What changed in this filing

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Item 1A. Risk Factors

2022-02-25 compared with 2021-03-29 · 202 added, 218 removed, 639 unchanged (40% of the section changed)

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The COVID-19 pandemic’s impact on businesses and consumers in our market area has had, and we expect will continue to have, a material adverse effect on our business, financial condition, results of operations and cash flows.

• Since March 2020, when the World Health Organization declared the outbreak of a strain of novel coronavirus disease, COVID-19, a global pandemic, the COVID-19 pandemic, as well as governmental and private sector responses to it, have had a severe impact in our markets, causing, among other things:

◦ closures of many businesses, leading to loss of revenues and above average unemployment, and

• Since March 2020, when the World Health Organization declared the outbreak of a strain of novel coronavirus disease, COVID-19, to be a global pandemic, the COVID-19 pandemic, as well as governmental and private sector responses to it, have had a severe impact in our markets, causing, among other things:

◦ closures of many businesses, leading to loss of revenues and, from time to time, above average unemployment, and

◦ the imposition of governmental orders initially requiring non-essential businesses to close their facilities and later limiting the number of customers and other personnel permitted on their premises.

• The duration and severity of the COVID-19 pandemic in 2021 and possibly beyond, including the potential for resurgences from time to time, as well as the pace of vaccination programs both within and outside of our market area, and the efficacy of any vaccine against new variants of coronavirus are impossible to predict.

• We expect that the continuation of the adverse economic conditions caused by the COVID-19 pandemic will have a significant adverse effect in 2021 on our business, financial condition, results of operations and cash flows, including by:

• The duration and severity of the COVID-19 pandemic through 2022 and possibly beyond, including the potential for resurgences from time to time, as well as the pace of vaccination and testing programs both within and outside of our market area, and the efficacy of any vaccine against new variants of coronavirus are impossible to predict.

• The continuation of the COVID-19 pandemic in 2022 may result in adverse economic conditions in our market that could have a significant adverse effect in 2022 on our business, financial condition, results of operations and cash flows, including by:

◦ reducing demand for products and services from our customers, and

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See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report on Form 10-K for detail on the Company’s lending exposure to industries which management believes have experienced the most adverse effects of the COVID-19 pandemic.

• Although we expect many of our borrowers whose loans we modified in 2020 will be able to make timely loan payments through 2021, we anticipate that some will be not able to do so, and that we will need to begin collection activities.

Beginning in March 2020, we modified the terms of loans to our commercial and small business borrowers impacted by the COVID-19 pandemic.

These modifications generally allowed customers to temporarily cease making either principal payments or both interest and principal payments.

Most of these modifications ended in the third or fourth quarter of 2020.

See “Management’s Discussion and Analysis of

Financial Condition and Results of Operations” section of this annual report on Form 10-K for a detailed breakout of our COVID-19-related loan modifications.

• The increase in remote and hybrid work arrangements, if continued, could ultimately result in reduced demand for office space in our market, and such reduction in demand could adversely affect both the value of the collateral securing some of our commercial real estate loans and the demand by developers and other borrowers for new commercial real estate loans.

• Some negative effects of the COVID-19 pandemic, including the recognition of charge-offs, may be delayed because of the impact of prior and potential future government stimulus actions or payment assistance provided to clients and customers.

• It may be challenging for us to grow our core business while the COVID-19 pandemic continues or if the recovery from the COVID-19 pandemic is slow or erratic.

• It may be challenging for us to grow our core business while the COVID-19 pandemic continues or if the recovery from the COVID-19 pandemic continues to be erratic.

There are various risks associated with our acquisition growth strategy, any of which could have a material adverse effect on our business.

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• Changes in interest rates can have a material effect on many areas of our business, including on our net interest income, deposit costs, and loan volume and delinquency, and may have an adverse effect on our profitability.

The Federal Open Market Committee’s decision to maintain the target range for the federal funds rate between 0.0% and 0.25% to help mitigate the effects of the COVID-19 pandemic has had and will likely continue to have an adverse effect on our operating results.

The Federal Open Market Committee’s decision to maintain the target range for the federal funds rate between 0.0% and 0.25% for an extended period of time to help mitigate the effects of the COVID-19 pandemic has had and may continue to have an adverse effect on our operating results.

Any decision by the Federal Open Market Committee in 2022 to increase the federal funds rate could subsequently be modified or reversed depending on future changes in the U.S.

• The geographic concentration of our loan portfolio and lending activities in eastern Massachusetts and southern and coastal New Hampshire makes us vulnerable to a downturn in our local economy.

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• If our allowance for loan losses is insufficient to cover actual loan losses, our earnings and capital could decrease.

• We may be required to increase our allowance for loan losses as a result of our adoption of the new standard for determining the amount of the allowance for loan losses (commonly referred to as the “CECL model”).

This new standard will become effective for us beginning January 1, 2022.

In addition, our allowance for loan losses for the year ended December 31, 2020 may be difficult to evaluate in comparison to our peers that already have adopted the new standard.

• On January 1, 2022, we adopted a new standard for determining the amount of the allowance for loan losses (commonly referred to as the “CECL standard”).

Therefore, our allowance for loan losses for the year ended December 31, 2021 may be difficult to evaluate in comparison to our peers that previously adopted the new standard.

• Replacement of the LIBOR benchmark interest rate may adversely affect our business, financial condition, and results of operations, including by causing us to incur significant expenses in effecting the transition, resulting in reduced loan balances if borrowers do not accept the substitute index or indices, and resulting in disputes or litigation with customers over the appropriateness or comparability to LIBOR of the substitute index or indices.

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failure to document transactions properly or to obtain proper authorization;

failure to comply with applicable regulatory

requirements and conduct of business rules;

equipment failures, including those caused by natural disasters or by electrical, telecommunications or other essential utility outages;

failure to comply with applicable regulatory requirements and conduct of business rules;

equipment failures, including those caused by natural disasters or by

electrical, telecommunications or other essential utility outages;

business continuity and data security system failures, including those caused by computer viruses, cyber-attacks or unforeseen problems encountered while implementing major new computer systems or upgrades to existing systems;

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• We may be unable to disclose some restrictions or limitations on our operations imposed by our regulators.

• Eastern Insurance Group LLC’s business model, in which it acts as an agent in offering insurance solutions for clients with insurance needs, could become outdated as insurance carriers increasingly offer products directly to consumers.

• Eastern Insurance Group’s business model, in which it acts as an agent in offering insurance solutions for clients with insurance needs, could become outdated as insurance carriers increasingly offer products directly to consumers.

• To the extent that we acquire other companies, our business may be negatively impacted by certain risks inherent with such acquisitions.

• We intend to adopt one or more new stock-based benefit plans, subject to shareholder approval, which will increase our annual compensation and benefit expenses related to the stock options and stock awards granted to participants under the new stock-based benefit plans.

• In 2021, we adopted a new stock-based benefit plan, which will increase our annual compensation and benefit expenses related to awards granted to participants under such plan.

Certain provisions of our articles of organization, as well as state and federal banking laws, may make our stock a less attractive investment compared to the stock of peer companies.

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• Our articles of organization provide that state and federal courts located in Massachusetts will be the exclusive forum for substantially all disputes between us and our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

• The market price of our stock value may be negatively affected by applicable regulations that restrict stock repurchases by us through October 14, 2023.

• The market price of our stock value may be negatively affected by applicable regulations that restrict the level of stock that we may repurchase through October 14, 2023.

Risks potentially affecting our business, financial condition, results of operations and cash flows

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Risks Related to the COVID-19 Pandemic and Associated Economic Slowdown

The duration and severity of the COVID-19 pandemic in 2021 and beyond, including the potential for resurgences from time to time, as well as the pace of vaccination programs both within and outside of our market area, and the efficacy of any vaccine against new variants of coronavirus are impossible to predict.

The type of coronavirus that causes COVID-19 constantly changes through mutation, and new variants of the virus typically emerge over time.

Multiple variants of the virus

that causes COVID-19 have been documented in the United States, including within our markets, and globally during this pandemic.

Center for Disease Prevention and Control (the “CDC”) reports that several of these variants seem to spread more easily and quickly than other variants, and these variants may lead to more cases of COVID-19.

An increase in the number of cases will put more strain on health care resources, lead to more hospitalizations, and potentially lead to more deaths.

The duration and severity of the COVID-19 pandemic in 2022 and beyond, including the potential for resurgences from time to time, as well as the pace of vaccination and testing programs both within and outside of our market area, and the efficacy of any vaccine against new variants of coronavirus are impossible to predict.

The type of coronavirus that causes COVID-19 constantly changes through mutation, and new variants of the virus have emerged and will likely continue to emerge over time.

Multiple variants of the virus that causes COVID-19 have been documented in the United States, including within our markets, and globally during this pandemic.

Center for Disease Prevention and Control (the “CDC”)

reports that several of these variants seem to spread more easily and quickly than other variants, and these variants may lead to more cases of COVID-19.

A surge in the number of cases has, and may in the future, put more strain on health care resources, lead to more hospitalizations, and potentially lead to more deaths.

There is also substantial uncertainty regarding the pace of economic recovery and the return of business and consumer confidence if and when the impact of the COVID-19 pandemic lessens.

The COVID-19 pandemic, including associated governmental and private sector responses, has had, and we expect will continue to have, a material adverse effect on our business, financial condition, results of operations and cash flows, as discussed below.

