HFG Hometown Financial Group, Inc./MD S-1/A amended IPO prospectus section summaries

Offering and conversion

Hometown Financial Group, Inc. (HFG) is conducting a stock offering as part of the conversion of Hometown Financial Group, MHC, the mutual holding company of TruNorth Bank, into a stock holding company. HFG common stock has no existing public or private market; the company expects to list on the Nasdaq Capital Market under “HFG,” subject to final approval. Shares are offered at $10.00 each.

Each scenario includes estimated offering expenses of $5.826 million; selling-agent fees and expenses range from $4.598 million to $6.937 million. HFG also intends to contribute shares equal to 4% of shares sold to a charitable foundation established in connection with the conversion.

At least 51.0 million shares must be sold to complete the conversion and offering. The subscription offering is scheduled to expire December 18, 2026; extensions are subject to limits and regulatory approval, and the offering must be completed by July 6, 2028. Orders may require confirmation, modification, or cancellation if the offering extends beyond February 1, 2027, or the share count moves outside the specified range. Subscriber funds are held in a segregated TruNorth Bank account and earn 0.05% annually pending completion or termination. Keefe, Bruyette & Woods is acting on a best-efforts basis and is not obligated to purchase shares unless HFG conducts a firm-commitment underwriting.

Proposed acquisition and footprint

Immediately after the conversion and offering, HFG expects to acquire New Hampshire-based Primary Bank for approximately $160.0 million: approximately $85.4 million in cash and 7,566,012 HFG shares. The conversion is not contingent on the merger, but the merger depends on completion of the conversion. If the merger is terminated, HFG may terminate or delay the conversion; a delay could materially affect its timing and structure and give subscribers rights to modify or rescind orders.

TruNorth Bank operates 54 full-service offices—48 in Massachusetts, five in Connecticut, and one in New Hampshire. Primary Bank has four full-service offices in New Hampshire.

Employee 401(k) subscription option

The TruNorth Bank 401(k) Plan had approximately $170.733 million in assets at December 31, 2025 and approximately 1,050 active and former participants. The plan may acquire up to 8,536,650 shares at $10.00 per share. Eligible participants may elect to invest up to 50% of their account balance, net of outstanding loans, as of September 30, 2026. Elections through the CBERA portal are irrevocable and due by 2:00 p.m. ET on December 11, 2026. The minimum purchase is 25 shares ($250); generally, the maximum is 50,000 shares ($500,000) per individual or qualifying joint account, or 120,000 shares ($1.2 million) for a person or entity together with associates or persons acting in concert, across offering categories.

Participants must use a Schwab brokerage account within the plan to hold HFG shares. Maintaining the account costs $12.50 per quarter ($50 annually) when it holds at least $1 in cash or securities—equivalent to 20% of a $250 minimum purchase. Total HFG stock in the brokerage account, including IPO shares, may not exceed 90% of the participant’s plan balance. Existing brokerage assets cannot be used directly for the IPO purchase: designated funds are liquidated pro rata from core investments and held in an interest-bearing account pending closing. Oversubscription may reduce or eliminate an allocation; unused funds and interest are returned in cash after closing.

The plan offers pass-through voting rights. Sales may be subject to Section 16(b), and certain officers subject to regulatory restrictions cannot trade IPO shares for one year. Employer stock carries concentration risk; the prospectus warns that investing more than 20% of retirement savings in one company or industry may leave savings insufficiently diversified. The shares are not deposits, are not FDIC-insured or government-guaranteed, and HFG’s share price may be volatile.

The tax-qualified, multiple-employer plan permits eligible employees to defer 1%–75% of compensation, subject to legal limits. TruNorth matches eligible deferrals, including catch-up contributions, dollar-for-dollar up to 5% of compensation, and contributes an additional 3% of compensation for eligible employees regardless of employee deferrals. Employee deferrals, employer discretionary contributions, and rollovers are immediately vested; matching contributions vest 20% per service year beginning after one year and are fully vested after five years, subject to accelerated vesting in specified circumstances.

Selected plan-fund returns through July 31, 2026 were:

These are plan-fund returns, not HFG stock performance. HFG identifies as a non-accelerated filer and an emerging growth company.

Conversion, offering and transaction

Hometown Financial Group, MHC plans to convert from mutual to stock ownership, cease to exist, and become Hometown Financial Group, Inc., a Maryland stock holding company owned by public stockholders. TruNorth Bank will remain its wholly owned subsidiary. The new holding company has conducted no business beyond organizational matters. The conversion and offering are intended to strengthen capital and liquidity, support organic growth and technology investment, fund employee stock-based plans and a charitable foundation, and provide capacity for potential acquisitions.

The appraisal was as of August 4, 2026, and will be updated before closing. If final pro forma market value is below $530.4 million or above $825.2 million, the company may terminate and refund the offering, reset the range and resolicit orders, or take another permitted action. The $10 offering price and appraisal are not assurances that shares will trade at or above $10. At the midpoint, appraisal-indicated P/E was 11.01x versus 13.44x for peers, and price-to-book and price-to-tangible-book were 51.92% and 60.42%, respectively, versus peer averages of 128.05% and 149.09%. The appraisal applied a slight downward adjustment for profitability, growth and earnings viability, but a slight upward adjustment for financial condition.

At the midpoint, intended uses of net proceeds are:

Initially, substantial proceeds are expected to be placed in short-term investments. The company says repayment of the senior note is expected to reduce interest expense and improve net interest margin. Retained funds may also support dividends, repurchases, investments, debt reduction, acquisitions or branch expansion.

Primary Bank acquisition and offering participation

On July 6, 2026, Hometown agreed to acquire Primary Bank of Bedford, New Hampshire, for an indicated transaction value of approximately $160.0 million. At June 30, 2026, Primary Bank had $769.5 million of assets, $664.8 million of net loans, $644.2 million of deposits and four locations. Its shareholders may elect $33.00 cash or 3.100 Hometown shares per share, subject to 50% of Primary shares being converted to cash and 50% to stock. The appraisal excludes approximately 7,566,012 shares expected to be issued as merger consideration; that amount could increase if Primary Bank options are exercised. The merger is expected immediately after the conversion, subject to approvals and completion of the offering. The conversion is not contingent on the merger, though termination of the merger could lead Hometown to delay or terminate the conversion.

Subscription priority goes to qualifying depositors as of June 30, 2025, then June 30, 2026, followed by tax-qualified employee plans and then employees, officers, directors/trustees and corporators. Remaining shares may be offered to the local community and then through a syndicated community or underwritten offering; orders may be prorated if oversubscribed. The ESOP is expected to purchase 8% of shares sold plus foundation shares. Directors/trustees, executive officers and associates expect to subscribe for 1.195 million shares ($11.95 million), equal to 2.3% of shares at the minimum offering size, excluding foundation shares. They pay the same price as other buyers and generally cannot sell offering shares for at least one year.

The offering requires orders for at least 51.0 million shares, excluding foundation shares, and final regulatory approvals. If demand is insufficient, Hometown may increase purchase limits or seek an extension beyond February 1, 2027, subject to regulatory approval and resolicitation. Funds returned after termination or resolicitation earn 0.05% interest.

Business and strategy

At June 30, 2026, Hometown MHC had $6.94 billion of consolidated assets, $5.32 billion of net loans, $5.81 billion of deposits and $755.3 million of equity capital. TruNorth Bank operates 54 offices in Massachusetts, northeastern Connecticut and southern New Hampshire. On August 21, 2026, the company merged its three subsidiary banks into one institution, renamed TruNorth Bank. Management expects the unified brand and operations to reduce redundancies and non-interest expense, improve efficiency, broaden customer access and support larger lending relationships. After a history of eight bank acquisitions in 11 years, management expects to emphasize organic growth while remaining open to opportunistic acquisitions.

The substantial property-related loan concentration makes disciplined underwriting and credit oversight important as the company expands commercial lending. Management aims to grow core deposits and diversify funding through additional products, digital channels, fintech partnerships and selective branches. Its commercial initiative targets New England middle-market businesses with $10 million–$500 million in annual revenue, with opportunities to cross-sell deposits, cash management and letters of credit; it hired a Chief Commercial Banking Officer in December 2025.

For FY 2026, TruNorth Mortgage originated $458.1 million of one- to four-family loans, sold $151.6 million in the secondary market and generated $1.8 million of non-interest income. It serviced $525.0 million of loans sold to third parties and earned $887,000 in servicing fees. It also originated $108.4 million of home equity loans and lines of credit retained in portfolio.

Dilution, trading and other risks

The company will contribute shares equal to 4% of shares sold to a charitable foundation, valued at $24.0 million at the offering midpoint. The foundation must distribute at least 5% of average fair value of net investment assets annually, implying about $1.2 million of first-year grants at midpoint; the contribution dilutes purchasers and adversely affects conversion-year net income. Existing Giving Tree foundations had $14.6 million in assets at June 30, 2026, donated more than $3.1 million in 2025 and contributed over $14 million to more than 900 organizations and causes during 2015–2025.

Potential post-offering stock benefit plans require shareholder approval and cannot be implemented until at least six months after completion. If adopted within 12 months, plans may reserve up to 4% of shares sold plus foundation shares for restricted stock and up to 10% for options. Estimated total dilution from stock awards and options is 10.91% at the minimum and 11.37% at the adjusted maximum; estimated combined grant value is $88.471 million and $137.650 million, respectively. Option estimates use a $4.68 grant-date fair value per option. Employment and change-in-control agreements with certain executives are also planned.

There is no current market for HFG shares. Nasdaq Capital Market listing approval is a closing condition; KBW intends, but is not obligated, to make a market. Shares will be issued in book-entry form, and purchasers may not receive ownership statements before trading begins around closing. The board has not determined whether or when to pay dividends. The prospectus identifies risks relating to lending and credit, interest rates, economic conditions, liquidity and funding, growth, regulation, competition, operations and accounting, as well as share-price volatility, use of proceeds, post-offering returns, benefit-plan dilution, anti-takeover provisions and litigation forum selection.

Hometown qualifies as an emerging growth company and elected the extended transition period for new or revised accounting standards, which may make its financial statements less comparable to public companies that adopt standards earlier. EGC status ends upon specified time, revenue, debt-issuance or public-float thresholds, including annual gross revenue of at least $1.235 billion, issuance of more than $1.0 billion of non-convertible debt over three years, or qualifying non-affiliate market value above $700 million.

