Employee Benefits

12 Months Ended

Dec. 31, 2025

Employee Benefits

Employee Benefits

Note 10 – Employee Benefits

401(k) Plan – The Company has an employee tax deferred incentive plan (the “401(k) plan”) under which the Company makes voluntary contributions within certain limitations. All employees who meet specified age and length of service requirements are eligible to participate in the 401(k) plan. The amount contributed by the Company is included in salaries and employee benefits expense on the consolidated statements of income. The amounts contributed by the Company to the 401(k) plan for the years ended December 31, 2025, 2024 and 2023 were $2.9 million, $2.6 million and $2.0 million, respectively.

Employee Pension Plan – The Company provided pension benefits through a defined benefit plan maintained with the Co-operative Banks Employees Retirement Association (“CBERA”) (the “Plan”).

The Plan was a multi-employer plan whereby the contributions by each bank are not restricted to provide benefits to the employees of the contributing bank; therefore, the Company is not required to recognize the funded status of the plan on its consolidated balance sheet and need only accrue for any quarterly contributions due and payable on demand, or any withdrawal liabilities assessed by CBERA if the Company intended to withdraw from the Plan. Future benefits under the Plan were frozen as of December 31, 2023 and the Company withdrew from the defined benefit plan maintained with CBERA during the second quarter of 2024. The Plan was terminated during the year ended December 31, 2024 and was fully liquidated during the year ended December 31, 2025.

During the year ended December 31, 2024, an expense of $390,000 was recorded to reflect an increase in the liability related to the withdrawal from the Plan. During the year ended December 31, 2025, as part of the final Plan liquidation, the Company contributed an additional $480,000 to the Plan. The expenses were primarily driven by final computations for estimated payouts to participants.

Officers’ Deferred Compensation Plan – During 2014, the Company put into place an unfunded, defined contribution, Non-qualified Deferred Compensation Plan (“Officers’ Deferred Comp Plan”) for select employees of the Company.

The Officers’ Deferred Comp Plan was provided to key management of the Company and results in 5% - 20% of the employee’s then current base salary being credited to the participant’s account annually, subject to increases based upon increases in annual base compensation and the possibility of additional discretionary contributions. The employees vest at varying dates in accordance with each individual’s deferred compensation participation agreement; however, all key officers will be fully vested upon the attainment of age 65. The obligations under these plans are included in accrued retirement liabilities in the Company’s consolidated balance sheets and approximated $2.4 and $2.6 million at December 31, 2025 and 2024, respectively. The expense under the Officers’ Deferred Comp Plan (recorded in salaries and employee benefits in the consolidated statements of income) approximated $342,000, $300,000 and $349,000 for the years ended December 31, 2025, 2024 and 2023, respectively.

Deferred Compensation Plan – In January 2022, the Company put into place an unfunded Non-qualified Deferred Compensation Plan (“Deferred Comp Plan”) for select employees of the Company. The Deferred Comp Plan was provided to key management of the Company and allows for the employees to defer amounts from their salary, bonus, or Long-Term Incentive Plan (“LTIP”) into the Deferred Comp Plan to be paid out at a future date. Amounts deferred under the Deferred Comp Plan increase in value based upon the growth of the Bank’s tangible capital, with the Compensation Committee holding discretionary authority. The obligations under the Deferred Comp Plan are included in accrued retirement liabilities on the Company’s consolidated balance sheets and approximated $5.1 million and $878,000 at December 31, 2025 and 2024, respectively. The expense under this plan (recorded in salaries and employee benefits in the consolidated statements of income) was $509,000 and $6,000 for the years ended December 31, 2025 and 2023, respectively. The Company recognized income due to forfeitures under the Deferred Comp Plan (recorded in salaries and employee benefits in the consolidated statements of income) of $360,000 during the year ended December 31, 2024.

LTIP – In January 2020, the Company put into place an LTIP for certain members of its management team where benefits are awarded annually on a discretionary basis and cliff vest after three years.

