6.0 million, or 2.7%, and an increase in commercial real estate loans of $2.1
million, or 0.2%.

Total delinquency was $3.2 million, or 0.14%
of total loans, at March 31, 2026, compared to $3.1 million, or 0.14% of total loans, at December 31, 2025. At March 31, 2026, nonaccrual
loans totaled $4.7 million, or 0.21% of total loans, compared to $5.2 million, or 0.24% of total loans, at December 31, 2025. At March
31, 2026 and December 31, 2025, there were no loans 90 or more days past-due and still accruing interest. Total nonperforming assets,
defined as nonaccrual loans and other real estate owned, totaled $4.7 million, or 0.17% of total assets, at March 31, 2026, compared
to $5.2 million, or 0.19% of total assets, at December 31, 2025. At March 31, 2026 and December 31, 2025, the Company did not have any
other real estate owned.

At March 31, 2026, the allowance for credit losses
was $20.5 million, or 0.93% of total loans and 436.9% of nonaccrual loans, compared to $20.3 million, or 0.93% of total loans and 393.2%
of nonaccrual loans, at December 31, 2025.

At March 31, 2026, total criticized loans, defined
as special mention and substandard loans, totaled $58.7 million, or 2.7% of total loans, compared to $39.7 million, or 1.8% of total loans,
at December 31, 2025. Loans designated special mention, which are not considered classified, increased $20.5 million, from $17.1 million,
or 0.8% of total loans, at December 31, 2025 to $37.6 million, or 1.7% of total loans, at March 31, 2026. During the same period, substandard
loans decreased $1.4 million, or 6.1%, to $21.1 million, or 1.0% of total loans.

Of the $37.6 million in loans designated special
mention at March 31, 2026, $14.7 million, or 39.1%, are commercial and industrial loans, and $22.9 million, or 60.9%, are commercial real
estate loans. Of the $21.1 million in loans categorized substandard at March 31, 2026, $7.3 million, or 34.4%, are

[Excerpt truncated for page length; source filing is linked above.]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The
following discussion should be read in conjunction with the Company’s Consolidated Financial Statements and notes thereto,
each appearing elsewhere in this Annual Report on Form 10-K. Management’s discussion focuses on 2025 results compared to
2024. For a discussion of 2024 results compared to 2023, refer to Part II, Item 7 of our Annual Report filed on Form 10-K, which
was filed with the SEC on March 10, 2025.

Overview.

We
strive to remain a leader in meeting the financial service needs of the local community and to provide quality service to the
individuals and businesses in the market areas that we have served since 1853. Historically, we have been a community-oriented
provider of traditional banking products and services to business organizations and individuals, including products such as residential
and commercial real estate loans, consumer loans and a variety of deposit products. We meet the needs of our local community through
a community-based and service-oriented approach to banking.

We
have adopted a growth-oriented strategy that continues to focus on increasing commercial lending and residential lending. Our
strategy also calls for increasing deposit relationships, specifically core deposits, and broadening our product lines and services.
We believe that this business strategy is best for our long-term success and viability, and complements our existing commitment
to high quality customer service.

In
connection with our overall growth strategy, we seek to:

You
should read the following financial results for the year ended December 31, 2025 in the context of this strategy.

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For
the twelve months ended December 31, 2025, the Company reported net income of $15.3 million, or $0.75 per diluted share, compared
to $11.7 million, or $0.56 per diluted share, for the twelve months ended December 31, 2024. Net interest income increased $10.3
million, or 17.2%, provision for credit losses increased $1.0 million, non-interest income decreased $387,000, or 3.0%, and non-interest
expense increased $4.1 million, or 6.9%, during the same period in 2024.

During
the twelve months ended December 31, 2025, net interest income increased $10.3 million, or 17.2%, to $70.1 million, compared to
$59.8 million for the twelve months ended December 31, 2024. The increase in net interest income was due to an increase in interest
income of $8.8 million, or 8.0%, and a decrease in interest expense of $1.5 million, or 3.0%.

During
the twelve months ended December 31, 2025, the Company recorded a provision for credit losses of $335,000, compared to a reversal
of credit losses of $665,000 during the twelve months ended December 31, 2024. The $1.0 million increase in the provision for
credit losses was primarily due to an increase in total loans of $113.2 million, or 5.5%.

General.