Principal risks and exposures

Credit, real estate and geographic concentration

At June 30, 2026, lending was concentrated in residential mortgages and commercial real estate, with much of the company’s business tied to Massachusetts and nearby markets.

Of non-owner-occupied CRE, $19.6M, or 1.5%, was past due. These loans depend on property cash flows and tenants’ rent payments; commercial business loans can involve larger individual exposures and reliance on borrowers’ operating cash flows. Construction lending is exposed to project delays, cost overruns, completion and valuation risks, and availability of take-out financing. Residential loans remain vulnerable to local economic weakness and declining home values. Management intends to grow commercial lending, increasing the importance of managing these exposures. Inadequate credit-loss estimates or regulatory and auditor reviews could require higher provisions or charge-offs.

A local downturn could weaken borrowers, collateral and guarantors, increase delinquencies, foreclosures and credit provisions, and reduce loan demand, liquidity and profitability. Massachusetts was described as broadly resilient in 2026, but risks include high living costs, an aging workforce, subdued hiring, industry-specific job losses and reduced federal funding to educational institutions. Housing values remain near record highs, though price growth has flattened after earlier double-digit gains. Inflation could raise operating costs and impair repayment capacity; deflation could also weaken business borrowers and collateral.

Interest rates, securities and funding

Net interest income is the company’s principal income source. Because interest-bearing liabilities generally reprice or mature sooner than earning assets, rising rates may raise deposit and borrowing costs faster than asset yields. Falling rates can reduce yields as borrowers prepay mortgages and callable securities are reinvested at lower rates; an inverted yield curve may also pressure margins. Rate changes can affect loan demand, mortgage originations, asset values and equity. Asset/liability strategies may not offset substantial or prolonged rate movements.

Unrealized available-for-sale securities gains and losses, net of tax, flow through accumulated other comprehensive income or loss and stockholders’ equity, even if securities are not sold. Further fair-value declines could reduce equity and book value per share.

Deposits are the primary funding source. Competition or customers shifting to higher-yielding alternatives could require more expensive certificates of deposit, FHLB advances, brokered deposits or credit lines, pressuring margin and earnings. Municipal deposits are mainly demand or short-term and rate-sensitive; losing them or paying more to retain them could impair liquidity and profitability.

A significant funding risk is the planned exit from the Massachusetts Depositors Insurance Fund (DIF), subject to approval by the Massachusetts Banking Commissioner. At June 30, 2026, deposits above the federal insurance limit totaled $1.85B, including $630.0M of federally uninsured CDs, then fully covered by DIF. After DIF notified TruNorth Bank in October 2026 that excess deposits exceeded its internal threshold, the bank expected to exit. New deposits above FDIC limits would no longer receive DIF coverage; existing accounts generally retain coverage for one year, declining as funds are withdrawn, while existing term deposits retain applicable coverage until maturity. Depositor outflows or use of reciprocal programs could raise funding costs and reduce net income. At the holding-company level, cash flows depend mainly on offering proceeds and TruNorth Bank dividends, which are subordinate to bank creditors and subject to regulatory restrictions.

Mortgage banking, growth and Primary Bank merger

For FY2026, TruNorth Mortgage originated $458.1M and sold $151.6M of one- to four-family mortgages, generating $1.8M of gain-on-sale income. Servicing sold loans generated $887,000 in fees; serviced loans totaled $525.0M at June 30, 2026. Reliance on agency and other investor programs, market liquidity, rates and investor demand can constrain activity. The company has recently retained some longer-term fixed-rate mortgages to diversify its balance sheet; representations and warranties can also require repurchases or indemnification.

Hometown Financial is shifting toward organic growth after consolidating subsidiary bank brands, but attracting customers and experienced bankers, managing capacity and funding expansion may be difficult. Costs could outpace revenue, and acquisitions add integration, dilution, impairment and management-distraction risks. The company reported no excess CRE concentration under supervisory guidance at June 30, 2026, and did not expect the Primary Bank acquisition to create one; regulatory scrutiny or lending limits could nevertheless constrain growth.

The proposed Primary Bank merger, under an agreement dated July 6, 2026, requires regulatory and shareholder approvals and completion of a conversion and stock offering. Delays, conditions, insufficient orders for minimum offering shares, integration costs or unrealized synergies could delay, diminish or prevent completion. More than 10% of eligible Primary Bank shares exercising dissenters’ rights would permit termination; cash payments to dissenters could exceed otherwise applicable merger consideration. Hometown Financial expects to issue approximately 7,566,012 common shares. At the offering midpoint after closing, former Primary Bank shareholders are expected to own approximately 10.8%, and new offering stockholders, including the charitable foundation, approximately 89.2%.

Offering, dilution and shareholder risks

The $10.00 offering price is based on an independent appraisal, not an assurance of market value; shares may trade below that price. The company expects to invest $249.8M–$339.0M of net proceeds in TruNorth Bank, or $390.4M at the adjusted maximum. Planned uses also include an ESOP stock-purchase loan, repayment of a $135.0M senior note due March 15, 2027, and approximately $85.4M for the cash portion of the Primary Bank acquisition, including option payments. Beyond specified uses, allocation and timing are largely discretionary. Undeployed capital may depress return on equity; public-company and stock-plan costs add pressure.

The ESOP intends to buy 8% of shares sold in the offering and contributed to the foundation, at an estimated cost of $42.4M at the minimum to $66.0M at the adjusted maximum. A proposed stock-based plan, if implemented within one year, would cap restricted stock and options at 4% and 10%, respectively, of shares sold and contributed to the foundation. Estimated first-year ESOP and plan expense is approximately $10.9M pre-tax ($9.1M after tax) at the minimum offering range, assuming a $10.00 share price; expense may increase if the share price rises. At stated limits, estimated ownership dilution from options is 8.05% at the minimum and 8.39% at the adjusted maximum; restricted-stock dilution is 3.38% and 3.53%, respectively. Plans adopted after 12 months may exceed those limits. The intended foundation contribution equals 4% of offering shares; at the midpoint it is estimated to dilute ownership by 3.43%. Its tax benefit is uncertain, with deductions generally limited to 10% of taxable income annually and excess contributions carried forward for up to five years.

Other material risks

Regulation and compliance can impose costs, restrict operations or lead to sanctions; BSA/AML failures could also restrict acquisitions or branch openings. Competition from banks, credit unions, fintech and other providers may force lower loan rates or higher deposit rates. Cyberattacks, technology or third-party failures, fraud, control breakdowns and AI errors or bias could cause losses, litigation, regulatory action, customer attrition and reputational harm. Litigation could be costly, although no material pending or potential proceedings were reported.

Hometown Financial’s wealth-management business had $192.9M of assets under management at June 30, 2026.

Market losses, client withdrawals, fee pressure, competition and regulatory change could reduce wealth-management income. Accounting estimates—including credit-loss allowances, goodwill impairment and taxable income—and new accounting standards may materially change reported results. As an emerging growth company, Hometown Financial has elected reduced disclosures, exemption from auditor attestation of internal controls under Sarbanes-Oxley Section 404(b), and extended accounting-standard transition periods, potentially limiting comparability. Other risks include dependence on bank dividends, stock-price volatility, takeover defenses, restrictions on share repurchases and the Maryland exclusive-forum provision for specified internal corporate and derivative claims.

Hometown Financial Group, MHC — FY2026

Hometown Financial Group grew its balance sheet and improved net interest income and margin in FY2026. However, sharply higher loan credit-loss expense and operating costs more than offset those gains, reducing net income. Asset-quality measures also weakened, although bank capital ratios strengthened.

Balance sheet

Assets increased 5.4%, with deposit growth and higher cash and available-for-sale securities. Net loans grew 1.8%, while FHLB advances declined.

FY2026 operating results

Net interest and dividend income rose 24.1%, reflecting higher interest and dividend income and lower interest expense. But loan credit-loss expense increased substantially, and non-interest expense rose 20.2%. As a result, income before tax declined and net income fell 9.4%.

Margins, credit quality and capital

The margin and spread gains did not prevent lower returns on average assets and equity. The efficiency ratio improved slightly, despite higher non-interest expense relative to average assets. Credit indicators worsened: non-performing loans, non-performing assets and net charge-offs increased, while allowance coverage of non-performing/non-accrual loans declined. Bank capital ratios strengthened.

Operating footprint

Hometown Financial Group — Q1 FY2027

Hometown Financial Group reported stronger net interest income and margin for the three months ended September 30, 2026, but net income declined as credit-loss expense rose sharply. Net loans grew while deposits and cash declined, and delinquent loans increased substantially, particularly in commercial real estate (CRE). Comparability with the prior-year quarter is affected by Colonial Federal, acquired October 31, 2025, which is included in the current quarter but not the prior-year quarter.

Quarterly results

Net interest and dividend income rose 13.7% as interest income increased 6.9% and interest expense fell 5.4%. Lower deposit costs, particularly certificate repricing, reduced the average cost of interest-bearing deposits to 2.00% from 2.20%; the average cost of total interest-bearing liabilities declined to 2.27% from 2.49%. Average interest-earning assets grew 3.9% to $6.402 billion, and their average yield increased to 5.61% from 5.45%.

Credit-loss expense increased to $10.0 million, including $5.2 million of net charge-offs, primarily related to CRE. Non-interest income increased 13.4%, including approximately $777,000 of bank-owned life insurance (BOLI) death-benefit income. Non-interest expense rose 5.9%, reflecting higher salaries and benefits, advertising, merger costs, and digital banking costs. Despite lower net income, the efficiency ratio improved.

Financial condition and funding

Cash and due from banks fell 60.4%, as the company used cash to support $97.9 million of loan growth and fund $135.0 million of deposit outflows. The deposit decline was primarily seasonal municipal outflows. Core deposits, excluding certificates of deposit, declined 2.4% to $3.59 billion; certificates declined 2.1% to $2.09 billion. FHLB advances increased partly to fund loan growth and deposit outflows.

Net loans increased 1.8%; the company originated $351.1 million of gross loans. Growth was led by one- to four-family residential loans, up $86.1 million, and construction and land development, up $38.3 million. Multifamily loans declined $23.3 million and CRE loans declined $16.6 million. Available-for-sale securities’ net unrealized loss widened to $32.1 million from $12.5 million, contributing to a $15.6 million increase in accumulated other comprehensive loss, to $25.3 million.

Credit quality

Four existing CRE loans totaling $35.0 million became more than 30 days past due; CRE accounted for $55.8 million, or 81.0%, of delinquent loans. The company recorded a $5.1 million charge-off on one relationship and specific reserves of $3.6 million and $1.9 million on two others. Reported CRE challenges included higher cap rates, changing tenancy and space needs, lease-roll risk, and underinvestment in tenant improvements. Non-accrual loans included an $11.6 million CRE participation loan.