The COVID-19 pandemic and governmental and private sector action in response to the COVID-19 pandemic are having a material adverse effect on the global, national and local economies, and on our business, financial condition, results of operations and cash flows, and it is premature to predict if or when economic activity will revert to the level that existed before the spread of COVID-19 in our region.

Governmental and private sector action in response to the COVID-19 pandemic have generally had the effect in our market of curtailing household and business activity, although such action has not always been coordinated or consistent across jurisdictions and has fluctuated during the pandemic.

The COVID-19 pandemic and governmental and private sector action in response to the COVID-19 pandemic are having a material adverse effect on the global, national and local economies, and on our business, financial condition, results of operations and cash flows, and it remains premature to predict if or when economic activity will revert to the level that existed before the spread of COVID-19 in our region.

Our market consists primarily of eastern Massachusetts and southern and coastal New Hampshire.

Massachusetts issued an emergency order in March 2020 requiring all businesses and organizations that did not provide certain essential services to close their workplaces and facilities to workers, customers and the public.

New Hampshire did not impose similar restrictions.

Massachusetts progressively relaxed its restrictions, including limits on the size of indoor and outdoor gatherings in public and private venues and the capacity of business locations, including our branches and office spaces, during the summer of 2020, then tightened the restrictions in the fall of 2020 in response to increasing community transmission of COVID-19.

After the winter surge in cases, the state again began moving to relax the restrictions in February 2021.

Quarantine requirements for those who tested positive for COVID-19 or were exposed to it, imposed by Massachusetts and New Hampshire, caused staff shortages across our branch footprint, causing us to reduce hours and at times close branches, disrupting service for our customers.

We are unable to predict how the governmental and private sector action will evolve in 2021 in response to the COVID-19 pandemic in our market.

Since the beginning of the COVID-19 pandemic, the nature of response by the states in which we operate have, at various times, included issuance and subsequent expiration of a state of emergency and the imposition, relaxation and/or reinstitution of restrictions on business and organizations that do not provide certain essential services.

The number of cases in each state have fallen with widespread vaccinations (and booster shots) but risen in connection with the emergence of new variants.

Quarantine requirements for those who tested positive for COVID-19 or were exposed to it, imposed by Massachusetts and New Hampshire, have caused staff shortages across our branch footprint, causing us to reduce hours and, at times, close branches, disrupting service for our customers.

We are unable to predict how the governmental and private sector action will evolve in 2022 in response to the COVID-19 pandemic in our markets.

Our commercial and small business borrowers that operate businesses such as hotels, inns, restaurants and retail stores that depend primarily upon customers patronizing their businesses in person have experienced the most significant adverse effects of the COVID-19 pandemic, and we expect these effects to continue.

Many individuals, households and businesses have changed their behavior in response to governmental mandates and advisories, sharply restraining commercial and social interactions and, as a consequence, have reduced consumer discretionary spending.

Our commercial and small business borrowers that operate businesses such as hotels, inns, restaurants and retail stores that depend primarily upon customers patronizing their businesses in person have experienced the most significant adverse effects as a consequence of reduced commercial and social interactions and discretionary spending, and we expect these effects to persist for some or all of 2021.

Many individuals, households and businesses have changed their behavior in response to governmental mandates and advisories, sharply restraining certain commercial and social interactions.

Our commercial and small business borrowers that operate businesses such as hotels, inns, restaurants and retail stores that depend primarily upon customers patronizing their businesses in person have experienced the most significant adverse effects as a consequence of reduced commercial and social interactions and discretionary spending, and we expect these effects to persist for some or all of 2022 and possibly beyond.

To the extent such changed customer behavior continues, our commercial and small business borrowers will continue to experience adverse effects to their businesses.

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See tabular disclosure of “High Risk Industries” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K.

The COVID-19 pandemic has significantly increased the level of unemployment in our market, and if elevated levels of unemployment continue, the Company may experience greater levels of delinquent loans especially among our consumer and small business loans

The closure in Massachusetts of many workplaces and facilities to workers, customers and the public due to the COVID-19 pandemic has significantly increased the level of unemployment in Massachusetts.

The COVID-19 pandemic has significantly affected from time to time the level of unemployment in our market, and during periods of elevated unemployment, the Company may experience greater levels of delinquent loans especially among our consumer and small business loans

The economic consequences of the COVID-19 pandemic have significantly increased from time to time the level of unemployment in Massachusetts.

For example, the unemployment rate reported by the Department of Labor’s Bureau of Labor Statistics for Massachusetts for May 2020 was 15.3%.

Although the level of unemployment in Massachusetts declined to an average of 8.4% for the three-month period ended December 31, 2020, unemployment in Massachusetts continues to far exceed the pre-pandemic level of 2.8% reported from August 2019 through March 2020.

Although, the level of unemployment in Massachusetts had declined to 3.9% as of December 31, 2021, unemployment in Massachusetts continues to exceed the pre-pandemic level of 2.9% reported as of December 31, 2019.

Customary means to collect non-performing assets may be prohibited or impractical during the COVID-19 pandemic, and there is a risk that collateral securing a non-performing asset may deteriorate if we choose not to, or are unable to, foreclose on collateral on a timely basis.

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The law prohibited landlords and lenders from initiating or completing evictions and foreclosures.

The law also required lenders to provide forbearance to mortgage borrowers who submit a request affirming that they have experienced a financial impact from the COVID-19 pandemic.

Although the Massachusetts moratorium on evictions and foreclosures expired on October 17, 2020, a federal moratorium established by the CDC went into effect January 31, 2021 and was further extended to June 30, 2021.

We are unable to predict whether Massachusetts or the CDC will reinstate the same or similar moratoriums after June 30, 2021 because of a resurgence of the COVID-19 pandemic in Massachusetts or the United States, respectively.

The law, which expired on October 17, 2020, also required lenders to

provide forbearance to mortgage borrowers who submitted a request affirming that they have experienced a financial impact from the COVID-19 pandemic.

A federal moratorium established by the CDC went into effect January 31, 2021 and was further extended to August 26, 2021.

We are unable to predict whether Massachusetts or the CDC will reinstate the same or similar moratoriums because of a resurgence of the COVID-19 pandemic in Massachusetts or the United States, respectively.

There is a risk that the collateral securing a nonaccrual loan may deteriorate if we choose not to, or are unable to, foreclose on the collateral on a timely basis during the COVID-19 pandemic.

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As a consequence, many of those borrowers have sought and may continue to seek payment deferments on their indebtedness.

Consistent with the public encouragement provided generally by federal and state financial institution regulators after the spread of COVID-19 in the United States, Eastern Bank has attempted to work constructively with borrowers to negotiate loan modifications or forbearance arrangements that reduce or defer the monthly payments due to Eastern Bank.

Consistent with the public encouragement provided generally by federal and state financial institution regulators after the spread of COVID-19 in the United States, Eastern Bank believes that it has worked constructively with borrowers since March 2020 to negotiate loan modifications or forbearance arrangements that reduce or defer the monthly payments due to Eastern Bank.

Generally, these modifications are for three to six months and allow customers to temporarily cease making either principal payments or both interest and principal payments.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K for additional information regarding loan modifications for the year ended December 31, 2021.

Although we expect many of our borrowers whose loans we modified in 2020 will be able to make timely loan payments through 2021, we anticipate that some will be not able to do so, and we will need to begin collection activities.

In addition, some of our borrowers whose loans were previously not modified may seek modifications as they experience the continued impact of the COVID-19 pandemic.

We may experience greater than usual credit costs in the future if the effect of the COVID-19 pandemic in our market continues.

Our provision for loan losses increased to $38.8 million for the year ended December 31, 2020, compared to $6.3 million for the year ended December 31, 2019.

The increase in our provision for loan losses, which occurred primarily in the quarter ended June 30, 2020, was driven primarily by our perception of the economic distress being experienced by many of our borrowers due to the COVID-19 pandemic.

We may experience additional credit costs in the future if the effect of the COVID-19 pandemic in our market continues.

The Federal Open Market Committee’s decision to maintain the target range for the federal funds rate between 0.0% and 0.25% to help mitigate the effects of the COVID-19 pandemic will likely have an adverse effect on our operating results.

Although many of the borrowers whose loans we modified in 2020 had resumed making timely loan payments as of December 31, 2021, it is possible that some of those borrowers, as well as some of our borrowers whose loans were previously not modified, may seek future modifications as they experience the continued impact of the COVID-19 pandemic.

The increase in remote and hybrid work arrangements, if continued, could ultimately result in reduced demand for office space in our market, and such reduction in demand could adversely affect both the value of the collateral securing some of our commercial real estate loans and the demand by developers and other borrowers for new commercial real estate loans.

The COVID-19 pandemic has caused many employers to shift to remote and/or hybrid workforce arrangements in which employees work from their homes instead of going into their employers’ offices.

If remote and/or hybrid work patterns continue for an extended period of time or become more widespread, there may be long-term implications for how many businesses successfully operate and, in turn, their need for leased office space may contract.

A reduction in the need for office space could result in a reduction in our loan demand and/or in our customers’ ability to repay their loans, which, in turn, may have an adverse effect on our business and results of operation.

We cannot predict how hybrid and remote work patterns will evolve in practice and whether demand for office real estate will fall as a result.

Commercial real estate loans for office, mixed use office and medical office space represented approximately 8.8% of our loan portfolio at December 31, 2021.

Any material reduction in the demand for these categories of commercial office space in our market could adversely affect both the value of the collateral securing a portion of our commercial real estate loans and the demand by developers and other borrowers for new commercial real estate loans, which, in turn, may have a negative impact on our business and financial results.