Our
consolidated results of operations depend primarily on net interest and dividend income. Net interest and dividend income is the
difference between the interest income earned on interest-earning assets and the interest paid on interest-bearing liabilities.
Interest-earning assets consist primarily of commercial real estate loans, commercial and industrial loans, residential real estate
loans and securities. Interest-bearing liabilities consist primarily of time deposits and money market accounts, demand deposits,
savings accounts and borrowings from the FHLB. The consolidated results of operations also depend on the provision for loan losses,
non-interest income, and non-interest expense. Non-interest income includes service fees and charges, income on bank-owned life
insurance, gains (losses) on sales of mortgages, gains (losses) on non-marketable equity investments and gains (losses) on securities.
Non-interest expense includes salaries and employee benefits, occupancy expenses, data processing, advertising expense, FDIC insurance
assessment, professional fees and other general and administrative expenses.

Critical
Accounting Policies.

Our
accounting policies are disclosed in Note 1 to our consolidated financial statements. Given our current business strategy and
asset/liability structure, the more critical policy is the allowance for credit losses and provision for credit losses. In addition
to the informational disclosure in the notes to the consolidated financial statements, our policy on this accounting policy is
described in detail in the applicable sections of “Management’s Discussion and Analysis of Financial Condition
and Results of Operations.” Senior management has discussed the development and selection of this accounting policy
and the related disclosures with the Audit Committee of the Board.

The
allowance for credit losses is an estimate of expected losses inherent within the Company’s existing loans held for investment
portfolio. The allowance for credit losses for loans held for investment, as reported in our consolidated balance sheet, is adjusted
by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries. Accrued
interest receivable on loans held for investment was $7.6 million at December 31, 2025 and is excluded from the estimate of credit
losses.

This
evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change. The credit
loss estimation process involves procedures to appropriately consider the unique characteristics of loan portfolio segments, which
consist of commercial real estate loans, residential real estate loans, commercial and industrial loans, and consumer loans. These
segments are further disaggregated into loan classes, the level at which credit risk is monitored. For each of these pools, the
Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment
speed, curtailments, time to recovery, probability of default, and loss given default. The modeling of expected prepayment speeds,
curtailment rates, and time to recovery are based on historical internal data. The quantitative component of the ACL on loans
is model-based and utilizes a forward-looking macroeconomic forecast. For commercial real estate loans, residential real estate
loans, and commercial and industrial loans, the Company uses a discounted cash flow method, incorporating probability of default
and loss given default forecasted based on statistically derived economic variable loss drivers, to estimate expected credit losses.
This process includes estimates which involve modeling loss projections attributable to existing loan balances, and considering
historical experience, current conditions, and future expectations for pools of loans over a reasonable and supportable forecast
period. The historical information either experienced by the Company or by a selection of peer banks, when appropriate, is derived
from a combination of recessionary and non-recessionary performance periods for which data is available. The expected loss estimates
for the consumer loan segment are based on historical loss rates using the WARM method.

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Although
management believes it has established and maintained the allowance for credit losses at adequate levels for the current economic
environment and supportable forecast period, if management’s assumptions and judgments prove to be incorrect due to changes
in the economic environment and related adjustments to the quantitative components of the CECL methodology, and the allowance
for credit losses is not adequate to absorb forecasted losses, our earnings and capital could be significantly and adversely affected.

Analysis
of Net Interest Income.

The
Company’s earnings are largely dependent on its net interest income, which is the difference between interest earned on
loans and investments and the cost of funding (primarily deposits and borrowings). Net interest income expressed as a percentage
of average interest-earning assets is referred to as net interest margin. For more information regarding the Company’s use
of Non-GAAP financial measures see “Explanation of Use of Non-GAAP Financial Measurements.”

Average
Balance Sheet.

The
following table sets forth information relating to the Company for the years ended December 31, 2025, 2024 and 2023. The average
yields and costs are derived by dividing interest income or interest expense by the average balance of interest-earning assets
or interest-bearing liabilities, respectively, for the periods shown. Average balances are derived from average daily balances.
The yields include fees which are considered adjustments to yields. Loan interest and yield data does not include any accrued
interest from non-accruing loans.

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Rate/Volume Analysis.

The following table shows
how changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected
our interest and dividend income and interest expense during the periods indicated. Information is provided in each category with
respect to: (1) interest income changes attributable to changes in volume (changes in volume multiplied by prior rate); (2) interest
income changes attributable to changes in rate (changes in rate multiplied by prior volume); and (3) the net change.

The changes attributable
to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due
to rate.

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Explanation of Use of Non-GAAP Financial
Measurements.

