Bluestone Financial MHC 3134102 20211231

BLUESTONE FINANCIAL, MHC AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2021 AND

THREE MONTHS ENDED DECEMBER 31, 2020
CONTENTS
Independent Auditors’ Report................................................................................................................ 1-3
Consolidated Financial Statements
Consolidated Balance Sheets ................................................................................................................... 4

Consolidated Statements of Net Income .................................................................................................. 5
Consolidated Statements of Comprehensive Income ............................................................................... 6
Consolidated Statements of Changes in Equity ....................................................................................... 7
Consolidated Statements of Cash Flows .............................................................................................. 8-9
Notes to Consolidated Financial Statements ..................................................................................... 10-59
Appendix A: Management Report ..................................................................................................... 60-61

INDEPENDENT AUDITORS’ REPORT
Audit Committee
Bluestone Financial, MHC and Subsidiary
Report on the Consolidated Financial Statements and Internal Control

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the consolidated financial statements of Bluestone Financial, MHC and Subsidiary (the
“Company”), which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and the
related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the
year ended December 31, 2021 and the three months ended December 31, 2020, and the related notes to the
consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
financial position of Bluestone Financial, MHC and Subsidiary as of December 31, 2021 and 2020, and the
results of their operations and their cash flows for the year ended December 31, 2021 and the three months
ended December 31, 2020 in accordance with accounting principles generally accepted in the United States of
America.
We also have audited Bluestone Financial, MHC and Subsidiary’s internal control over financial reporting,
including controls over the preparation of schedules equivalent to basic financial statements in accordance with
the instructions for Federal Financial Institutions Examination Council Instructions for Consolidated Reports
of Condition and Income (call report instructions), as of December 31, 2021, based on criteria established in
Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America (GAAS). Our responsibilities under those standards are further described in the Auditors’
Responsibilities for the Audits of the Financial Statements and Internal Control Over Financial Reporting
section of our report. We are required to be independent of the Company and to meet our other ethical
responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Consolidated Financial Statements and Internal Control Over
Financial Reporting
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with accounting principles generally accepted in the United States of America, and for the design,
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implementation, and maintenance of effective internal control over financial reporting relevant to the
preparation and fair presentation of financial statements that are free from material misstatement, whether due
to fraud or error. Management is also responsible for its assessment about the effectiveness of internal control
over financial reporting, included in the accompanying Management Report.
In preparing the consolidated financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to
continue as a going concern within one year after the date that the consolidated financial statements are available
to be issued.
Auditors’ Responsibilities for the Audits of the Consolidated Financial Statements and Internal Control Over
Financial Reporting
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and about whether effective internal
control over financial reporting was maintained in all material respects, and to issue an auditors’ report that
includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and
therefore is not a guarantee that an audit of financial statements or an audit of internal control over financial
reporting conducted in accordance with GAAS will always detect a material misstatement or a material
weakness when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control. Misstatements are considered to be material if there is a substantial likelihood
that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on
the financial statements.
In performing an audit of consolidated financial statements and an audit of internal control over financial
reporting in accordance with GAAS, we:
• Exercise professional judgment and maintain professional skepticism throughout the audits.
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements.
• Obtain an understanding of internal control relevant to the statement audit in order to design audit procedures
that are appropriate in the circumstances.
• Obtain an understanding of internal control over financial reporting relevant to the audit of internal control
over financial reporting, assess the risks that a material weakness exists, and test and evaluate the design and
operating effectiveness of internal control over financial reporting based on the assessed risk.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluate the overall presentation of the consolidated financial
statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise
substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control-related matters
that we identified during the financial statement audit.
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Definition and Inherent Limitations of Internal Control Over Financial Reporting
An entity's internal control over financial reporting is a process effected by those charged with governance,
management, and other personnel, designed to provide reasonable assurance regarding the preparation of
reliable financial statements in accordance with accounting principles generally accepted in the United States
of America. Because management’s assessment and our audit were conducted to meet the reporting
requirements of Section 112 of the Federal Deposit Insurance Corporation Improvement Act (FDICIA), our
audit of the Company’s internal control over financial reporting included controls over the preparation of
consolidated financial statements in accordance with accounting principles generally accepted in the United
States of America and controls over the preparation of schedules equivalent to basic financial statements in
accordance with the Federal Financial Institutions Examination Council Instructions for Consolidated Reports
of Condition and Income (call report instructions). An entity's internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the entity; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America, and that receipts and expenditures of
the entity are being made only in accordance with authorizations of management and those charged with
governance; and (3) provide reasonable assurance regarding prevention, or timely detection and correction of
unauthorized acquisition, use, or disposition of the entity's assets that could have a material effect on the
financial statements. Because of its inherent limitations, internal control over financial reporting may not
prevent, or detect and correct, misstatements. Also, projections of any assessment of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Report on Other Legal and Regulatory Requirements
We were not engaged to, and we have not performed any procedures with respect to management’s assertion
regarding compliance with laws and regulations included in the accompanying Management Report.
Accordingly, we do not express any opinion, or any other form of assurance, on management’s assertion
regarding compliance with designated laws and regulations.
Boston, MA
March 30, 2022
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CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2021 AND 2020
2021 2020
(In thousands)
Assets
Cash and Cash Equivalents
Cash and due from banks $ 3,006 $ 5,518
Interest bearing deposits 109,451 111,542
Federal funds sold 433 433
Total Cash and Cash Equivalents 112,890 117,493

Certificates of deposit -- 5,965
Securities available for sale, at fair value 332,122 195,909
Loans held for sale 9,317 47,920
Loans receivable, net 828,222 852,253
Accrued interest receivable 3,199 3,948
Premises and equipment, net 16,702 17,028
Stock in Federal Home Loan Bank, at cost 1,146 1,251
Stock in Federal Reserve Bank, at cost 2,875 2,875
Goodwill and intangible assets 1,052 1,058
Deferred income taxes 2,285 1,267
Bank-owned life insurance 12,990 12,671
Other assets 2,667 2,859
Total Assets $ 1,325,467 $ 1,262,497
Liabilities and Equity

Liabilities
Deposits $ 1,182,115 $ 1,126,798
Federal Home Loan Bank advances 567 907
Accrued expenses and other liabilities 8,978 7,250
Total Liabilities 1,191,660 1,134,955
Equity
Retained earnings 65,511 56,140
Equity acquired in merger 67,663 67,663
Accumulated other comprehensive income 633 3,739
Total Equity 133,807 127,542
Total Liabilities and Equity $ 1,325,467 $ 1,262,497
The accompanying notes are an integral part of these consolidated financial statements.
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CONSOLIDATED STATEMENTS OF NET INCOME

Year ended Three months ended

December 31, 2021 December 31, 2020
(In thousands)
Interest Income
Interest and fees on loans $ 33,322 $ 8,358
Interest and dividends on securities 4,501 843
Interest on short-term investments 164 36
Total Interest Income 37,987 9,237
Interest Expense
Interest on deposits 2,422 896
Interest on Federal Home Loan Bank advances 1 74
Total Interest Expense 2,423 970
Net Interest Income 35,564 8,267
Provision for Loan Losses 545 300
Net Interest Income After Provision for Loan Losses 35,019 7,967
Noninterest Income
Customer service fees 2,069 487
Retail investment sales revenue 1,058 258
Trust department fees 806 169
Gain on sale of loans, net 7,622 3,087
Gain on sale of securities, net 86 --
Other noninterest income 1,633 279
Total Noninterest Income 13,274 4,280
Noninterest Expense
Salaries and employee benefits 22,175 5,806
Occupancy and equipment, net 4,306 1,005
Data processing 3,122 1,347
Deposit insurance 367 167
Professional fees 1,002 541
Advertising and marketing 1,093 450
Other general and administrative 3,719 845
Total Noninterest Expense 35,784 10,161
Income Before Income Taxes and Bargain Purchase Gain 12,509 2,086
Federal and State Income Taxes
Current 3,008 1,058
Deferred 130 (567)
Total Federal and State Income Taxes 3,138 491
Bargain purchase gain (Note 1) -- 3,407
Net Income $ 9,371 $ 5,002
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


(In thousands)
Net Income $ 9,371 $ 5,002
Other Comprehensive Income

Unrealized (losses) gains on securities available for sale (4,272) 787
Reclassification adjustment for net gain
realized in income (86) --
Net unrealized (losses) gains (4,358) 787
Related tax effects 1,177 (185)
Net-of-tax-amount (3,181) 602
Director retirement plan:

Gains arising during the period 104 --
Related tax effects (29) --
Net-of-tax-amount 75 --
Reclassification adjustment for net unrealized loss from
adoption of ASU 2017-08, net of tax -- (377)
Total Other Comprehensive Income (3,106) 225
Comprehensive Income $ 6,265 $ 5,227
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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Accumulated
Other
Retained Equity Acquired Comprehensive
Earnings in Merger Income Total Equity
(In thousands)
Balance at September 30, 2020 $ 51,616 $ 12,163 $ 3,137 $ 66,916
Comprehensive Income 5,002 -- 225 5,227
Equity acquired in merger with

Mansfield Co-operative Bank -- 55,500 -- 55,500
Effect of adoption of ASU 2017-08 (478) -- 377 (101)
Balance at December 31, 2020 56,140 67,663 3,739 127,542
Comprehensive Income 9,371 -- (3,106) 6,265
Balance at December 31, 2021 $ 65,511 $ 67,663 $ 633 $ 133,807
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CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)
Cash Flows from Operating Activities
Net income $ 9,371 $ 5,002
Adjustments to reconcile net income to cash provided by (used in)
operating activities:
Bargain purchase gain -- (3,407)
Provision for loan losses 545 300
Net amortization of securities premiums 2,259 739
Net accretion of deferred loan
costs, premiums, and fees 2,422 (161)
Net accretion of discount on certificates of deposit (477)
Gains on sales of securities, net (86) --
Depreciation and amortization expense 1,581 379
Amortization of mortgage servicing rights 271 85
Amortization of core deposit intangibles 6 2
Deferred income tax provision 130 (567)
Decrease (increase) in accrued interest receivable 749 (94)
Loans originated for sale (378,297) (159,860)
Proceeds from sale of loans 424,522 146,096
Gain on sales of loans (7,622) (3,087)
Other, net 1,434 (350)
Total adjustments 47,437 (19,925)
Net Cash Provided By (Used In) Operating Activities 56,808 (14,923)
Cash Flows from Investing Activities
Cash and cash equivalents acquired in merger -- 100,041
Decrease in certificates of deposit 5,965 196
Activity in securities available for sale:
Purchases (238,983) (17,241)
Sales 26,877 --
Maturities, calls and principal payments 69,362 15,222
Redemption of Federal Home Loan Bank stock 105 2,059
Purchase of Federal Reserve Bank stock -- (161)
Net loan principal amortization 21,064 38,916
Purchase of premises and equipment, net (1,255) (143)
Net Cash (Used In) Provided By Investing Activities (116,865) 138,889
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CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