We have experienced and may continue to experience greater than usual credit costs in the future if the effect of the COVID-19 pandemic in our market continues.

The COVID-19 pandemic has caused us to experience greater than usual credit costs.

For example, for the year ended December 31, 2020, our provision for loan losses increased to $38.8 million, compared to $6.3 million for the year ended December 31, 2019.

The increase in our provision for loan losses for 2020, which occurred primarily in the quarter ended March 31, 2020, was driven primarily by our perception of the economic distress being experienced by many of our borrowers due to the COVID-19 pandemic.

Although our provision for loan loss decreased to a net release of allowance for loan losses of $9.7 million, for the year ended December 31, 2021 due to a reduction in the level of our criticized and classified loans, we may still experience additional credit costs in the future if the economic effect of the continuing COVID-19 pandemic in our market worsens.

Although the Federal Open Market Committee may raise the target range for the federal funds rate, our operating results have been, and may in the future be, adversely affected by low target ranges intended to help mitigate the effects of the COVID-19 pandemic.

Anticipating the economic impact of the COVID-19 pandemic, the Federal Open Market Committee of the Federal Reserve in March 2020 reduced the target range for the federal funds rate to between 0.00% and 0.25%, compared to the previous target of between 1.00% and 1.25%.

The Federal Open Market Committee announced on December 16, 2020 that it had decided to keep the target range for the federal funds rate at 0.00% to 0.25% and that over upcoming months the Federal Reserve will continue to increase its holdings of U.S.

Treasury securities and agency mortgage-backed securities in an effort to support the flow of credit to households and businesses.

The range remained at such levels for the remainder of 2020 and all of 2021.

Although the Federal Open Market Committee has stated that it may raise the target range for the federal funds rate above the current range, the Company’s operating results have already been adversely impacted by the prolonged period of low rates initiated by the Federal Reserve to mitigate the impact of the COVID-19 pandemic on the U.S.

If the Federal Open Market Committee determines not to raise the target range for the federal funds rate, or if it raises but then lowers it again, such changes will impact our operating results.

Changes in interest rates can have a material effect on many areas of our business, including our net interest income and net interest margin.

When interest rates on our interest-earning assets decline at a faster pace than interest rates on our interest-bearing liabilities, our net interest income is adversely affected.

Our planning for 2021 assumes that the current interest rate environment will remain in effect through December 31, 2021;

and interest rates on our interest-earning assets will continue to decline in 2021 at a faster pace than interest rates on our interest-bearing liabilities .

We anticipate the COVID-19 recession will have other adverse effects on our operating results beyond the year ended December 31, 2020.

Other factors likely to have an adverse effect on our operating results include:

• reduced fee income as we waive certain fees for our customers impacted by the COVID-19 pandemic,

Our planning for 2022 assumes increases in the federal funds rate, but changes in economic conditions may preclude the Federal Reserve from raising interest rates or cause them to lower them again.

The associated economic impacts of the COVID-19 pandemic may have other adverse effects on our operating results beyond the year ended December 31, 2021.

Other factors that may have an adverse effect on our operating results include:

• reduced fee income to the extent we waive certain fees for our customers impacted by the COVID-19 pandemic,

• possible constraints on liquidity and capital, due to supporting client activities or regulatory actions,

• potential losses in our investment securities portfolio due to volatility in the financial markets, and

• higher operating costs, increased cybersecurity risks and a potential loss of productivity while we continue to work remotely and must address a higher level of loan modifications, distressed credit management and PPP loan originations.

In addition, because both the COVID-19 pandemic and the associated economic downturn are unprecedented, it may be challenging for management while the COVID-19 pandemic continues to make certain judgments and estimates, such as the current value of commercial real estate collateral, that are material to our Consolidated Financial Statements, given the inherently uncertain operating environment.

In addition, because both the COVID-19 pandemic and the associated economic impacts are unprecedented, it may be challenging for management while the COVID-19 pandemic continues to make certain judgments and estimates, such as the current value of commercial real estate collateral, that are material to our Consolidated Financial Statements, given the inherently uncertain operating environment.

Remote work performed by our employees due to the effects of the COVID-19 pandemic may disrupt our operations, which could have a material adverse effect on our business.

As a result of the onset of the COVID-19 pandemic, a substantial majority of our colleagues now perform their work remotely.

While we believe that our COVID-19 pandemic response plans and their implementation have helped avoid significant interruptions to our critical services, there can be no assurance that our employees will be able to perform their jobs remotely on an uninterrupted basis, and reliance on such plans could expose our business to other operational risks.

Since the onset of the COVID-19 pandemic in our market in March 2020, a substantial majority of our colleagues have performed their work remotely.

While we believe that our COVID-19 pandemic response plans and their implementation have helped avoid significant interruptions to our critical services, there can be no assurance that our employees will be able to continue to perform their jobs remotely on an uninterrupted basis, and reliance on such plans could expose our business to other operational risks.

For example, while we have taken steps to ensure that our remote-work solutions are reliable and secure, there can be no assurance that these solutions will be used or function as intended, or that they will be completely effective in preventing interruptions in our services or cybersecurity incidents.

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Any compromise, failure, or interruption in the availability of the solutions that support our remote-work operations could directly or indirectly result in cybersecurity incidents, interruptions to our business, and negative effects on our reputation and results of operations.

We may experience additional expense and reputational risk arising out of our origination of PPP loans if one or more companies, individuals or public officials allege that we acted unfairly in connection with PPP lending, including by choosing not to process certain PPP applications or in favoring our customers over other eligible PPP borrowers.

Through December 31, 2020, we originated approximately 8,900 loans to PPP borrowers, representing in the aggregate $1.2 billion of PPP loans, and we are currently participating in the second round of PPP funding.

The vast majority of our PPP borrowers are existing commercial and small business borrowers, non-profit customers, retail banking customers and clients of Eastern Wealth Management and Eastern Insurance Group LLC.

We may experience additional expense and reputational risk arising out of our origination of PPP loans if one or more companies, individuals or regulators allege that we acted unfairly in connection with PPP lending, including by choosing not to process certain PPP applications or in favoring our customers over other eligible PPP borrowers.

Through December 31, 2021, we originated approximately 15,500 loans to PPP borrowers, representing in the aggregate $1.7 billion of PPP loans.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Outlook and Trends” in this Annual Report on Form 10-K for additional information regarding our PPP loans as of December 31, 2021.

As of the date of this Annual Report on Form 10-K, federal and state officials are investigating how participating PPP lenders process applications and whether certain PPP lenders may have inappropriately or unfairly prioritized certain customers to the detriment of other eligible borrowers.

Similarly, there are pending lawsuits against other banks brought by eligible PPP borrowers alleging that various PPP lenders improperly prioritized existing customers when those lenders approved PPP loans.

We understand that from time to time federal and state officials have scrutinized how participating PPP lenders have processed applications and whether certain PPP lenders may have inappropriately or unfairly prioritized certain customers to the detriment of other eligible borrowers.

Similarly, we understand that lawsuits have been brought against other banks by eligible PPP borrowers alleging that various PPP lenders improperly prioritized existing customers when those lenders approved PPP loans.

Federal and state law enforcement agencies and regulators have stated that investigations or other regulatory proceedings have been opened concerning how participating PPP lenders processed applications and whether certain PPP lenders may have inappropriately or unfairly prioritized certain customers to the detriment of other eligible borrowers.

Similarly, there are pending lawsuits against other PPP lenders brought by PPP borrowers alleging that those lenders engaged in inappropriate conduct in connection with the approval and administration of PPP loans, such as improperly prioritizing existing customers when approving PPP loans, restricting loan eligibility and other alleged misconduct.

There can be no assurance that we will not be the target of government scrutiny or that one or more private parties will not bring PPP-related claims against us that are similar to those brought against other banks.

An important element of our business strategy is to pursue growth in our core business, and it may be challenging for us to grow our core business while the COVID-19 pandemic and associated economic slowdown continue or if the recovery from the COVID-19 pandemic is slow or erratic.

The COVID-19 pandemic and the associated economic slowdown are unprecedented.

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We also are unable to predict whether our existing and prospective customers will have confidence in assessing when the COVID-19 pandemic will likely abate and the likely pace of any economic recovery.

It may be challenging for us to grow our core business while the COVID-19 pandemic continues or if the recovery from the COVID-19 pandemic is slow or erratic.

It may be challenging for us to grow our core business while the COVID-19 pandemic continues or if the recovery from the COVID-19 pandemic continues to be erratic.

If the continuing effects of the COVID-19 pandemic impede our ability to grow our core business, our return on equity may be less than our peer companies, and the market price of our stock may be adversely affected.

Risks Related to Our Acquisition Strategy

We may fail to realize all of the anticipated benefits of the Century Merger, or those benefits may take longer to realize than expected.

We may also encounter significant difficulties in integrating with Century.

On November 12, 2021, we acquired Century.

The success of the Century Merger, including anticipated benefits and cost savings, will depend, in part, on our ability to successfully integrate Century’s operations in a manner that results in various benefits and that does not materially disrupt existing customer relationships or result in decreased revenues due to loss of customers.

The process of integrating operations could result in a loss of key personnel or cause an interruption of, or loss of momentum in, the activities of one or more of the combined company’s businesses.

Inconsistencies in standards, controls, procedures and policies could adversely affect the combined company.

The diversion of management’s attention and any delays or difficulties encountered in connection with the Century Merger and the integration of Century’s operations could have an adverse effect on the business, financial condition, operating results and prospects of the combined company.