Under the LTIP, individuals are granted “phantom shares” and benefits are accrued based upon the projected growth of the Bank’s tangible capital. The obligations under this plan are included in accrued retirement liabilities on the Company’s consolidated balance sheets and approximated $7.2 million and $14.6 million as of December 31, 2025 and 2024, respectively. The expense under this plan (recorded in salaries and employee benefits in the consolidated statements of income) approximated $2.6 million, $6.1 million and $7.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Director Pension Plan – The Company maintains a director defined benefit pension plan which covers members of the board of directors who were in service prior to 2023, upon meeting specific qualifications.

Pension expense under this plan is charged to current operations and consists of several components of net periodic pension cost based on various actuarial assumptions regarding future experience under the plans.

The Company recognizes the over-funded or under-funded status of a defined benefit plan as an asset or liability in its consolidated balance sheet and it recognizes changes in the funded status of the plan in the year in which the changes occur. The funded status of a plan is measured as the difference between the fair value of plan assets and the “projected benefit obligation” (“PBO”) at the consolidated financial statement date. The unrecognized prior service costs, net actuarial gains and accounting transition obligation are reflected as OCI. The changes in the plan’s funded status are recognized as charges or credits to OCI to the extent that they are not required to be recognized as components of net periodic pension cost in net income (see Note 16). Effective December 31, 2024, the director pension plan was frozen and participants no longer accrue additional retirement benefits.

A comparison of the actuarial estimates of the benefit obligations to the recorded obligations are as follows as of the measurement date, December 31:

	2025		2024
	(in thousands)
Projected benefit obligations	$	(6,847)	$	(5,725)
Plan assets at fair value		-		-
Funded status	$	(6,847)	$	(5,725)

Amounts recognized on the consolidated balance sheet as of December 31 are as follows:

	2025		2024
	(in thousands)
Accrued retirement liabilities	$	(4,816)	$	(4,642)
Accumulated other comprehensive loss included in sahreholders' equity, pre-tax		(2,031)		(1,083)
Net amount recognized	$	(6,847)	$	(5,725)

Amounts included in AOCI (pre-tax) that have not yet been recognized as components of net periodic pension cost as of December 31 are as follows:

	2025		2024
	(in thousands)
Unrecognized net actuarial losses	$	(1,054)	$	(883)
Unrecognized prior service costs		(977)		(200)
Unrecognized losses included in AOCI	$	(2,031)	$	(1,083)

The weighted average actuarial assumptions used to determine the director pension plan projected benefit obligations and net periodic pension cost are as follows as of December 31:

	2025	2024
Pre-retirement discount rate for net periodic pension cost	5.31%	4.81%
Pre-retirement discount rate for projected benefit obligation	4.70%	5.31%
Post-retirement discount rate for projected benefit obligation	4.70%	5.31%
Rate of compensation increase	0.00%	0.00%

The following schedule reflects the net periodic pension cost, contributions received, and benefits paid for the years ended December 31:

	2025		2024		2023
	(in thousands)
Benefit obligation at beginning of the year	$	5,725	$	5,744	$	4,998
Service cost		-		316		260
Interest cost		344		264		261
Plan amendments		1,025		-		430
Actuarial (gain) loss		233		(119)		244
Benefits paid		(480)		(480)		(449)
Benefit obligation at end of the year	$	6,847	$	5,725	$	5,744

The components of projected net periodic pension cost for the years ended December 31 are as follows (amortization amounts will be recorded via charges or credits to OCI):

	2025		2024		2023
	(in thousands)
Service cost	$	-	$	316	$	260
Interest cost		344		264		261
Amortization of prior service costs		62		86		81
Amortization of net actuarial losses		248		57		487
Net periodic pension cost	$	654	$	723	$	1,089
Employer contribution	$	480	$	480	$	449
Benefits paid	$	480	$	480	$	449

The Company records an estimate of net periodic pension cost for the director pension plan to accrued retirement liabilities on the consolidated balance sheet on a monthly basis. Equity adjustments, to AOCI, in conjunction with the pension plan are recorded by the Company annually upon receipt of the independent actuarial report.