The company reported 55 offices, compared with 52, and 718 full-time-equivalent employees, compared with 650. TruNorth Bank’s September 2026 total capital ratio was 15.15%; the September 2025 comparison was 16.60% for TruNorth Bank, bankESB, and bankHometown combined, so the entity bases differ.

Forward-Looking Statements and Key Uncertainties

HFG’s forward-looking statements address its business plans, growth, operating strategy, loan-portfolio quality, and expected future risks, costs, and benefits. Actual results may differ materially. Important execution uncertainties include whether the conversion or merger is completed, whether integration with Primary Bank proceeds successfully and on schedule, and whether HFG can realize the benefits of a unified brand.

Economic and banking conditions could affect loan and deposit demand, borrower repayment, and portfolio performance. Risks include weaker economic growth, inflation, recession, labor shortages, and changing interest rates. These conditions may pressure margins and yields, mortgage-banking revenue, loan originations, and the values of mortgage-servicing rights and other financial instruments; they may also increase delinquencies, defaults, losses, or prepayments. Results additionally depend on loan and investment portfolio quality, credit-loss allowance estimates, real-estate values, residential and commercial property conditions, and local demand for loans and deposits.

Funding, market, and execution risks include changes in deposit balances and composition—including uninsured deposits—access to cost-effective funding, expense management, competition, and conditions in securities and secondary-mortgage markets. HFG’s results also depend on its ability to execute its strategy, enter new markets, and achieve acquisition-related revenue synergies and cost savings on schedule; acquisitions could also lead to goodwill charges.

Other exposures include changes in regulation, capital requirements, insurance premiums, and monetary or fiscal policy; technology implementation and maintenance costs; cybersecurity incidents, data breaches, ransomware, system failures, and reliance on third-party providers. Employee retention and development, equity-compensation expense, consumer behavior, the financial health of securities issuers, and geopolitical, political, military, terrorism, civil-unrest, or public-health events could also adversely affect results.

Except where required by law, HFG disclaims an obligation to update its forward-looking statements.

Intended use of offering proceeds

Hometown Financial estimates net proceeds of $499.576M to $678.091M across the base offering scenarios, rising to $780.737M if the offering is increased to the adjusted maximum. The scenarios assume a $10 per-share offering; the adjusted maximum reflects a potential 15% increase in the offering range.

Planned allocation of net proceeds

The $135.0M senior-debt repayment relates to a note due March 15, 2027. Its June 30, 2026 net book value was $134.4M, including $559,000 of deferred issuance costs.

Uses, flexibility and risks

TruNorth’s contribution is intended to help fund the pending Primary Bank acquisition’s cash consideration, currently estimated at approximately $85.4M. TruNorth may use the remaining proceeds for new loans, investment securities, repayment of Federal Home Loan Bank advances as they mature, general corporate purposes, and possible future franchise expansion. Hometown Financial currently has no other acquisitions or expansion projects planned.

Hometown Financial may use its retained proceeds for investment securities, dividends, share repurchases or general corporate purposes; it has not allocated amounts among these uses. Initially, it expects to hold a substantial portion in shorter-term investment securities before deployment. Federal regulations generally prohibit share repurchases during the first year after conversion, except for specified equity-benefit-plan funding or extraordinary circumstances with prior regulatory approval.

Proceeds are estimates and may vary with offering expenses; a syndicated community offering could increase expenses. Purchases funded by withdrawals from existing deposit accounts do not provide new investment funds and instead reduce TruNorth’s deposits. Actual uses may change with interest rates, equity markets, financial-services laws and regulations, competitive position, expansion opportunities and approvals, and broader market conditions.

Dividend Policy

Hometown Financial has not decided whether to pay dividends following the conversion and stock offering. Any dividend would be at the board’s discretion and subject to statutory and regulatory limits. In deciding whether and how much to distribute, the board expects to consider the company’s capital needs, financial condition and results, alternative uses of funds, tax considerations, and economic conditions. Dividends are not assured and could be reduced or eliminated; where permitted, the board may also consider special cash or stock dividends or returns of capital.

Hometown Financial expects to file a consolidated federal tax return with TruNorth Bank. Consequently, cash distributions to shareholders are expected to be taxable dividends rather than tax-free returns of capital. For three years after the conversion and offering, the company may not declare an extraordinary dividend that recipients would treat as a tax-free return of capital.

TruNorth Bank dividends are expected to be Hometown Financial’s primary source of income, making the bank’s ability to distribute funds an important constraint on the parent company’s ability to pay shareholders. Bank distributions are subject to savings-institution capital-distribution rules. TruNorth Bank does not intend to make distributions that would trigger tax on earnings deemed withdrawn from its bad-debt reserves.

The offering will not include preferred stock, but Hometown Financial’s articles authorize the company to issue it in the future. Preferred shareholders could have dividend priority over common shareholders.

Common Stock Market

Hometown Financial is newly formed and has never issued capital stock; no public or private market currently exists for its common stock. The company expects its shares to be listed on the Nasdaq Capital Market under the symbol HFG, subject to completion of the conversion and offering, final Nasdaq approval, and satisfaction of listing requirements, including having a designated market maker.

Keefe, Bruyette & Woods (KBW) has indicated that it intends to act as market maker, but it is not obligated to do so or to continue doing so. The development of an active, orderly trading market and the liquidity of the shares are uncertain and outside the company’s control. Limited buyers or sellers could adversely affect resale prices, and investors may be unable to sell shares at or above the $10.00-per-share offering price.

Unaudited pro forma transaction basis

The pro forma statements reflect Hometown Financial’s proposed conversion and stock offering and its proposed merger with Primary Bank, applying purchase accounting to the merger. They use June 30, 2026 balance-sheet data and FY2026 income and may not reflect subsequent changes in economic conditions or interest rates; they are not actual combined historical results.

Key assumptions include a midpoint offering of 60.0 million shares at $10 per share, or $600.0 million gross proceeds, with $11.2 million of offering expenses; 2.4 million shares issued to a charitable foundation; and 7,566,012 shares issued to Primary Bank shareholders, alongside approximately $80.5 million in cash consideration. Merger consideration assumes $31 per share for stock and $33 per share for cash.

Pro forma combined balance sheet

At June 30, 2026:

The merger is expected to create $33.9 million of goodwill. The core deposit intangible is amortized over ten years using the sum-of-the-years-digits method.

FY2026 pro forma combined income

Earnings adjustments and acquisition accounting

Hometown’s as-converted pro forma FY2026 net income before the merger was $50.750 million, with EPS of $0.88. Repayment of senior notes reduces annual interest expense by $11.764 million and increases after-tax income by $8.823 million. The offering adjustment reduces net income by $1.498 million, while merger adjustments reduce it by $2.528 million. Merger-related income adjustments include $(0.360) million to interest income and $(0.246) million to interest expense; core deposit intangible amortization adds $2.766 million to noninterest expense. Relevant adjustments use a 25% marginal tax rate.

The acquired-loan adjustment is a net $345,000, comprising reversal of Primary Bank’s $6.622 million allowance for credit losses, a $3.374 million positive yield fair-value adjustment, and a $(9.651) million credit fair-value adjustment. The credit component reflects estimated embedded credit losses; the yield component reflects market-versus-portfolio yields, with its fair-value adjustment accreted into income over the loans’ lives.

Merger cash adjustments total $93.898 million, including $80.541 million of cash consideration and $4.872 million of option cashouts, as well as merger costs.

Offering, debt and benefit-plan items

The offering contributes $600.0 million gross proceeds before expenses; pro forma adjustments also include $6.0 million in other assets. Hometown’s $134.441 million senior note payable is assumed repaid at maturity on March 15, 2027, so no senior notes payable remain on the pro forma balance sheet. The offering-related benefit plans include an internally funded ESOP loan with a $49.9 million balance and 25-year straight-line principal amortization; no consolidated interest expense is assumed on that loan.

The pro forma results depend on transaction, valuation, credit-loss and amortization assumptions.

Regulatory capital and pro forma scenarios

As of June 30, 2026, Hometown MHC and TruNorth Bank exceeded all applicable regulatory capital requirements and were considered well capitalized. The pro forma estimates assume the stock offering and Merger with Primary Bank were completed as of that date, TruNorth Bank received a capital contribution, and TruNorth Bank, bankESB and bankHometown were combined. The offering scenarios are 51.0 million shares (minimum), 60.0 million (midpoint), 69.0 million (maximum) and 79.35 million (adjusted maximum), at $10 per share.

Hometown MHC historical and Hometown Financial pro forma capital

Hometown Financial offering assumptions

TruNorth Bank historical and pro forma capital

Historical excess capital was $405.227M for CET1, $327.180M for Tier 1 risk-based capital, $274.690M for total risk-based capital and $403.459M for leverage. In the pro forma scenarios, excess capital ranges from the minimum to adjusted maximum as follows: CET1, $589.336M–$704.637M; Tier 1 risk-based, $499.743M–$614.621M; total risk-based, $441.508M–$555.821M; and leverage, $592.654M–$702.757M.

TruNorth’s assumed offering-related infusion is $249.788M, $294.417M, $339.046M and $390.369M across the four scenarios; after ESOP adjustments, capital increases are $207.356M, $244.497M, $281.638M and $324.350M. Assumed risk-based asset increases are $49.958M, $58.883M, $67.809M and $78.074M, respectively. Disallowed intangible assets are $185.694M in each scenario.

Pro forma capitalization

Figures are as of June 30, 2026, or pro forma at closing, as applicable. The pro forma reflects the conversion, stock offering and merger with Primary Bank.

The pro forma assumes repayment of the entire $134.441M senior note. Merger adjustments reduce deposits by $246,000.

Offering scenarios assume a price of $10.00 per share. At the minimum, pro forma shares comprise 51.0M shares offered, 2.04M issued to the charitable foundation, and 7,566,012 issued as merger consideration.

The minimum-offering adjustment includes $519.446M of additional paid-in capital and a $15.300M reduction in retained earnings. Equity also reflects deductions for shares acquired by the ESOP and stock-based benefit plans. The ESOP is assumed to acquire 8% of offering and foundation shares, financed by an intercompany loan eliminated in consolidation. Benefit plans are assumed to purchase shares equal to 4% of those shares; implementation requires shareholder approval.

