2020 ANNUAL REPORT JOURNEY WELL 2020 ANNUAL REPORT NEWBURYPORT BANK 2020 ANNUAL REPORT

Purpose, People and Growth: The Pandemic Shaped Our Journey Without Impacting Our Results. Making a Difference in 2020 “Our financial results exceeded our growth goals and greatest expectations alike.”

Impressive problem solving and execution resulted in a remarkable year with a further strengthened balance sheet and a solid income statement that enabled us to make strategic investments in our future. I am proud to share that we exceeded our goal in total assets. We experienced new customers, new relationships and new referrals. We were part of the solution to address the challenges our businesses and our communities faced during the pandemic. The Bank took on a leadership role with the Paycheck Protection Program (PPP) by providing funding, often in under 24 hours, and ultimately helped 589 businesses keep their doors open and safeguard over 8,600 jobs.

Our financial results exceeded our growth goals and greatest expectations alike.

• Asset growth goal of 12% exceeded; we ended the year at $1.21 billion, up 16%. To our Customers, Corporators, Employees and Directors, • Deposit growth goal of 12% exceeded; we ended the year with $768.6 million, up 15%. Our purpose begins with people. Improving people’s lives, strengthening businesses and • Net income goal of $3 million exceeded; we ended the year with $5.8 million. making our communities more vibrant each day is what drives us. • Net interest income goal of $33 million exceeded; we ended the year with $36.2 million. The year 2020 and the global pandemic challenged all of our norms and values. I am • Net interest spread goal of 2.77% exceeded; we ended the year with a 3.10% spread. humbled and honored by our people at Newburyport Bank and how they maintained our • Net interest margin goal of 3.06% exceeded; we ended the year with 3.28%. mission to serve our customers and communities with wisdom, courage and care. It is with great pride I report that we achieved superior customer engagement this year while also delivering our strongest financial growth results in years. Our Commercial Lending Division had a record year. Total commercial loan balances were $616.8 million, a 34% increase year over year. Having more development officers in 2020 The Plan was in Place. connecting with our community businesses, as well as referrals from our Private Client Group, drove growth across commercial and industrial, small business, and municipal We were not immune to uncertainty when the pandemic struck. We had, however, the segments. Additionally, our relationship with BancAlliance and its national leveraged credits benefit of a fully prepared multi-year strategic plan that provided the financial insight, added $8.0 million in new commercial loans to our balance sheet. business objectives and affirmation of our values to guide our next move. We shared with our team that we anticipated no reductions in staff, compensation or benefits. All we asked Our Residential Real Estate Lending Division new loan originations exceeded the prior year for was a commitment to safety and to the goals in our strategic plan. by 27% growth to $170.5 million. We were able to help, with fast turnaround and thoughtful guidance, more than 318 households with first mortgages. Furthering the strength of our It soon became clear that our customers wanted to see and talk with us, and we with them. asset base, our team was able to more than double the gain on sold loans to $1.5 million as We swiftly put in place robust safety procedures so that our team and our customers could compared to the prior year. be comfortable and protected. We took the bold move to have our customers walk through our doors and became one of the first banks in our region to fully re-open its lobbies.

For the remainder of the year, we continued our planned journey with investments in talent, facilities, technology, products and services, and branding to deliver sustained profitable growth.

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Deposits totaled $889.4 million as of December 31, 2020. This was a 16% increase from Exciting Transformations Include New $768.6 million at year-end 2019. Demand deposit accounts grew by 65%. Retail Banking grew checking accounts by 29%. Government Banking and Private Client Group grew Lending Center, Advanced Technology and deposits by 135%. Modernized In-Person Banking Model Net income for 2020 was $5.8 million, up from $4.3 million in 2019. This result reflects the decision to stay the course with our investments in people, systems, brand and technology in the first half of the year together with the continuation of low interest rates. Creation of Newburyport Bank’s Lending Center

Positioned as Premier. Our vision at Newburyport Bank is to remain a strong, independent, community partner that helps neighbors and businesses navigate life’s Journey Well. As we continually aspire to that vision, our key objective is to become the premier full-service community bank in the Greater Seacoast region. We see the year 2021 building on the successful path we have forged.

A new Chief Talent Officer will help us train existing staff, hire new associates, conduct succession planning and strategically scale in alignment with our growth plan. Notably, Our new Newburyport Bank Lending Center, 43 Main Street, Amesbury, MA we will grow our commercial and industrial lending business with superior leadership and a larger team. Extraordinary growth of our Lending Division prompted the development of a new facility. The newly established Newburyport Bank Lending Center is now a much-appreciated base Investments in technology, mobile banking services and in our communities will attract a for our expanding Consumer and Residential lending teams. broader range of customers. Our new brand identity will enter its third year with continued marketing energy and attractive branch facilities, contributing to our ability to outgrow our peers.