We believe that it is common practice in
the banking industry to present interest income and related yield information on tax-exempt loans and securities on a tax-equivalent
basis, as well as presenting tangible book value per share and that such information is useful to investors because it facilitates
comparisons among financial institutions. However, the adjustment of interest income and yields on tax-exempt loans and securities
to a tax-equivalent amount, as well as the presentation of tangible book value per share may be considered to include financial
information that is not in compliance with GAAP. A reconciliation from GAAP to non-GAAP is provided below.

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Comparison of Financial Condition at
December 31, 2025 and December 31, 2024.

At December 31, 2025, total assets increased
$83.4 million, or 3.1%, from December 31, 2024 to $2.7 billion. The increase in total assets was primarily due to an increase in
total loans of $113.2 million, or 5.5%, partially offset by a decrease in cash and cash equivalents of $26.1 million, or 39.2%.
The balance sheet composition and changes since December 31, 2024 are discussed below.

Cash and Cash Equivalents.

Cash and cash equivalents is comprised
of cash on hand and amounts due from banks, interest-earning deposits in other financial institutions and federal funds sold. Cash
and cash equivalents totaled $40.4 million, or 1.5% of total assets, at December 31, 2025 and $66.5 million, or 2.5% of total assets,
at December 31, 2024. Balances in cash and cash equivalents will fluctuate due primarily to the timing of net deposit flows, borrowing
and loan inflows and outflows, investment purchases and maturities, calls and sales proceeds, and the immediate liquidity needs
of the Company.

Investments.

At December 31, 2025, the investment securities
portfolio totaled $365.2 million, or 13.3% of total assets, compared to $366.1 million, or 13.8% of total assets, at December 31,
2024. At December 31, 2025, the Company’s available-for-sale securities portfolio, recorded at fair market value, increased
$15.1 million, or 9.4%, from $160.7 million at December 31, 2024 to $175.8 million. The held-to-maturity securities portfolio,
recorded at amortized cost, decreased $16.2 million, or 7.9%, from $205.0 million at December 31, 2024 to $188.8 million at December
31, 2025.

At December 31, 2025, the Company reported
gross unrealized losses on the available-for-sale securities portfolio of $23.4 million, or 11.8% of the amortized cost basis of
the available-for-sale securities portfolio, compared to gross unrealized losses of $31.2 million, or 16.2% of the amortized cost
basis of the available-for-sale securities at December 31, 2024. At December 31, 2025, the Company reported gross unrealized losses
on the held-to-maturity securities portfolio of $30.5 million, or 16.2% of the amortized cost basis of the held-to-maturity securities
portfolio, compared to $39.4 million, or 19.2% of the amortized cost basis of the held-to-maturity securities portfolio at December
31, 2024.

The Bank is required to purchase FHLB stock
at par value in association with advances from the FHLB. The stock is classified as a restricted investment and carried at cost
which management believes approximates fair value. The Company’s investment in FHLB capital stock amounted to $4.9 million
and $5.4 million at December 31, 2025 and December 31, 2024, respectively.

At December 31, 2025 and 2024, the Company
held $423,000 of Atlantic Community Bankers Bank stock. The stock is restricted and carried in other assets at cost. The stock
is evaluated for impairment based on an estimate of the ultimate recovery to the par value.

Loans.

Total loans increased $113.2 million, or
5.5%, from $2.1 billion, or 77.9% of total assets, at December 31, 2024 to $2.2 billion, or 79.7% of total assets, at December
31, 2025. The increase in total loans was primarily driven by an increase in residential real estate loans, including home equity
loans, of $81.2 million, or 10.5%, an increase in commercial and industrial loans of $10.1 million, or 4.8%, and an increase in
commercial real estate loans of $23.3 million, or 2.2%. The increase in total loans was partially offset by a decrease in consumer
loans of $1.5 million, or 33.3%.

Management continues to closely monitor
the loan portfolio for any signs of deterioration in borrowers’ financial condition and also in light of speculation that
commercial real estate values may deteriorate as the market continues to adjust to higher vacancies and interest rates. We continue
to proactively take steps to mitigate risk in our loan portfolio.

Total delinquency was $3.1 million, or
0.14% of total loans, at December 31, 2025, compared to $5.0 million, or 0.24% of total loans at December 31, 2024. At December
31, 2025, nonaccrual loans totaled $5.2 million, or 0.24% of total loans, compared to $5.4 million, or 0.26% of total loans, at
December 31, 2024. At December 31, 2025 and December 31, 2024, there were no loans 90 or more days past-due and still accruing
interest. Total nonperforming assets, defined as nonaccrual loans and other real estate owned, totaled $5.2 million, or 0.19% of
total assets, at December 31, 2025, compared to $5.4 million, or 0.20% of total assets, at December 31, 2024. At December 31, 2025
and December 31, 2024, the Company did not have any other real estate owned.