No options are included in pro forma shares outstanding. If the plans are implemented within the first year, options may be reserved for up to 10% of offering and foundation shares, creating potential additional dilution. Pro forma deposits do not reflect customer withdrawals to fund stock purchases, which would reduce deposits.

Pro forma conversion, offering and Primary Bank merger

The pro forma analysis for the year ended June 30, 2026 is hypothetical, assumes the offering and Primary Bank acquisition are completed, and is not a forecast. It presents four offering scenarios at $10 per share:

Management intends to contribute at least half of net proceeds to TruNorth Bank, lend funds to the ESOP, repay its $135.0 million senior note, and retain the remainder for future use.

Pro forma earnings and per-share valuation

The assumed reinvestment yield is 4.19% pretax (3.14% after tax), based on the five-year U.S. Treasury yield at June 30, 2026. Management considers this more representative of current rates than the regulatory weighted-average asset/deposit-rate method.

Pro forma equity and tangible value

The equity-per-share share counts include merger shares; the earnings-per-share counts also reflect unreleased ESOP shares.

Dilution, assumptions and limitations

The ESOP is assumed to purchase 8% of offering and foundation shares, financed by a Hometown Financial loan repayable over 25 years; TruNorth Bank expects to contribute at least enough to cover the payments. The benefit plan is assumed to purchase restricted shares equal to 4% and grant options equal to 10% of offering and foundation shares, with five-year vesting. Estimated grant-date fair value is $4.68 per option. If authorized but unissued shares are used, estimated ownership and voting dilution is 3.38%–3.53% from restricted awards and 8.05%–8.39% from options across the offering scenarios.

The analysis assumes all offering shares are sold, the Primary Bank acquisition is completed, and stockholders approve the benefit plans. It excludes post-transaction operating results and expected public-company costs, deposits withdrawn to purchase shares, and subsequent share-price changes. Pro forma equity is GAAP carrying value—not market or liquidation value—and does not mark assets to market or account for the conversion liquidation account or tax bad-debt reserves. Actual proceeds, share counts, plan approvals, expenses and dilution may differ; the filing cautions that the pro forma information should not be treated as a projection of future results or share value.

Pro forma comparison and valuation

The analysis presents results for the year ended June 30, 2026, assuming the conversion, stock offering and Merger occurred at the beginning of the year. RP Financial concluded that the additional capital raised without the charitable foundation would be immaterial to the pro forma valuation; the pro forma valuation is unchanged with or without the foundation.

Offering and shares allocated to the foundation

No shares would be issued to the foundation in the offering without it.

Pro forma financial position and earnings

Amounts in $M, except per-share data.

Pricing, profitability and capitalization

Pro forma return on assets remains approximately 0.75%–0.77% across the cases. As the offering size increases, the price-to-earnings multiple rises and return on equity declines.

Merger shares remain 7.566012 million in every case; the foundation’s shares account for the difference in total shares. Market capitalization includes shares issued in the offering and the Primary Bank acquisition.

Acquisition of Primary Bank

On July 6, 2026, Hometown Financial agreed to acquire Primary Bank for approximately $160.0 million in cash and stock. At June 30, 2026, Primary Bank had $769.5 million of assets, $664.8 million of net loans, and $644.2 million of deposits, and operated four locations in southern New Hampshire.

Consideration and transaction mechanics

Primary Bank shareholders may elect to receive $33.00 in cash or 3.100 Hometown Financial shares per share. The consideration will be prorated so that, in aggregate, 50% of eligible shares receive cash and 50% receive stock. Hometown Financial currently expects to pay approximately $85.4 million in cash, including payments for Primary Bank options, and issue approximately 7,566,012 common shares. The number of shares issued could increase if Primary Bank options are exercised before closing. Outstanding options will be cancelled for cash equal to the excess of $33.00 over each option’s exercise price.

The boards cited the opportunity to build a larger, more competitive banking franchise, expand growth opportunities and New Hampshire deposit market share, and realize cost savings and economies of scale. They expect the banks’ complementary businesses and compatible cultures to support integration.

Closing conditions, risks, and governance

Closing is subject to regulatory approvals or non-objections, Primary Bank shareholder approval, completion of Hometown Financial’s conversion and stock offering, and customary conditions. Required regulatory authorities include the Federal Reserve Board, Massachusetts Division of Banks, and New Hampshire Banking Department. Although the conversion is not contingent on the merger, if the merger ends Hometown Financial may terminate or delay the conversion; a delay could materially affect its timing and manner, and subscribers could modify or rescind purchase orders.

Execution risks include delayed or denied approvals, burdensome approval conditions, failure to obtain shareholder approval, deal delay or termination, employee departures, management distraction, integration challenges, lower-than-expected savings, and higher-than-expected transaction costs. Holders exercising dissenters’ rights are entitled to fair value in cash; if dissenting shares exceed 10% of eligible outstanding shares, Hometown Financial may terminate the agreement. Primary Bank may owe a $6.25 million cash termination fee in specified circumstances involving a third-party acquisition proposal. Either party may terminate if the transaction is not completed by July 6, 2027, subject to the agreement’s terms.

After closing, current Hometown Financial and TruNorth Bank executive officers are expected to remain in their roles. The boards are expected to include current directors and at least one independent Primary Bank director; Hometown Financial and TruNorth have determined to appoint William Greiner and Dick Anagnost.

Hometown Financial (HFG) — FY2026 MD&A

Business and results

Hometown Financial conducts its banking business primarily through TruNorth Bank, which is funded mainly by deposits and focuses on residential, commercial real estate (CRE), multifamily, construction, and commercial business lending. At June 30, 2026, its $5.32B loan portfolio comprised $2.04B of one- to four-family mortgages (37.3%), $1.87B of CRE (34.3%), $622.0M of multifamily loans (11.4%), $393.0M of commercial business loans (7.2%), and $245.3M of construction loans (4.5%). Results are driven chiefly by net interest income and are also sensitive to credit costs, interest rates, local economic conditions, non-interest income and expenses, and regulation.

FY2026 results include the effects of the October 31, 2025 Colonial Acquisition, which contributed operations for only part of the year and complicates year-over-year comparisons.

¹Net interest income plus non-interest income.

Net interest margin increased to 3.59% from 3.15%, and the net interest rate spread rose to 3.06% from 2.60%. The $44.6M increase in net interest income reflected $34.1M from rate changes and $10.6M from volume changes. Average interest-earning assets grew $531.0M to $6.40B; asset yield was 5.45% versus 5.30%, while the cost of interest-bearing liabilities declined to 2.39% from 2.70%. Average loans rose $321.6M to $5.33B, and loan yield increased to 5.74% from 5.47%. Loan interest included acquisition-credit-mark accretion of $17.3M, up from $13.8M.

Interest expense declined despite higher average interest-bearing deposits: deposit expense was $98.9M versus $102.6M as the average rate fell to 2.11% from 2.38%. FHLB advance expense was $7.4M versus $10.6M, reflecting lower average advances and rates.

Non-interest income benefited from higher customer fees and BOLI income, including a $1.4M death-benefit gain; offsets included a $1.0M realized loss on available-for-sale securities and the absence of FY2025’s $988,000 bargain-purchase gain. Higher non-interest expense reflected salary and benefits (+$10.2M), occupancy and equipment (+$4.8M), and other G&A (+$6.6M, including $2.5M of subsidiary-bank merger costs and a $2.0M charitable-foundation contribution), as well as digital banking, advertising, intangible amortization, and acquisition-related costs. The effective tax rate declined to 24.5% from 26.2%.

Balance sheet, funding, and credit

Assets increased $355.6M (5.4%); the Colonial Acquisition added $353.4M of assets at closing, including $166.2M of loans and $137.3M of securities. Cash and due from banks rose to $370.3M from $276.3M, and securities to $733.7M from $598.7M. Cash growth reflected $305.5M of deposit growth exceeding loan growth, $154.9M of securities purchases, and repayment or maturity of $39.5M of FHLB advances.

Net loans increased $94.2M, but excluding Colonial-acquired loans they declined $70.3M (1.3%). Excluding the acquisition, residential mortgages grew $60.1M and home equity loans/lines grew $16.0M; declines in multifamily ($85.3M), construction/land development ($44.3M), commercial business ($11.4M), and CRE ($4.7M) more than offset that growth. Multifamily payoffs and construction completions/paydowns exceeded new lending. Colonial loans totaled approximately $168.5M at year-end, including post-close activity.

Deposits rose $305.5M (5.5%), including $278.5M from Colonial; excluding the acquisition, they increased $27.0M. Core deposits grew 6.6% to $3.68B from $3.45B, and certificates of deposit increased 3.7% to $2.13B from $2.06B. FHLB advances fell as deposit growth enabled repayment of higher-cost maturities. BOLI increased to $146.4M from $137.2M, mainly from the acquisition. Equity growth included FY2026 earnings and $22.5M related to the fair value of the acquired business.

Credit costs rose sharply: the loan-loss provision was $39.3M versus $10.7M, primarily reflecting charge-offs and CRE deterioration. Charge-offs totaled $30.1M, up $21.2M; $21.7M involved three CRE loans with aggregate fair value of $31.5M before charge-off. Non-accrual loans increased to $77.3M from $54.5M, including a $23.4M increase in non-accrual CRE loans and 12 newly added loans totaling $49.3M. A $5.5M CRE office loan in East Providence was transferred to foreclosed assets. The loan allowance for credit losses (ACL) increased 22.6% to $49.9M from $40.7M, including approximately $8.9M of higher specific reserves. Off-balance-sheet credit provision was $407,000 versus $1.6M.

The bank adopted a probability-of-default/loss-given-default ACL framework prospectively as a change in estimate, with no material FY2026 effect. A hypothetical 10% increase or decrease in modeled loss factors for collectively evaluated loans would raise or lower the June 30 ACL by approximately $5.2M, to $55.1M or $44.7M, respectively, with corresponding pretax earnings effects absent offsets.

During the year, all held-to-maturity securities were transferred to available-for-sale. At transfer, amortized cost was $51.5M versus fair value of $50.2M, and a $1.3M net unrealized loss was recorded in accumulated other comprehensive loss.

Business developments, risk, and liquidity

TruNorth Mortgage originated $458.1M of residential mortgages, sold $151.6M and earned $1.8M in sale fees. It serviced $525.0M of loans sold to third parties, earning $887,000 in servicing fees, and originated $108.4M of home equity loans/lines, all retained. Goodwill was $95.7M at year-end and is expected to increase a further $33.9M from the Merger; the annual impairment assessment found fair value more likely than not above carrying value, with no quantitative test or impairment charge. Consolidation of three banking subsidiaries reduced historical costs, but management expects savings to be more than offset by public-company costs, ESOP share-purchase compensation, and potentially a stock-based benefit plan.