I’m proud of all that we accomplished in 2020. Our purpose and our team exemplified a spirit of community and gift of generosity that is at the heart of this organization. Thank you for The New Branch Experience: 2020 Design Upgrades letting us join you on your life’s journey.

Journey Well,

Lloyd L. Hamm, Jr. President and CEO

Newburyport Bank Core Values: Design renovations upgrade the banking experience at our Newbury and Amesbury offices.

We will treat customers, co-workers and We are investing in our customers’ comfort and in our future with exciting new branch design renovations featuring the “Universal Banker Model.” This model offers advantages community members with respect, fairness for customers and bankers alike. The design reduces the amount of time required by the and unwavering commitment to a high customer to connect with a banker and all but eliminates traditional teller lines. Highly standard of integrity and professionalism. skilled bankers are prepared to handle needs from simple to complex. For the bank, the design advances the type of business our skilled branch staff can conduct, requires less space, and ultimately strives to deliver elevated customer satisfaction.

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New Technology Platform Brings Speed, President’s Award

Features, Safety and Scale Ronald Richer - Internal Service Excellence

The COVID-19 pandemic produced many unique situations that 5 required immediate and strategic responses. Ron and his team

Account consolidations and changes responded with vision, creativity, and enthusiastic problem By investing in stronger solving. Some of the many projects included: installing Plexiglas® WELCOME TO AN technologies and Checking Accounts Even Better Journey. between cubicles; establishing a “lifeboat” site; swiftly closing operational efficiencies, CURRENT ACCOUNT CHANGING TO ACCOUNT IMPACTS and coordinating the sanitation of branches; posting signage No monthly maintenance fee. we’re investing in better Basic Checking Free Personal Checking No charge per check. and doorbells at branches as conditions continually evolved; Monthly maintenance fee $8 (from $10). Minimum balance $500 (from $1,000). banking services for Companion Checking NOW account Minimum opening balance $100 (from $1,000). establishing our PPP “hot” site and providing our Bank team with

Maintenance fee waived when minimum our customers. Navigator Checking NOW account balance met or direct deposit. the personal protective equipment needed to enable us to operate

Navigator Business Commercial Checking No change. Checking safely with each other and the public.

Stephanie Santos - External Service Excellence

2020 COMPUTER SYSTEMS UPGRADE GUIDE Stephanie joined the Bank in 2019 with the mission to build our Business Banking Division. Her vital role became all the Technology investment in the new computer systems brings a new level of innovation and service. more critical with the arrival of the pandemic and the financial uncertainty it caused our business clients. We turned to Stephanie, Our 2020 computer systems upgrade is driving exciting levels of innovation and service. her team, and the entire Bank staff to quickly build capabilities and We now have expanded online and mobile services, and streamlined registration to procedures to respond professionally and effectively to the Small significantly improve the customer experience. Our upgrade to the new computing platform Business Association’s Paycheck Protection Program (PPP) needs. demonstrates our commitment to investing in the safest and most convenient banking Stephanie’s exceptional leadership was the essential element in our experiences for our customers while further enabling the Bank to scale with ease. overwhelming success with this program. Stephanie’s outstanding performance continues to impress existing and new customers with the benefits of banking with Newburyport Bank.

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New Hires COVID-19

Sal DeFranco, Assistant Vice President, Business Banking Officer The challenges brought on by COVID-19 brought out the best in Newburyport Bank. Our team members demonstrated strength, creativity, and fortitude in the pursuit of providing The veterans in our community have already served us. Now it is our unparalleled customer service. At all hours of the day, and in all situations, we collaborated, turn to do for them what we do best: offer personalized banking to adapted, and cheerfully served. It was inspiring to be a part of this team. We are incredibly help build bright futures. In 2020, we recruited a dedicated leader for proud to have provided over $70 million in funding of Paycheck Protection Program (PPP) this important service as part of the expansion of our long-standing loans to our local businesses. Our dedicated teams united together in a shared mission, commitment to the banking needs of veterans. working tirelessly to support our customers and make the year a success. Distinguished military veteran, former Navy SEAL, trained lender and award-winning small business entrepreneur, Sal DeFranco leads our endeavor as a dedicated veteran partner and guide. With Sal, we now offer new and specialized business lending programs, cash Charitable Giving management services, and residential lending programs designed for veterans.