If we experience difficulties in the integration process, including those listed above, we may fail to realize the anticipated benefits and synergies of the Century Merger in a timely manner or at all.

Our future results will suffer if we do not effectively manage our expanded operations following the Century Merger.

Following the Century Merger, the size and operational scope of our business has increased significantly beyond its current size and scope.

The Century Merger has increased our asset size and will further increase the breadth and complexity of our business with the addition of new business lines in which we have not previously engaged, and exposure to industry sectors, such as higher education, which we have not historically served.

The size and scope of our commercial loan and lease portfolio has also increased in size as a result of the Century Merger.

The commercial loan portfolio we acquired from Century includes loans that are concentrated in industry sectors (such as higher education and nonprofit organizations) that are relatively new to us.

Some such loans are of greater size than the typical size of commercial loans that we have made in recent years.

Our future success depends, in part, upon our ability to manage this expanded business, which poses substantial challenges for our management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity.

There can be no assurances that we will be successful in this regard or that we will realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the Century Merger.

We may be unsuccessful identifying and competing for acquisitions.

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Accordingly, attractive opportunities may not be available to us, and there can be no assurance that we will be successful in identifying, completing or integrating future acquisitions.

We may not be able to acquire other institutions on acceptable terms.

We may not be able to acquire

other institutions on acceptable terms.

The ability to grow may be limited if we are unable to successfully make acquisitions in the future.

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Acquisitions typically involve the payment of a premium over book and market values, and therefore, some dilution of our tangible book value and net income per share may occur in connection with any future transaction.

The consummation of a merger will be contingent upon the satisfaction of a number of conditions, including regulatory approvals, that may be outside of our control and that we and our merger partner may be unable to satisfy or obtain or which may delay the consummation of such merger or result in the imposition of conditions that could reduce the anticipated benefits from the merger or cause the parties to abandon the merger.

The consummation of a merger is contingent upon the satisfaction of a number of conditions, some of which are beyond our control and that of a merger partner, including, among others, the receipt of required regulatory approvals and approval of shareholders.

These conditions to the closing of a merger may not be fulfilled in a timely manner or at all, and, accordingly, a prospective merger may be delayed substantially or may not be completed.

In addition, the parties to the merger agreement will likely have the contractual right to decide to terminate a merger agreement at any time, or in certain other circumstances, either mutually or individually.

As a condition to granting required regulatory approvals, governmental entities may impose conditions, limitations or costs, require divestitures or place restrictions on our conduct after the closing of a merger.

Such conditions or changes and the process of obtaining regulatory approvals could, among other things, have the effect of delaying completion of

a merger or of imposing additional costs or limitations on us following a merger, any of which may have an adverse effect on us following such merger.

The degree of scrutiny that bank regulators give to bank mergers can change from time to time.

For example, in July 2021, President Biden issued an Executive Order encouraging the Department of Justice, in consultation with the federal bank regulators, to review current merger practices and adopt a plan for the “revitalization of merger oversight” to provide more extensive scrutiny of bank mergers.

The Department of Justice’s Antitrust Division announced in December 2021 that it is seeking additional public comments on whether and how the Antitrust Division should revise the 1995 Bank Merger Competitive Review Guidelines.

We are unable to predict whether any revision to the 1995 Guidelines, or any other change bank regulators may adopt, will have a material adverse effect on our ability to acquire or merge with banking companies in our market area.

Our acquisitions of assets from insurance agencies may not perform in accordance with our expectations.

Eastern Bank’s subsidiary Eastern Insurance Group, LLC routinely acquires insurance agencies in existing and adjacent markets.

Eastern Insurance Group routinely acquires insurance agencies in existing and adjacent markets.

We identify potential acquisition targets based on records of their historical, and our projections of their future, revenue performance.

These transactions are often structured as asset purchases through which we acquire certain assets and rights of the target, including the target’s business relationships with its own customers, as well as the target’s sales producers, working to ensure both the target’s customers and sales producers remain with Eastern Insurance Group LLC.

Several factors could negatively affect the results of this type of acquisition, including, but not limited to:

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and effects of competition in the financial services industry, including competitors’ success in recruiting away the target’s sales producers.

We can provide no assurances that the customers or sales producers of any particular acquisition target will join or remain at Eastern.

We can provide no assurances that the customers or sales producers of any particular acquisition target will join or remain at Eastern Insurance Group.

Risks Related to Our Business and Our Industry Generally

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Our net interest income and our earnings would be similarly affected if the interest rates on our interest earning assets declined at a faster pace than the interest rates on our interest-bearing liabilities.

The Federal Open Market Committee twice reduced interest rates in March 2020 in response to the disruption of global economic activity due to actions taken to mitigate the spread of COVID-19.

On March 3, 2020, the Federal Open Market Committee reduced the target range for the federal funds rate by 50 basis points, to 1.00% to 1.25%, and on March 15, 2020, the Federal Open Market Committee further reduced the target range for the federal funds rate to 0.00% to 0.25%.

On December 16, 2020, the Federal Open Market Committee announced that it had decided to keep the target range for the federal funds rate at 0.00% to 0.25%.

Interest rate changes may impact our ability to attract deposits and to generate attractive earnings through our investment portfolio and we are unable to control or predict with certainty changes in market interest rates.

The target range for the federal funds rates has been 0.00% to 0.25% since March 2020.

Although the Federal Open Market Committee has indicated that it may raise interest rates in 2022, any decision by the Federal Open Market Committee to increase interest rates could subsequently be modified or reversed depending on future changes in the U.S.

Interest rate changes may impact our ability to attract deposits and to generate attractive earnings through our loan and investment portfolio.

We are unable to control or predict with certainty changes in market interest rates.

Global, national, regional and local economic conditions, the effects of a widespread outbreak of disease pandemics such as COVID-19, competitive pressures and the policies of regulatory authorities, including monetary policies of the Federal Reserve Board, affect interest income and interest expense.

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If our allowance for loan losses is insufficient to cover loan losses, our earnings and capital could decrease.

At December 31, 2020, our allowance for loan losses was $113.0 million, or 1.3% of total loans (excluding PPP loans), compared to $82.3 million, or 0.9% of total loans, at December 31, 2019.

At December 31, 2021, our allowance for loan losses was $97.8 million, or 0.82% of total loans (excluding PPP loans but reflecting the impact of our Century acquisition), compared to $113.0 million, or 1.30% of total loans (excluding PPP

loans), at December 31, 2020.

We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for many of our loans.

In determining the amount of the allowance for loan losses, we review our loans, loss and delinquency experience, and commercial and commercial real estate peer data and we evaluate other factors including, among other things, current economic conditions.

If our assumptions are incorrect, or if delinquencies or non-

performing loans increase, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio, which would require additions to our allowance, which could materially decrease our net income.

If our assumptions are incorrect, or if delinquencies or non-performing loans increase, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio, which would require additions to our allowance, which could materially decrease our net income.

In addition, our federal and state regulators, as an integral part of their examination process, periodically review our allowance for loan losses and may require us to increase the allowance by recognizing additional provisions for loan losses charged to income, or to charge-off loans, which, net of any recoveries, would decrease the allowance for loan losses.

Any such additional provision for loan losses or net increase in charge-offs could have a material adverse effect on our financial condition and results of operations.

We may be required to increase our allowance for loan losses as a result of our adoption as of January 1, 2022 of the new accounting standard for determining the amount of the allowance for loan losses.

As we are permitted to do as an emerging growth company, we have elected to postpone the adoption of Financial Accounting Standards Board Accounting Standards Update No.

2016–13 (“Measurement of Credit Losses on Financial Instruments”), commonly referred to as the “CECL model.” The new standard will be effective for us beginning January 1, 2022.

We are adopting this standard later than our peers, and as a result, our loan loss allowance will be difficult to evaluate in comparison to our peers.

The CECL credit loss model will be a significant change from the standard in place today, because it requires the allowance for loan losses to be calculated based on current expected credit losses rather than losses inherent in the portfolio as of a point in time.

When adopted, the CECL model may increase our allowance for loan losses, which could materially affect our financial condition and results of operations.

The extent of the increase and its impact to our financial condition is under evaluation but will ultimately depend upon the nature and characteristics of our portfolio at the adoption date and the macroeconomic conditions and forecasts at that date.

Accordingly, the potential financial impact of our future CECL adoption is currently unknown.

Our loan loss allowance at December 31, 2020, and at the end of the interim quarters in 2021, may be difficult to evaluate in comparison to our peers.

We are adopting the CECL model as of January 1, 2022, which is later than many of our peers that are publicly traded, and therefore, our loan loss allowance at December 31, 2020, and at the end of the interim quarters in 2021, may be difficult to evaluate in comparison to many of those peers.

We increased our allowance for loan losses as a result of our adoption as of January 1, 2022 of the new accounting standard for determining the amount of the allowance for loan losses and may be required to do so again in the future.

Effective January 1, 2022, we adopted the Financial Accounting Standards Board Accounting Standards Update No.

2016-13 (“Measurement of Credit Losses on Financial Instruments”), commonly referred to as the “CECL standard.” We adopted this standard later than our peers, and as a result, our loan loss allowance may be difficult to evaluate in comparison to our peers.

The CECL credit loss model represents a significant change from our past methodology because it requires the allowance for loan losses to be calculated based on current expected credit losses rather than losses inherent in the portfolio as of a point in time.

CECL requires an allowance to be created upon the origination or acquisition of a financial asset measured at amortized cost.