(In thousands)
Cash Flows from Financing Activities
Net increase in deposits $ 55,794 $ 2,295
Repayments of Federal Home Loan Bank advances (340) (46,761)
Net Cash Provided by (Used In) Financing Activities 55,454 (44,466)
Net (Decrease) Increase in Cash and Cash Equivalents (4,603) 79,500
Cash and Cash Equivalents, Beginning of Year 117,493 37,993
Cash and Cash Equivalents, End of Year $ 112,890 $ 117,493

Supplemental Cash Flow Information
Supplemental Disclosure
Interest paid on deposits 2,433 1,214
Interest paid on Federal Home Loan Bank advances 1 106
Income taxes paid, net of refunds 3,037 495
(Decrease) increase in unrealized gain on securities
available for sale, net (4,358) 787
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS COMBINATION
On October 1, 2020, Bridgewater Savings Bank, a Massachusetts savings bank merged with
Mansfield Co-operative Bank, a Massachusetts co-operative Bank. Effective on the merger
date, Bridgewater Financial, MHC, the parent company of Bridgewater Savings Bank,
changed its name to Bluestone Financial, MHC (the “Company”) and Bridgewater Savings
Bank changed its name to Bluestone Bank (the “Bank”).
The Company accounted for the business combination using the acquisition method
pursuant to the Business Combinations Topic of the FASB ASC. Accordingly, the
Company recognized the assets acquired and liabilities assumed at their fair values as of the
acquisition date. The following summarizes the estimated fair value of the assets acquired
and liabilities assumed as of the date of the acquisition:
(in thousands)
Assets
Cash and cash equivalents $ 100,041
CDs held for investment 6,161
Investment securities 58,639
Loans receivable, net 403,337
Premises and equipment 7,255
Bank-owned life insurance 10,781
Core deposit intangible 59
Other assets 8,121
Total Assets Acquired $ 594,394
Liabilities
Deposits $ 504,612
Federal Home Loan Bank advances 28,761
Other liabilities 2,114
Total Liabilities Assumed 535,487
Equity Value of Acquired Entity $ 55,500
The excess of the fair value of the assets acquired over the liabilities assumed and the equity
value of the acquired entity was recorded as a bargain purchase gain in the amount of
$3,407,000 on the Company’s Consolidated Statement of Net Income for the three months
ended December 31, 2020.
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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

BUSINESS COMBINATION (CONTINUED)
Fair value adjustments to assets acquired and liabilities assumed are generally amortized
using either an effective yield or straight-line basis over periods consistent with the
average life, useful life and/or contractual terms of the related assets and liabilities.
Fair values of the major categories of assets acquired and liabilities assumed were
determined as follows:
Cash and Cash Equivalents:

The fair value of cash and cash equivalents approximates the respective carrying
amounts because the instruments are payable on demand or have short-term maturities.
Investment Securities:
The fair values of securities were based on quoted market prices for identical securities
received from an independent third-party pricing service. When quoted market prices for
identical securities were unavailable, prices provided by the independent pricing service
were based on recent trading activity and other observable information including, but not
limited to, market interest rate curves, referenced credit spreads and estimated prepayment
rates where applicable.
Loans:
The loans acquired were recorded at fair value without a carryover of the allowance for
loan losses. Fair value of the loans is determined using market participant assumptions in
estimating the amount and timing of both principal and interest cash flows expected to
be collected, as adjusted for an estimate of future credit losses and prepayments, and
then applying a market based discount rate to those cash flows. The overall discount
on the loans acquired in this transaction was due primarily to anticipated credit loss, as
well as considerations for liquidity and market interest rates.
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BUSINESS COMBINATION (CONTINUED)
Core Deposit Intangible:
The fair value of the core deposit intangible is derived by comparing the interest rate
and servicing costs that the financial institution pays on the core deposit liability versus the
current market rate for alternative sources of financing. The intangible asset represents
the stable and relatively low-cost source of funds that the deposits and accompanying
relationships provide the Company, when compared to alternative funding sources.
Deposits:
The fair value of acquired savings and transaction deposit accounts was assumed to
approximate the carrying value as these accounts have no stated maturity and are
payable on demand. The fair value of time deposits were determined based on the
present value of the contractual cash flows over the remaining period to maturity
using a market interest rate.
Equity Value of Acquired Entity:
The fair value measurement of a mutual entity should include the assumptions that
market participants would make about future member benefits as well as any other
relevant assumptions market participants would make about the mutual entity. The
equity value of acquired entity was calculated using the market approach model,
whereby amounts used as inputs to the model were established through comparisons
involving similar companies.
Determining the fair value of assets and liabilities, particularly illiquid assets and
liabilities, is a complicated process involving significant judgment and estimates and
assumptions used to calculate estimated fair value. The Company may incur losses on the
acquired loans that are materially different from losses originally projected.
BASIS OF PRESENTATION AND CONSOLIDATION
The consolidated financial statements include the accounts of the Company and its wholly-
owned subsidiary, the Bank. The Bank has four subsidiaries, BRISABA Securities
Corporation II and III, and Mansfield Securities Corporation, formed for the purpose of
buying, holding, and selling securities and SC Main Corporation, which holds and sells real
estate. All significant intercompany accounts and transactions have been eliminated in
consolidation.
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METHOD OF ACCOUNTING
The consolidated financial statements are prepared on the accrual basis of accounting for all
significant items of income and expense.
BUSINESS
The Company provides a variety of financial services to individuals and small businesses
through its offices in southeastern Massachusetts. Its primary deposit products are
checking, savings and term certificate accounts, and its primary lending products are
residential and commercial mortgage loans. The Company also provides fiduciary services
to customers through its Trust Department.
USE OF ESTIMATES
In preparing consolidated financial statements in conformity with accounting principles

generally accepted in the United States of America (“GAAP”), management is required to
make estimates and assumptions that affect the reported amount 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 loan losses, the valuation of other real estate
owned and deferred tax assets. In connection with the determination of the estimated losses
on collateral dependent impaired loans and other real estate owned, management obtains
independent appraisals for significant properties.
While management uses available information to recognize losses on loans and other real
estate owned, further reductions in the carrying amounts of loans and other real estate
owned may be necessary based on changes in local economic conditions. In addition,
regulatory agencies, as an integral part of their examination process, periodically review the
estimated losses on loans and other real estate owned. Such agencies may require the
Company to recognize additional losses based on their judgments about information
available to them at the time of their examination. Because of these factors, it is reasonably
possible that the estimated losses on loans and foreclosed real estate may change materially
in the near term. However, the amount of the change that is reasonably possible cannot be
estimated.
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CASH AND CASH EQUIVALENTS
Cash equivalents include amounts due from banks and short-term investments, which
mature overnight or on demand.
INVESTMENT SECURITIES
Securities classified as available-for-sale consist of investment securities with readily

determinable fair values that the Company intends to hold for an indefinite period of time
but not necessarily until maturity. These securities are carried at estimated fair value based
on information provided by a third party pricing service with any unrealized gains and
losses excluded from net income and reported in accumulated other comprehensive income,
which is reported as a separate component of equity, net of the related deferred tax effect.
The amortization of premiums and the accretion of discounts are recognized in interest
income using methods approximating the interest method over the period to maturity,
adjusted for anticipated prepayments.
Realized gains (losses) on the sale of securities available-for-sale are determined using the
specific-identification method based on the adjusted cost basis of the specific securities sold
and included in noninterest income and, when applicable, are reported as a reclassification
adjustment, net of tax, in other comprehensive income.
Each reporting period, the Company evaluates all securities with a decline in fair value
below the amortized cost of the investment to determine whether or not the impairment is
deemed to be OTTI.
OTTI is required to be recognized if: (1) the Company intends to sell the security; (2) it is
“more likely than not” that the Company will be required to sell the security before recovery
of its amortized cost basis; or (3) for debt securities, the present value of expected cash
flows is not sufficient to recover the entire amortized cost basis. For all impaired debt
securities that the Company intends to sell, or more likely than not will be required to sell,
the full amount of the depreciation is recognized as OTTI through earnings. Credit-related
OTTI for all other impaired debt securities is recognized through earnings.
Non-credit related OTTI for such debt securities is recognized in other comprehensive
income, net of applicable taxes.
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LOANS HELD FOR SALE
Loans originated and intended for sale in the secondary market are carried at the lower of
cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized
through a valuation allowance by charges to income. Loans are sold to third party investors
servicing released.
FEDERAL HOME LOAN BANK STOCK
The Bank, as a member of the Federal Home Loan Bank (“FHLB”), is required to maintain
an investment in capital stock of the FHLB. Based on 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 Company reviews for impairment based on the ultimate
recoverability of the cost basis in the FHLB stock. As of December 31, 2021 and 2020, no
impairment has been recognized.
FEDERAL RESERVE BANK STOCK
Under the terms and provisions of the Federal Reserve Act, the Bank is required to hold
Federal Reserve Bank stock equal to 6% of its capital and surplus as of the time it became a
Federal Reserve Member bank. One-half of the Bank’s subscription is paid to the Federal
Reserve Bank of Boston and the remaining half is subject to call when deemed necessary by
the Board of Governors of the Federal Reserve System. At December 31, 2021 and 2020,
the amount of the Bank’s subscription subject to call amounted to $2,875,000.
LOANS
The Company’s loan portfolio includes residential real estate, commercial real estate,
construction, home equity lines-of-credit, SBA/USDA, commercial (including loans
originated under the Paycheck Protection Program (“PPP Loans”) formed in 2020 as part of
the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act) and consumer
segments. Consumer loans include classes for chattel and personal loans. A substantial
portion of the loan portfolio is represented by mortgage loans in southeastern
Massachusetts. The ability of the Company’s debtors to honor their contracts is dependent
upon the real estate and general economic conditions in this area.
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LOANS (CONTINUED)
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 loans losses, and any deferred fees or costs on
originated loans. Interest income is accrued on the unpaid principal balance. Loan
origination fees and certain direct origination costs are deferred and recognized as an
adjustment of the related loan yield using the interest method.
Generally, the recognition of income on a loan is discontinued and previously accrued

interest is reversed, when interest or principal payments become ninety days past due
unless, in the opinion of management, the outstanding interest remains collectible and the
loan is well secured. Past due status is determined based on contractual terms. Interest is
subsequently recognized only as received until the loan is returned to accrual status. A loan
is restored to accrual status when all interest and principal payments are current and the
borrower has demonstrated to management the ability to make payments of principal and
interest as scheduled. The Company’s practice is to charge off any loan or portion of a loan
when the loan is determined by management to be uncollectible due to the borrower’s
failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial
condition, the depreciation of underlying collateral, the loan’s classification as a loss by
regulatory examiners, or for other reasons.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established as losses are estimated to have occurred
through a provision for loan losses charged to earnings. Loan losses are charged against the
allowance when management believes the uncollectibility of a loan balance is confirmed.
Subsequent recoveries, if any, are credited to the allowance.
The allowance is based on two basic principles of accounting: (i) Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 450,
Contingencies, which requires that losses be accrued when they are probable of occurring
and estimable and (ii) FASB ASC 310, Receivables, which requires that losses on impaired
loans be accrued based on the differences between the loan balance and either the value of
collateral, if such loans are considered to be collateral dependent and in the process of
collection, the present value of future cash flows, or the loan's value as observable in the
secondary market. A loan is considered impaired when, based on current information and
events, the Company has concerns about the ability to collect the scheduled payments of
principal or interest when due according to the contractual terms of the loan agreement.
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ALLOWANCE FOR LOAN LOSSES (CONTINUED)
Factors considered by management in determining impairment include payment status,