Interest-rate risk is management’s principal market risk. Modeled first-year net interest income was $241.5M at baseline, $242.0M under a +200-basis-point shock (+0.23%), and $241.6M under a −200-basis-point shock (+0.04%). Economic value of equity was $1.672876B at baseline; a +200-bp shock reduced it by $44.357M (2.65%) to $1.628519B, while a −200-bp shock reduced it by $3.410M (0.20%) to $1.669467B. All modeled changes were within board policy guidelines. The models assume an unchanged opening balance-sheet mix and immediate, permanent, uniform rate shifts; actual results may differ, and the models may not capture certain fair-value changes.

At June 30, 2026, available borrowing capacity included $1.99B from FHLB Boston, against $157.4M outstanding; an undrawn $51.5M Federal Reserve Bank of Boston line; and $55.0M of undrawn correspondent-bank lines. Management monitors liquidity daily and expects adequate funds for commitments, supported by deposits, collections, loan-sale proceeds, and securities maturities. Net stock-offering proceeds are expected to significantly increase liquidity and capital resources. Before the subsequent subsidiary-bank merger, Hometown Financial and each named bank exceeded regulatory capital requirements; bankESB, bankHometown, and TruNorth Bank were categorized as well-capitalized.

Business and planned use of offering proceeds

Hometown Financial was incorporated in July 2026 as the planned bank holding company for TruNorth Bank. It has conducted no business beyond organizational activities. Following the conversion and stock offering, Hometown Financial will own all shares of TruNorth Bank, and at least 50% of the offering’s net proceeds will be contributed to the bank.

The holding company plans to use part of the proceeds it retains to lend to the employee stock ownership plan (ESOP) for its stock purchases and to repay a $135.0 million senior note. It may use additional proceeds for dividends or share repurchases, subject to its capital needs and regulatory limits.

Hometown Financial expects its cash flow to depend primarily on returns from investing retained proceeds and on dividends from TruNorth Bank. The bank’s ability to pay dividends to the holding company is subject to regulatory restrictions. Hometown Financial may also pursue other permitted activities, including acquisitions of banks and financial services companies.

Initially, Hometown Financial will have no property of its own. It will pay TruNorth Bank for premises, equipment, furniture, and staff support, and its officers will initially also serve as TruNorth Bank officers.

Business profile and strategy

HFG operates TruNorth Bank, a Massachusetts-chartered community bank with 54 offices across Massachusetts, northeastern Connecticut and southern New Hampshire. Its lending footprint also extends into Rhode Island, New York for commercial loans, and Maine, Vermont and Florida for residential lending. The bank is shifting from a decade of acquisition-led expansion toward organic growth, with plans to invest in lending capacity, sales, talent, technology and infrastructure. It intends to expand commercial banking to New England middle-market companies with $10M–$500M in annual revenue, cross-sell deposits and cash-management services, and grow consumer and business deposits through digital channels, fintech partnerships and targeted branches.

On August 21, 2026, bankHometown and TruNorth Bank merged into bankESB, which took the TruNorth Bank name, bringing the three subsidiary banks under one brand. Management expects reduced duplication and expense, improved efficiency and customer access, and higher lending limits with less reliance on affiliate participations. HFG has acquired eight banks in 11 years and may consider opportunistic acquisitions. Its pending Primary Bank acquisition, agreed July 6, 2026, was valued at approximately $160.0M. Primary had $769.5M of assets, $664.8M of net loans and $644.2M of deposits at June 30, 2026; it would add four New Hampshire locations. Consideration is split equally between cash elections of $33.00 per share and stock elections of 3.100 Hometown Financial shares per share, subject to approvals and completion of the conversion and stock offering.

Lending and credit

Gross loans grew 1.8% year over year. Real-estate-based lending totaled $5.07B, or 92.7% of gross loans, leaving the bank exposed to property values and real-estate credit cycles.

Residential balances included $333.7M of jumbo loans. Fixed-rate and adjustable-rate residential loans were $1.03B and $1.01B, respectively. Adjustable mortgages generally reprice after initial five-, seven- or 10-year fixed periods; higher resets can increase borrower payment burdens. The bank historically sold most long-term fixed-rate mortgages while retaining servicing, but has recently retained some to diversify its balance sheet. FY2026 mortgage originations were $458.1M versus $449.3M in FY2025; $151.6M was sold in FY2026, generating $1.8M of gains. Serviced loans sold to others totaled $525.0M at June 30, 2026, producing $887,000 of servicing income. Home-equity originations were $108.4M and retained.

CRE was 71.6% non-owner-occupied. Major exposures included office ($339.3M), industrial ($298.3M), shopping plazas ($289.5M) and retail ($215.6M). Management cites property cash flows, market values and potentially lengthy foreclosures as risks; typical CRE loan-to-value limits are 80%, with minimum debt-service coverage ratios of 1.25x for CRE and 1.20x for multifamily. Construction lending adds completion, cost-overrun and take-out financing risks. Commercial portfolios included $103.6M of franchise loans and $75.8M to condominium associations, both performing well and below concentration limits. The largest lending relationship was $75.3M across six CRE loans and was performing to terms.

CRE drove the deterioration: non-accrual CRE loans rose to $59.992M from $36.622M, including 12 newly non-accrual loans totaling $49.3M. CRE net charge-offs were $28.373M versus $8.689M. Non-performing assets included a $5.546M foreclosed East Providence office building. Allowance coverage of non-accrual loans declined to 64.55% from 74.72%, although allowance coverage of total loans rose to 0.91% from 0.76%. HFG modified $70.7M of loans to financially troubled borrowers during FY2026; modified loans totaled $73.1M at year-end. It changed its CECL methodology to a probability-of-default/loss-given-default framework, with no material effect on the allowance or results.

Funding, investments and other activities

Core deposits were $3.68B, or 63.3% of deposits. Total deposits increased, while the average deposit rate declined.

Municipal deposits were $772.3M. Federally uninsured deposits were $1.85B; uninsured certificates were $630.037M, of which $248.941M matured within three months. Although Massachusetts Depositors Insurance Fund coverage meant no deposits were uninsured at June 30, 2026, the Fund later notified TruNorth that excess-insured deposits exceeded its internal threshold. Subject to approval, the bank plans to exit the Fund and has established an IntraFi reciprocal-deposit program to provide customers access to FDIC coverage.

Available-for-sale debt securities had $746.204M amortized cost and $733.700M fair value, with a 4.60% weighted-average yield on amortized cost; $526.740M amortized cost matured after ten years. HFG transferred all remaining held-to-maturity securities to available-for-sale during FY2026; the transferred $51.5M amortized-cost portfolio had $50.2M fair value and a $1.3M net unrealized loss recorded in accumulated other comprehensive loss.

FHLB Boston borrowing capacity was $1.99B, with $157.4M outstanding; HFG also had $55.0M of correspondent lines and $51.5M of Federal Reserve capacity, unused. A $135.0M senior note bears 8.75% fixed interest and matures March 15, 2027; HFG intends to repay it at maturity using offering proceeds. Another $9.0M of variable-rate subordinated debentures bears three-month SOFR plus 3.11%–3.26%, matures from October 2033 to December 2037, and qualifies as Tier 1 capital subject to regulatory limits.

Wealth-management assets under management increased to $192.9M from $160.5M; investment-services income rose to $830,000 from $711,000. HFG ranked 12th in Massachusetts deposits, with $5.36B and 0.83% market share; its New Hampshire and Connecticut shares were 0.14% and 0.22%. Competition from banks, credit unions, mortgage providers, fintechs and other financial firms may constrain growth. The company plans a charitable foundation funded with shares equal to 4% of shares sold in the offering; existing Giving Tree foundations had $14.6M in assets and donated more than $3.1M in 2025.

Supervision, regulation and capital distributions

TruNorth Bank is a Massachusetts-chartered stock savings bank. After the conversion, it will be wholly owned by Hometown Financial, a Federal Reserve-regulated bank holding company. TruNorth is supervised by the Massachusetts Division of Banks, the Federal Reserve and the FDIC, and must comply with a broad range of banking, consumer-protection, fair-lending, anti-money-laundering and other requirements. Regulators can impose capital and operational requirements, restrict dividends or business activities, and take enforcement action—including fines, cease-and-desist orders or removal of officers and directors. Deficiencies in controls, underwriting, asset quality or other safety-and-soundness areas can also prompt remediation requirements. Violations of consumer, privacy, data-security, sanctions, lending or electronic-payment rules can result in legal, financial and reputational harm.

At June 30, 2026, HFG’s three banking subsidiaries—TruNorth Bank, bankESB and bankHometown—were each classified as “well capitalized”; the filing does not provide their individual capital ratios or the amount of headroom above requirements. Well-capitalized status generally requires risk-based total capital of at least 10.0%, Tier 1 capital of 8.0%, leverage capital of 5.0% and CET1 capital of 6.5%. Separately, minimum federal risk-based ratios are 4.5% CET1, 6.0% Tier 1 and 8.0% total capital, plus a 4.0% Tier 1 leverage minimum; the 2.5% CET1 conservation buffer sits above the risk-based minimums, and falling below it may limit distributions and discretionary bonuses. Regulators may set higher institution-specific requirements. A community-bank leverage ratio framework took effect July 1, 2026, at 8% Tier 1 capital to average assets for qualifying institutions under $10 billion; TruNorth had not opted in as of June 30, 2026.

A decline in capital status can restrict growth, deposit rates, dividends and brokered deposits. Undercapitalized banks must generally submit a capital-restoration plan, guaranteed by the holding company up to the lesser of 5.0% of the bank’s assets when deemed undercapitalized or the amount needed to reach adequately capitalized status. Critically undercapitalized institutions may face receivership or conservatorship within 270 days, subject to exceptions. Brokered deposits are generally restricted unless a bank is well capitalized or receives FDIC approval; institutions with brokered deposits above 10% of assets may face higher deposit-insurance assessments.