We expect an initial increase in our allowance for loan losses at the time of CECL adoption in the range of $25.0 million to $30.0 million.

For discussion of factors that we anticipate will contribute to our expected increase to our allowance for loan losses under the CECL standard, see the “CECL Adoption” section within “Management’s Discussion and Analysis — Outlook and Trends” In Part II, Item 7 of this Annual Report on Form 10-K.

We also expect that CECL will require us to greatly increase the data we need to collect and review to determine the appropriate level of our allowance for loan losses.

Under CECL, the allowance for credit loss is an estimate of the expected credit losses on financial assets measured at amortized cost, which is measured using relevant information about past events, including historical credit loss experience on financial assets with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the financial assets.

Changes in economic forecasts, loan portfolio composition and credit quality, changes in model assumptions and other factors will influence the CECL standard outcomes and the resulting calculation of our allowance for loan losses.

Any increase in our allowance for loan losses, or expenses incurred to determine the appropriate level of our allowance for loan losses, could materially affect our financial condition and results of operations.

Our loan loss allowance at December 31, 2021 may be difficult to evaluate in comparison to our peers.

We adopted the CECL standard as of January 1, 2022, which is later than many of our peers that are publicly traded, and therefore, our loan loss allowance at December 31, 2021 may be difficult to evaluate in comparison to many of those peers.

The geographic concentration of our loan portfolio and lending activities makes us vulnerable to a downturn in the local economy.

We primarily serve individuals, businesses and municipalities located in eastern and central Massachusetts, including the greater Boston metropolitan area, southern New Hampshire, including its coastal region, and northern Rhode Island.

At December 31, 2020, approximately $6.8 billion, or 95.8% of our total loans secured by real estate, were secured in this market area.

At December 31, 2021, approximately $8.2 billion, or 95.0% of our total loans secured by real estate, were secured by real estate located in this market area.

Therefore, our success is largely dependent on the economic conditions, including employment levels, population growth, income levels, savings trends and government policies, in this market area.

Weaker economic conditions caused by recessions, unemployment, inflation, a decline in real estate values or other factors beyond our control may adversely affect the ability of our borrowers to service their debt obligations and could result in higher loan and lease losses and lower net income for us.

Although there is not a single employer or industry in our market area on which a significant number of our customers are dependent, a substantial portion of our loan portfolio is composed of loans secured by property located in the greater Boston metropolitan area.

Although there is not a single employer or industry in our market area on which a significant number of our customers are dependent, a substantial portion of our loan portfolio is composed of loans secured by real estate property located in the greater Boston metropolitan area.

This makes us vulnerable to a downturn in the local economy and real estate markets.

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Moreover, a significant decline in general economic conditions, caused by inflation, recession, acts of terrorism, an outbreak of hostilities or other international or domestic calamities, unemployment, public health crises or other factors beyond our control could further impact these local economic conditions and could further negatively affect the financial results of our banking operations.

In addition, deflationary pressures, while possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our business borrowers, and the values of underlying collateral securing loans, which could negatively affect our financial performance.

In addition, deflationary pressures, if present, while possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our business borrowers, and the values of underlying collateral securing loans, which could negatively affect our financial performance.

In the event of severely adverse business and economic conditions generally or specifically in the principal markets in which we conduct business, there can be no assurance that the federal government and the Federal Reserve Board would intervene.

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Hacking and identity theft risks, in particular, could cause serious reputational harm.

Cyber threats are rapidly evolving, and we may not be able to anticipate or prevent all such attacks.

Cyber threats are

rapidly evolving, and we may not be able to anticipate or prevent all such attacks.

Although to date we have not experienced any material losses relating to cyber-attacks or other information security breaches, there can be no assurance that we will not suffer such losses in the future.

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As a result, cybersecurity and the continued enhancement of our controls and processes to protect our systems, data and networks from attacks, unauthorized access or significant damage remain a priority.

Accordingly, we may be required to expend additional resources to enhance our

protective measures or to investigate and remediate any information security vulnerabilities or exposures.

Accordingly, we may be required to expend additional resources to enhance our protective measures or to investigate and remediate any information security vulnerabilities or exposures.

Any breach of our system security could result in disruption of our operations, unauthorized access to confidential customer information, significant regulatory costs, such as enforcement actions and/or the imposition of civil money penalties, litigation exposure and other possible damages, loss or liability.

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Also, any failure to prevent a security breach or to quickly and effectively deal with such a breach could cause reputational harm, negatively impact customer confidence, undermine our ability to attract and keep customers, and possibly result in regulatory sanctions.

We rely on third-party vendors, which could expose Eastern Bank to additional cybersecurity risks.

We rely on third-party vendors, which could expose us to additional cybersecurity risks.

Third-party vendors provide key components of our business infrastructure, including certain data processing and information services.

On Eastern Bank’s behalf, third parties may transmit confidential, propriety information.

Third parties may transmit confidential, propriety information on our behalf.

Although we require third-party providers to maintain certain levels of information security, such providers may remain vulnerable to operational and technology vulnerabilities, including cyber-attacks, security breaches, unauthorized access, breaches, fraud, phishing attacks, misuse, computer viruses, or other malicious attacks, which could result in unauthorized access, misuse, loss or destruction of data, an interruption in service or other similar events that may impact our business.

Although Eastern Bank may contractually limit liability in connection with attacks against third-party providers, we remain exposed to the risk of loss associated with such vendors.

In addition, a number of Eastern Bank’s vendors are large national entities with dominant market presence in their respective fields.

Although we may contractually limit liability in connection with attacks against third-party providers, we remain exposed to the risk of loss associated with such vendors.

In addition, a number of our vendors are large national entities with dominant market presence in their respective fields.

Their services could prove difficult to replace in a timely manner if a failure or other service interruption were to occur.

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For example, a number of fintechs have applied for commercial bank or industrial loan company charters or are actively seeking to acquire commercial banks or industrial loan companies.

For example, a fintech completed its proposed acquisition of a federal savings association in our market area in 2021, and the FDIC approved in 2020 two federal deposit insurance applications by two proposed industrial loan companies, the first time the FDIC has done so since 2008.

The federal and state bank regulatory agencies have demonstrated a willingness to charter non-traditional bank charter applicants, such as fintechs, which increases competition in the industry.

In addition, other fintechs have partnered with existing banks to allow them to offer deposit products to their customers.

changes, such as the recently proposed revisions to the FDIC’s rules on brokered deposits intended to reflect recent technological changes and innovations, may also make it easier for fintechs to partner with banks and offer deposit products.

In addition, other fintechs have partnered with existing banks to allow them to offer deposit products to their customers under current and proposed interagency guidelines on third party relationships.

Regulatory changes, such as the recent revisions to the FDIC’s rules on brokered deposits intended to reflect recent technological changes and innovations, may also make it easier for fintechs to partner with banks and offer deposit products.

In addition to fintechs, the large technology companies have begun to make efforts toward providing financial services directly to their customers and are expected to continue to explore new ways to do so.

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Achieving our growth targets requires us to attract customers that currently bank at other financial institutions in our market, thereby increasing our share of the market.

Our ability to successfully grow will depend on a variety of factors, including our customers’ ability to meet their obligations to us, our ability to attract and retain experienced bankers and insurance agents, the continued availability of desirable business opportunities, the competitive responses from other financial institutions in our market areas and our ability to manage our growth.

Our ability to successfully grow will depend on a variety of factors, including our customers’ ability to meet their obligations to us, our ability to attract and retain experienced bankers and

insurance agents, the continued availability of desirable business opportunities, the competitive responses from other financial institutions in our market areas and our ability to manage our growth.

Growth opportunities may not be available, or we may not be able to manage our growth successfully.

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Accordingly, our ability to implement our strategic plan and our future success depends on our ability to attract, retain and motivate highly skilled and qualified personnel, including our senior management and other key employees and directors.

the COVID-19 pandemic, the marketplace for skilled personnel was becoming more competitive, which meant the cost of hiring, incentivizing and retaining skilled personnel was likely to increase.

The rapid and continued increase in unemployment levels caused by COVID-19 has created additional uncertainty with respect to our current and future workforce.

The disruption of the labor market caused by COVID-19 has created additional uncertainty with respect to our current and future workforce.

The failure to attract or retain, including as a result of an untimely death or illness of key personnel, or ability to replace a sufficient number of appropriately skilled and key personnel, could place us at a significant competitive disadvantage and prevent us from successfully implementing our strategy, which could impair our ability to implement our strategic plan successfully, achieve our performance targets and otherwise have a material adverse effect on our business, financial condition and results of operations.

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These and other factors may impact specific categories of the portfolio differently and the effect any of these factors may have on any specific category of the portfolio cannot be predicted.

Many state and local governmental authorities have experienced deterioration of financial condition in recent years due to declining tax revenues, increased demand for services and various other factors.

To the extent Eastern Bank has any municipal securities in its portfolio from issuers who are experiencing deterioration of financial condition or who may experience future deterioration of financial condition, the value of such securities may decline and could result in other-than-temporary impairment charges, which could have an adverse effect on Eastern Bank’s financial condition and results of operations.

Additionally, a general, industry-wide decline in the fair value of municipal securities could significantly affect Eastern Bank’s financial condition and results of operations.

In addition to the potential decline in fair value due to volatility in the fair value of Eastern Bank’s investments, unrealized losses on investment securities result from changes in credit spreads and liquidity issues in the marketplace, along with changes in the credit profile of individual securities issuers.