collateral value and the probability of collecting scheduled principal and interest payments
when due.
The Company’s goal is to mitigate risks from an unforeseen threat to the loan portfolio as a
result of an economic downturn or other negative influences. Plans that aid in mitigating
these potential risks in managing the loan portfolio include: enforcing loan policies and
procedures, evaluating the borrower's business plan through the loan term, identifying and
monitoring primary and alternative sources of repayment and obtaining adequate collateral
to mitigate loss in the event of liquidation. Specific reserves are established based upon
credit and/or collateral risks on an individual loan basis. A risk rating system is used to
estimate potential loss exposure and to provide a measuring system for setting general and
specific reserve allocations.
The Company’s allowance for loan losses has three basic components: general, specific and
unallocated components, as further described below. Each of these components is
determined based upon estimates that can and do change when the actual events occur. As a
result of the uncertainties inherent in the estimation process, management's estimate of loan
losses and the related allowance could change in the near term. While the allowance may
be allocated for specific portfolio segments, the entire allowance balance is available to
absorb credit losses inherent in the total loan portfolio.
General component:
The general component of the allowance for loan losses is used to estimate inherent losses
in the pools of non-classified loans and is based on historical loss experience adjusted for
qualitative factors, stratified by loan segments. Management uses a rolling average of
historical losses based on a timeframe appropriate to capture relevant loss data for each loan
segment. The historical loss factor is adjusted for the following qualitative factors:
levels/trends in delinquencies, real estate values, concentrations and risk ratings; effects of
changes in underwriting standards; experience/ability/depth of lending management and
staff; and national and local economic trends and conditions. There were no changes in the
Company’s policies or methodology pertaining to the general component of the allowance
for loan losses during the years ended December 31, 2021 and 2020.
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The qualitative factors are determined based on the various risk characteristics of each loan
segment. Risk characteristics relevant to each portfolio segment are as follows:
Residential real estate – The Company generally does not originate loans with a loan-to-
value ratio greater than 80 percent and does not grant loans that would be classified as
subprime upon origination. All loans in this segment are collateralized by owner-occupied
residential real estate and repayment is dependent on the credit quality of the individual
borrower. The overall health of the economy, including unemployment rates and housing
prices, will have an effect on the credit quality in this segment.
Commercial real estate – Loans in this segment are primarily income-producing properties
throughout southeastern Massachusetts. The underlying cash flows generated by the
properties are adversely impacted by a downturn in the economy as evidenced by increasing
vacancy rates, which in turn, will have an effect on the credit quality in this segment.
Management obtains rent rolls annually and continually monitors the cash flows of these
loans.
Construction – Loans in this segment include both owner-occupied and speculative real
estate development loans for which payment is derived from sale of the property. Credit
risk is affected by cost overruns, time to sell at an adequate price, and market conditions.
Home equity lines-of-credit – Loans in this segment are generally collateralized by

residential real estate and repayment is dependent on the credit quality of the individual
borrower. The Company generally does not originate loans with combined loan-to-value
ratios greater than 70%. The Company generally has first or second liens on the properties
securing these loans.
SBA/USDA –These loans were purchased on the secondary market and are unconditionally
guaranteed by the SBA and USDA as to principal and interest. The loans in this segment
are not allocated a general reserve because the Company has not experienced losses on such
loans and management expects the guarantees, if necessary, will be effective. The loans
purchased by the Company are primarily small business and agricultural.
Commercial – Loans in this segment are made to businesses and are generally secured by
assets of the business. Repayment is expected from the cash flows of the business. A
weakened economy, and resultant decreased consumer spending, will have an effect on the
credit quality in this segment.
18

General component: (continued)
Consumer loans – Loans in this segment include chattel loans secured by modular homes
and personal loans, which are secured by personal property or savings or are unsecured.
Repayment is dependent on the credit quality of the individual borrower.
Specific component:
The specific component of the allowance for loan losses relates to loans that are classified
as impaired. Impairment is measured on a loan-by-loan basis by either the present value of
expected future cash flows discounted at the loan’s effective interest rate, the loan’s
observable market price, or the fair value of the collateral if the loan is collateral dependent.
An allowance is established when the measured value of the impaired loan is lower than the
carrying value of that loan.
A loan is considered impaired when, based on current information and events, it is probable
that the Company will be unable to collect the scheduled payments of principal or interest
when due according to the contractual terms of the loan agreement. Factors considered by
management in determining impairment include payment status, collateral value, and the
probability of collecting scheduled principal and interest payments when due. Loans that
experience insignificant payment delays and payment shortfalls generally are not classified
as impaired. Management determines the significance of payment delays and payment
shortfalls on a case-by-case basis, taking into consideration all of the circumstances
surrounding the loan and the borrower, including the length of the delay, the reasons for the
delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the
principal and interest owed.
Large groups of smaller balance homogeneous loans are collectively evaluated for
impairment. Accordingly, the Company does not separately identify individual personal
loans for impairment, unless such loans are the subject of a restructuring agreement.
The Company periodically may agree to modify the contractual terms of loans. When a
loan is modified and a concession that the Company would not otherwise consider is made
because a borrower is experiencing financial difficulty, the modification is considered a
troubled debt restructuring (“TDR”). All TDRs are initially classified as impaired.
19

Specific component: (continued)
Typically, such concessions consist of a reduction in interest rate to a below market rate,
taking into account the credit quality of the note, or a deferment of payments, principal or
interest, which materially alters the Company's position or significantly extends the note's
maturity date, such that the present value of cash flows to be received is materially less than
those contractually established at the loan's origination. Restructured loans are included in
the impaired loan category.
Losses on loans modified as TDRs, if any, are charged against the allowance for loan losses
when management believes the uncollectibility of the loan balance is confirmed.
Subsequent recoveries, if any, are credited to the allowance for loan losses. Loans modified
as TDRs with payment defaults are considered in the general component of the allowance
for loan losses for each of the Company's loan classes.
Unallocated component:
An unallocated component is maintained to cover uncertainties that could affect

management’s estimate of probable losses. The unallocated component of the allowance
reflects the margin of imprecision inherent in the underlying assumptions used in the
methodologies for estimating allocated and general reserves in the portfolio.
Loan Modifications under the CARES Act and Interagency Statement:
On March 27, 2020, the CARES Act, which provides relief from certain requirements
under GAAP, was signed into law. Section 4013 of the CARES Act gives entities
temporary relief from the accounting and disclosure requirements for troubled debt
restructurings (TDRs) under ASC 310-40 in certain situations.
In addition, on April 7, 2020, certain regulatory banking agencies issued an interagency

statement that offers practical expedients for evaluating whether loan modifications in
response to the COVID-19 pandemic are TDRs. The interagency statement was originally
issued on March 22, 2020, but was revised to address the relationship between their original
TDR guidance and the guidance in Section 4013 of the CARES Act.
To qualify for TDR accounting and disclosure relief under the CARES Act, the applicable
loan must not have been more than 30 days past due as of December 31, 2019, and the
modification must be executed during the period beginning on March 1, 2020, and ending
on the earlier of December 31, 2020, or the date that is 60 days after the termination of the
national emergency declared by the president on March 13, 2020,
20

Loan Modifications under the CARES Act and Interagency Statement: (continued)
under the National Emergencies Act related to the outbreak of COVID-19. On December
27, 2020, the Consolidated Appropriations Act, 2020 (CAA) was signed into law,
extending TDR relief through January 1, 2022. The CARES Act applies to modifications
made as a result of COVID-19 including: forbearance agreements, interest rate
modifications, repayment plans, and other arrangements to defer or delay payment of
principal or interest. The interagency statement does not require the modification to be
completed within a certain time period if it is related to COVID-19 and the loan was not
more than 30 days past due as of the date of the Bank’s implementation of its modification
programs. Moreover, the interagency statement applies to short-term modifications
including payment deferrals, fee waivers, extensions of repayment terms, or other
insignificant payment delays as a result of COVID-19.
The Bank continues to apply section 4013 of the CARES Act and the interagency statement
in connection with applicable modifications. For modifications that qualify under either the
CARES Act or the interagency statement, TDR accounting and reporting is suspended
through the period of the modification; however, the Bank will continue to apply its
existing non-accrual policies including consideration of the loan’s past due status which is
determined on the basis of the contractual terms of the loan. Once a loan has been
contractually modified, the past due status is generally based on the updated terms
including payment deferrals.
DERIVATIVE FINANCIAL INSTRUMENTS
Mortgage loan commitments are referred to as derivative loan commitments if the loan that
will result from exercise of the commitment will be held for sale upon funding. Loan
commitments that are derivatives are recognized at fair value on the consolidated balance
sheets in other assets and other liabilities with changes in their fair values recorded in other
income, if material. The Company records a zero value for the loan commitment at
inception (the time the commitment is issued to a borrower). Subsequent to inception,
changes in the fair value of the loan commitment are recognized based on changes in the
fair value of the underlying mortgage loan due to interest rate changes, changes in the
probability the derivative loan commitment will be exercised, and the passage of time. In
estimating fair value, the Company assigns a probability to a loan commitment based on an
expectation that it will be exercised and the loan will be funded.
To protect against the price risk inherent in derivative loan commitments, the Company
utilizes “best efforts” for loan sale commitments to mitigate the risk of potential
decreases in the values of loans that would result from the exercise of the derivative
21

DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
loan commitments. Forward loan sale commitments are recognized at fair value on the
consolidated balance sheets in other assets and other liabilities with changes in their fair
values recorded in other income, if material. The Company estimates the fair value of its
forward loan sales commitments using a methodology similar to that used for derivative
loan commitments.
PREMISES AND EQUIPMENT
Land is carried at cost. Buildings 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, ranging from 3 to 40 years, or the terms of the leases, if shorter.
Expected terms include lease option periods to the extent that the exercise of such options is
reasonably assured.
Expenditures for improvements, which extend the life of an asset, are capitalized and
depreciated over the asset's remaining useful life. Expenditures for repairs and maintenance
are charged to operating expenses as incurred.
Gains or losses realized on the disposition of premises and equipment are reflected in the
consolidated statements of income.
VALUATION OF LONG-LIVED ASSETS
The Company accounts for the valuation of long-lived assets under FASB ASC 360,
Property, Plant and Equipment. This guidance requires that long-lived assets be reviewed
for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of the long-lived asset is
measured by a comparison of the carrying amount of the asset to future undiscounted net
cash flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the estimated fair value of the assets. Assets to be disposed of
are reportable at the lower of the carrying amount or fair value, less costs to sell.
22

GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill is not amortized, but is evaluated for impairment on an annual basis. Other
intangible assets consist of core deposit intangibles and are amortized over their estimated
useful lives of periods up to twenty years and are periodically reviewed for impairment.
Impairment of goodwill and other intangible assets, if any, is recognized in earnings.
In conducting the annual impairment analysis, management first reviews qualitative factors
to determine whether it is more likely than not that the fair value of a reporting unit is less
than its carrying amount. If it is determined that it is more likely than not that the fair value
of a reporting unit is less than its carrying amount, then the two-step impairment test must
be completed. The two-step impairment test will compare the fair value of an acquired unit
to its carrying value, including goodwill. The fair value is based on observable market
prices, when practicable; other valuation techniques may be used when market prices are
unavailable. Management assesses the recoverability of intangible assets whenever events
or changes in circumstances indicate that their carrying value may not be recoverable. If the
carrying amount exceeds fair value, an impairment charge is recorded to earnings.
MORTGAGE SERVICING RIGHTS
Servicing right assets are recognized as separate assets when rights are acquired through
purchase or through sale of financial assets. Under the servicing assets and liabilities
accounting principal guidance in FASB ASC 860-50 Servicing Assets and Liabilities,
servicing rights resulting from the sale of originated loans by the Bank are initially
measured at fair value at the date of transfer with the income statement effect recorded in
gain on sales of loans. Capitalized servicing rights are reported in other assets and are
amortized into noninterest income in proportion to, and over the period of, the estimated
future net servicing income of the underlying financial assets. Servicing rights are
evaluated for impairment based upon the fair value of the rights by predominant
characteristics, such as interest rates and terms. Impairment is recognized through a
valuation allowance, to the extent that fair value is less than the carrying amount. If the
Bank later determines that all or a portion of the impairment no longer exists, a reduction of
the allowance may be recorded as an increase to income.
23

MORTGAGE SERVICING RIGHTS (CONTINUED)
Changes in valuation allowance are reported with other non-interest expense on the
consolidated statements of income. Fair value is determined by reviewing the market value
of servicing rights of similarly constituted portfolios. Fair value is subject to fluctuations as
a result of changes in estimated and actual prepayment speeds and default rates and losses.
FORECLOSED REAL ESTATE
Foreclosed real estate includes properties that have been acquired in complete or partial
satisfaction of debt. At the time of foreclosure, foreclosed real estate is recorded at fair
value less cost to sell, which becomes the property’s new basis. Any write-downs at time of
acquisition are charged to the allowance for loan losses. Subsequent to acquisition, a
valuation allowance is established, if necessary, to report these assets at the lower of fair
value less cost to sell or the new cost basis. Impairment losses on property to be held and
used are measured as the amount by which the carrying amount of a property exceeds its
fair value. Gains and losses realized on the sale, and any adjustment resulting from periodic
re-evaluation of these assets are included in losses on and expenses of other real estate
owned, net, on the consolidated statements of income as appropriate. The net costs of
maintaining and operating these assets are expensed as incurred, while certain costs to
improve such properties are capitalized.
BANK-OWNED LIFE INSURANCE
Bank-owned life insurance policies are reflected on the consolidated balance sheets at cash
surrender value. Changes in cash surrender value are reflected in other income on the
consolidated statements of net income and are not subject to income tax unless the policies
are surrendered or otherwise conveyed to a new owner.
TRUST ASSETS
Trust assets held in a fiduciary or agency capacity are not included in the Company’s
consolidated financial statements, as they are not assets of the Company.
24

TRANSFERS OF FINANCIAL ASSETS

Transfers of an entire financial asset, a group of entire financial assets, or a participating
interest in an entire financial asset are accounted for as sales when control over the assets
has been surrendered. Control over transferred assets is deemed surrendered when (1) the
assets have been isolated from the Company, (2) the transferee obtains the right (free of
conditions that constrain it from taking advantage of that right) to pledge or exchange the
transferred assets, and (3) the Company does not maintain effective control over the
transferred assets through an agreement to repurchase them before their maturity.
In the normal course of business, the Company may transfer a portion of a financial asset,
for example, a participation loan. In order to be eligible for sales treatment, the transfer of
the portion of the loan must meet the criteria of a participating interest. In order to meet the
criteria for a participating interest, all cash flows from the loan must be divided
proportionately, the rights of each loan holder must have the same priority, the loan holders
must have no recourse to the transfer other than standard representations and warranties and
no loan holder has the right to pledge or exchange the entire loan. If it does not meet the
criteria of a participating interest, the transfer must be accounted for as a secured borrowing.
REVENUE RECOGNITION
The Company recognizes revenue in accordance with Accounting Standards Update

(“ASU”) 2014-09, Revenue from Contracts with Customers (“Topic 606”). The core
principle of Topic 606 is that an entity should recognize revenue to reflect the transfer of
goods and services to customers in an amount equal to the consideration the entity receives
or expects to receive. The Company’s revenue is composed of net interest income and
noninterest income, and the scope of the guidance explicitly excludes net interest income, as
well as many other revenues for financial assets and liabilities including loans, leases,
securities and derivatives.
The Company earns fees from its deposit customers for transaction-based and account
maintenance services. Transaction-based fees for services such as ATM use, wire transfers,
and stop payments are recognized at the time the transaction is executed as that is the point
in time that the Company fulfills the customer’s request. Overdraft fees are recognized at
the point in time that the overdraft occurs. Account maintenance fees, which relate
primarily to monthly maintenance, are earned over the course of a month, representing the
period over which the Company satisfies the performance obligation and are recognized
monthly. Service charges on deposits are withdrawn from the customer’s account.
Interchange fees from debit cardholder transactions are recognized daily, concurrently with
the transaction processing services provided to customers, and are based on rates of the
corresponding payment network.
25

Retail investment sales revenue generally represents fees earned on a per transaction basis.
Revenue from these services is recognized from commissions upon execution of the retail
investment transaction services provided to customers. Trust department fee revenue is
generally based on a percentage of assets under management for customers. Revenue from
these services is recognized as the services are provided to customers at the trust
administration fee agreed upon with the customer.
INCOME TAXES
Deferred tax assets and liabilities are reflected at currently enacted income tax rates
applicable to the period in which the deferred tax assets or liabilities are expected to be
realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and
liabilities are adjusted accordingly through the provision for income taxes. A valuation
allowance is recorded against deferred tax assets when management deems that more likely
than not, a portion of the asset will not be realized.
At December 31, 2021 and 2020, the Company does not have any uncertain tax positions
that require accrual or disclosure. The Company records interest and penalties as part of
income tax expense. No interest or penalties were recorded for the year ended December
31, 2021 and three months ended December 31, 2020.
The Company’s base amount of its federal income tax reserve for loan losses is a permanent
difference for which there is no recognition of a deferred tax liability. However, the loan
loss allowance maintained for financial reporting purposes is a temporary difference with
allowable recognition of a related deferred tax asset, if deemed realizable.
ADVERTISING AND MARKETING COSTS

Advertising costs and marketing costs are expensed as incurred and amounted to $1,077,000
and $450,000 for the year ended December 31, 2021 and three months ended December 31,
2020, respectively.
RETIREMENT PLAN
The compensation cost of the director retirement plans are recognized on the projected unit
credit method over the director’s approximate service period. The aggregate cost method is
utilized for funding purposes.
26

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 are reported as
a separate component of the retained earnings section of the consolidated balance sheets,
such items, along with net income, are components of comprehensive income.
The components of accumulated other comprehensive income and related tax effects,
included in retained earnings, are as follows:
2021 2020
(In thousands)
Securities available for sale:
Net unrealized gains $ 923 $ 5,281
Tax effect (184) (1,361)
739 3,920
Director retirement plan:
Unrecognized net loss (148) (252)
Tax effect 42 71
(106) (181)
Net-of-tax effect $ 633 $ 3,739
RECENTLY ADOPTED ACCOUNTING STANDARDS
Effective October 1, 2020, the Company adopted Accounting Standards Update (“ASU”)
2017-08 Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium
Amortization on Purchased Callable Debt Securities. This ASU amends the amortization
period for certain purchased callable debt securities held at a premium. It shortens the
amortization period for the premium to the earliest call date. Under current GAAP,
premiums on callable debt securities generally are amortized to the maturity date. ASU
2017-08 became effective in fiscal years beginning after December 15, 2019, including
interim periods. The Company adopted this guidance effective October 1, 2020, recording a
$478,000 cumulative effect adjustment as a decrease to retained earnings.
27

FUTURE ACCOUNTING PRONOUNCEMENTS
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic
350): Simplifying the Test for Goodwill Impairment. This ASU eliminates Step 2 from the
goodwill impairment test. Instead, under the new guidance, an entity is to perform its annual
goodwill impairment test by comparing the fair value of a reporting unit with its carrying
amount. An impairment charge would be recognized for the amount by which the carrying
amount exceeds the reporting unit's fair value. The new guidance is effective for annual
reporting periods, and interim reporting periods within those annual periods, beginning after
December 15, 2021. The Company anticipates that the adoption of this update will not have
a material impact on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The amendments in
this Update increase transparency and comparability among organizations by requiring
reporting entities to recognize all leases with terms greater than 12 months as lease assets
and lease liabilities on the balance sheet and disclose key information about leasing
arrangements. ASU 2016-02, as amended by ASU 2020-05, becomes effective in fiscal
years beginning after December 15, 2021 and interim periods beginning after December 15,
2022. The Company anticipates that the adoption of this update will not have a material
impact on its consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic
326). The amendments in this Update affect entities holding financial assets and net
investments in leases that are not accounted for at fair value through net income. The main
objective of this update is to provide financial statement users with more decision-useful
information about the expected credit losses on financial instruments and other
commitments to extend credit held by a reporting entity at each reporting date. To achieve
this objective, the incurred loss impairment methodology in current GAAP will be replaced
with a methodology that reflects expected credit losses and requires consideration of a
broader range of reasonable and supportable information to inform credit loss estimates.
This update also requires enhanced disclosures to help investors and other financial
statement users better understand significant estimates and judgments used in estimating
credit losses, as well as the credit quality and underwriting standards of a reporting entity’s
portfolio. Additionally, this update amends the accounting for credit losses on available-
for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-
13, as amended by ASU 2019-10, becomes effective in fiscal years beginning after
December 15, 2022, including interim periods. An entity will adopt this update through a
cumulative-effect adjustment to retained earnings as of the beginning of the first reporting
period in which the guidance is effective. The Company is currently reviewing this update
to determine the impact on its consolidated financial statements.
28