Paying honor to the people in our community who have served is one more way we can meet our founding goal of doing right by our customers and the communities we serve. Newburyport Bank recently received the Small Business Association award as the Top SBA 7-A Lender to veteran-owned businesses. WE HAVE AN OPPORTUNITY TO IMPACT SOMEONE’S

Rebecca Regnet, Executive Vice President, Chief Talent Officer

Newburyport Bank is at the forefront of advancing our industry. Our redefined in-person branch service model and our new mobile and Journey interactive technology not only enhances the customer experience, but supports how we manage and grow team careers. In 2020, we invested in our strategy and our people with the addition of Rebecca When we support our communities, we make a real difference and become part of something bigger. Regnet as Executive Vice President, Chief Talent Officer. We proudly value and invest in the people, businesses, and communities of the Greater Rebecca brings to us an exceptional blend of human resource Seacoast region. The more we can help each other Journey Well, the stronger we all leadership skills as well as banking industry experience in sales, bank become. product development and bank software and services. During 2020, we invested in more than 150 organizations who, like Newburyport Bank, are Prior to joining us, Rebecca consulted with the Bank for more committed to creating brighter futures for the people of our greater communities. than four years through her company, The Center for Practical Management. Rebecca was instrumental in the creation of our management development program; design of our new employee onboarding program; implementation of our multi-year team member career development strategy; and in identifying market growth opportunities for our Retail Banking Division. Rebecca builds on this experience now by providing executive leadership to the entire Retail Banking & Customer Service, Marketing and Human Resources teams.

8 9 NEWBURYPORT FIVE CENTS BANCORP, MHC NEWBURYPORT FIVE CENTS BANCORP, MHC CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF INCOME December 31, 2020 and 2019 December 31, 2020 and 2019 (in thousands) (in thousands)

2020 2019 2020 2019 ASSETS INTEREST AND DIVIDEND INCOME Cash and Due from Banks $ 5,872 $ 4,103 Interest and Fees on Loans $ 38,959 $ 35,028 Short-term Investments 57,397 21,028 Interest on Debt Securities 2,906 3,186 Total Cash and Cash Equivalents 63,269 25,131 Dividend Income 519 620 Interest in Short-term Investments and Certificates of Deposit 1 43 343 Certificates of Deposit 694 4,142 Total Interest and Dividend Income 42,527 39,177 Securities Available for Sale, at fair value 101,947 119,829 Marketable Equity Securities, at fair value 11,005 8,482 INTEREST EXPENSE Federal Home Loan Bank Stock, at cost 4,366 5,856 Deposits 4,959 9,739 Loans held for sale 624 815 FHLB and Other Borrowings 1,368 1,622 Loans, net 979,407 834,126 Securities Sold Under Agreement to Repurchase 8 5 Premises and Equipment, net 19,1 73 19,912 Total Interest Expense 6,335 11,366 Accrued Interest Receivable 3,243 3,001 Bank-owned Life Insurance 17,090 17,205 NET INTEREST INCOME 36,192 27, 8 1 1 Net Deferred Tax Asset 4,384 3,300 Provision for Loan Losses 5,167 1,759 Other Assets 6,826 2,786 Net Interest Income, after Provision for Losses 31,025 26,052 Total Assets $ 1,212,028 $ 1,044,585 NON-INTEREST INCOME LIABILITIES AND EQUITY CAPITAL Customer Service Fees 287 392 Deposits $ 886,874 $ 766,290 Net Gain on Securities Available for Sale 725 1,016 Securities Sold Under Agreements to Repurchase 2,404 1,307 Net Gain on Marketable Equity Securities 1,603 1,846 FHLB and Other Borrowings 154,822 122,567 Net Gain on Sales of Mortgage Loans 1,484 673 Mortgagor’s Escrow Accounts 2,567 2,259 Bank-owned Life Insurance Income 819 526 Accrued Expenses and Other Liabilities 18,545 10,933 Miscellaneous 2,332 1,472 Total Liabilities 1,065,212 903,356 Total Non-interest Income 7,250 5,925

Retained Earnings 146,238 140,389 NON-INTEREST EXPENSES Accumulated Other Comprehensive Income 578 840 Salaries and Employee Benefits 20,401 15,794 Total Equity Capital 146,816 141,229 Occupancy and Equipment 3,583 3,445 Total Liabilities and Equity Capital $ 1,212,028 $ 1,044,585 Data Processing 2,066 2,254 Charitable Contributions 195 303 Advertising 7 13 1,211 Deposit Insurance 352 102 Other General and Administrative 3,855 3,592 Total Non-interest Expenses 31,165 26,701

Income before Income Taxes 7,110 5,276 Provision for Income Taxes 1,261 940 Net Income $ 5,849 $ 4,336