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At December 31, 2025, the allowance for
credit losses was $20.3 million, or 0.93% of total loans and 393.2% of nonaccrual loans, compared to $19.5 million, or 0.94% of
total loans and 362.9% of nonaccrual loans, at December 31, 2024. Total criticized loans, defined as special mention and substandard
loans, increased $1.3 million, or 3.4%, from $38.4 million, or 1.9% of total loans, at December 31, 2024 to $39.7 million, or 1.8%
of total loans, at December 31, 2025. A summary of our past due and nonperforming loans by class is listed in Note 3 of the accompanying
unaudited consolidated financial statements.

Our commercial real estate portfolio is
comprised of diversified property types and primarily within our geographic footprint. At December 31, 2025, the commercial real
estate portfolio totaled $1.1 billion and represented 50.4% of total loans. Of the $1.1 billion, $900.5 million, or 81.9%, was
categorized as non-owner occupied commercial real estate and represented 325.1% of the Bank’s total risk-based capital.

The Company’s commercial real estate
loans are considered to be relatively diversified by borrower, industry and concentrated in the New England geographical area.
A significant portion of the loan portfolio consists of commercial real estate loans, primarily made in Massachusetts, and to a
lesser degree, Connecticut, and secured by real estate or other collateral in the market. Although these loans are made to a diversified
pool of unrelated borrowers across numerous businesses, adverse developments in the local real estate market could have an adverse
impact on this portfolio of loans and the Company’s income and financial position. While our basic market area is in Massachusetts,
the Company has made loans outside that market area where the applicant is an existing customer, and the nature and quality of
such loans was consistent with the Company’s lending policies.

We continuously monitor the asset quality
of our loan portfolio. For the commercial portfolio, we monitor credit quality using a risk rating scale, which assigns a risk-grade
to each borrower based on a number of quantitative and qualitative factors associated with a commercial loan transaction. Management
utilizes a loan risk rating methodology based on an 8-point scale. Pass grades are 0-4 and non-pass categories, which align with
regulatory guidelines, include: special mention (5), substandard (6), doubtful (7) and loss (8). Risk rating assignment is determined
by analyzing key factors, which may include: industry and market conditions, position within the industry, earnings trends, operating
cash flow, debt capacity, guarantor strength, management, financial reporting, collateral and other considerations.

CRE Concentrations.

The
OCC, the FRB, and the FDIC (“Agencies”) issued guidance in 2006 which addresses institutions with increased
concentrations of commercial real estate (“CRE”) loans. The guidance does not establish specific CRE lending limits;
rather, it promotes sound risk management practices and appropriate levels of capital that will enable institutions to continue
to pursue CRE lending in a safe and sound manner. In developing this guidance, the Agencies recognized that different types of
CRE lending present different levels of risk, and that consideration should be given to the lower risk profiles and historically
superior performance of certain types of CRE, such as well-structured multifamily housing finance, when compared to others, such
as speculative office space construction.

Institutions are encouraged to segment
their CRE portfolios to acknowledge these distinctions for risk management purposes. The guidance focuses on those CRE loans for
which the cash flow from the real estate is the primary source of repayment rather than loans to a borrower for which real estate
collateral is taken as a secondary source of repayment or through an abundance of caution. Thus, for the purposes of the guidance,
CRE loans include those loans with risk profiles sensitive to the condition of the general CRE market (for example, market demand,
changes in capitalization rates, vacancy rates, or rents). CRE loans are land development and construction loans (including 1-
to 4-family residential and commercial construction loans) and other land loans. CRE loans also include loans secured by multifamily
property, and nonfarm nonresidential property where the primary source of repayment is derived from rental income associated with
the property (that is, loans for which 50 percent or more of the source of repayment comes from third party, nonaffiliated, rental
income) or the proceeds of the sale, refinancing, or permanent financing of the property. Excluded from the scope of this guidance
are loans secured by nonfarm nonresidential properties where the primary source of repayment is the cashflow from the ongoing operations
and activities conducted by the party, or affiliate of the party, who owns the property.