The following estimated pension benefit payments, which reflect expected future service as appropriate, are expected to be paid over the next ten years (in thousands):

Estimated benefit payments
2026	$	540
2027		528
2028		564
2029		758
2030		854
2031 and thereafter		3,390
	$	6,634

Employee Stock Ownership Plan (“ESOP”) – As part of the Initial Public Offering ("IPO") completed on December 27, 2023, the Bank established a tax-qualified ESOP to provide eligible employees the opportunity to own Company shares. The ESOP borrowed $47.2 million from the Company to purchase 3,416,458 common shares on the open market. The loan is payable in annual installments over 20 years at an interest rate of 8.50%. During the year ended December 31, 2025, the loan was refinanced into annual installments over the remaining 19 years at an interest rate of 7.50%. As the loan is repaid to the Company, shares are released and allocated proportionally to eligible participants on the basis of each participant’s proportional share of compensation relative to the compensation of all participants. The unallocated ESOP shares are pledged as collateral on the loan. The Company accounts for its ESOP in accordance with FASB ASC 718-40, Compensation – Stock Compensation. Under this guidance, unreleased shares are deducted from shareholders’ equity as unearned ESOP shares on the accompanying consolidated balance sheets.

The Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they are committed to be released. To the extent that the fair value of the Company’s ESOP shares differs from the cost of such shares, the difference will be credited or debited to shareholders' equity.

As the loan is internally leveraged, the loan receivable from the ESOP to the Company is not reported as an asset nor is the debt of the ESOP shown as a liability on the Company’s consolidated balance sheets.

Total compensation expense recognized in connection with the ESOP was $3.2 million and $2.8 million for the years ended December 31, 2025 and 2024, respectively. The Company did not recognize any compensation expense related to the ESOP for the year ended December 31, 2023.

The following table presents share information held by the ESOP:

	As of December 31,
	2025		2024
	(Dollars in thousands)
Allocated shares		170,823		—
Shares committed to be released		170,823		170,823
Unallocated shares		3,074,812		3,245,635
Total shares		3,416,458		3,416,458
Fair value of unallocated shares	$	60,943	$	58,616

Stock-Based Compensation – On April 23, 2025, the shareholders of the Company approved the NB Bancorp, Inc. 2025 Equity Incentive Plan (“2025 Plan”). The 2025 Plan provides for the issuance of up to 5,987,802 shares of common stock pursuant to grants of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), non-qualified stock options and incentive stock options, any or all of which can be granted with performance-based vesting conditions. Under the 2025 Plan, 1,708,229 shares may be issued as RSAs or RSUs, including those issued as performance shares and PSUs, and 4,270,573 shares may be issued upon the exercise of stock options. These shares may be awarded from the Company’s authorized but unissued shares. However, the 2025 Plan permits the grant of additional RSAs or RSUs above the aforementioned limit, provided that, for each additional share of RSA or RSU awarded in excess of such limit, the pool of shares available to be issued upon the exercise of stock options will be reduced by three shares. The restricted stock awards are measured based on grant-date fair value, which reflects the 10-day volume-weighted average price of our stock, on the date of the grant. All of the restricted stock awards which have been granted to date vest over five years in equal portions beginning on the first anniversary date of the restricted stock award.

The following table presents stock-based compensation activity for the periods indicated (dollars in thousands):

	For the Year Ended December 31, 2025			For the Year Ended December 31, 2024			For the Year Ended December 31, 2023
	Number of Shares		Weighted-Average Grant Date Fair Value Per Share	Number of Shares		Weighted-Average Grant Date Fair Value Per Share	Number of Shares		Weighted-Average Grant Date Fair Value Per Share
Non-vested balance at beginning of period	—	$	—	—	$	—	—	$	—
Granted	1,284,525		16.41	—		—	—		—
Vested	—		—	—		—	—		—
Forfeited	—		—	—		—	—		—
Non-vested balance at end of period	1,284,525	$	16.41	—	$	—	—	$	—

The following table presents stock-based compensation expense for the periods indicated:

	For the Year Ended December 31, 2025		For the Year Ended December 31, 2024		For the Year Ended December 31, 2023
	(in thousands)
Stock-based compensation expense:
Restricted stock awards	$	2,910	$	—	$	—
Total stock-based compensation expense	$	2,910	$	—	$	—
Related tax benefits recognized in earnings	$	—	$	—	$	—

During the year ended December 31, 2025, the Company granted 1,284,525 shares of restricted stock with a weighted-average grant date fair value per share of $16.41 and recognized $2.9 million of stock compensation expense. The Company did not have any restricted stock activity or recognize any stock compensation expense during the years ended December 31, 2024 or 2023.