Deposits, dividends and funding

A significant deposit-insurance change is pending: TruNorth’s deposits are insured by the FDIC up to applicable limits, generally $250,000 per separately insured depositor, and excess balances currently receive Massachusetts Depositors Insurance Fund (DIF) coverage. In October 2026, DIF notified TruNorth that excess balances had surpassed an internal threshold. TruNorth plans to exit DIF, subject to approval by the Massachusetts Banking Commissioner. New accounts’ balances above FDIC limits will then lack DIF coverage. Existing accounts generally retain coverage for one year after exit, with coverage reduced as funds are withdrawn; term deposits existing on the notice date remain covered, as applicable, through maturity. Once the transition ends, depositors may need to move funds or arrange alternative coverage, creating a potential customer-retention and deposit-stability risk. Higher FDIC assessments could also increase expenses. TruNorth says it knows of no condition or violation that could lead to termination of its deposit insurance.

Dividends and other distributions by Hometown Financial are subject to Federal Reserve guidance and may need prior consultation when retained earnings do not cover distributions or retention is inadequate for capital needs. Distributions depend on earnings, capital, asset quality and financial condition, and may be restricted if TruNorth becomes undercapitalized. Following conversion, Hometown Financial cannot pay common dividends if doing so would reduce stockholders’ equity below the conversion-related liquidation account. Its funds are expected to come primarily from offering proceeds and TruNorth dividends; subsidiary creditors, including depositors, have prior claims on subsidiary assets and earnings. The holding company also has a “source of strength” obligation to support TruNorth with capital, liquidity and other resources in financial stress, potentially when the holding company itself has limited resources. The community bank leverage ratio option, capital rules and Massachusetts law further constrain distributions.

Business, acquisition and ownership restrictions

Massachusetts approval is generally required for branch openings or closings, mergers, stock issuance and certain other activities. Bank branching and acquisitions require prior approval from the Massachusetts Commissioner of Banks and the Federal Reserve; interstate acquisitions are subject to deposit-concentration limits and other conditions. The state generally limits lending to one borrower to 20% of capital stock, surplus and undivided profits, subject to exceptions; TruNorth complied as of June 30, 2026. Massachusetts rules generally cap aggregate investments in corporate common and preferred stock at 4% of deposits, alongside federal restrictions. Affiliate transactions and insider lending are subject to quantitative, collateral, underwriting and approval requirements.

The Change in Bank Control Act generally requires 60 days’ prior notice to the Federal Reserve for control acquisitions; a control presumption can arise at 10% ownership in specified circumstances. The Bank Holding Company Act generally requires Federal Reserve approval for control, including ownership of 25% or more of a voting class, and acquisitions of 5% or more may also raise a control presumption depending on circumstances. Hometown Financial has not elected financial holding company status, limiting it to activities permitted to bank holding companies.

On August 21, 2026, TruNorth Bank, bankESB and bankHometown merged into one institution, after which Hometown Financial (Massachusetts) and Hometown MHC ceased to qualify as Massachusetts bank holding companies. If Hometown Financial acquires and separately operates a second banking institution, it would be subject to Massachusetts registration, reporting, examination and certain acquisition-approval requirements.

Other regulatory matters

TruNorth and bankESB received “Outstanding” ratings in their latest federal and Massachusetts Community Reinvestment Act examinations; bankHometown was rated “Satisfactory” federally and “High Satisfactory” in Massachusetts. TruNorth is a Federal Home Loan Bank of Boston member and held the required capital stock at June 30, 2026; the stock is carried at cost, has no quoted market value under redemption provisions and had no recognized impairment. TruNorth does not sell insurance but is licensed to solicit and refer customers to third-party insurance producers through Hometown Wealth Management’s partnership with LPL Financial.

After conversion and offering, Hometown Financial will be subject to Exchange Act reporting, proxy and insider-trading requirements. Nonaffiliate shareholders may generally resell shares without registration; affiliate resales are subject to Rule 144 limits, including a three-month volume cap based on the greater of 1% of outstanding shares or average weekly trading volume over the preceding four weeks.

Hometown Financial qualifies as an emerging growth company (EGC), providing reduced executive-compensation disclosure, exemptions from certain shareholder advisory votes and auditor attestation of internal controls under Sarbanes-Oxley Section 404(b), and an extended transition period for adopting certain accounting standards. EGC status ends at the earliest of the fiscal year-end after the fifth anniversary of the offering; annual gross revenue of at least $1.235 billion, as adjusted for inflation; issuance of more than $1.0 billion of nonconvertible debt over three years; or qualifying nonaffiliate public float above $700 million at the end of a second-quarter measurement period.

Taxation

At June 30, 2026, Hometown MHC had a $7.0 million federal net operating loss (NOL) carryforward, representing the remaining loss acquired from Colonial Federal Savings Bank, and no capital-loss carryovers. Federal NOLs generally carry forward indefinitely, but NOLs arising after 2017 can offset no more than 80% of taxable income; federal carrybacks are generally unavailable. Massachusetts does not allow NOL or capital-loss carryforwards or carrybacks, limiting the ability to use losses against future state taxable income.

Hometown MHC was not subject to the 15% corporate alternative minimum tax (CAMT) at June 30, 2026, and had no minimum-tax credit carryovers. Hometown Financial may generally exclude 100% of dividends received from TruNorth Bank because they are members of the same affiliated corporate group.

Massachusetts savings banks currently pay excise tax at 9.0% of federal taxable income, subject to specified adjustments. Three TruNorth Bank subsidiaries—Hometown Securities I, Inc., ESB Securities Corporation and NACB Securities Corporation—are classified as Massachusetts security corporations. They pay tax at the applicable gross-income rate: 0.33% for a security corporation that is a bank holding company, or 1.32% if it is not. Hometown Financial also pays Maryland franchise taxes and files an annual report.

Hometown MHC’s federal and Massachusetts income tax returns had not been audited since 2023. None of TruNorth Bank’s or its subsidiaries’ state tax returns had been audited in the preceding five years.

Management and governance

Hometown Financial and TruNorth Bank share directors and officers in corresponding roles, and expect to continue this arrangement unless a business need arises to separate management. Following the August 2026 merger of bankESB, bankHometown and TruNorth Bank, Matthew S. Sosik became TruNorth Bank Chairman and CEO, and Michael R. Wheeler became President of Hometown MHC, Hometown Financial and TruNorth Bank. Other leadership appointments followed earlier acquisitions and functional needs: Ryan Kirwin leads residential lending, William Parent strategy, Sheryl Shinn technology, Reed Whitman finance, and Scott Sanborn commercial banking.

The 12-member Hometown Financial board is elected annually; ten directors are independent under Nasdaq standards. Sosik and Wheeler are non-independent employees. Jennifer R. Buras is Lead Independent Director, helping set board agendas, chairing independent-director sessions and liaising with management. Independent directors also meet on matters including CEO performance and compensation, audit and internal controls. The Audit, Compensation, and Nominating and Corporate Governance Committee members meet applicable independence requirements; N. Andrew Robb is the SEC-defined audit committee financial expert. Management cites directors’ local knowledge of businesses, real estate and demographics as useful in assessing customer needs and lending risk.

For the proposed Primary Bank merger, Hometown Financial plans to appoint current Primary Bank directors William Greiner and Dick Anagnost to the Hometown Financial and TruNorth Bank boards for one-year terms at the merger’s effective time. In FY2026, TruNorth Bank paid $53,000 to All-Star Incentives, Inc., whose president is director Brian E. Galonek, for branded merchandise, and $110,000 to the law firm of director David E. Surprenant for legal services; the board considered these relationships in assessing independence. Director and executive loans at June 30, 2026 were made in the ordinary course on comparable terms, were performing and complied with banking regulations. No other related-person transactions above $120,000 were reported since June 30, 2025.

Executive compensation and arrangements

FY2026 compensation for the three named executives was:

*Wheeler’s other compensation included $173,098 in nonqualified deferred-compensation contributions. Whitman’s included $99,000 in deferred-compensation contributions; he also received $607 in nonqualified deferred-compensation earnings.

In connection with the conversion and stock offering, the bank plans new three-year employment agreements for Sosik and Wheeler, automatically extended annually unless notice of non-renewal is given. Minimum short-term target cash bonus opportunities are 100% of base salary for Sosik and 45% for Wheeler. Qualifying termination without cause or resignation for good reason generally provides severance based on remaining contractual compensation or two times salary plus average incentive compensation; qualifying termination in connection with a change in control may provide three times salary plus incentive compensation and health-care payments. Planned change-in-control agreements for Whitman and certain other executives provide, after qualifying post-change-in-control termination, two times salary plus target incentive bonus and a lump sum for 24 months of health-care coverage. Certain benefits may be reduced where that yields a higher after-tax result.

Sosik is fully vested in a salary-continuation benefit calculated as a 75%-of-final-average-compensation annuity, offset by specified Social Security and defined-contribution annuity amounts and converted to a lump sum using a 5% discount rate. Wheeler’s unfunded SERP receives annual account contributions totaling $173,098 and credits interest at 4.5%; qualifying change-in-control termination can accelerate vesting and provide the account balance plus the present value of five additional annual contributions. SERP benefits are subject to payment timing and post-separation covenants; cause termination forfeits benefits, and covenant violations can stop future payments and require repayment. Whitman’s deferred-compensation account receives 20% of defined Annual Compensation annually, plus $29,000 each January 1 in 2026, 2027 and 2028, with monthly interest at the Wall Street Journal Prime Rate. Benefits generally vest after three years, with specified earlier-vesting events; applicable distributions are generally lump sums, and a tax gross-up covers FICA/Medicare taxes attributable to the benefit.

Retirement plans and planned stock programs

FY2026 employer contribution expense for the 401(k) Plan was $5.1 million. Hometown Financial provides a 3% safe-harbor contribution and matches 100% of the first 5% of employee deferrals. Participants are intended to be able to use part of their 401(k) balances to buy offering shares.

An ESOP effective January 1, 2027 may acquire up to 8% of offering shares, including shares contributed to the charitable foundation. It is expected to be financed by a company loan at a fixed rate equal to Prime at closing, with an anticipated 25-year term; bank contributions and ESOP-held dividends are expected to fund repayment, and shares will be allocated as principal is repaid. Compensation expense will reflect the fair value of shares committed for release and reduce earnings. A related supplemental ESOP for Sosik and Wheeler will provide fully vested cash benefits for benefits limited by tax-code caps, including compensation above $360,000 for 2026 (indexed). A possible rabbi trust would remain exposed to TruNorth Bank’s general creditors in insolvency.