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As part of their ongoing supervisory monitoring
processes, the Agencies use certain criteria to identify institutions that are potentially exposed to significant CRE concentration
risk. An institution that has experienced rapid growth in CRE lending, has notable exposure to a specific type of CRE, or is approaching
or exceeds the following supervisory criteria may be identified for further supervisory analysis of the level and nature of its
CRE concentration risk:

1. Total reported loans for construction,
land development, and other land represent 100 percent or more of the institution’s total risk-based capital; or

2. Total commercial real estate
loans, as defined in this guidance, represent 300 percent or more of the institution’s total risk-based capital, and the
outstanding balance of the institution’s commercial real estate loan portfolio has increased by 50 percent or more during
the prior 36 months.

The Agencies use the criteria as a preliminary
step to identify institutions that may have CRE concentration risk. Because regulatory reports capture a broad range of CRE loans
with varying risk characteristics, the supervisory monitoring criteria do not constitute limits on an institution’s lending
activity but rather serve as high-level indicators to identify institutions potentially exposed to CRE concentration risk.

The Company holds a concentration in commercial
real estate loans. As of December 31, 2025, commercial real estate loans represented 396.8% of consolidated bank risk-based capital.
Non-owner occupied commercial real estate loans totaled $900.5 million, or 325.1% of consolidated bank risk-based capital, and
owner-occupied commercial real estate loans totaled $198.6 million, or 71.7% of consolidated bank risk-based capital. As of December
31, 2025, construction, land development and other land loans represented 39.0% of consolidated bank risk-based capital. During
the prior 36 months, the Company has experienced an increase in its commercial real estate portfolio of 9.0%.

The management team has extensive experience
in underwriting commercial real estate loans and has implemented and continues to maintain heightened risk management procedures
and strong underwriting criteria with respect to its commercial real estate portfolio. The Company’s Board of Directors (the
“Board”) has established internal maximum limits on CRE as an asset class overall as well as sub limits within CRE
by property class, to better manage and control the exposure to property classes during periods of changing economic conditions.
The Board also has minimum targets for regulatory capital ratios that are in excess of well capitalized ratios.

Our risk management process begins with
a robust underwriting program. The underwriting and risk rating of all loans is completed by the Company’s Credit Department
that is independent of the originating lender(s).

At December 31, 2025 and December 31, 2024,
non-owner and owner occupied commercial real estate loans, totaled $1.1 billion, or 50.4%, of total gross loans, and $1.1 billion,
or 52.0%, of total gross loans, respectively.

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The table below breaks down the commercial
real estate portfolio outstanding balance by non-owner and owner occupied and by concentration as of December 31, 2025:

The table below breaks down the commercial
real estate portfolio outstanding balance by non-owner and owner occupied and by concentration as of December 31, 2024:

At December 31, 2025, of the $1.1 billion
in commercial real estate loans, $900.5 million, or 41.3% of total loans, were categorized as non-owner occupied and represented
325.1% of total bank risk-based capital.

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The following table further breaks down
the non-owner occupied commercial real estate portfolio balances by concentration, collateral location and weighted average loan-to-value
(“LTV”) as of December 31, 2025:

At December 31, 2024, of the $1.1 billion
in commercial real estate loans, $880.8 million, or 42.6% of total loans, was categorized as non-owner occupied and represented
325.2% of total risk-based capital.

The following table further breaks down
the non-owner occupied commercial real estate portfolio balances by concentration, collateral location and weighted average LTV
as of December 31, 2024.

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The Company also underwrites and originates
owner occupied commercial real estate loans. These loans are typically term loans made to support properties that rely upon the
operations of the business occupying the property for repayment. The Agencies specifically excluded owner occupied commercial real
estate from their concentration guidance, as the primary source of repayment is the cash flow from the ongoing operations and activities
conducted by the party, or affiliate of the party, who owns the property.

The table below depicts a well-diversified
portfolio of owner occupied commercial real estate portfolio as of December 31, 2025:

The table below depicts a well-diversified
portfolio of owner occupied commercial real estate as of December 31, 2024:

____________________

Commercial Real Estate Office Exposure.

Our total office related commercial real
estate loans (which is comprised of loans within our commercial real estate portfolio that are secured by office space, medical
office space, and mixed-use where rental income is primarily from office space) totaled $195.2 million, or 70.5% of total bank
risk-based capital and $200.1 million, or 73.9% of total bank risk-based capital, as of December 31, 2025 and December 31, 2024,
respectively.

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The table below breaks the commercial real
estate office loans by collateral type for the periods noted:

CRE office loans are primarily concentrated
in Massachusetts, where approximately 42.3% at December 31, 2025 and 41.5%, at December 31, 2024, of the total balance of CRE office
loans are located. The Company does not have CRE loans secured by office real estate in greater Boston or New York.