Risks and Uncertainties
In March 2020, the World Health Organization declared the outbreak of a novel coronavirus
(“COVID-19”) as a pandemic. The Company is monitoring the outbreak of COVID-19 and
the related business and travel restrictions and changes to behavior intended to reduce its
spread, and its impact on operations, financial position, cash flows, credit risk, and the
industry in general, in addition to the impact on its employees. At this time, COVID-19 has
not changed the Company’s ability to operate. Due to the rapid development and fluidity of
this situation, the magnitude and duration of the pandemic and its impact on the Company’s
operations and liquidity is uncertain as of the date of this report. However, as of the date
the financial statements were available to be issued, no specific material adverse matters
have been identified or are estimable.
SUBSEQUENT EVENTS
Management has evaluated the accompanying consolidated financial statements for other
subsequent events and transactions through March 30, 2022, the date these consolidated
financial statements were available for issue, based on FASB ASC 855, Subsequent Events,
and have determined that no other material subsequent events have occurred that would
affect the information presented in the accompanying consolidated financial statements or
require additional disclosure.
29

NOTE 2 – RESTRICTIONS ON CASH AND DUE FROM BANKS
The Bank may be required to maintain average balances on hand or with the Federal
Reserve Bank (“FRB”). The Bank was not required to maintain a balance with the FRB at
December 31, 2021 and 2020.
NOTE 3 – SECURITIES AVAILABLE FOR SALE
The amortized cost and estimated fair value of securities available for sale with gross
unrealized gains and losses follows:
December 31, 2021

Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
(In Thousands)
Securities available for sale
State and municipal bonds $ 49,715 $ 2,401 $ (201) $ 51,915
Asset -backed securities 8,681 231 (26) 8,886
Government-sponsored
agency bonds 37,993 -- (302) 37,691
Government-sponsored residential
mortgage-backed securities 234,810 540 (1,720) 233,630
Total $ 331,199 $ 3,172 $ (2,249) $ 332,122
December 31, 2020

Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
(In Thousands)
Securities available for sale
State and municipal bonds $ 54,093 $ 2,586 $ (3) $ 56,676
Asset -backed securities 17,358 995 (2) 18,351
Government-sponsored
agency bonds 5,903 51 -- 5,954
mortgage-backed securities 113,275 1,698 (29) 114,928
Total $ 190,629 $ 5,315 $ (34) $ 195,909
Investment securities are exposed to various risks such as interest rate, market, and credit
risks. Due to the level of risk associated with certain investment securities, it is at least
reasonably possible that changes in the fair values of the investment securities will occur in
the near term and that such changes could materially affect the value of the investment
portfolio and the amounts reported in the Company’s consolidated financial statements.
30

NOTE 3 – SECURITIES AVAILABLE FOR SALE (CONTINUED)
The amortized cost and estimated fair value of debt securities by contractual maturity at
December 31, 2021 follows. Expected maturities will differ from contractual maturities
because the issuer, in certain instances, has the right to call or prepay obligations without
call or prepayment penalties. Mortgage and asset-backed securities are shown in total, as
their maturities are highly variable.
Amortized Fair
Cost Value
Amounts maturing in: (In thousands)
One year or less 501 500
Over one year through five years 4,933 4,929
Over five through ten years 50,312 50,507
Over ten years 31,962 33,669
Mortgage-and asset-backed securities amortizing monthly 243,491 242,517
$ 331,199 $ 332,122
For the year ended December 31, 2021 and three months ended December 31, 2020,
proceeds from sales of securities available for sale amounted to $26,877,000 and $0,
respectively. For the year ended December 31, 2021 and three months ended December 31,
2020, gross realized gains on sales amounted to $502,000 and $0, respectively. For the year
ended December 31, 2021 and three months ended December 31, 2020, gross realized
losses amounted to $416,000 and $0, respectively.
Information pertaining to securities with gross unrealized losses, aggregated by investment

category and length of time that individual securities have been in a continuous loss
position, follows:
31

Less Than Twelve Months Twelve Months or Greater

Gross Gross
Unrealized Fair Unrealized Fair
Losses Value Losses Value
(In thousands)
As of December 31, 2021:
State and municipal bonds $ (113) $ 7,568 $ (89) $ 4,439
Asset -backed securities (15) 455 (10) 542
Government-sponsored agency bonds (285) 36,708 (17) 983
mortgage-backed securities (1,654) 190,020 (66) 5,980
Total debt securities (2,067) 234,751 (182) 11,944
$ (2,067) $ 234,751 $ (182) $ 11,944
Less Than Twelve Months Twelve Months or Greater

Gross Gross
Unrealized Fair Unrealized Fair
Losses Value Losses Value
(In thousands)
State and municipal bonds $ (3) $ 5,330 $ -- $ --
Asset -backed securities (2) 744 -- --
Government-sponsored agency bonds -- 1,000 -- --
mortgage-backed securities (29) 15,104 -- --
Total debt securities (34) 22,178 -- --
$ (34) $ 22,178 $ -- $ --
Management evaluates securities for other-than-temporary impairment at least on a

quarterly basis and more frequently when economic or market concerns warrant such
evaluation. At December 31, 2021, one hundred sixteen debt securities have unrealized
losses, with aggregate depreciation of 0.92% from the Company’s amortized cost. At
December 31, 2020, thirty-eight securities have unrealized losses, with aggregate
depreciation of 0.16% from the Company’s amortized cost.
These unrealized losses on the Company’s debt securities relate principally to changes in
interest rates and not to an increase in the credit risk of the issuers.
32

Management has performed an analysis of various market factors and has considered the
difference between cost and fair value and other available data. In addition, because the
Company does not intend to sell these securities and it is not more likely than not that the
Company will be required to sell these securities, the Company has determined that no
securities have other-than-temporary declines in fair value as of December 31, 2021 or
2020.
NOTE 4 - LOANS
A summary of the balances of loans follows:
2021 2020
(In thousands)
Mortgage real estate loans:
Residential $ 336,954 $ 323,289
Commercial 326,134 334,007
Construction 59,837 61,448
Home equity lines-of-credit 39,177 41,517
762,102 760,262
Other loans:
SBA/USDA 14,684 18,821
Commercial 37,840 58,358
Consumer:
Chattel 17,174 17,781
Personal 464 663
70,162 95,622
Total Loans 832,264 855,883
Allowance for loan losses (5,568) (5,048)

Net premiums on purchased loans 1,775 1,629
Net deferred origination fees and costs (249) (211)
Loans receivable, net $ 828,222 $ 852,253
Included in Commercial Loans is $9,244,000 and $26,559,000 of PPP loans which are
guaranteed by the SBA at December 31, 2021 and 2020, respectively.
33

NOTE 4 - LOANS (CONTINUED)
Activity in the allowance for loan losses for the year ended December 31, 2021 is as
follows:
Residential Commercial Home Equity SBA/
Real Estate Real Estate Construction Lines of Credit USDA Commercial Consumer Unallocated Total
(In thousands)
Allowance for loan losses:
Balance at December 31, 2020 $ 1,861 $ 1,918 $ 153 $ 491 $ -- $ 143 $ 164 $ 318 $ 5,048
Provision for losses 361 349 129 24 -- 10 (20) (308) 545
Loans charged off -- -- (25) -- -- -- (25)
Recoveries -- -- -- -- -- -- -- -- --
Ending balance: individually evaluated
for impairment $ 8 $ -- $ -- $ -- $ -- $ -- $ 1 $ -- $ 9
Ending balance: collectively evaluated
for impairment $ 2,214 $ 2,267 $ 282 $ 490 $ -- $ 153 $ 143 $ 10 $ 5,559
Loans receivable:
Individually evaluated for impairment $ 981 $ 2,030 $ -- $ 259 $ -- $ 316 $ 44 $ 3,630
Collectively evaluated for impairment 335,973 324,104 59,837 38,918 14,684 37,524 17,594 828,634
Balance at December 31, 2021 $ 336,954 $ 326,134 $ 59,837 $ 39,177 $ 14,684 $ 37,840 $ 17,638 $ 832,264
Activity in the allowance for loan losses for the three months ended December 31, 2020 is
as follows:
Residential Commercial Home Equity SBA/
Real Estate Real Estate Construction Lines of Credit USDA Commercial Consumer Unallocated Total
(In thousands)
Allowance for loan losses:
Balance at September 30, 2020 $ 1,684 $ 1,912 $ 127 $ 476 $ -- $ 104 $ 152 $ 293 $ 4,748
Provision for losses 177 6 26 15 -- 39 12 25 300
Loans charged off -- -- -- -- -- -- -- -- --
Recoveries -- -- -- -- -- -- -- -- --
Ending balance: individually evaluated

for impairment $ 13 $ -- $ -- $ -- $ -- $ -- $ 1 $ -- $ 14
Ending balance: collectively evaluated

for impairment $ 1,848 $ 1,918 $ 153 $ 491 $ -- $ 143 $ 163 $ 318 $ 5,034
Loans receivable:
Individually evaluated for impairment $ 316 $ 2,121 $ 1,826 $ 387 $ -- $ 471 $ 46 $ 5,167
Collectively evaluated for impairment 322,973 331,886 59,622 41,130 18,821 57,887 18,397 850,716
Balance at December 31, 2020 $ 323,289 $ 334,007 $ 61,448 $ 41,517 $ 18,821 $ 58,358 $ 18,443 $ 855,883
34

The following is a summary of past due and non-accrual loans:

Greater than Past Due 90
30-59 Days 60-89 Days 90 Days Total Past Days and Still Loans on
Past Due Past Due Past Due Due Accruing Non-Accrual
(In thousands)
December 31, 2021:
Residential real estate $ -- $ 253 $ 1,592 $ 1,845 $ -- $ 1,592
Commercial real estate -- -- -- -- -- --
Construction -- -- -- -- -- --
Home equity lines-of-credit 200 -- -- 200 -- 20
SBA/USDA -- -- -- -- -- --
Commercial -- -- -- -- -- 834
Consumer 99 -- -- 99 -- --
Total $ 299 $ 253 $ 1,592 $ 2,144 $ -- $ 2,446
Greater than Past Due 90

30-59 Days 60-89 Days 90 Days Total Past Days and Still Loans on
Past Due Past Due Past Due Due Accruing Non-Accrual
(In thousands)
December 31, 2020:
Residential real estate $ 921 $ -- $ 239 $ 1,160 $ -- $ 239
Home equity lines-of-credit 220 -- 77 297 -- 77
SBA/USDA -- -- -- -- -- --
Commercial 1,456 -- -- 1,456 -- --
Consumer 2 -- -- 2 -- --
Total $ 2,599 $ -- $ 316 $ 2,915 $ -- $ 316
35

The following is a summary of information pertaining to impaired loans:

Unpaid Unpaid
Recorded Principal Related Recorded Principal Related
Investment Balance Allowance Investment Balance Allowance
(In thousands)
Impaired loans without a valuation allowance:
Residential real estate $ 897 $ 897 $ 15 $ 15
Commercial real estate 2,030 2,030 2,121 2,121
Construction -- -- 1,826 1,826
Home equity lines-of-credit 259 259 387 387
SBA/USDA -- -- -- --
Commercial 316 316 471 471
Consumer -- -- 1 1
Total 3,502 3,502 4,821 4,821
Impaired loans with a valuation allowance:

Residential real estate 84 84 $ 8 301 301 $ 13
Home equity lines-of-credit -- -- -- -- -- --
SBA/USDA -- -- -- -- -- --
Commercial -- -- -- -- -- --
Consumer 44 44 1 45 45 1
Total 128 128 9 346 346 14
Total impaired loans $ 3,630 $ 3,630 $ 9 $ 5,167 $ 5,167 $ 14
36