After the offering, the company intends to adopt an option and restricted-stock plan, subject to shareholder approval. If adopted within one year, proposed regulatory limits are 10% of offering-plus-foundation shares for options and 4% for restricted stock. At the adjusted maximum offering range, the illustrative maximum is 8,252,400 options and 3,300,960 restricted shares. At a $10 share price, restricted shares would be worth $33.010 million and options’ estimated grant-date fair value would be $38.621 million ($4.68 per option). Across the stated $8–$14 share-price range, estimated values are $26.408–$46.213 million for restricted shares and $30.864–$54.053 million for options. These are potential, not awarded, amounts; the company has not decided whether to seek approval within or after the first year. Shares could be newly issued or repurchased.

Following the August 2026 merger, separate bankESB and North Shore Bank incentive plans were discontinued and executives moved to a single TruNorth Bank plan. Awards depend on individual and bank performance, including earnings, safety and soundness, peer-relative performance and return on assets, with all required thresholds to be met. Beginning August 2026, annual director retainers are $55,000, or $85,000 for the Lead Independent Director, plus committee retainers of $10,000–$27,500. FY2026 director compensation ranged from $52,095 to $107,187; prior director fee-deferral and retirement agreements were terminated in August 2026, with benefits expected to be distributed in September 2027.

Directors, executive officers, and their associates indicated that they intend to subscribe for 1,195,000 common shares for $11.950 million, at $10 per share. This represents 2.3% of the shares sold at the minimum offering range, excluding shares to be contributed to the charitable foundation. The indications count toward the offering’s minimum but are not guaranteed purchases.

The largest individual indications were 120,000 shares ($1.2 million) each from director Brian E. Galonek and Chairman and CEO Matthew S. Sosik. The reported indications include purchases by associates, such as spouses and other relatives, but exclude ESOP purchases and any stock awards or options that may be granted no earlier than six months after the conversion and offering. Insiders will receive the same offering price and terms as other purchasers, and state that they are buying for investment rather than resale.

Conversion and offering structure

Hometown MHC’s conversion to a fully stock-owned structure and the public offering were unanimously approved by the relevant boards and Hometown MHC corporators on October 28, 2026. The Massachusetts Commissioner of Banks has authorized the offering to commence, but final Massachusetts and Federal Reserve approvals remain outstanding; the Federal Reserve must also approve Hometown Financial as TruNorth Bank’s bank holding company. At closing, Hometown Financial will own all TruNorth Bank shares, and public stockholders—including the charitable foundation—will own Hometown Financial.

The offering is intended to fund growth, strengthen capital and liquidity, finance the Primary Bank acquisition, support technology and employee stock benefits, and provide for possible acquisitions and a community charitable foundation. Hometown Financial was “well capitalized” as of June 30, 2026, and regulators had not directed or advised it to raise capital. A portion of the proceeds is expected to repay $135.0 million of senior debt maturing in 2027, which management expects will reduce interest expense and improve net interest margin.

Primary Bank is expected to merge into TruNorth Bank immediately after the conversion and offering. The conversion is not contingent on the merger, but the merger is contingent on conversion. If the merger is terminated, the company may terminate or delay the conversion, and subscribers may be able to modify or rescind their orders.

Appraisal and offering terms

RP Financial’s August 4, 2026 appraisal assumes completion of the Primary Bank acquisition and a foundation contribution of shares valued at $10.00 per share equal to 4% of shares sold. The final valuation and share count will be updated at closing. The appraisal used peer price-to-book, price-to-tangible-book, price-to-earnings and price-to-assets methods, emphasizing book value and earnings; price-to-assets was considered less relevant given the company’s capital above regulatory requirements. It is a going-concern appraisal, not a liquidation valuation, and does not assure a per-share market value or trading price at or above $10.00. RP Financial did not independently verify the company’s financial information or value its assets or liabilities.

At the midpoint, the appraisal’s valuation ratios compare with peer averages as follows:

These represent appraisal-estimated discounts of 18.1% on price-to-earnings and 59.5% on both book-value measures. RP Financial made slight downward adjustments for profitability, growth and earnings viability, citing lower pro forma core earnings and returns, and a slight upward adjustment for financial condition, citing stronger pro forma capital, liquidity and lower funding costs. Its initial fee was $520,000, plus up to $15,000 in expenses and $25,000 per subsequent update.

Subscription, distribution and execution

Nontransferable subscription rights are offered first to eligible depositors and other priority groups, then potentially to community investors and through a syndicated community offering or underwriting. Eligible Account Holders are qualifying depositors with at least $50 at June 30, 2025; Supplemental Eligible Account Holders are qualifying depositors at June 30, 2026 who were not in the first priority. Allocation is subject to available shares, purchase limits and proportional allocation rules. Tax-qualified employee benefit plans may purchase up to 10% of shares sold plus foundation shares; the ESOP intends to purchase 8% of that combined amount. The general individual subscription limit is 50,000 shares ($500,000), while the overall limit across offering categories is generally 120,000 shares ($1.2 million) per person or entity, including associates or a group acting in concert. Officers, directors and associates are collectively limited to 25% of shares sold plus foundation shares.

The subscription offering is scheduled to expire at 2:00 p.m. ET on December 18, 2026. Signed original order forms and full payment must be received by then. The offering will not close unless at least 51.0 million shares are subscribed and other closing conditions are met. If the minimum is not reached within 45 days after expiration and regulators do not approve an extension, funds are returned with 0.05% annual interest and withdrawal authorizations are canceled. Extensions beyond February 1, 2027 give subscribers an opportunity to confirm, change or cancel orders; nonresponders’ orders are canceled. The offering must be completed by July 6, 2028.

If the updated appraisal moves outside the stated range (including the permitted 15% increase), the company may resolicit subscribers, return funds with 0.05% annual interest, or potentially terminate the conversion after consulting regulators. Issuing more shares increases aggregate equity but dilutes each purchaser’s ownership and pro forma earnings and equity per share.

Shares left after subscription priorities may be offered to community investors, with preference for local natural persons; the company may accept or reject orders. KBW would manage a syndicated community offering on a best-efforts basis and is not obligated to buy unsold shares. A firm-commitment underwriting is a possible alternative, subject to board choice, market conditions and customary conditions. If distribution channels fail to sell the shares, another sale arrangement may require regulatory approval.

KBW receives a $100,000 nonrefundable management fee, credited against closing fees of 0.90% of subscription proceeds and 1.50% of community-offering proceeds; foundation shares and ESOP purchases are excluded from those fee bases. It may receive up to $100,000 for substantial resolicitation work and up to 5.0% of proceeds sold in a syndicated offering or firm-commitment underwriting. Expense reimbursement is capped at $345,000, subject to specified exceptions. Separate records-management fees include $75,000 (of which $35,000 had been paid by the prospectus date), potentially increased by $12,500, plus up to $40,000 in expenses.

Depositor, tax and share provisions

Depositors’ account terms and outstanding loan terms remain unchanged through conversion, with the same stated FDIC and Massachusetts Depositors Insurance Fund coverage. Eligible depositors from the June 30, 2025 and June 30, 2026 measurement dates receive interests in a liquidation account based initially on qualifying deposit balances; interests decline if balances fall and are extinguished if accounts close. They are payable only in specified liquidation circumstances, after creditors (including depositors’ deposit and accrued-interest claims), and qualifying mergers generally do not trigger payment. A parallel TruNorth Bank account is intended to support the parent account if needed.

The conversion and related mergers are expected to qualify as tax-free reorganizations, and purchasers’ stock basis is expected to equal the purchase price. Counsel considers it more likely than not that the nontransferable, no-cost subscription rights and the benefit of the supporting bank liquidation account have zero fair market value. These opinions are not binding on tax authorities; if challenged, holders could recognize taxable income or gain. The company will not seek an IRS ruling.

Shares purchased in the offering by directors/trustees, certain officers and corporators generally cannot be sold for one year, subject to exceptions. Directors, certain officers and associates generally must use an SEC-registered broker or dealer for purchases during the first three years. Hometown Financial generally cannot repurchase shares during the first year without compelling reasons or specified exceptions and approvals; Massachusetts rules generally restrict repurchases for three years, with limited exceptions.

TruNorth Bank Foundation

In connection with its conversion and stock offering, Hometown Financial plans to establish TruNorth Bank Foundation, Inc., a Delaware non-stock, nonprofit private foundation. The company intends to contribute shares equal to 4% of the shares sold in the offering, valued at $10 per share. The donation will dilute other stockholders, a factor the company says it considered; in return, the foundation will participate directly in any future appreciation in the shares and support community organizations in the banks’ current and future markets.

The foundation generally must distribute at least 5% of the average fair market value of its net investment assets annually. It may also fund grants with future dividends, loans secured by its shares (subject to applicable law), or share sales. The foundation’s board will set grant policies and manage and vote the shares. On each stockholder proposal, the foundation must vote its shares in the same proportion as the other shares voted.

For five years, the board must include a qualified local community representative who is not an officer, director, or employee of the company or a bank, as well as at least one TruNorth Bank director. The initial board is to comprise five TruNorth Bank directors or officers and one independent representative from the local charitable sector. Hometown Financial stockholders will have no nomination or voting rights over the foundation.

Tax treatment and regulatory requirements

Hometown Financial expects the share contribution to qualify for a federal charitable deduction at fair market value, subject to a limit of 10% of annual taxable income; unused deductions may be carried forward for five years. The company estimates it may claim the deduction in the contribution year and the following five years, but the actual benefit depends on IRS approval and sufficient taxable income. If the IRS denies the foundation tax-exempt status, the contribution would be expensed without a tax benefit, reducing earnings in the year of that determination. The foundation’s investment income is generally taxed at 1.39%, while earnings and gains from asset sales are generally exempt from federal and state income taxes.

Regulatory approval and oversight are significant implementation considerations. Regulators may examine the foundation at its expense, issue supervisory directives, and require annual reporting, written operating and conflict-of-interest policies, compliance with private-foundation rules, and pro-rata voting of its bank holding company shares. Within six months after the conversion and offering, the foundation must submit a three-year operating plan and specified governance documents to regulators. It must also apply to the IRS for recognition as a 501(c)(3); exemption is not assured.

Community rationale

The company presents the foundation as a means to deepen community ties and support the long-term value and visibility of its community-banking franchise, complementing its Community Reinvestment Act responsibilities. Recent community-lending ratings varied by bank: TruNorth Bank and bankESB received “Outstanding” Massachusetts ratings, while bankHometown received “High Satisfactory.” In federal examinations, TruNorth Bank and bankESB received “Outstanding” ratings and bankHometown received “Satisfactory.”