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$611,000 CONTRIBUTED Thank You to our Team Members, Board of Directors and Corporators Newburyport Bank Charitable Newburyport Bank New Hampshire SPCA Foundation, Inc. Newbury Protection Fire Company #2 $195,000 Newburyport Choral Society $396,000 The year 2020 challenged us all in new ways. We are deeply grateful to our team of 1st Lt. Derek Hines Soldiers Assistance Fund Newburyport Human Rights Commission Anna Jaques Community Health Foundation Alzheimer’s Association, MA-NH Chapter 170 employees who selflessly served our customers. Newburyport Lions Club Arts in Reach American Independence Museum Newburyport Pioneer League Byfield Community Arts Center American Legion Dover Post 8 Baseball The Board’s guidance and insights are invaluable to the success of this organization. It is Newburyport Youth Hockey League Coastal Connections, Inc. Amesbury Chamber of Commerce Opportunity Works, Inc. an honor and a privilege to have the benefit of their astute leadership, wise counsel, and Coastal Economic Development Corporation Amesbury Council On Aging Our Neighbors Table Community Action Partnership of Strafford County considerate service. Pope Memorial Humane Society Cross Roads House, Inc. Amesbury Holiday Program Portsmouth Christian Academy Essex County Community Foundation Amesbury Youth Hockey League Portsmouth Little League Exeter Hospital Amesbury Youth Rotary Basketball League River Valley Charter School Families First Health & Community Support Anna Jaques Hospital Aid Association Our Directors: Rotary Club of Haverhill Firehouse Center For the Arts Big Brothers Big Sisters of New Hampshire Rotary Club of Newburyport Gather Black Heritage Trail of NH Patricia C. Johnson Bascom Salisbury Beach Partnership, Inc. General Charitable Society of Newburyport Boys & Girls Club of Lower Salvation Army of Newburyport GreenPath, Inc. Boys and Girls Club of Greater Haverhill Stephen P. Blanchette Sea Festival of Trees Lucy’s Love Bus Charitable Trust Care Dimensions Seacoast Board of Realtors Christopher M. Bouton Merrohawke Nature School Christ Episcopal Church Society of American Military Engineers Monarch School of New England Coastal Trails Coalition, Inc. Society of St. Vincent de Paul James T. Connolly My Friend’s Place Communities United, Inc. Somersworth Festival Association Newburyport Adult & Community Education Community Service of Newburyport SOS Recovery Community Organization Stephen J. DeGuglielmo Newburyport Art Association Cops For Kids With Cancer Strafford EDC Newburyport Chamber Music Festival Dana Farber Cancer Institute Brian S. Fecteau Strawbery Banke Museum Newburyport Education Foundation Daniel Webster Council, BSA The Granite YMCA Newburyport Literary Association, Inc. Dondero Elementary PTA Lloyd L. Hamm, Jr. The Home for Little Wanderers Newburyport Maritime Society Emmaus, Inc. The Housing Partnership Nourishing The North Shore Exchange Club of Haverhill Edward R. Hayes The Music Hall Our Neighbors Table Exeter Area Chamber of Commerce The Pettengill House, Inc. Salisbury Council on Aging Exeter Hospital Lucien R. Lacroix The Ryan J. Johnston Memorial Foundation Salisbury Elementary School PTA Exit Dance Theatre Veterans Count Marc A. MacBurnie Salvation Army of Newburyport Experience Hampton, Inc. Veterans Northeast Outreach Center, Inc. Salvation Army of Portsmouth Firehouse Center For the Arts Whittier Home Association Charles W. Morse, III Seacoast Charter School Friends of Newburyport Youth Services Whittier Regional Vocational Technical High School Seacoast Community Lunch Friends of the Amesbury Public Library Workshop Arts, Inc. Janice C. Morse Seacoast Educational Endowment - Dover Gather Wreaths Across America Seacoast Mental Health Center Granite State Children’s Alliance Jeffrey D. Nahas YMCA of the Seacoast Simple Living, Inc. Greater Beverly Chamber of Commerce YWCA of Greater Newburyport Southern New Hampshire Services, Inc. Greater Dover Chamber of Commerce K. Mark Primeau Zoo New England St. Paul’s Episcopal Church Greater Newburyport Chamber of Commerce Jean L. Trim The Arc of Greater Haverhill-Newburyport, Inc. Greater Newburyport Ovarian Cancer Awareness The Impossible Dream Greenbelt Michael A. Webber The Pelican Intervention Fund Gundalow Company The Pettengill House, Inc. Hampton Area Chamber of Commerce Wentworth-Douglass Hospital Jeanne Geiger Crisis Center, Inc. Zoo New England Kittery Block Party And finally, we are thankful for our Corporators who, as respected members of our Link House, Inc. communities, consistently demonstrate integrity and good judgment. As the Bank’s Lucy’s Love Bus Charitable Trust LUNGSTRONG ambassadors, these qualities are vital to the important role Corporators play in Richard A. Eaton Charitable Audubon Society, Inc. representing our organization. Foundation, Inc. Maudslay Arts Center Merrimac Council on Aging & Senior Center $20,000 Merrimack River Feline Rescue Society Merrimack Valley Chamber of Commerce Amesbury High School Merrimack Valley Habitat for Humanity Newburyport High School Monarch School of New England Pentucket Regional High School Preservation Trust Triton Regional High School New England Exchange Club Foundation, Inc.

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