Winchester Bancorp, Inc. operates as the registered bank holding company of Winchester Savings Bank, a Massachusetts-chartered savings bank headquartered in Winchester, Massachusetts, with a history dating back to 1871. The Bank operates from its main office and four full-service branch offices in eastern Massachusetts, located in Arlington, Danvers and Woburn, with its primary deposit market in Middlesex County and, to a lesser extent, Essex County, and its primary lending market in Middlesex County and surrounding Massachusetts counties. The Boston metropolitan area benefits from a highly diversified economic base, including numerous institutions of higher learning, medical care and research centers, and corporate headquarters of significant multinational corporations, along with many technology companies, which drives demand for residential homes, multifamily apartments, office buildings, shopping centers, industrial warehouses and other commercial properties.
The Bank faces significant competition within its market both in making loans and attracting deposits, with a high concentration of financial institutions including large money center and regional banks, community banks and credit unions. Competitors include commercial banks, savings institutions, mortgage banking firms, consumer finance companies and credit unions, as well as short-term money market funds, brokerage firms, mutual funds and insurance companies for deposits. Some competitors offer products and services that the Bank does not currently offer, such as automated wire transfers, and the Bank's ability to compete does not depend on any existing customer relationships.
The Bank's business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family residential real estate loans, multi-family residential real estate loans, construction loans, commercial real estate loans, home equity loans and lines of credit, commercial business loans and consumer loans, as well as in investment securities. The Bank retains the significant majority of the one- to four-family residential real estate loans it originates, and historically has sold limited amounts of loans, with no loans held for sale at any of the dates indicated.
The loan portfolio is composed primarily of mortgage loans, with one- to four-family residential real estate loans totaling $405.3 million, or 46.5% of the total loan portfolio at June 30, 2026, multi-family real estate loans totaling $212.6 million, or 24.3%, commercial real estate loans totaling $106.6 million, or 12.2%, and construction loans totaling $116.4 million, or 13.3%. Home equity loans and lines of credit totaled $29.0 million, or 3.3%, commercial loans totaled $3.9 million, or 0.4%, and consumer and other loans totaled $166,000, or less than 0.1% of the total loan portfolio. The average principal loan balance of one- to four-family residential real estate loans was $482,000, with 81.9% owner-occupied and 18.1% rental properties, while the average commercial real estate loan balance was $1.3 million and the average multi-family loan balance was $2.3 million.
The Bank originates fixed-rate and adjustable-rate one- to four-family residential real estate loans with terms up to 30 years, generally limiting loan-to-value ratios to 80% without private mortgage insurance, up to 95% with private mortgage insurance, and up to 97% for affordable and first-time homebuyer programs. Commercial real estate loans are originated with rates tied to Federal Home Loan Bank five-year classic advance rate plus a margin, with maximum loan-to-value ratios generally 75%, and the majority are non-owner-occupied. Construction loans are structured as straight construction or construction/permanent loans, underwritten to the same guidelines as commercial mortgage loans, with a maximum loan-to-value ratio of 75% of the estimated appraised market value upon completion. Home equity loans and lines of credit are secured by the borrower's primary or secondary residence, commercial loans are generally secured by business assets such as equipment and accounts receivable, and consumer loans include new and used automobile loans, unsecured overdraft lines of credit and loans secured by savings accounts.
In connection with the mutual holding company reorganization completed on April 30, 2025, the Company sold 3,997,012 shares of common stock at $10.00 per share for gross proceeds of $39,970,000, and issued 5,112,457 shares to Winchester Bancorp, MHC, and 185,907 shares to the Winchester Savings Bank Charitable Foundation, Inc. At June 30, 2026, the Company had total assets of $1.1 billion, total deposits of $809.2 million and total stockholders' equity of $120.5 million. The Company had net income of $4.4 million for the year ended June 30, 2026, compared to a net loss of $874,000 for the year ended June 30, 2025.
The Company's financial performance improved significantly in fiscal 2026, with net income of $4.4 million compared to a net loss of $874,000 in the prior year, reflecting a turnaround in profitability. Total assets grew to $1.1 billion, and total deposits reached $809.2 million, while total stockholders' equity stood at $120.5 million at June 30, 2026. The loan portfolio expanded to $873.8 million in total gross loans, up from $754.1 million at June 30, 2025, with the allowance for credit losses increasing to $4.8 million from $4.2 million.
The Company's forward-looking statements include goals, intentions and expectations regarding business plans, prospects, growth, financial condition and results of operations, the quality of loan and investment portfolios, and estimates of risks and future costs and benefits. These statements are based on current beliefs and expectations and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control, and the Company is under no duty to update any forward-looking statements after the date of the report.
The Company's growth strategy centers on its primary lending market in Middlesex County and surrounding Massachusetts counties, with a focus on originating one- to four-family residential real estate loans, multi-family real estate loans, commercial real estate loans and construction loans. The Bank retains the significant majority of the one- to four-family residential real estate loans it originates, and from time to time purchases loan participations where it is not the lead lender, with outstanding participations totaling $59.5 million, or 6.8% of the loan portfolio, at June 30, 2026, consisting of eight borrower relationships secured by commercial real estate. The Bank also occasionally sells participations to remain within loans-to-one-borrower limits, having participated out $2.0 million in loans during the year ended June 30, 2025.
The Bank's lending activities are supported by its deposit gathering in Middlesex and Essex Counties, with the Boston metropolitan area's diversified economic base, including technology companies and institutions of higher learning, driving demand for various property types. The Bank's ability to generate loans depends on relative borrower demand, market interest rates and pricing levels established by competing banks, thrifts, credit unions and mortgage banking companies, and the volume of loan originations can vary from period to period. The Bank's adjustable-rate one- to four-family residential real estate loans carry terms to maturity ranging from five to 30 years, with initial fixed-rate periods of three, five or seven years, and the Bank generally limits loan-to-value ratios to 80% without private mortgage insurance, up to 95% with private mortgage insurance, and up to 97% for affordable and first-time homebuyer programs.