In addition, unrealized losses on investment securities may result from changes in credit spreads and liquidity issues in the marketplace, along with changes in the credit profile of individual securities issuers.

Under Generally Accepting Accounting Principles (“GAAP”), we are required to review our investment portfolio periodically for the presence of other-than-temporary impairment of our securities, taking into consideration current market conditions, the extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, current analysts’ evaluations, our ability and intent to hold investments until a recovery of fair value, as well as other factors.

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In addition, some of our commercial real estate loans are not fully amortizing and contain large balloon payments upon maturity.

These balloon payments may require the borrower to either sell or refinance the underlying property in order to make the balloon payment,

which may increase the risk of default or non-payment.

In addition, as a result of COVID-19, we have put in place a loan modification program which has resulted in a number of commercial customers deferring their loans with us.

Even with deferrals, some customers may be unable to repay their loans as agreed after the deferral period is over.

Because of the risks associated with commercial loans, and especially as a result of the economic stress in our market due to the COVID-19 pandemic, we may experience higher rates of default than if the portfolio were more heavily weighted toward residential mortgage loans.

These balloon

payments may require the borrower to either sell or refinance the underlying property in order to make the balloon payment, which may increase the risk of default or non-payment.

In addition, because of the risks associated with commercial loans, and especially as a result of the economic stress in our market due to the COVID-19 pandemic, we may experience higher rates of default than if the portfolio were more heavily weighted toward residential mortgage loans.

Higher rates of default could have an adverse effect on our financial condition and results of operations.

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A significant portion of our loan portfolio is secured by real estate, and we could become subject to environmental liabilities with respect to one or more of these properties.

At December 31, 2020, $6.8 billion, or 78.2% of our total loans, comprised loans secured by real estate.

At December 31, 2021, $8.7 billion, or 72.7% of our total loans (excluding PPP loans), comprised loans secured by real estate.

During the ordinary course of business, we may foreclose on and take title to properties securing defaulted loans.

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Our business may be adversely affected by credit risks associated with residential property.

At December 31, 2020, one- to four-family residential real estate loans were $2.4 billion, or 27.2% of total loans (excluding PPP loans).

One- to four-family residential real estate loans include residential real estate mortgages, home equity loans and lines and investment real estate loans secured by one- to four-family residential properties.

At December 31, 2021, loans secured by one- to four-family residential real estate were $3.2 billion, or 26.9% of total loans (excluding PPP loans).

Loans secured by one- to four-family residential real estate include residential real estate mortgages, home equity loans and lines and investment real estate loans secured by one- to four-family residential properties.

At December 31, 2021,$180.0 million of one- to four-family residential real estate loans were part of the commercial loan portfolio.

One- to four-family residential mortgage lending, whether owner occupied or non-owner occupied, is generally sensitive to regional and local economic conditions that significantly impact the ability of borrowers to meet their loan payment obligations.

As a result of the COVID-19 pandemic, our borrowers with loans secured by one- to four-family residential real estate owners may default in greater numbers than we have experienced in recent years before the COVID-19 pandemic.

In addition, the risk of tenant rent strikes or inability to pay rent on time or at all has greatly increased with the increase in the unemployment rate.

Declines in real estate values could cause some of our residential mortgages to be inadequately collateralized, which would expose us to a greater risk of loss if we seek to recover on defaulted loans by selling the real estate collateral.

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Moreover, our decision regarding the classification of a loan participation and loan loss provisions associated with a loan participation is made in part based upon information provided by the lead lender.

A lead lender also may not monitor a participation loan in the same manner as we would for loans that we

A lead lender also may not monitor a participation loan in the same manner as we would for loans that we originate.

At December 31, 2021, we held loan participation interests in commercial and industrial, commercial real estate, commercial construction and business banking loans totaling $1.1 billion.

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dollars (“USD LIBOR”).

We also enter into interest rate swap arrangements with customers that are indexed to USD LIBOR.

We have entered into interest rate swap arrangements with customers that are indexed to USD LIBOR.

USD LIBOR is a series of interest rates published on a daily basis for varying lengths of time known as tenors (e.g., 30, 60, 90 days, etc.) and is intended to reflect banks’ average cost of wholesale unsecured borrowing.

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Hedging against interest rate exposure may adversely affect our earnings.

We employ techniques that limit, or “hedge,” the adverse effects of rising interest rates on our loan portfolios.

We employ techniques that limit, or “hedge,” the adverse effects of changing interest rates on our loan portfolios.

We also engage in hedging strategies with respect to arrangements where our customers swap floating interest rate obligations for fixed interest rate obligations, or vice versa.

Our hedging activity varies based on the level and volatility of interest rates and other changing market conditions.

These techniques may include purchasing or selling futures contracts, purchasing put and call

options on securities or securities underlying futures contracts, or entering into other mortgage-backed derivatives.

These techniques may include purchasing or selling futures contracts, purchasing put and call options on securities or securities underlying futures contracts, or entering into other mortgage-backed derivatives.

There are, however, no perfect hedging strategies, and interest rate hedging may fail to protect us from loss.

Moreover, hedging activities could result in losses if the event against which we hedge does not occur.

Moreover, hedging activities

could result in losses if the event against which we hedge does not occur.

Additionally, interest rate hedging could fail to protect us or adversely affect us because, among other things:

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We cannot provide assurance whether we will be required to take an impairment charge in the future.

Any impairment charge would have a negative effect on shareholders’ equity and financial results and may cause a decline in our stock price.

Any impairment charge would have a negative effect on our shareholders’ equity and financial results and may cause a decline in our stock price.

We may need to raise additional capital in the future, but that capital may not be available when it is needed, or the cost of that capital may be very high.

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Weakness in the U.S.

economy is currently adversely affecting, and may continue to adversely affect, our business.

economy may adversely affect, our business.

A deterioration of business and economic conditions has adversely affected, and could in the future adversely affect the credit quality of our loans, results of operations and financial condition.

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A significant natural disaster, such as a hurricane, earthquake, fire or flood, could have a material adverse impact on our local market area and ability to conduct business, and our insurance coverage may be insufficient to compensate for losses that may occur.

Public health crises, such as pandemics and epidemics, such as the global outbreak of the coronavirus, geopolitical crises, such as terrorism, war or the perception that hostilities may be imminent, political instability or civil unrest, or other conflict, human error or other events outside of our control, could cause disruptions to our business or the United States economy as a whole, and our business and operating results could suffer.

Public health crises, such as pandemics and epidemics, such as the global outbreak of COVID-19, domestic or geopolitical crises, such as terrorism, military conflict, including escalating military tension between Russia and Ukraine, war or the perception that hostilities may be imminent, political instability or civil unrest, or other conflict, human error or other events outside of our control, could cause disruptions to our business or the United States

economy as a whole, and our business and operating results could suffer.

The occurrence of any such event could have a material adverse effect on our business, operations and financial condition.

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Some of our competitors may not be affected by such new laws and regulatory developments and would therefore not bear related compliance costs, resulting in cost savings that could provide them with a competitive advantage over us.

Eastern Insurance Group LLC’s business model could become outdated as insurance carriers offer products directly to consumers.

Eastern Insurance Group’s business model could become outdated as insurance carriers offer products directly to consumers.

Technological advances in the insurance market have increased the number of insurance carriers that work directly with consumers to generate insurance policies.

Since Eastern Insurance Group LLC acts solely as an insurance agent and does not originate insurance policies, this shift in business model could result in decreased revenue and could eventually

result in the eradication of the insurance agent model altogether.

As such, an increase in direct-to-consumer insurance products could result in decreased profitability for Eastern Insurance Group LLC.

Since Eastern Insurance Group acts solely as an insurance agent and does not originate insurance policies, this shift in business model could result in decreased revenue and could eventually result in the eradication of the insurance agent model altogether.

As such, an increase in the number or popularity of direct-to-consumer insurance products could result in decreased profitability for Eastern Insurance Group.

Our return on equity may be relatively low for the foreseeable future compared to our publicly traded peer companies.

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Net income divided by average shareholders’ equity, known as “return on equity,” is a ratio many investors use to compare the performance of financial institutions.

Our return on equity may be relatively low compared to our publicly traded peers until we are able to leverage the additional capital we receive from our 2020 IPO.

Our return on equity will also be negatively affected by added expenses associated with our employee stock ownership plan and the stock-based benefit plans we intend to adopt in 2021, subject to shareholder approval.

Our return on equity may be relatively low compared to our publicly traded peers until we are able to leverage the additional capital we raised in our 2020 IPO.

Our return on equity will also be negatively affected by added expenses associated with our employee stock ownership plan and the stock-based benefit plans adopted in 2021.

Until we can increase our net interest income and non-interest income and leverage the capital raised in the offering, we expect our return on equity to be relatively low for the foreseeable future compared to our publicly traded peer companies.

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According to a 2016 report sponsored in part by the City of Boston, sea levels in Boston, which rose approximately nine inches relative to land during the twentieth century, may rise another eight inches by 2030, and by 2050, the sea level in Boston may be as much as 1.5 feet higher than it was in 2000.

The increase in the relative sea level in Boston is expected to result in higher coastal surges during storm events and, when considered with projected increases in precipitation intensities, an increase in stormwater flooding.

The increase in the relative sea level in Boston and other coastal regions of Massachusetts and New Hampshire in our market is expected to result in higher coastal surges during storm events and, when considered with projected increases in precipitation intensities, an increase in stormwater flooding.