Takeover defenses and regulatory restrictions

Hometown Financial’s charter, bylaws and applicable laws give its board substantial ability to resist or delay a change of control. The board may consider effects on the company, TruNorth Bank and other stakeholders—including shareholders, employees, customers, creditors and communities—and may reject a proposal and take lawful steps to oppose it. These provisions can also make it harder for shareholders to replace directors or participate in a transaction. The board states that it is unaware of any current effort to obtain control.

Charter and bylaw provisions

• Directors are elected annually, but may be removed only for cause with approval from at least two-thirds of the voting power. Cumulative voting is prohibited.
• A holder beneficially owning more than 10% of the common stock generally cannot vote shares above that limit, unless the acquisition received advance approval from a majority of qualifying unaffiliated directors.
• Special shareholder meetings may be called by specified officers or a majority of the full board. Shareholders may request one only if they hold at least a majority of all votes entitled to be cast.
• Shareholder nominations and business proposals are subject to detailed notice and information requirements. Notice is generally due 90–100 days before the anniversary of the prior annual meeting, with an alternative deadline if the meeting date is announced late and moved forward.
• Director qualifications exclude certain competitors’ directors, officers or 10% owners; people with specified criminal or regulatory histories or certain transaction-related agreements; candidates who have lost more than one prior election; and candidates aged 72 or older.
• The board may issue authorized but unissued preferred stock without shareholder action and establish its rights and preferences, potentially impeding an unapproved control transaction. The board says it has no current plan or understanding to issue preferred stock.
• Many charter provisions require supermajority approval to amend. Specified core provisions—including the 10% voting limit, director-removal rules, board authority over preferred stock and shareholder nomination rules—generally require approval from at least 80% of outstanding voting stock. Bylaws may be amended by a majority of the full board or by at least 80% of votes entitled to be cast in director elections.

Legal and regulatory constraints

• Maryland law generally prohibits specified business combinations with an “interested stockholder” for five years after the person becomes interested. After that period, a combination generally requires board recommendation and approval by 80% of eligible voting power and two-thirds of voting power excluding the interested stockholder and certain affiliates, subject to a statutory minimum-price exception.
• Hometown’s bylaws opt out of Maryland’s Control Share Acquisition Act. Stockholders therefore do not receive that law’s voting-right protections for control-share acquisitions unless the board repeals the opt-out.
• For three years after the conversion and stock offering, federal rules generally require prior Federal Reserve approval for a person to acquire or offer to acquire more than 10% of a class of Hometown Financial equity. Massachusetts rules and the conversion plan also restrict Hometown Financial from selling or liquidating itself, or causing TruNorth Bank to be sold or liquidated, during that period without prior state approval.
• Under the Bank Holding Company Act, a bank holding company generally needs Federal Reserve approval before acquiring 5% or more of Hometown Financial’s common stock; another company generally needs approval before acquiring 25% or more. Control may also be found through influence over board elections or management.
• Massachusetts law imposes approval, registration, reporting and examination requirements on a company controlling two or more banking institutions. Following the August 21, 2026 mergers of TruNorth Bank, bankESB and bankHometown into one institution, Hometown Financial (Massachusetts) and Hometown MHC ceased to qualify as Massachusetts bank holding companies. A separate three-year post-conversion restriction requires prior state approval for a person to acquire more than 10% of a converted mutual holding company’s equity.

Investor implication: The provisions and approval requirements may deter or delay unsolicited acquisitions and limit shareholders’ ability to influence control outcomes. They give the board broad discretion to resist offers, including potentially attractive ones.

Capital stock and anticipated issuance

Hometown Financial is authorized to issue 200 million common shares and 10 million preferred shares, each with a $0.01 par value. In connection with the conversion and stock offering, it expects to issue up to 82.524 million common shares, including shares for the charitable foundation, plus approximately 7.566012 million additional shares as merger consideration for the acquisition of Primary Bank. No preferred shares will be issued in the offering.

Once paid for, common shares are fully paid and non-assessable. They are not deposit accounts and are not insured by the FDIC, the Massachusetts Depositors Insurance Fund, or another government agency.

Common-share rights and restrictions

Common shareholders generally have one vote per share, but a person beneficially owning more than 10% of outstanding common stock may not vote shares exceeding that limit. Shareholders elect Hometown Financial’s board; they do not directly control TruNorth Bank. Hometown Financial owns the bank’s stock, and its board directs how those shares are voted.

Common dividends are subject to statutory solvency tests, regulatory restrictions, and limits intended to preserve the conversion-related liquidation account. If preferred shares are issued in the future, they could have priority over common shares for dividends and distributions.

Certain charter amendments require a two-thirds shareholder vote, and certain other matters require an 80% vote. Common shareholders have no preemptive rights unless the board approves them, and no appraisal rights unless the board elects to grant them for specified transactions. Common shares are not redeemable.

Preferred stock and potential dilution

The board may issue preferred stock without shareholder approval. Preferred shares could carry voting, dividend, liquidation, or conversion preferences, potentially diluting common shareholders’ voting power and helping impede an unfriendly takeover.

Liquidation priority

In a liquidation, creditors and deposit liabilities are paid before residual assets are distributed; TruNorth Bank’s liquidation account must also be distributed to eligible account holders. At the holding-company level, common shareholders receive only residual assets remaining after liabilities and any preferred-stock priority.

Exclusive forum

The charter generally requires specified derivative, fiduciary-duty, Maryland corporate-law, and internal-affairs claims to be brought in Maryland state or federal courts, subject to jurisdiction over indispensable parties. Federal securities-law claims are excluded. The provision may limit shareholders’ choice of venue and increase litigation expense for investors located elsewhere.

Hometown Financial’s common-stock transfer agent and registrar is Continental Stock Transfer & Trust Company, located in New York, New York.

Experts

Hometown MHC’s consolidated financial statements for the years ended June 30, 2026 and 2025 are included in the prospectus in reliance on the audit report of Wolf & Company, P.C., an independent registered public accounting firm. RP Financial consented to publication of its report summary estimating the pro forma market value of Hometown Financial common stock after the conversion and stock offering, and of its letters concerning subscription rights and liquidation accounts.

Legal and Tax Matters

Luse Gorman, PC, Hometown Financial’s special counsel, opined on the legality of the common stock and the federal income tax consequences of the conversion and stock offering. Wolf & Company, P.C. opined on the Massachusetts income tax consequences. Both firms consented to references to their opinions in the prospectus. Kilpatrick Townsend & Stockton LLP will advise KBW on certain legal matters.

Additional Information and Regulatory Filings

Hometown MHC has applied to the Massachusetts Commissioner of Banks and the Federal Reserve Board for approval of the conversion. Hometown Financial has also filed a bank holding company application with the Federal Reserve Board.

In connection with the conversion and stock offering, Hometown Financial will register its common stock under Section 12(b) of the Securities Exchange Act. Registration will subject the company and its stockholders to proxy and periodic-reporting requirements, as well as insider-trading restrictions that apply to directors, officers, and holders of more than 10% of the stock. The company has undertaken to maintain the registration for at least three years after the conversion and offering.

Hometown Financial Group — FY ended June 30, 2026

Consolidated results

Net interest income rose 24.1%, as interest expense declined despite higher interest income. Higher credit costs and non-interest expense more than offset that growth: provision for loan losses rose sharply, while non-interest expense increased 20.2%, including higher salaries and benefits, occupancy, general and administrative, and merger costs. FY2026 non-interest income included a $1.021 million realized loss on AFS securities. The effective tax rate fell to 24.46% from 26.19%.

Balance sheet and cash flow

Operating cash flow increased substantially year over year. Deposits increased 5.5%; non-certificate deposits were $3.677 billion versus $3.448 billion, and time deposits were $2.134 billion versus $2.057 billion. Deposits exceeding the $250,000 FDIC insurance limit totaled $1.85 billion, up from $1.77 billion. Available borrowing capacity and other funding sources were $2.097 billion, mainly $1.990 billion of FHLB capacity. FHLB advances declined to $157.406 million from $189.179 million. Senior notes remained at $135 million principal, bearing a fixed 8.75% rate and due March 15, 2027.

Credit quality and lending

Loan growth was modest, while credit deterioration was concentrated in commercial real estate. CRE loans were $1.873 billion (34.28% of loans); CRE watch/special-mention balances rose to $173.837 million from $109.696 million, and substandard balances to $67.192 million from $44.893 million. Higher charge-offs, individually evaluated loans requiring specific reserves, and management’s assessment of CRE trends drove the increase in provision. Although non-accrual loans rose, loans 90+ days past due declined, primarily because CRE delinquencies fell. HFG’s lending is concentrated in New England, principally in real estate-related and commercial lending.

During FY2026, the company prospectively replaced its vintage-based expected-loss method with a probability-of-default/loss-given-default framework using borrower and loan characteristics and a 12-month economic forecast followed by reversion toward historical conditions. Management said the change did not materially affect the allowance or results.

Securities, acquisitions and capital

HFG transferred all remaining HTM securities to AFS during FY2026 to align classification with liquidity, interest-rate-risk management, balance-sheet strategy and planned subsidiary unification. At year-end, AFS securities had $746.204 million amortized cost and $733.700 million fair value, a $12.504 million net unrealized loss. Management attributed unrealized losses primarily to interest rates, recorded no credit-loss allowance, and said it neither intended nor was more likely than not required to sell before recovery of amortized cost. AFS securities pledged as collateral increased to $584.687 million from $366.553 million.

The October 2025 CFSB acquisition had $22.5 million fair-value consideration and added $353.407 million of assets and $291.179 million of liabilities, including $166.196 million gross loans, $137.312 million investments and $278.489 million deposits; goodwill recognized was $185,000. CFSB paid HFG a $39.9 million special dividend before closing. The prior North Shore Bank transaction generated a $988,000 bargain-purchase gain in FY2025. Goodwill impairment was not recorded.

HFG and its subsidiary banks were classified as well capitalized and met regulatory requirements. AOCI loss improved to $9.772 million from $10.437 million.

Subsequent developments and risks

On August 21, 2026, TruNorth Bank and bankHometown merged into bankESB, which was renamed TruNorth Bank. HFG also announced an agreement to acquire Primary Bank and adopted a plan for its mutual holding company to convert to a stock holding company; both remained subject to approvals and other conditions. Following the bank consolidation, TruNorth expected to exit the Massachusetts Depositors Insurance Fund in late 2026, subject to approval, and established reciprocal deposit services through IntraFi. The company’s estimates are particularly sensitive to credit losses, acquired-asset fair values, goodwill, foreclosed-asset valuation and deferred taxes.