Interest Interest
Average Interest Income Average Interest Income
Recorded Income Recognized Recorded Income Recognized
Investment Recognized on Cash Basis Investment Recognized on Cash Basis
(In thousands)
Residential real estate $ 2,074 $ 34 $ -- $ 909 $ 6 $ --
Commercial real estate 9,064 552 -- 8,432 93 --
Construction 1,782 55 -- 1,827 7 --
Home equity lines-of-credit 293 12 -- 363 4 --
SBA/USDA -- -- -- -- -- --
Commercial 5,027 132 -- 3,705 28 --
Consumer 45 3 -- 46 1 --
Total $ 18,285 $ 788 $ -- $ 15,282 $ 139 $ --
No additional funds are committed to be advanced in connection with impaired loans.
There were no trouble debt restructurings for the year ended December 31, 2021 and three
months ended December 31, 2020.
LOAN MODIFICATIONS
The Bank works with customers to modify loan agreements when borrowers are experiencing
financial difficulty. The Bank will modify a loan to minimize the risk of loss and achieve the
best possible outcome for both the borrower and the Bank. Loan modifications can take
various forms including payment deferral, rate reduction, covenant waiver, term extension, or
other action. Depending on the nature of modification, it may, or may not, be accounted for as
a troubled debt restructuring (TDR).
THE CARES ACT AND INTERAGENCY STATEMENT
In response to the COVID-19 pandemic, financial institutions were provided relief from certain
TDR accounting and disclosure requirements for qualifying loan modifications.
Specifically, Section 4013 of the CARES Act provided temporary relief from certain GAAP
requirements for modifications related to COVID-19. In addition, a group of banking
regulatory agencies issued a revised interagency statement that offers practical expedients for
evaluating whether COVID-19 loan modifications are TDRs.
As of December 31, 2021, loan balances, associated with loan modifications designated in
connection with these relief provisions in their deferral period, totaled approximately $778,000
and included 4 outstanding loans. These modifications represent payment deferrals,with
various terms. The Bank will continue to evaluate the effectiveness of the loan
modification program as the deferral periods end.
37

CREDIT QUALITY INFORMATION
The Company utilizes an eight-grade internal loan rating system for commercial real estate,
construction, and commercial loans as follows:
Loans rated in the first four grades (1, 2, 3 and 4) are considered “pass” rated loans with low to
average risk.
Loans rated 5 are considered “special mention”. These loans are starting to show signs of
potential weakness and are being monitored by management.
Loans rated 6 are considered “substandard”. Generally, a loan is considered substandard if it is

inadequately protected by the current net worth and paying capacity of the obligors and/or the
collateral pledged. There is a distinct possibility that the Company will sustain some loss if the
weakness is not corrected.
Loans rated 7 are considered “doubtful”. Loans classified as doubtful have all the weaknesses
inherent in those classified as substandard with the added characteristic that the weaknesses
make collection or liquidation in full, on the basis of existing facts, conditions and values, highly
questionable.
Loans rated 8 are considered uncollectible (“loss”) and of such little value that their continuance
as loans is not warranted.
On a periodic basis, management formally reviews the ratings on all commercial real estate,
construction and commercial loans. The following table presents the Company’s loans by risk
rating:
Risk Commercial Comercial
Rating Real Estate Construction Commercial Real Estate Construction Commercial
(In thousands)
Category:
Pass 1-4 $ 317,811 $ 59,837 $ 36,384 $ 324,881 $ 59,419 $ 56,822
Special Mention 5 1,560 -- 1,014 2,172 -- 901
Substandard 6 6,763 -- 442 6,954 2,029 635
Doubtful 7 -- -- -- -- -- --
Loss 8 -- -- -- -- -- --
Total $ 326,134 $ 59,837 $ 37,840 $ 334,007 $ 61,448 $ 58,358
Credit quality for residential real estate, home equity lines-of-credit, SBA/USDA, chattel and
personal loans is determined by monitoring loan payment history, past due status, and ongoing
communication with customers.
38

NOTE 5 – LOAN SERVICING
Mortgage loans serviced for others are not included in the accompanying consolidated
statements of financial condition. The unpaid principal balances of these loans at December 31,
2021 and December 31, 2020 were approximately $106,631,000 and $154,987,000, respectively.
There were no mortgage servicing rights capitalized in either period. Amortization of mortgage
servicing rights was $271,000 and $85,000 for the year ended December 31, 2021 and the three
months ended December 31, 2020, respectively. Mortgage servicing rights with a carrying value
of approximately $398,000 and $669,000 are included in other assets on the consolidated
statements of financial condition at December 31, 2021 and December 31, 2020, respectively.
The fair value of mortgage servicing rights at December 31, 2021 and December 31, 2020
approximated their carrying value. There were no impairments recognized in either period.
NOTE 6 – ACCRUED INTEREST RECEIVABLE
Accrued interest receivable consists of the following:
December 31,
2021 2020
Investment securities $ 1,091 $ 1,080

Loans receivable 2,108 2,868
$ 3,199 $ 3,948
39

NOTE 7 – PREMISES AND EQUIPMENT
A summary of the cost and accumulated depreciation and amortization of premises and
equipment follows:
December 31,
2021 2020
(In thousands)
Land $ 6,138 $ 6,138
Buildings and improvements 20,412 20,154
Furniture and equipment 7,459 6,460
34,009 32,752
Accumulated depreciation and amortization (17,307) (15,724)
$ 16,702 $ 17,028
Depreciation and amortization expense for the year ended December 31, 2021 and three months
ended December 31, 2020 amounted to $1,581,000 and $379,000, respectively.
Pursuant to the terms of non-cancelable lease agreements in effect at December 31, 2021
pertaining to premises and equipment, future minimum lease commitments under various
operating leases are as follows:
Year Ending December 31, Amount

(in thousands)
2022 $ 200
2023 178
2024 163
2025 166
2026 166
Thereafter 59
$ 932
The leases contain options to extend for up to five years. The cost of such rental extensions is
not included above. Lease expense amounted to $327,000 and $80,000 for year ended December
31, 2021 and the three months ended December 31, 2020, respectively.
40

NOTE 8 – GOODWILL AND OTHER INTANGIBLE ASSETS
Information pertaining to goodwill and other intangible assets is as follows:
December 31,
2021 2020
(In thousands)
Goodwill $ 1,000 $ 1,000

Core deposit intangible asset:
Original balance 342 342
Accumulated amortization (290) (284)
Total goodwill and other intangible assets $ 1,052 $ 1,058
In connection with the merger with Mansfield Co-operative Bank on October 1, 2020, a core
deposit intangible of $60,000 was recorded which will be amortized over ten years.
At December 31, 2021, estimated amortization expense for core deposit intangibles for the next
five years is as follows:
Year Ending December 31, Amount

(In thousands)
2022 $ 6
2023 6
2024 6
2025 6
2026 6
Amortization expense for the year ended December 31, 2021 and the three months ended
December 31, 2020 amounted to $6,000 and $2,000, respectively.
41

NOTE 9 - DEPOSITS
A summary of deposit balances, by type, is as follows:
December 31,
2021 2020
(In thousands)
Demand deposits $ 213,371 $ 181,471

NOW 151,535 147,651
Regular and other savings 215,688 223,123
Money market deposits 420,048 333,314
Total non-certificate accounts 1,000,642 885,559
Term certificates less than $250,000 135,163 171,665

Term certificates of $250,000 or more 46,310 69,574
Total certificates 181,473 241,239
$ 1,182,115 $ 1,126,798
A summary of term certificate accounts, including brokered deposits, by maturity dates at

December 31, 2021 and December 31, 2020 is as follows:
2021 2020
Maturing During the Weighted Weighted
Year Ending December 31, Amount Average Rate Amount Average Rate
(Dollars in thousands)
2021 $ -- 0.00 % $ 172,103 1.10 %
2022 125,088 0.38 36,367 0.85
2023 28,559 0.64 9,768 1.40
2024 11,148 1.81 9,936 2.00
2025 15,175 1.34 12,454 1.44
2026 1,251 0.67 70 1.25
Thereafter 252 1.28 541 1.19
$ 181,473 1.06 % $ 241,239 1.13 %
42

NOTE 10 - BORROWINGS
A summary of fixed-rate advances by maturity from the FHLB at December 31, 2021 and
December 31, 2020 is as follows:
2021 2020
Maturing During the Weighted Weighted
Year Ending Average Average
December 31, Amount Rate Amount Rate
2021 $ -- -- % $ 340 0.00 %
2022 30 0.00 30 0.00
2023 246 0.00 246 0.00
2024 85 0.00 85 0.00
2025 -- 0.00 -- 0.00
2026 60 1.00 60 1.00
Thereafter 146 0.00 146 0.00
$ 567 0.07 % $ 907 0.07 %
The Bank also has a $2,886,000 available line of credit with the FHLB at an interest rate that
adjusts daily, of which none was outstanding at December 31, 2021 and December 31, 2020.
At December 31, 2021, borrowings from the FHLB are secured by a blanket lien on qualified
collateral, defined principally as 75% of the carrying value of first mortgage loans on owner-
occupied residential property. In addition, at December 31, 2021, the Company pledged
mortgage-backed and asset-backed securities with an amortized cost of $1,630,000 and fair value
of $1,685,000.
The Bank also has an agreement with the Federal Reserve Bank of Boston to borrow under the
discount window. At December 31, 2021, consumer loans with a carrying value of $17,075,000
and a security with a fair value of $612,000 were pledged to secure such borrowings; however, at
December 31, 2021, there were no amounts advanced under this agreement.
43

NOTE 11 - INCOME TAXES
Allocation of the federal and state income taxes between current and deferred portions is as
follows:
Year Ended Three Months Ended

(In thousands)
Current tax provision:
Federal $ 2,045 $ 709
State 963 349
3,008 1,058
Deferred tax provision:
Federal 91 (378)
State 39 (189)
130 (567)
Total tax provision:

Federal 2,136 331
State 1,002 160
$ 3,138 $ 491
44

NOTE 11 - INCOME TAXES (CONTINUED)
The reasons for the difference between tax at the Federal statutory income tax rate and the
effective tax rates are summarized as follows:
(In thousands)
Statutory tax provision at rate of 21% $ 2,627 $ 438
Increase (decrease) resulting from:
State taxes, net of federal taxes 792 126
Tax exempt income (220) (59)
Officer's life insurance (67) (15)
Other, net 6 1
Total provision for income taxes $ 3,138 $ 491
Effective tax rate 25.1 % 23.5 %
The components of the net deferred tax asset are as follows:
2021 2020
(In thousands)
Deferred tax assets:
Federal $ 2,274 $ 2,316
State 1,077 1,093
3,351 3,409
Deferred tax liabilities:
Federal (797) (1,573)
State (269) (569)
(1,066) (2,142)
Net deferred tax asset $ 2,285 $ 1,267
45