These effects in Boston and similar conditions elsewhere in our market area may adversely affect the value of commercial and residential properties that secure some of our loans and may adversely affect economic develop in portions of our market area.

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Eastern Bank and its customers will need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns.

The Securities and Exchange Commission has stated that it plans to propose rules in reaction to climate change that could result in increased costs associated with compiling information about ourselves and our customers in order to comply with such rules.

We and our customers may face cost increases, asset value reductions, operating process changes, and the like.

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This negative publicity may be driven by adverse news coverage in traditional media and may also be spread through the use of social media platforms.

If our relationships with our customers, vendors and suppliers were to become the subject of such negative publicity, our ability to attract and retain customers and employees may be negatively impacted and our stock price may also be impacted.

If our relationships with our customers, vendors and

suppliers were to become the subject of such negative publicity, our ability to attract and retain customers and employees may be negatively impacted and our stock price may also be impacted.

Additionally, many investors now consider how corporations are addressing ESG matters when making investment decisions.

For example, certain investors incorporate the business risks of climate change and the adequacy of companies’ responses to climate change and other ESG matters as part of their investment theses.

These shifts in investing

priorities may result in adverse effects on the trading price of our common stock if investors determine that we do not sufficiently address ESG matters in accordance with their standards or other third-party standards for evaluating ESG matters.

These shifts in investing priorities may result in adverse effects on the trading price of our common stock if investors determine that we do not sufficiently address ESG matters in accordance with their standards or other third-party standards for evaluating ESG matters.

Risks Related to Regulations

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Among the instruments used by the Federal Reserve Board to implement these objectives are open market purchases and sales of U.S.

government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits.

government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits and the interest rate paid on such reserves.

These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits.

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These and other restrictions limit the manner in which we and Eastern Bank may conduct business and obtain financing.

Because our business is highly regulated, the laws, rules, regulations, and supervisory guidance and policies applicable to us are subject to regular modification and change.

The laws, rules, regulations, and supervisory guidance and policies applicable to us are subject to modification and change.

Changes to statutes, regulations, or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect us in substantial and unpredictable ways.

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Our need to review and evaluate the impact of ongoing rule proposals, final rules and implementation guidance from regulators further complicates the development and implementation of new information systems for our business.

Also, our regulators expect us to perform increased due diligence and ongoing monitoring of third-party vendor relationships, thus increasing the scope of management involvement and decreasing the efficiency otherwise resulting from our relationships with third-party technology providers.

President Biden’s future appointees to the independent bank regulatory agencies may adopt new regulatory policies and pursue different bank supervisory priorities.

We are unable to predict whether those policies and priorities will have a material adverse effect on our business, financial condition, and results of operations.

Also, our regulators expect us to perform increased due diligence and ongoing monitoring of third-

party vendor relationships, thus increasing the scope of management involvement and decreasing the efficiency otherwise resulting from our relationships with third-party technology providers.

Presidential appointees to the independent bank regulatory agencies may adopt new regulatory policies and pursue different bank supervisory priorities.

We are unable to predict whether changes in the policies and priorities of independent bank regulatory agencies will have a material adverse effect on our business, financial condition, and results of operations.

We are subject to capital and liquidity standards that require banks and bank holding companies to maintain more and higher quality capital and greater liquidity than has historically been the case.

We became subject to new capital requirements in 2015.

These new standards, which now apply and were fully phased-in as of January 1, 2019, force bank holding companies and their bank subsidiaries to maintain substantially higher levels of capital as a percentage of their assets, with a greater emphasis on common equity as opposed to other components of capital.

These new standards, which now apply and were fully phased-in as of January 1, 2019, require bank holding companies and their bank subsidiaries to maintain substantially higher levels of capital as a percentage of their assets, with a greater emphasis on common equity as opposed to other components of capital.

The need to maintain more and higher quality capital, as well as greater liquidity, and generally increased regulatory scrutiny with respect to capital levels, may at some point limit our business activities, including lending, and our ability to expand.

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An increase in FDIC insurance assessments could significantly increase our expenses.

The Dodd-Frank Act eliminated the maximum Deposit Insurance Fund ratio of 1.5% of estimated deposits, and the FDIC has established a long-term ratio of 2.0%.

On September 30, 2018, the Deposit Insurance Fund reserve ratio reached 1.36%, exceeding the statutorily required minimum reserve ratio of 1.35%.

The FDIC has the authority to increase assessments in order to maintain the Deposit Insurance Fund ratio at particular levels.

The Dodd-Frank Act eliminated the maximum Deposit Insurance Fund (“DIF”) ratio of 1.5% of estimated deposits, and the FDIC has established a long-term ratio of 2.0%.

On September 30, 2021, the Deposit Insurance Fund reserve ratio was 1.27%.

In September 2020, the FDIC adopted a restoration plan designed to ensure that the DIF reserve ratio reaches 1.35% by September 2028.

Although the FDIC has the authority to increase assessments in order to maintain the DIF ratio at particular levels, as of the date of this Annual Report on Form 10-K the FDIC has not proposed a general increase in assessment rates that would apply to Eastern Bank.

In addition, if our regulators issue downgraded ratings of Eastern Bank in connection with their examinations, the FDIC could impose significant additional fees and assessments on us.

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Local, state or federal tax authorities may interpret laws and regulations differently than we do and challenge tax positions that we have taken on tax returns.

This may result in differences in the treatment of revenues, deductions, credits and/or differences in the timing of these items.

The differences in treatment may

result in payment of additional taxes, interest, penalties or litigation costs that could have a material adverse effect on our operating results.

Our donation to the Eastern Bank Charitable Foundation is not fully tax deductible, which could reduce our profits.

On October 15, 2020, we made a one-time donation of approximately 7.5 million shares of common stock to the Eastern Bank Charitable Foundation having an aggregate market value at that time of $91.3 million.

We may not have sufficient profits to be able to fully use the tax deduction from that donation to the Eastern Bank Charitable Foundation.

Pursuant to the Internal Revenue Code, an entity is permitted to deduct up to 10% of its taxable income (income before federal income taxes and charitable donations) in any one year for charitable donations.

Any donation in excess of the 10% limit may be deducted for federal income tax purposes over each of the five years following the year in which the charitable donation is made.

Accordingly, a charitable donation could, if necessary, be deducted over a six-year period.

We have determined that a portion of the $91.3 million stock donation to the Eastern Bank Charitable Foundation will not be deductible over the remaining carryover period for federal and state tax purposes and have recorded a $12.0 million valuation allowance.

For financial reporting purposes, our ability to deduct this donation depends upon our estimate of future taxable income.

To the extent our estimates of future taxable income decline, and therefore the portion of the donation that is estimated to be deductible declines, an increase in the valuation allowance may be necessary, which could reduce our profits.

This may result in differences in the

treatment of revenues, deductions, credits and/or differences in the timing of these items.

The differences in treatment may result in payment of additional taxes, interest, penalties or litigation costs that could have a material adverse effect on our operating results.

Due to Section 162(m) of the Internal Revenue Code, we may not be able to deduct all of the compensation of some executives, including executives of companies we may acquire in the future.

Section 162(m) of the Internal Revenue Code generally limits to $1 million annual deductions for compensation paid to “covered employees” of any “publicly held corporation.” A “publicly held corporation” includes any company that issues securities required to be registered under Section 12 of the Securities Exchange Act of 1934 or companies required to file reports under Section 15(d) of the Exchange Act, determined as of the last day of the company’s taxable year.

We were a publicly traded company as of December 31, 2020.

We expect that the deductibility of compensation to our covered employees will be similarly limited in future years.

Section 162(m) of the Internal Revenue Code generally limits to $1 million annual deductions for compensation paid to “covered employees” of any “publicly held corporation.” A “publicly held corporation” includes any company, such as Eastern Bankshares, Inc., that issues securities required to be registered under Section 12 of the Securities Exchange Act of 1934 or companies required to file reports under Section 15(d) of the Exchange Act, determined as of the last day of the company’s taxable year.

We expect that as a publicly held corporation, the deductibility of compensation to our covered employees will be similarly limited.

Pursuant to proposed U.S.

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A reduction in net income could negatively affect the price of Eastern Bankshares, Inc.

Risks Related to Anticipated Stock-Based Benefit Plans

Risks Related to Stock-Based Benefit Plans

Our stock-based benefit plans have increased and will continue to increase our expenses and reduce our income.

We intend to adopt one or more new stock-based benefit plans, subject to shareholder approval, which will increase our annual compensation and benefit expenses related to the stock options and stock awards granted to participants under the new stock-based benefit plans.

The actual amount of these new stock-related compensation and benefit expenses will depend on the number of options and stock awards actually granted under the plans, the fair market value of our stock or options on the date of grant, the vesting period, and other factors which we cannot predict at this time.

In the event we adopt stock-based benefit plans on or before October 14, 2021 (i.e., within 12 months following our IPO), the total shares of common stock reserved for issuance pursuant to awards of restricted stock and grants of options under such plans would be limited to 7,470,326 shares and 18,675,815 shares, representing 4% and 10%, respectively, of the total number of shares of our common stock sold in our IPO and donated to the Eastern Bank Charitable Foundation.

If we award restricted shares of common stock or grant options in excess of these amounts under stock-based benefit plans adopted after October 14, 2021 our costs would increase further.

In addition, we will recognize compensation expense annually for our employee stock ownership plan when shares are committed to be released to participants’ accounts, and we will recognize compensation expense for restricted stock awards and stock options over the vesting period of awards made to recipients.