The Bank's cost structure is influenced by its underwriting and monitoring practices, including requiring borrowers and loan guarantors to provide quarterly, semi-annual or annual financial statements depending on the size of the loan, and obtaining environmental phase one reports when hazardous materials may have existed on the site. The Bank's loan quality control process may utilize an independent third party to conduct appraisal reviews subsequent to loan origination, and all appraisals are input into Fannie Mae's Desktop Underwriter for reasonableness prior to origination. The Bank's delinquency procedures involve sending late notices between the 16th and 18th day after a loan is past due, contacting borrowers at 30 days past due, and potentially beginning foreclosure proceedings after a 90-day cure period.
The Bank's capital allocation is reflected in its regulatory lending limits, with the maximum amount the Bank may lend to one borrower generally limited to 20% of capital, which was $20.5 million at June 30, 2026. The Bank's internal loans-to-one-borrower limits are $2.5 million for residential first mortgage loans, $1.0 million for residential second mortgage loans, and $10.0 million for other extensions of credit. The Bank's largest loan relationship at June 30, 2026 was $16.0 million, collateralized by a 53-unit multi-family real estate loan and $16.8 million in cash held in a restricted account, representing a 38.8% participation interest, and the second largest loan was $15.8 million, collateralized by a 33-unit multi-family real estate loan.
The Bank faces headwinds from competition in its market area, with a high concentration of financial institutions, some of which offer products and services the Bank does not currently offer, such as automated wire transfers. The Bank's loan portfolio is subject to risks from commercial real estate and multi-family real estate lending, which generally have larger balances and involve a greater degree of risk than one- to four-family residential real estate loans, with repayment often dependent on the successful operation and management of income-producing properties. Construction lending involves additional risks because funds are advanced upon the security of a project of uncertain value before completion, and adjustable-rate mortgage loans may increase borrower default risk as interest rates rise, subject to rate caps.
The Bank's ability to compete and grow is also affected by general economic conditions nationally and in its market areas, changes in the level and direction of loan delinquencies and write-offs, fluctuations in real estate values, demand for loans and deposits, inflation and changes in interest rates, and changes in laws or government regulations or policies, including monetary and fiscal policies. The imposition of tariffs or other domestic or international governmental policies and retaliatory responses could also impact the business. The Bank's operational and information security systems are subject to risks of failure or breach, including cyberattacks, and the Bank's ability to retain key employees is important to its operations.
Management's message emphasizes the Company's position as a community bank with a long history, having been originally chartered in 1871, and its focus on serving the eastern Massachusetts market. The forward-looking statements highlight goals and intentions regarding business plans, prospects, growth, financial condition and results of operations, with an emphasis on the quality of the loan and investment portfolios and estimates of risks and future costs and benefits. The strategic priorities include continuing to originate a mix of one- to four-family residential real estate loans, multi-family real estate loans, commercial real estate loans and construction loans, while managing the risks inherent in these lending activities, and maintaining the Bank's regulatory capital position, with the loans-to-one-borrower limit at $20.5 million at June 30, 2026.
Total assets were $1.1 billion at June 30, 2026, compared to $1.1 billion at June 30, 2025. Total deposits were $809.2 million at June 30, 2026, and total stockholders' equity was $120.5 million. Net income was $4.4 million for the year ended June 30, 2026, compared to a net loss of $874,000 for the year ended June 30, 2025. Total gross loans were $873.8 million at June 30, 2026, up from $754.1 million at June 30, 2025, with net deferred loan origination costs of $1.7 million and an allowance for credit losses of $4.8 million, resulting in loans, net of $870.8 million. The allowance for credit losses was $4.2 million at June 30, 2025, with loans, net of $751.2 million. The Company sold 3,997,012 shares of common stock at $10.00 per share for gross proceeds of $39,970,000 in connection with the reorganization, and issued 5,112,457 shares to Winchester Bancorp, MHC, and 185,907 shares to the Winchester Savings Bank Charitable Foundation, Inc. The largest loan relationship was $16.0 million, representing a 38.8% participation interest, and the second largest loan was $15.8 million. Loan participations where the Bank is not the lead lender totaled $59.5 million, or 6.8% of the loan portfolio, consisting of eight borrower relationships. The Bank participated out $2.0 million in loans during the year ended June 30, 2025, and purchased one loan during the year ended June 30, 2026.
The Bank's loan portfolio is concentrated in commercial real estate and multi-family real estate loans, which generally have larger balances and involve a greater degree of risk than one- to four-family residential real estate loans, with repayment often dependent on the successful operation and management of income-producing properties, and any decline in real estate values may be more pronounced for these property types. Construction lending involves additional risks because funds are advanced upon the security of a project of uncertain value before completion, and if the appraised value of a completed project proves to be overstated, the Bank may have inadequate security and may incur a loss. Adjustable-rate mortgage loans may increase borrower default risk as interest rates increase, subject to rate caps, and the interest rates on most of these loans do not adjust for up to five years after origination, limiting their effectiveness in compensating for changes in market interest rates. The Bank faces significant competition in its market area, with some competitors offering products and services the Bank does not currently offer, such as automated wire transfers. The Bank's loan participations where it is not the lead lender totaled $59.5 million, or 6.8% of the loan portfolio, and consisted of eight borrower relationships secured by commercial real estate, exposing the Bank to credit risk from borrowers it did not originate.
Analysis on 9/16/2026