NOTE 11 - INCOME TAXES (CONTINUED)
The tax effects of each item that give rise to deferred taxes are as follows:
December 31,
2021 2020
(In thousands)
Net unrealized gain on securities available for sale $ (184) $ (1,361)
Allowance for loan losses 1,566 1,419
Employee benefit plans 1,396 1,220
Unrecognized prior service cost pertaining to
director retirement plan 42 71
Depreciation (409) (431)
Acquisition accounting (175) 487
Other, net 49 (138)
Net deferred tax asset $ 2,285 $ 1,267
A summary of the change in the net deferred tax asset is as follows:

(In thousands)
Balance at beginning of year $ 1,267 $ 885

Deferred tax provision (130) 567
Deferred tax effect of other comprehensive
income/loss 1,148 (185)
Balance at end of year $ 2,285 $ 1,267
The Company’s income tax returns are subject to review and examination by federal and state
taxing authorities. No years prior to September 30, 2018 remain subject to examination.
The federal income tax reserve for loan losses at the Company’s base year amounted to
$6,113,000. If any portion of the reserve is used for purposes other than to absorb loan losses,
approximately 150% of the amount actually used (limited to the amount of the reserve) would be
subject to taxation in the fiscal year in which used. As the Company intends to use the reserve
only to absorb loan losses, a deferred tax liability of $1,718,000 has not been provided.
46

NOTE 12 - DERIVATIVE FINANCIAL INSTRUMENTS
MORTGAGE LOAN COMMITMENTS
The Company enters into commitments to originate loans for sale and uses forward
commitments to sell loans, which are derivative instruments. These instruments involve both
credit and market risk.
Forward commitments to sell loans require the Company to make delivery at a specific future
date of a specified amount, at a specified price or yield. At December 31, 2021 and December
31, 2020, such commitments amounted to $9,317,000 and $47,920,000, respectively.
The rates on commitments to originate loans for sale may be locked with the borrower at the
time of commitment. These rate lock agreements require the Company to originate a loan at a
specific interest rate upon completion of various underwriting requirements and involve both
credit and market risk. At December 31, 2021 and December 31, 2020, the Company had
$28,875,000 and $177,948,000, respectively, in outstanding rate lock agreements on
commitments to grant mortgage loans that are intended to be sold.
The fair value of these commitments is not material and, accordingly, not reflected on the
consolidated balance sheets.
NOTE 13 - OTHER COMMITMENTS AND CONTINGENCIES
In the normal course of business, there are outstanding commitments which are not reflected in
the accompanying consolidated financial statements.
LOAN COMMITMENTS
The Company 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 and advance funds on outstanding lines-of-credit. Such
commitments involve, to varying degrees, elements of credit and interest rate risk in excess of
the amount recognized in the consolidated balance sheets. The Company’s exposure to credit
loss is represented by the contractual amount of the commitments. The Company uses the same
credit policies in making commitments as it does for on-balance-sheet instruments.
47

NOTE 13 - OTHER COMMITMENTS AND CONTINGENCIES (CONTINUED)
LOAN COMMITMENTS (CONTINUED)
At December 31, 2021 and 2020, the following financial instruments were outstanding whose
contract amounts represent credit risk:
2021 2020
(In thousands)
Commitments to originate loans $ 52,645 $ 23,644

Unadvanced funds on home equity lines-of-credit 72,414 62,928
Unadvanced funds on personal lines-of-credit 1,457 1,534
Unadvanced funds on commercial lines-of-credit 35,121 35,181
Unadvanced funds on construction loans 70,264 39,399
$ 231,901 $ 162,686
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. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee. The
commitments for lines-of-credit may expire without being drawn upon; therefore, the total
commitment amounts do not necessarily represent future cash requirements. The Company
evaluates each customer’s credit worthiness on a case-by-case basis. Funds disbursed under
commitments to grant loans, home equity lines-of-credit and construction loans are primarily
secured by real estate, and commercial lines-of-credit are generally secured by business assets.
Funds disbursed under commitments to grant personal lines-of-credit are secured by collateral, as
deemed necessary.
LOANS SOLD WITH RECOURSE OBLIGATIONS
The Company sells fixed rate mortgages on a servicing-released basis to various investors
pursuant to contracts which include limited recourse provisions whereby the Company would be
required to repurchase loans and/or refund premiums in the event a borrower defaults or if the
loan is paid off within the first several months of being sold, as defined in the individual
agreements. At December 31, 2021 and December 31, 2020, the principal balance of loans sold
subject to such recourse provisions was $67,314,000 and $163,925,000, respectively and
premiums received on loans sold that were subject to refund provisions amounted to $1,353,000
and $4,063,000, respectively. The contracts also include repurchase obligation provisions for
fraud or misrepresentation. Premiums refunded by the company for repurchases under these
agreements have not had a material impact on the financial statements. No liability has been
recorded in the consolidated financial statements related to these recourse obligations.
48

NOTE 13 - OTHER COMMITMENTS AND CONTINGENCIES (CONTINUED)
OTHER CONTINGENCIES
Various legal claims also arise from time to time in the normal course of business which, in the
opinion of management, will have no material effect on the Company’s consolidated financial
statements.
NOTE 14 – MINIMUM REGULATORY CAPITAL REQUIREMENTS
The Company and the Bank are subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital requirements can initiate
certain mandatory and possibly additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Company’s and the Bank’s consolidated financial
statements. Under capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Company and the Bank must meet specific capital guidelines that involve
quantitative measures of its assets, liabilities and certain off-balance-sheet items as calculated
under regulatory accounting practices. The capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings and other factors.
Mutual holding companies are not covered by the prompt corrective action provisions of the
capital guidelines.
Quantitative measures established by regulation to ensure capital adequacy require the Company
and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total,
Tier 1, and Common Equity Tier 1 capital (as defined) to risk-weighted assets (as defined) and of
Tier 1 capital to average assets (as defined). Management believes, as of December 31, 2021
and December 31, 2020, that the Company and the Bank met all capital adequacy requirements
to which it was subject.
Additionally, as of December 31, 2021, the most recent notification from regulatory authorities
categorized the Bank as well capitalized under the regulatory framework for prompt corrective
action. To be categorized as well capitalized, the Bank must maintain minimum ratios as set
forth in the following table. There are no conditions or events since the notification that
management believes have changed the Bank’s category. The Company’s and the Bank’s actual
capital amounts and ratios as of December 31, 2021 and December 31, 2020 are also presented
in the table:
49

NOTE 14 – MINIMUM REGULATORY CAPITAL REQUIREMENTS (CONTINUED)
For Capital Capitalized Under the

Adequacy Prompt Corrective
Actual Purposes Action Provisions
Amount Ratio Amount Ratio Amount Ratio
Total capital (to risk weighted assets):
Consolidated $ 137,692 16.5 % $ 81,946 ≥ 10.5 % N/A N/A
Bank 137,475 17.6 % 81,913 10.5 % $ 78,013 10.0 %
Tier I capital (to risk weighted assets):
Consolidated 132,123 15.8 % 66,337 ≥ 8.5 % N/A N/A
Bank 131,816 16.9 % 66,311 8.5 % 62,410 8.0 %
Tier I capital (to total average assets):
Bank 131,816 10.1 % 52,288 4.0 % 65,360 5.0 %
Common Equity Tier 1 Capital
(to risk weighted assets)
Consolidated N/A N/A N/A N/A N/A N/A
Bank 131,816 16.9 % 54,609 7.0 % 50,708 6.5 %

Total capital (to risk weighted assets):
Consolidated $ 128,047 16.2 % $ 82,872 ≥ 10.5 % N/A N/A
Bank 127,741 16.2 % 82,840 10.5 % $ 78,896 10.0 %
Tier I capital (to risk weighted assets):
Bank 122,601 15.5 % 67,061 8.5 % 63,116 8.0 %
Tier I capital (to total average assets):
Bank 122,601 9.7 % 50,418 4.0 % 63,023 5.0 %
Common Equity Tier 1 Capital
(to risk weighted assets)
Consolidated N/A N/A N/A N/A N/A N/A
Bank 122,601 15.5 % 55,227 7.0 % 51,282 6.5 %
50

NOTE 15 – RETIREMENT BENEFIT PLANS
401(K) PLAN
The Bank has a 401(k) savings plan, which provides for voluntary contributions by participating
employees, subject to certain limitations. The 401(k) savings plan allows an employee to
contribute between 1% and 75% of his or her base compensation to the plan on a tax-deferred or
after-tax basis. Under the terms of the plan, the Bank matches the employee’s contribution at a
level of 100%, up to the first 5% of an employee’s contribution. The Bank may also make a
discretionary contribution of up to 3% of an eligible employee’s compensation. The Bank had
provided a 401(k) plan for former Mansfield Co-operative Bank employees through membership
in the Cooperative Bank Employees Retirement Association (CBERA). This 401(k) savings
plan allowed an employee to contribute between 1% and 75% of his or her base compensation to
the plan on a tax-deferred or after-tax basis. The Bank matched the employee’s contribution at a
level of 100%, up to the first 5% of the employee’s compensation. The Bank also provided an
additional contribution at a level of 3% of the employee’s plan-defined compensation.
Subsequent to December 31, 2020, this plan was combined with the Bluestone Bank 401(k) plan.
Total expense under the 401(k) plan for the year ended December 31, 2021 and the three months
ended December 31, 2020 amounted to $1,238,000 and $224,000, respectively.
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENTS
The Bank has a supplemental executive retirement agreement with its current Chief Executive
Officer (“CEO”) which provides for an annual contribution and interest, as defined in the
agreement, to be credited to a deferred compensation account. The expense associated with this
agreement for the year ended December 31, 2021 and three months ended December 31, 2020
amounted to $373,000 and $137,000, respectively.
The Bank has supplemental executive retirement agreements with five other officers. The
agreements provide for an annual contribution and interest, as defined in the agreements, to be
credited to a deferred compensation account. The expense associated with these agreements for
the year ended December 31, 2021 and three months ended December 31, 2020 amounted to
$277,000 and $20,000, respectively.
The Bank also has a supplemental executive retirement agreement with the former President of
an acquired bank, which provides for the retired executive to receive monthly benefits, subject to
certain limitations as set forth in the agreement. The present value of these future benefits and
the term over which they are accrued are subject to actuarial assumptions. Total expense under
the agreement for the year ended December 31, 2021 and three months ended December 31,
2020 amounted to $33,000 and $9,000, respectively.
51

NOTE 15 – RETIREMENT BENEFIT PLANS (CONTINUED)
ENDORSEMENT SPLIT-DOLLAR LIFE INSURANCE ARRANGEMENT
The Bank is the sole owner of a life insurance policy pertaining to the former President of an
acquired bank. The Bank has entered into an agreement with the former President whereby the
Bank will pay to the former President’s estate or beneficiaries a portion of the death benefit that
the Bank will receive as beneficiary of such policy. The Bank has recognized a liability related
to this agreement in the amount of $394,000 at December 31, 2021 and December 31, 2020.
The Bank has a split-dollar life insurance agreement with a former executive of an acquired bank
on a life insurance policy owned by the individual. The former executive is listed as the insured
under the policy and has named the beneficiary. Under the agreement, the Bank previously paid
all of the policy premiums amounting to $500,000. Upon death, the surrender of the policy, or
termination of the agreement, the former executive has agreed to reimburse the Bank the amount
of cumulatively paid premiums, plus an interest factor of 2.64% per year. The Bank records in
the asset section of its balance sheet an amount equivalent to the lesser of the reimbursable
amount or the cash surrender value of the policy. At December 31, 2021, the Bank is carrying an
asset of $733,000, which is the calculated reimbursable amount, while the cash surrender value
of the policy approximates $856,000.
52

DIRECTOR RETIREMENT PLAN
The Company adopted a Director Retirement Plan (the “Plan”), which provides certain directors
with a continuing benefit from the Company upon retirement or death. The funded status of the
Plan at December 31, 2021 and 2020 is as follows:
2021 2020
(In thousands)
Accumulated benefit obligation $ 725 $ 869
Change in benefit obligation:

Benefit obligation at beginning of year $ 869 $ 1,118
Service cost 23 5
Interest cost 16 4
Curtailment gain (31)
Actuarial loss 38 32
Effect of settlement (12) 2
Benefits paid (178) (292)
Benefit obligation at end of year 725 869
Fair value of plan assets -- --
Funded status $ (725) $ (869)
The following assumptions were used to determine the benefit obligation and the net periodic
benefit cost at or for the year ended December 31, 2021 and the three months ended December
31, 2020:
2021 2020
Discount rate used for benefit obligations 2.25% 1.75%

Discount rate used for net periodic benefit cost 1.75% 1.75%
Rate of compensation increase 3.00% 3.00%
The expense related to the Plan amounted to $100,000 and $81,000 for the year ended December
31, 2021 and three months ended December 31, 2020, respectively.
53

DIRECTOR RETIREMENT PLAN (CONTINUED)
At December 31, 2021, estimated future benefit payments, which reflect expected future service,
as appropriate, are as follows:
Year ending December 31:

(In thousands)
2022 $ 182
2023 34
2024 34
2025 34
Thereafter 557
$ 841
The Company has a Director Retirement Plan (the “Mansfield Bank Plan”), which provides
certain directors of the acquired Mansfield Co-operative Bank with a continuing benefit from the
Company upon retirement or death. The funded status of the Plan at December 31, 2021 and
2020 is as follows:
2021 2020
(In thousands)
Accumulated benefit obligation $ 681 $ 681
Change in benefit obligation:

Benefit obligation at beginning of period $ 681 $ 536
Service cost 44 16
Interest cost 13 5
Curtailment gain (167)
Actuarial loss (gain) (31) 124
Effect of settlement -- --
Benefits paid (41) --
Benefit obligation at end of year 499 681
Fair value of plan assets -- --
Funded status $ (499) $ (681)
54

DIRECTOR RETIREMENT PLAN (CONTINUED)
The following assumptions were used to determine the benefit obligation and the net periodic
benefit cost at or for the year ended December 31, 2021 and the three months ended December
31, 2020:
2021 2020
Discount rate used for benefit obligations 2.48% 2.08%

Discount rate used for net periodic benefit cost 2.08% 2.10%
Rate of compensation increase 0.00% 0.00%
The expense related to the Mansfield Bank Plan amounted to $23,000 and $13,000 for the year
ended December 31, 2021 and the three months ended December 31, 2020, respectively.
At December 31, 2021, estimated future benefit payments, which reflect expected future service,
as appropriate, are as follows:
Year ending December 31:

(In thousands)
2022 $ 41
2023 41
2024 22
2025 11
Thereafter --
$ 115
The Bank has Director Retirement Benefit Agreements with directors who do not have benefits
provided by the Director Retirement Plan. The expense associated with these agreements for the
year ended December 31, 2021 and three months ended December 31, 2020 amounted to
$129,000 and $0, respectively.
Effective December 31, 2021, benefit accruals and vesting under the Plan, the Mansfield Bank
Plan and the Director Retirement Benefit Agreements were frozen. Effective January 1, 2022 a
defined contribution retirement plan which provides for an annual contribution and interest was
adopted.
55

EXECUTIVE EMPLOYMENT AGREEMENTS
The Company has executive employment agreements with both the CEO and the President of the
Company. The agreement with the CEO expires December 31, 2022. The original term of the
agreement with the President is through December 31, 2023 with automatic renewals for
successive one-year terms unless notice of non-renewal is given no less than ninety days prior to
the expiration of any renewal term.
The employment agreements provide each executive with an established base salary. The
agreements also provide for payments of base salary, bonus and benefits, as defined in the
agreements, following a change in control or termination without cause, as defined in the
agreements.
SEVERANCE AND CHANGE IN CONTROL AGREEMENTS
In addition, the Company has entered into change in control agreements with certain other
officers of the Company, which provide for the continuation of base salary and benefits for one
year following a change in control, as defined in the agreements.
NOTE 16 - RELATED PARTY TRANSACTIONS
LOANS
In the normal course of banking business, loans are made to officers and directors of the
Company, as well as to their affiliates. Such loans are made in the ordinary course of business
with substantially the same terms (including interest rates and collateral) as those prevailing at
the time for comparable transactions with other persons. They do not involve more than normal
risk of collectability or present other unfavorable features. The aggregate amount of these loans
was approximately $9,935,000 and $10,996,000 at December 31, 2021 and 2020 respectively.
In addition, the Company has extended lines of credit to related parties totaling $3,804,000 and
$3,883,000 at December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020,
approximately $1,200,000 and $148,000, respectively, has been disbursed on these lines of
credit.
DEPOSITS
Deposits by related parties amounted to approximately $14,509,000 and $13,030,000 at

December 31, 2021 and 2020, respectively.
56

NOTE 17 - FAIR VALUES OF ASSETS AND LIABILITIES
DETERMINATION OF FAIR VALUE
The Company uses fair value measurements to record fair value adjustments to certain assets and
liabilities and to determine fair value disclosures. Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. Fair value is best determined based upon quoted market prices.
However, in many instances, there are no quoted market prices for the Company’s assets and
liabilities. In cases where quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques. 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.
FAIR VALUE HIERARCHY
The Company groups its assets 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 including
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.
The following methods and assumptions were used by the Company in estimating its fair value
disclosures:
All fair value measurements are obtained from a third party pricing service and are not
adjusted by management. The securities measured at fair value in Level 1 are based on
quoted market prices in an active exchange market. Securities measured at fair value in Level
2 are based on pricing models that consider standard input factors such as observable market
data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new
issue data.
57

NOTE 17 - FAIR VALUES OF ASSETS AND LIABILITIES (CONTINUED)
ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS
Assets measured at fair value on a recurring basis are as follows:

Total
Level 1 Level 2 Level 3 Fair Value
(In thousands)
December 31, 2021:
Debt securities $ -- $ 332,122 $ -- $ 332,122
Total assets $ -- $ 332,122 $ -- $ 332,122
December 31, 2020:

Debt securities $ -- $ 195,909 $ -- $ 195,909
Total assets $ -- $ 195,909 $ -- $ 195,909
ASSETS MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS
There were no liabilities measured at fair value on a recurring basis at December 31, 2021 or
2020. There were no transfers between Level 1, 2, or 3 during year ended December 31, 2021 or
the three month period ended December 31, 2020.
The Company may also be required, from time to time, to measure certain other financial assets
on a non-recurring basis in accordance with generally accepted accounting principles. There are
no liabilities measured at fair value on a non-recurring basis. These adjustments to fair value
usually result from application of lower-of-cost-or-market accounting or write-downs of
individual assets.
58

NOTE 17 - FAIR VALUES OF ASSETS AND LIABILITIES (CONTINUED)
ASSETS MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS (CONTINUED)
The following table summarizes the fair value hierarchy used to determine each adjustment and
the carrying value of the related individual assets as of December 31, 2021 and 2020.
Year Ended
December 31,
December 31, 2021 2021
Level 1 Level 2 Level 3 Total Losses
(In thousands)
Impaired loans $ -- $ 3,630 $ -- $ --
Year Ended
December 31,
December 31, 2020 2020
Level 1 Level 2 Level 3 Total Losses
(In thousands)
Impaired loans $ -- $ 5,167 $ -- $ --
Losses applicable to impaired loans and foreclosed real estate are based on the appraised value of
the underlying property, adjusted for selling costs. These appraised values may be discounted
based on management’s historical knowledge, expertise or changes in market conditions from
time of valuation.
59
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BLUESTONE FINANCIAL, MHC AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED DECEMBER 31, 2021 AND

Independent Auditors’ Report................................................................................................................ 1-3

Consolidated Financial Statements

Consolidated Balance Sheets ................................................................................................................... 4

Notes to Consolidated Financial Statements ..................................................................................... 10-59

Appendix A: Management Report ..................................................................................................... 60-61

Report on the Consolidated Financial Statements and Internal Control

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2021 AND 2020

Total Cash and Cash Equivalents 112,890 117,493

Total Assets $ 1,325,467 $ 1,262,497

Liabilities and Equity

Total Liabilities 1,191,660 1,134,955

Total Equity 133,807 127,542

Total Liabilities and Equity $ 1,325,467 $ 1,262,497

CONSOLIDATED STATEMENTS OF NET INCOME

YEAR ENDED DECEMBER 31, 2021 AND

Year ended Three months ended

Bargain purchase gain (Note 1) -- 3,407

Net Income $ 9,371 $ 5,002

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

YEAR ENDED DECEMBER 31, 2021 AND

Year ended Three months ended

Net Income $ 9,371 $ 5,002

Other Comprehensive Income

Net-of-tax-amount (3,181) 602

Director retirement plan:

Total Other Comprehensive Income (3,106) 225

Comprehensive Income $ 6,265 $ 5,227

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

YEAR ENDED DECEMBER 31, 2021 AND

Balance at September 30, 2020 $ 51,616 $ 12,163 $ 3,137 $ 66,916

Comprehensive Income 5,002 -- 225 5,227

Equity acquired in merger with

Effect of adoption of ASU 2017-08 (478) -- 377 (101)

Balance at December 31, 2020 56,140 67,663 3,739 127,542

Comprehensive Income 9,371 -- (3,106) 6,265

Balance at December 31, 2021 $ 65,511 $ 67,663 $ 633 $ 133,807

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2021 AND

Year ended Three months ended

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEAR ENDED DECEMBER 31, 2021 AND

Year ended Three months ended

Net Cash Provided by (Used In) Financing Activities 55,454 (44,466)

Net (Decrease) Increase in Cash and Cash Equivalents (4,603) 79,500

Cash and Cash Equivalents, Beginning of Year 117,493 37,993

Cash and Cash Equivalents, End of Year $ 112,890 $ 117,493

Year ended Three months ended

Supplemental Cash Flow Information

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED DECEMBER 31, 2021 AND

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Equity Value of Acquired Entity $ 55,500

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED DECEMBER 31, 2021 AND