We anticipate that in 2021, the first full year following our IPO, our incremental compensation expense for shares purchased in our IPO by the ESOP and for any new stock-based benefit plans will significantly increase our overall compensation expense as compared to prior years.

We have not determined when we will adopt one or more new stock-based benefit plans.

Stock-based benefit plans adopted after October 14, 2021 (i.e., more than 12 months following the completion of our IPO) may exceed regulatory restrictions on the size of stock-based benefit plans adopted on or before October 14, 2021, which would further increase our costs.

We currently expect that the number of shares available for grants of common stock and stock options under stock-based plans will not exceed 7,470,326 shares and 18,675,815 shares, representing 4% and 10%, respectively, of the total number of shares of our common stock sold in our IPO and donated to the Eastern Bank Charitable Foundation, regardless of when those plans are adopted.

If, however, we adopt stock-based benefit plans after October 14, 2021 (i.e., more than 12 months following the completion of our IPO), we would be permitted under applicable regulations to adopt equity plans under which we could grant shares of common stock or stock options exceeding 4% and 10%, respectively, of 186,758,154 shares of common stock sold in our IPO and issued to the Eastern Bank Charitable Foundation.

If we adopt stock-based benefit plans that provide for awards in excess of these amounts, our expenses associated with those plans, and dilution to our shareholders, would be greater.

Although the implementation of stock-based benefit plans would be subject to shareholder approval, the timing of the implementation of such plans will be at the discretion of our Board of Directors.

The implementation of stock-based benefit plans may dilute your ownership interest.

Historically, shareholders have approved these stock-based benefit plans.

One or more new stock-based benefit plans that we adopt may be funded either through open market purchases or from the issuance of authorized but unissued shares of common stock.

Our ability to repurchase shares of common stock to fund these plans will be subject to many factors, including applicable regulatory restrictions on stock repurchases, the availability of stock in the market, the trading price of the stock, our capital levels, alternative uses for our capital and our financial performance.

Although our intention is to fund the new stock-based benefit plans through open market purchases, if we instead use newly issued shares of our common stock to fund such a plan, in amounts equal to 18,675,815 option shares and 7,470,326 shares of restricted common stock, representing 10% and 4%, respectively, of the total number of shares of our common stock sold in our IPO and donated to Eastern Bank Charitable Foundation, then our shareholders would experience a 12.28% dilution in ownership interest .

In the event we adopt the plans after October 14, 2021 (i.e., more than 12 months following our IPO), new stock-based benefit plans would not be subject to these limitations, and shareholders could experience greater dilution.

Although the implementation of new stock-based benefit plans would be subject to shareholder approval, historically, the overwhelming majority of stock-based benefit plans adopted by banks and their holding companies following mutual-to-stock conversions have been approved by shareholders.

If we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act in a timely and capable manner, we may be subject to adverse regulatory consequences and there could be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements.

We are an emerging growth company for the fiscal year ending December 31, 2020.

Accordingly, we are not subject to Section 404(b) of the Sarbanes-Oxley Act of 2002.

We anticipate that we will cease to be an emerging growth company on December 31, 2021, as discussed below.

When Section 404(b) of the Sarbanes-Oxley Act becomes applicable to us, our management will be required to conduct an annual assessment of the effectiveness of our internal control over financial reporting and include a report on these internal controls in the annual reports we will file with the SEC on Form 10-K.

Our independent registered public accounting firm will be required to formally attest to the effectiveness of our internal controls.

When required, this process will require significant documentation of our policies, procedures and systems, review of that documentation by our internal auditing and accounting staff and our outside independent registered public accounting firm, and testing of our internal control over financial reporting by our internal auditing and accounting staff and our outside independent registered public accounting firm.

This process will involve considerable time and attention, may strain our internal resources, and will increase our operating costs.

We may experience higher than anticipated operating expenses and outside auditor fees during the implementation of these changes and thereafter.

If our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to

investigations by Nasdaq, the SEC or other regulatory authorities, which could require additional financial and management resources.

In 2021, we adopted the Equity Plan, which will increase our annual compensation and benefit expenses related to awards granted to participants under such plan.

The actual amount of these new stock-related compensation and benefit expenses will depend on the number of awards actually granted under the Equity Plan, the fair market value of the awards on the date of grant, the vesting period, and other factors which we cannot predict at this time.

In addition, we recognize compensation expense monthly for our employee stock ownership plan when shares are committed to be released to participants’ accounts, and we recognize compensation expense for restricted stock awards, performance stock units and restricted stock units over the vesting period of awards made to recipients.

We anticipate that in 2022, our incremental compensation expense for shares purchased in our IPO by the ESOP and the Equity Plan will significantly increase our overall compensation expense as compared to prior years.

If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely and capable manner, we may be subject to adverse regulatory consequences and there could be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements.

We ceased being an emerging growth company on December 31, 2021, and therefore Section 404(b) of the Sarbanes-Oxley Act is now applicable to us.

Accordingly, our management is now required to conduct an annual assessment of the effectiveness of our internal control over financial reporting and include a report on these internal controls in the annual reports we will file with the SEC on Form 10-K.

Our independent registered public accounting firm is required to formally attest to the effectiveness of our internal controls.

This requires significant documentation of our policies, procedures and systems, review of that documentation by our internal auditing and accounting staff and our outside independent registered public accounting firm, and testing of our internal control over financial reporting by our internal auditing and accounting staff and our outside independent registered public accounting firm.

This process involves considerable time and attention, strains our internal resources, and increases our operating costs.

We have experienced and may continue to experience higher than anticipated operating expenses and outside auditor fees during the implementation of these changes and thereafter.

price of our common stock could be negatively affected, and we could become subject to investigations by Nasdaq, the SEC or other regulatory authorities, which could require additional financial and management resources.

Risks Related to Our Articles of Organization and State and Federal Banking Laws

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and the required approval of at least 80% of the voting power of the shares then-outstanding entitled to vote for business combination transactions with interested shareholders.

Furthermore, shares of restricted stock and stock options that we may grant to employees and directors, stock ownership by our management and directors, employment agreements and/or change in control agreements that we have entered into with our executive officers and other factors may make it more expensive for companies or persons to acquire control of Eastern Bankshares, Inc.

Furthermore, shares of restricted stock, restricted stock units or stock options that we may grant to employees and directors, stock ownership by our management and directors, employment agreements and/or change in control agreements that we have entered into with our executive officers and other factors may make it more expensive for companies or persons to acquire control of Eastern Bankshares, Inc.

Taken as a whole, these statutory provisions and provisions in our articles of organization could result in our being less attractive to a potential acquirer and thus could adversely affect the market price of our common stock.

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Alternatively, if a court were to find the choice of forum provision contained in our articles of organization to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

The market price of our stock value may be negatively affected by applicable regulations that restrict stock repurchases by Eastern Bankshares, Inc.

Applicable regulations restrict us from repurchasing our shares of common stock during the first year following our IPO (i.e., through October 14, 2021) unless extraordinary circumstances exist and impose limitations on our ability to repurchase shares of our common stock through October 14, 2023.

Stock repurchases are a capital management tool that can

enhance the value of a company’s stock, and our inability to repurchase our shares of common stock through October 14, 2021 and limitations on our ability to repurchase our shares of common stock through October 14, 2023 may negatively affect our stock price.

Risks Related to Our Emerging Growth Company Status

We are an emerging growth company, and because we elect to comply only with the reduced reporting and disclosure requirements applicable to emerging growth companies, our common stock may be less attractive to investors.

We are an emerging growth company, and we expect to remain an emerging growth company until December 31, 2021.

For as long as we continue to be an emerging growth company, we plan to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of shareholder approval of any golden parachute payments not previously approved.

Investors may find our common stock less attractive if we choose to rely on these exemptions.

As an emerging growth company, we also will not be subject to Section 404(b) of the Sarbanes-Oxley Act of 2002, which would require that our independent auditors review and attest to the effectiveness of our internal control over financial reporting.

The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards.

Pursuant to the JOBS Act, we have elected to take advantage of the benefits of this extended transition period for complying with new or revised accounting standards as required when they are adopted for private companies.

As a result, our operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards.

We anticipate that we will cease to be an emerging growth company on December 31, 2021.

Applicable SEC rules specify that we will cease to be an emerging growth company upon the earliest of:

(1) December 31, 2026;

(2) the first fiscal year after our annual gross revenues are $1.07 billion or more;

(3) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities;

or (4) as of December 31 in any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million at the end of June 30 of that fiscal year.

Our current market capitalization exceeds $700 million.

Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

The market price of our stock value may be negatively affected by applicable regulations that restrict stock repurchases by us.

Massachusetts regulations prohibit us from repurchasing shares of our common stock through October 14, 2023 (i.e., during the first three years following the completion of our IPO), except to fund tax-qualified or nontax-qualified

employee stock benefit plans, or except in amounts not greater than 5% of our outstanding shares of common stock then outstanding.

Our repurchase of shares of common stock is also subject to Federal Reserve Board policy related to repurchases of shares by depository institution holding companies.

On November 12, 2021, we announced receipt of non-objection from the Federal Reserve Board to purchase over a 12-month period up to 9,337,900 shares of common stock, which represented 5% of our shares of common stock then outstanding.

The repurchase program, which is limited to $225 million through November 30, 2022, may be modified or terminated by our Board of Directors at any time.

In addition, the Federal Reserve Board could subsequently limit or prohibit our repurchase of common stock if we experience a material adverse change in our financial condition or results of operations.

UNRESOLVED STAFF COMMENTS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors