What changed in this filing

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Item 1. Business

2023-02-24 compared with 2022-02-25 · 202 added, 244 removed, 634 unchanged (41% of the section changed)

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Eastern Bank controls five active subsidiaries in addition to Eastern Insurance Group LLC, as follows:

Broadway Securities Corporation, a wholly owned subsidiary engaged in buying, selling, dealing in and holding securities and in holding industrial revenue bonds (“IRBs”), the majority of which were acquired in connection with our acquisition of Century Bancorp, Inc.

Refer to “Recent Acquisitions” within this section for additional discussion regarding our acquisition of Century;

Broadway Securities Corporation, a wholly owned subsidiary engaged in buying, selling, dealing in and holding securities and in holding industrial revenue bonds (“IRBs”);

Market Street Securities Corporation, a wholly owned subsidiary engaged in buying, selling, dealing in and holding securities;

Real/Property Services, Inc., a wholly owned subsidiary that provides real estate services to Eastern Bank;

Millennium Corporation, a wholly owned subsidiary engaged in holding IRBs, the majority of which were acquired through our acquisition of Century, and securities.

Millennium Corporation was formerly a subsidiary of Century Bank & Trust, which was acquired by us on November 12, 2021.

Refer to “Recent Acquisitions” within this section for additional discussion regarding our acquisition of Century;

Millennium Corporation, a wholly owned subsidiary engaged in holding IRBs;

Shared Value Investments LLC, a wholly owned subsidiary that invests in low income housing and other tax credit investments.

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Median household income in 2021 for the Boston–Worcester–Providence CSA was approximately $91,000 compared to $70,000 for the United States as a whole.

The estimated median age of the population in the Boston–Worcester–Providence CSA is 40, compared to 38.5 for the United States as a whole.

For the eleven counties in eastern Massachusetts

and southern New Hampshire in which our branches are located and from which we gather most of our deposits, the average unemployment rate as of October 2021 was 4.0%, as compared to 4.3% for the United States as a whole.

For the statistical area consisting of Boston and Cambridge, Massachusetts, and Nashua, New Hampshire—which is a subset of the Boston–Worcester–Providence CSA—the unemployment rate as of October 2021 was 4.7%, according to the U.S.

The estimated median age of the population in the Boston–Worcester–Providence CSA is 40.2 years, compared to 38.8 years for the United States as a whole.

For the eleven counties in eastern Massachusetts and southern New Hampshire in which our branches are located and from which we gather most of our deposits, the average unemployment rate as of December 2022 was 3.0%, as compared to 3.3% for the United States as a whole.

For the statistical area consisting of Boston and Cambridge, Massachusetts, and Nashua, New Hampshire, which is a subset of the Boston–Worcester–Providence CSA, the unemployment rate as of November 2022, the most recent date for which data was available, was 2.7%, according to the U.S.

Bureau of Labor Statistics.

As disclosed elsewhere in this Annual Report on Form 10-K, the COVID-19 pandemic significantly increased the unemployment rate in our market.The COVID-19 pandemic initially contributed to a significant increase in the unemployment rate in our market area, however, as of December 31, 2021 the unemployment rate has subsequently decreased as more workers have returned to work.

Please refer to the section of this Annual Report on Form 10-K titled “Item 1A.

Risk Factors—Risks Related to COVID-19 Pandemic and Associated Economic Slowdown” for additional information regarding the implications of the COVID-19 recession for our business.

Home to over 100 colleges and universities, including nationally and internationally recognized institutions such as Boston College, Boston University, Brown University, Harvard University, Massachusetts Institute of Technology, Northeastern University, Wellesley College and Worcester Polytechnic Institute, the Boston–Worcester–Providence CSA includes many employers in what often is referred to as the “knowledge-based economy” that relies on highly-educated employees, professionals and entrepreneurs.

Approximately 43.6% of the population in the Boston–Worcester–Providence CSA age 25 or older has at least a bachelor’s degree, compared to 33.1% for the United States as a whole.

Approximately 45.3% of the population in the Boston–Worcester–Providence CSA age 25 or older has at least a bachelor’s degree, compared to 35.0% for the United States as a whole as of December 31, 2022.

Major employment sectors range from education, services, manufacturing and wholesale and retail trade, to finance, technology and health care.

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Our most direct competition for deposits has historically come from banking institutions operating in our primary market area.

Based on data from the FDIC as of June 30, 2021 (the latest date for which information is available), we had a weighted average market share of 5.8% for the seven separate banking markets tracked by the Federal Reserve Board in which we have at least one branch.

Based on data from the FDIC as of June 30, 2022 (the latest date for which information is available), we had a weighted average deposit market share of 5.4% for the seven separate banking markets tracked by the Federal Reserve Board in which we have at least one branch.

In the Boston market, which accounted for 94.9% of our deposits as of June 30, 2022, our market share was 3.5%, representing the fifth largest deposit share in that market.

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We compete on a number of factors including, among others, customer service, quality of execution, range of products offered, price and reputation.

We expect competition to continue to increase, especially as a result of regulatory and technological changes and the continuing trend of consolidation in the financial services industry.

We expect competition to continue to increase, especially as a result of regulatory and technological changes, the continuing trend of consolidation in the financial services industry, and the Federal Open Market Committee’s (the “FOMC’s”) monetary policy, including increases to the federal funds rate, which have recently lead to increased competition for customer deposits.

Increased competition for deposits and the origination of loans could limit our growth in the future.

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During the past two decades, we have been able to expand our banking business through a combination of internal or “organic” growth complemented by opportunistic strategic transactions.

Since 1997, we have completed eight mergers or acquisitions, including our most recent acquisition of Century.

On November 12, 2021, we acquired Century, which operated 29 banking offices in 21 cities and towns in Massachusetts and southern New Hampshire, as of September 30, 2021, for $641.9 million in cash.

Since 1997, we have completed eight mergers or acquisitions of banking businesses.

Most recently, on November 12, 2021, we acquired Century Bancorp, Inc.

(“Century”), which operated 29 banking offices in 21 cities and towns in Massachusetts and southern New Hampshire, as of September 30, 2021, for $641.9 million in cash.

Century had total assets of approximately $6.8 billion at the time of our acquisition, at fair value and excluding goodwill and intangible assets.

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Our relationship-based approach has enabled us to achieve disciplined organic growth over time, and we expect this trend to continue.

We believe our support of our small business and non-profit customers in obtaining funding in 2020 and 2021 under the Paycheck Protection Program, also known as “PPP,” demonstrated both our commitment and capacity to meet our customers’ needs, even in the most challenging circumstance.

We believe our support of our small business and non-profit customers in obtaining funding under the Paycheck Protection Program, also known as “PPP,” demonstrated both our commitment and capacity to meet our customers’ needs, even in the most challenging circumstance.

The PPP was created by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and was first launched in April 2020.

Small Business Administration, or “SBA,” approved all applications for PPP funding across the nation on a “first come, first served” basis.

We believe that our experience as the largest SBA lender in New England for 13 consecutive years has made us effective in helping a large number of our customers avail themselves of the very attractive PPP loans.

On December 27, 2020, the Consolidated Appropriations Act, 2021 (the “Relief Act”) became law, and authorized an additional $284 billion of PPP loans and extended the PPP through March 31, 2021.

The American Rescue Plan Act of 2021, which was signed into a law on March 11, 2021, allocated an additional $7.25 billion for PPP loans.

The PPP ended on May 31, 2021.

We disbursed a total of $1.7 billion of loans to approximately 15,500 borrowers under the PPP of the CARES Act during the years ended December 31, 2021 and 2020.

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.

We disbursed a total of $1.7 billion of loans to approximately 15,500 borrowers under the PPP of the CARES Act.

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

Please refer to the subsection of this Annual Report on Form 10-K titled “Business—Lending Activities—Small Business Loans” for a summary description of PPP lending as relevant to Eastern Bank.

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We believe the vital need to make increasingly significant technological investments has greatly amplified the importance of scale in banking.

In addition, we believe that the COVID-19 pandemic recession has increased and will continue to increase the rate of consolidation in the banking industry.

We believe that as a result of our initial public offering (“IPO”), which was completed in October 2020, we are well-positioned as a consolidator in the banking market because of our financial strength, reputation and culture as evidenced by our recent acquisition of Century in November 2021.

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We have made significant investments in our technology to ensure we can deliver high-quality, innovative products and services to our customers.

In addition, we have continued investing in our new commercial lending origination system and platform, and we intend to progressively improve our consumer lending origination platform as well.

We are committed to regularly investing in technology and data analytics, as we are positioning our franchise for the future.

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Manage risk to navigate a range of economic environments.

We believe that our conservative credit culture, strong capital and liquidity position, and our deep client relationships are key to our long-term financial success.

We believe that stable long-term growth and profitability are the result of building strong customer relationships one at a time while maintaining superior credit discipline.

We believe that our conservative credit culture, strong capital and sources of liquidity, and our deep client relationships are key to our long-term financial success.

We believe that stable long-term growth and profitability are the result of building strong customer relationships one at a time while maintaining rigorous credit discipline.

We supplement our conservative risk culture with a rigorous and continuous enterprise risk management program.

The current COVID-19 pandemic has resulted in and is continuing to result in material uncertainty in the near- and medium-term future.

In addition, a sustained period of low interest rates that continued into 2021 put pressure on our net interest margin.

Recession expectations in 2022 for future periods, supported by high inflation, rising interest rates, lingering supply chain difficulties, and softer labor market dynamics, has resulted and is continuing to result in material uncertainty in the near- and medium-term future.

We believe we are enduring this period of stress from a position of strength, which allows us to maintain a strong balance sheet while still supporting our customers and communities in need.

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Lending Activities

We use funds obtained from deposits, as well as funds obtained from the Federal Home Loan Bank (“FHLB”) of Boston (“FHLBB”) advances and Federal funds, primarily to originate loans and to invest in securities.

We use funds obtained from deposits, including brokered certificates of deposit, as well as funds obtained from the Federal Home Loan Bank (“FHLB”) of Boston (“FHLBB”) advances and Federal funds, primarily to originate loans and to invest in securities.

We believe the portfolio is well diversified with approximately 860 commercial relationships at December 31, 2022.

During the year ended December 31, 2021, in connection with our acquisition of Century, we acquired loans which are outside of our traditional lending area.

Our lending area mainly consists of the greater Boston area, specifically eastern and central Massachusetts, southern New Hampshire, including the seacoast region, and northern Rhode Island.

In connection with our

acquisition of Century, we acquired loans which are outside of our traditional lending area.

Such loans will run-off over time as we are not actively pursuing lending activities in such areas.

The amount of loans acquired from Century which are outside of our traditional lending area was $490.6 million as of year ended December 31, 2021.

As of December 31, 2022, the remaining recorded investment balance of loans acquired in connection with our Century acquisition and which were outside of our traditional lending area was $411.6 million.

During the year ended December 31, 2022, we purchased mortgage loans, specifically one- to four-family residential real estate loans, a portion of which are outside of our traditional lending area.

Loans purchased were subject to the same underwriting criteria as those loans originated directly by us.

During the year ended December 31, 2022, we purchased $380.2 million of residential real estate loans, of which $175.1 million were outside of our traditional lending area.

Our lending focuses on the following categories of loans:

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We primarily target companies and institutions with annual revenues of $10 million to $500 million and strive to serve as the lead bank for customers with multi-product, long-term, profitable relationships with an emphasis on building long-term relationships.

In addition, we participate in the syndicated loan market, club lending transactions and the Shared National Credit Program (“SNC Program”).

Loans in this category consist of revolving and term loans extended to businesses and corporate enterprises for the purpose of financing working capital, facilitating equipment purchases and facilitating acquisitions.

In addition, we participate in the syndicated loan market, club lending transactions and the Shared National Credit Program (“SNC Program”), which is comprised of loans and commitments to extend credit aggregating more than $100 million or more at origination and shared by three or more unaffiliated supervised institutions.

Loans in this category consist of lines of credit and term loans extended to businesses and corporate enterprises for the purpose of financing working capital, facilitating equipment purchases and facilitating acquisitions.

As of December 31, 2022, we had total commercial and industrial loans of $3.2 billion, representing 23.2% of our total loans.

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For commercial and industrial loans, our primary focus is middle-market companies located in the markets we serve.

Loans are extended on both a secured and unsecured basis, according to the credit profile of the customer, at both fixed interest rates and variable interest rates at varying spreads over the London Interbank Offered Rate (“LIBOR”), Secured Overnight Financing Rate (“SOFR”), and Prime rate.

See “Risk Factors—Changes to and replacement of LIBOR may adversely affect our business, financial condition, and results of operations” in Part I, Item 1A of this Annual Report on Form 10-K for more information about the potential impact to our business.

The average tenor of our commercial and industrial portfolio varies according to market conditions but at December 31, 2022 it was 5.7 years.

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The average commercial and industrial lending relationship by balance at December 31, 2022 was $2.3 million.

At December 31, 2021, our ten largest commercial and industrial lending relationships, including relationships with combined commercial and industrial and owner-occupied commercial real estate exposure, had an average commitment of $68.8 million and ranged in commitment size from $60.0 million to $82.0 million.

At December 31, 2022, our ten largest commercial and industrial lending relationships, including relationships with combined commercial and industrial and owner-occupied commercial real estate exposure (e.g., combination of outstanding principal balance and undrawn commitment amount), had an average exposure of $68.9 million and ranged in exposure size from $62.2 million to $80.4 million.

Approximately 66.6% of our commercial and industrial loan exposure at December 31, 2022 was to customers headquartered within our primary lending market, which consists of eastern and central Massachusetts, southern New Hampshire, including the seacoast region, and northern Rhode Island, although we participate in the syndicated loan market and the SNC Program.

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As of December 31, 2022, our commercial and industrial SNC Program portfolio totaled $685.8 million, or 21.9%, of our commercial and industrial portfolio, and 37.3% of our commercial and industrial SNC Program portfolio were loans to borrowers headquartered in our primary lending market.

Our commercial and industrial portfolio also includes our Asset Based Lending Portfolio (“ABL Portfolio”).

As of December 31, 2021, our ABL Portfolio totaled $224.8 million, or 7.6%, of our commercial and industrial portfolio.

Our commercial and industrial portfolio also includes a portion of our PPP loans.

As of December 31, 2021, the amount of PPP loans included in our commercial and industrial portfolio was $112.8 million.

Our commercial and industrial portfolio also includes IRBs which are municipal bonds issued to finance major capital projects.

As of December 31, 2021, our commercial and industrial IRB portfolio totaled $1.0 billion, or 33.8% of our commercial and industrial portfolio.

The majority of our IRB portfolio is in educational and other non-profit sectors.

Our commercial and industrial portfolio also includes our Asset Based Lending Portfolio (“ABL Portfolio”), IRBs, and a portion of our PPP loans.

IRBs are municipal bonds issued to finance major capital projects and the majority of our IRB portfolio is in educational and other non-profit sectors.

As of December 31, 2022, our ABL, commercial and industrial IRB, and commercial and industrial PPP portfolios totaled $208.8 million, $1.0 billion, and $3.6 million, respectively.

Commercial Real Estate Loans.

Loans in this category include mortgage loans on commercial real estate, both investment and owner occupied.

Loans in this category include mortgage loans and lines of credit on commercial real estate, both investment and owner occupied.

Property types financed include office, industrial, multi-family, affordable housing, retail, hotel and other type properties.

See "Item 1A.

Risk Factors" in this Annual Report on Form 10-K for additional information regarding material reduction in demand for office and medical office space.

As of December 31, 2022, we had total commercial real estate loans of $5.2 billion, representing 38.0% of our total loans.

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Collateral values are established by independent third-party appraisals and evaluations.

The primary repayment sources include operating income generated by the real estate, permanent debt refinancing and/or the sale of the real estate.

Our commercial real estate loan portfolio also includes IRB loans of $629.6 million, or 13.9% of our commercial real estate portfolio, as of December 31, 2021.

Included in this amount was $376.7 million of IRB loans as of December 31, 2021 which were acquired in connection with our acquisition of Century.

repayment sources include operating income generated by the real estate, permanent debt refinancing and/or proceeds from the sale of the real estate.

Our commercial real estate loan portfolio includes IRB loans of $608.0 million, or 11.8% of our commercial real estate portfolio, as of December 31, 2022.

The average outstanding loan balance in our commercial real estate portfolio was approximately $3.5 million as of December 31, 2022, although we originate commercial real estate loans with balances significantly larger than this average.

At December 31, 2021, our ten largest commercial real estate loans had an average commitment of $52.8 million, ranging from $46.2 million to $68.3 million.

At December 31, 2022, our ten largest commercial real estate loans had an average exposure of $33.7 million, ranging from $27.0 million to $38.5 million.

We focus our commercial real estate lending on properties within our primary market area but will originate commercial real estate loans on properties located outside this area based on an established relationship with a strong borrower.

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We originate a variety of fixed- and adjustable-rate commercial real estate loans with terms and amortization periods generally up to 30 years, which may include balloon loans.

Interest rates and payments on most of our adjustable-rate loans are set based upon the 30-day LIBOR index plus a margin.

Interest rates and payments on most of our adjustable-rate loans are set based upon the 30-day LIBOR or SOFR index plus a margin.

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The majority of the loans in this category, measured by the outstanding loan balance as of December 31, 2022, are secured by properties located in our primary lending area.

At December 31, 2021, our ten largest construction loans had an average commitment of $22.5 million, ranging from $19.0 million to $30.0 million.

At December 31, 2022, our ten largest construction loans had an average exposure of $27.4 million, ranging from $24.0 million to $34.0 million.

Most of our construction loans are interest-only loans that provide for the payment of interest during the construction phase, which is usually up to 36 months, although the terms of some construction loans are extended, generally for periods of six to 12 months.

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For larger loans, we also will generally require an inspection of the property by an Eastern Bank-appointed construction engineer before disbursement of funds during the term of the construction loan.

Land development loans within the construction portfolio totaled $33.2 million as of December 31, 2021.

IRB loans within the construction portfolio totaled $68.7 million as of December 31, 2021.

Land development loans and IRB loans within the construction portfolio totaled $24.3 million and $36.9 million as of December 31, 2022, respectively.

Small Business Loans.

This category, which we refer to as “business banking,” is comprised of loans to small businesses with exposures of under $1.0 million and small investment real estate projects with exposures of under $3.0

These loans are separate and distinct from our commercial and industrial and commercial real estate portfolios described above due to the size of the loans.

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Our proprietary decision matrix, which includes a number of quantitative factors including, but not limited to, a guarantor’s credit score, industry risk, and time in business, is used to determine whether to make business banking loans.

A portion of our small business loans are guaranteed by the SBA, through the SBA 7(a) loan program.

The SBA 7(a) loan program supports, through a United States Government guarantee, some portion of the traditional commercial loan underwriting that might not be fully covered absent the guarantee.

A portion of our small business loans are guaranteed by the U.S.

Small Business Administration (“SBA”), through the SBA 7(a) loan program.

The SBA 7(a) loan program supports, through a United States Government guarantee,

some portion of the traditional commercial loan underwriting that might not be fully covered absent the guarantee.

Eastern Bank is a preferred lender under the SBA’s Preferred Lender Program, which allows expedited underwriting and approval of SBA 7(a) Loans.

For 2009-2021, Eastern Bank was distinguished as the highest producer of SBA 7(a) loans, in terms of loan volume, in New England.

As of December 31, 2021, our SBA portfolio held approximately 5,200 loans with $0.4 billion outstanding.

For 2009-2022, Eastern Bank was distinguished as the highest producer of SBA 7(a) loans, in terms of loan volume, in Massachusetts.

As of December 31, 2022, our SBA portfolio held approximately 1,800 loans with $119.6 million outstanding.

Our PPP loans are included in our commercial and industrial loans portfolio, as previously indicated, and in our business banking portfolio.

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Through a team of approximately 15 licensed mortgage loan officers, we originate residential loans either for sale to investors or to retain in our loan portfolio.

Decisions about whether to sell or retain residential loans are made based on the interest rate characteristics, pricing for loans in the secondary mortgage market, competitive factors and our capital needs, although we generally retain non-conforming jumbo residential loans in our portfolio.

Since 2016, we have outsourced to an independent party the processing, underwriting (using our criteria) and closing of residential loans originated by our mortgage loan officers.

During the year ended December 31, 2021, residential real estate mortgage originations were $1.1 billion of which $233.7 million were sold on the secondary markets.

During the year ended December 31, 2022, residential real estate mortgage originations were $524.6 million, of which $60.3 million were sold on the secondary markets.

We generally do not continue to service residential loans that we sell in the secondary market.

At December 31, 2022, our ten largest one- to four-family residential real estate loans had an average balance of $2.4 million, ranging from $2.2 million to $2.7 million.

As previously indicated, we began purchasing mortgage loans, specifically one- to four-family residential mortgages, during the year ended December 31, 2022.

Loans purchased were subject to the same underwriting criteria as those loans originated directly by us.

Home Equity Loans and Lines of Credit.

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Loans in this category consist of unsecured personal lines of credit, overdraft protection, automobile loans, home improvement loans, airplane loans and other personal loans.

Loans in this category include loans originated through our indirect automobile lending program, which we began to exit in 2018 to improve our liquidity position and to reduce lower yielding loans.

As of December 31, 2022, we had total other consumer loans of $194.1 million, representing 1.4% of our total loans.

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income sources and reliability, credit histories, term of repayment and collateral value, as applicable.

Included in this category of other consumer loans are home improvement and automobile loans of $104.4 million and $53.3 million, respectively, at December 31, 2021.

Loan Sales and Purchases

We generally originate commercial loans for our portfolio, although we sell participation interests in commercial and industrial loans and commercial real estate loans to local financial institutions, primarily on the portion of loans exceeding our borrowing limits.

We generally do not purchase whole loans, but we do purchase loan participations from other financial institutions.

During the year ended December 31, 2021, we purchased $346.3 million of loan participations.

As of December 31, 2021, we held loan participation interests, including SNCs, totaling $1.1 billion in loans originated by other lenders, consisting of $732.4 million of commercial and industrial loan participations, $362.9 million of commercial real estate loan participations, $37.1 million of commercial construction loan participations, and less than $0.1 million of business banking loan participations.

We began purchasing mortgage loans, specifically one- to four-family residential mortgages, during the year ended December 31, 2022.

Loans purchased were subject to the same underwriting criteria as those loans originated directly by us.

During the year ended December 31, 2022, we purchased $380.2 million of residential real estate loans.

We purchase loan participations from other financial institutions and during the year ended December 31, 2022, we purchased $650.5 million of loan participations.

As of December 31, 2022, we held loan participation interests, including SNCs, totaling $1.5 billion in loans originated by other lenders, consisting of $1.0 billion of commercial and industrial loan participations, $422.0 million of commercial real estate loan participations, $96.1 million of commercial construction loan participations, and less than $0.1 million of business banking loan participations.

Loan Approval Procedures and Authority

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At December 31, 2022, our regulatory limit on loans-to-one borrower was $494.4 million.

In November 2021, we acquired Century, the loan portfolio of which included loans of a larger size than we have historically made, as well as loans to borrowers in industries in which we have historically not participated in a meaningful way.

In connection with the acquisition, Eastern Bank’s Board of Directors approved adjustments to our internal limits on loans-to-one borrower (and related entities), as well as higher sub-limits for loans made in the higher education and healthcare industry sectors.

As of December 31, 2022, our internal limits on loans-to-one borrower (and related entities), all of which are subject to industry-specific sub-limits, were:

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• $50.0 million for commercial and industrial relationships, including loans to non-profit entities;

• $75.0 million for loans to education and healthcare entities with a risk rating between 1 and 4;

• $50.0 million for loans to education and healthcare entities with a risk rating of 5 and above.

Prior to the Century acquisition, our internal limits on loans-to-one borrower (and related entities) had been $25.0 million for commercial real estate loans;

$75.0 million for commercial real estate relationships;

and $40.0 million for commercial and industrial relationships, including loans to non-profit entities.

• $75.0 million for loans to education entities with a risk rating between 1 and 7;

• $50.0 million for loans to education entities with a risk rating of 8 and above;

• $75.0 million for loans to healthcare entities with a risk rating between 1 and 4;

• $50.0 million for loans the healthcare entities with a risk rating of 5 and above;

Aggregate exposure limits can be increased up to 10% on an exception basis with the approval of the Credit Committee, including the approval of the Chief Credit Officer and the Chief Commercial Banking Officer.

In connection with the acquisition of Century, as a condition of receiving regulatory approval, we provided $65.6 million of credit to the Massachusetts Housing Partnership (“MHP”).

The commitment exceeded our internal lending limits indicated above, but not our regulatory limit on loans-to-one-borrower also indicated above.

Our Board of Directors approved the exception to our internal lending limits for the MHP credit facility.

Investment Activities

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Agency bonds, U.S.

Treasury securities, state and municipal bonds and obligations, Small Business Administration pooled securities, and other debt securities.

Treasury securities, state and municipal bonds and obligations, and other debt securities.

We view our securities portfolio as a source of income and liquidity.

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At December 31, 2022, our securities totaled $7.2 billion, and generated interest and dividends of 20.8% of total interest income for the year ended December 31, 2022.

On at least a quarterly basis we review our security portfolio for impairment and to evaluate collection of principal and interest.

On at least a quarterly basis, we assess our securities portfolio for expected credit losses in accordance with the current expected credit losses (“CECL”) methodology, with separate approaches depending on whether a security is classified as available for sale or held to maturity.

Sources of Funds

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We believe we have been able to attract and maintain satisfactory levels of deposits based on the level of service we provide to our customers, the convenience of our banking locations, our electronic banking options, and our interest rates, all of which are generally competitive with those of competing financial institutions.

We also participate in the IntraFi Network (formerly known as “Promontory”), which allows us to provide access to multi-million dollar FDIC deposit insurance protection on deposits for consumers, businesses and public entities.

We also participate in the IntraFi Network, which allows us to provide access to multi-million dollar FDIC deposit insurance protection on deposits for consumers, businesses and public entities.

We can elect to sell or repurchase this funding as reciprocal deposits from other IntraFi Network banks depending on funding needs.

As of December 31, 2021, we had repurchased no reciprocal deposits from other IntraFi Network banks and had $520.5 million of additional capacity.

As of December 31, 2022, we had repurchased $665.0 million reciprocal deposits from other IntraFi Network banks and had no additional capacity.

In addition, we may purchase brokered deposits as an additional source of funds.

During the year ended December 31, 2022 we purchased brokered certificates of deposit which amounted to $928.6 million as of December 31, 2022.

At December 31, 2022, total borrowings were $740.8 million.

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As a member of the FHLBB, we are required to purchase shares in the FHLBB.

Accordingly, we had invested $10.9 million in shares of the FHLBB and had $14.0 million outstanding in FHLBB borrowings with original maturities ranging from 4 years to 20 years at December 31, 2021.

Accordingly, we had invested $41.4 million in shares of the FHLBB and had $704.1 million outstanding in FHLBB borrowings with original maturities ranging from 1 week to 20 years at December 31, 2022.

In addition, we had $2.0 billion of borrowing capacity remaining with the FHLBB at December 31, 2022.

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Eastern Wealth Management had 49 full-time equivalent employees as of December 31, 2022 and revenue of $23.6 million or approximately 13.4% of noninterest income during the year ended December 31, 2022.

As discussed in “Recent Acquisitions” within this section, we acquired Century on November 12, 2021, the operations of which included a wealth management division.

In 2020, Century’s last full fiscal year prior to our acquisition, brokerage commissions from its wealth management division amounted to $0.3 million.

Century’s wealth management business included securities supported by LPL Financial, a third-party securities brokerage business.

In connection with acquiring Century, we elected not to continue with a third-party securities brokerage relationship.

Eastern Insurance Group LLC

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Eastern Insurance Group operates through 21 non-branch offices in eastern Massachusetts, one office in Keene, New Hampshire, and one office in Providence, Rhode Island.

As measured by revenue, Eastern Insurance Group is the second largest insurance agency in Massachusetts, the thirty-fourth largest property and casualty insurance agency in the United States.

Eastern Insurance Group had 406 full-time equivalent employees as of December 31, 2021 and revenue of $97.2 million or approximately 15.5% of our total revenues.

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

During the five-year period ended December 31, 2021, Eastern Insurance Group acquired two insurance agencies for an average purchase price of $2.2 million.

On average the agencies acquired during that period had annual revenue of $0.9 million at the date of purchase.

See “Recent Acquisitions” within this section for additional information.

As measured by revenue, Eastern Insurance Group is the third largest insurance agency in Massachusetts and the thirty-ninth largest property and casualty insurance agency in the United States.

Eastern Insurance Group had 399 full-time equivalent employees as of December 31, 2022 and revenue of $98.8 million, or approximately 13.3% of our total revenues during the year ended December 31, 2022.

We are subject to the extensive regulatory framework applicable to bank holding companies, bank subsidiaries and their affiliates.

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These descriptions are not intended to be complete and are qualified in their entirety by reference to the full text of the statutes and regulations described.

Changes in applicable law or regulation, and in their interpretation and application by regulatory agencies and other governmental authorities cannot be predicted, but may have a material effect on our business, financial condition or results of operations.

Eastern Bank is a Massachusetts-chartered non-member bank.

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In addition, Eastern Bankshares, Inc.

is subject to the rules and regulations of the Securities and Exchange Commission under the federal securities laws.

Any change in applicable laws or regulations, whether by the United States Congress, the Massachusetts legislature, the Massachusetts Commissioner of Banks, the FDIC, or the Federal Reserve Board, could have a material adverse impact on the operations and financial performance of Eastern Bankshares, Inc.

is subject to the rules and regulations of the U.S.

Securities and Exchange Commission (the “SEC”) under the federal securities laws.

Any change in applicable laws or regulations could have a material adverse impact on the operations and financial performance of Eastern Bankshares, Inc.

and Eastern Bank.

In addition, Eastern Bankshares, Inc.

and Eastern Bank will be affected by the monetary and fiscal policies of the United States Government, including the Federal Reserve Board.

In view of changing conditions in the national economy and in the financial markets, it is

impossible for management to accurately predict future changes in monetary policy or the effect such changes may have on the business or financial condition of Eastern Bankshares, Inc.

and Eastern Bank are affected by the monetary and fiscal policies of the United States Government, including the Federal Reserve Board.

In view of changing conditions in the national economy and in the financial markets, it is impossible for management to accurately predict future changes in monetary policy or the effect such changes may have on the business or financial condition of Eastern Bankshares, Inc.

and Eastern Bank.

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Lending Activities.

A Massachusetts-chartered bank may make a wide variety of mortgage loans including fixed-rate loans, adjustable-rate loans, variable-rate loans, participation loans, graduated payment loans, construction and development loans, condominium and co-operative loans, second mortgage loans and other types of loans that may be made in accordance with applicable regulations.

accordance with applicable regulations.

Commercial loans may be made to corporations and other commercial enterprises with or without security.

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As a result of the conversion of Eastern Bank Corporation, the predecessor holding company of Eastern Bank, from a mutual into a stock holding company in connection with our IPO (the “Conversion”), Eastern Bankshares, Inc.

may not declare or pay a cash dividend on, or repurchase any of, its capital shares if

the effect thereof would cause its net worth to be reduced below (i) the amount required for the liquidation account established by Eastern Bankshares, Inc.

may not declare or pay a cash dividend on, or repurchase any of its capital shares if the effect thereof would cause its net worth to be reduced below (i) the amount required for the liquidation account established by Eastern Bankshares, Inc.

in connection with the IPO (“Liquidation Account”) or (ii) the regulatory capital requirements of Eastern Bankshares, Inc.

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may not repurchase shares of its common stock during the first three years following the completion of the IPO, except to fund tax-qualified or non-tax-qualified employee stock benefit plans, or except in amounts not greater than 5% of our outstanding shares of common stock where compelling and valid business reasons are established to the satisfaction of the Massachusetts Commissioner of Banks.

On November 12, 2021, the receipt of a notice of non-objection from the Federal Reserve Board to our first proposed share repurchase program.

Our authorization to repurchase shares under this program was disclosed.

Our authorization to repurchase shares under this program, which was approved by the Company’s Board of Directors, is limited to 9,337,900 shares, which represents 5% of our outstanding shares of common stock, over a 12-month period.

The program is further limited to $225 million through November 30, 2022 and may be modified or terminated by the Company’s Board of Directors at any time.

On November 12, 2021, we received a notice of non-objection from the Federal Reserve Board to our first proposed share repurchase program.

Our authorization to repurchase shares under this program, which was approved by our Board of Directors, was limited to 9,337,900 shares, which represented 5% of our then-outstanding shares of common stock, over a 12-month period.

The program was further limited to $225.0 million through November 30, 2022.

We completed the repurchase of the total number of shares authorized through this program during the year ended December 31, 2022.

On September 7, 2022, we announced receipt of a notice of non-objection from the Federal Reserve Board for a new share repurchase program.

The program, which authorizes the purchase of up to 8,900,000 shares, or 5.0% of our then-outstanding shares of common stock over a 12-month period, is limited to $200.0 million through August 31, 2023.

Protection of Personal Information.

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a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets ratio of 8.0%, and a Tier 1 capital to average assets leverage ratio of 4.0%.

The Federal Reserve has substantially identical requirements for the holding company.

For further discussion of these requirements, see Note 16, "Minimum Capital Requirements " within the Notes to the Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K.

For purposes of the regulatory capital requirements, common equity Tier 1 capital is generally defined as common shareholders’ equity and retained earnings.

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Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred shares and long-term perpetual preferred shares, mandatory convertible securities, intermediate preferred shares and subordinated debt.

Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25% or risk-weighted assets.

Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets.

As permitted by applicable capital regulations, we have opted out of the requirement to include Accumulated Other Comprehensive Income (“AOCI”) in our regulatory capital determinations.

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Higher levels of capital are required for asset categories believed to present greater risk.

For example, a risk weight of 0% is assigned to cash and United States government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one to four- family residential mortgages, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of up to 600% is assigned to permissible equity interests, depending on certain specified factors.

In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.

For example, a risk weight of 0% is assigned to cash and certain United States government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one to four- family residential mortgages, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of up to 600% is assigned to permissible equity interests, depending on certain specified factors.

In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” in an amount of 2.5% or greater, on top of the minimum risk-based capital ratios.

For banking organizations seeking to avoid the limitations on capital distributions and discretionary bonus payments, the capital conservation buffer effectively increases the minimum common equity Tier 1 capital ratio to 7.0%, the minimum Tier 1 capital ratio to 8.5%, and the minimum total capital ratio to 10.5%.

At December 31, 2022, Eastern Bank exceeded the regulatory requirement for the capital conservation buffer.

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The agencies have also established standards for safeguarding customer information.

If the appropriate federal banking agency determines that an institution fails to meet any standard

prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard.

If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard.

Investment Activities.

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Sections 22(h) and (g) of the Federal Reserve Act place restrictions on loans to a bank’s insiders, i.e., executive officers, directors and principal shareholders.

Under Section 22(h) of the Federal Reserve Act, loans to a director, an executive officer and to a greater than 10.0% shareholder of a financial institution, and certain affiliated interests of these, together with all other outstanding loans to such person and affiliated interests, may not exceed specified limits.

all other outstanding loans to such person and affiliated interests, may not exceed specified limits.

Section 22(h) of the Federal Reserve Act also requires that loans to directors, executive officers and principal shareholders be made on terms and conditions substantially the same as offered in comparable transactions to persons who are not insiders and also requires prior board approval for certain loans.

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The FDIC Board of Directors may also impose special assessments under stressed circumstances.

Pursuant to the Dodd-Frank Act, the FDIC has established 2.0% as the designated reserve ratio (“DRR”), which is the ratio of the Deposit Insurance Fund to insured deposits of the total industry.

In March 2016, the FDIC adopted final rules designed to meet the statutory minimum DRR of 1.35% by September 30, 2020, the deadline imposed by the Dodd-Frank Act.

The Dodd-Frank Act requires the FDIC to offset the effect on institutions with assets of less than $10 billion of the increase in the statutory minimum DRR to 1.35% from the former statutory minimum of 1.15%.

The FDIC’s rules reduced assessment rates on all banks but imposed a surcharge on banks with assets of $10 billion or more until the DRR reaches 1.35% and will provide assessment credits to banks with assets of less than $10 billion for the portion of their assessments that contribute to the increase of the DRR to 1.35%.

The rules also changed the method to determine risk-based assessment rates for established banks with less than $10 billion in assets to better ensure that banks taking on greater risks pay more for deposit insurance than less risky banks.

The reserve ratio reached 1.36% on September 30, 2018 and, as a result, the surcharge on banks with assets of $10 billion or more ceased with the first assessment invoice in 2019.

In addition, once the DRR reaches 1.38%, the FDIC

will apply the assessment credits to banks that had assets below $10 billion at any time during the credit calculation period, which includes Eastern Bank.

As of December 31, 2021, the Deposit Insurance Fund’s reserve ratio was 1.27%.

The FDIC Board previously voted on September 15, 2020 to maintain the current schedule of assessment rates for all insured depository institutions because of the extraordinary growth of insured deposits due to the pandemic.

The FDIC has authority to increase insurance assessments.

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The Massachusetts version is generally similar to the CRA but utilizes a five-tiered descriptive rating system.

Massachusetts law requires the Massachusetts Commissioner of Banks to consider, but not be limited to, a bank’s record of performance under Massachusetts law in considering any application by the bank to establish a branch or other deposit-taking facility, to relocate an office or to merge or consolidate with or acquire the assets and assume the liabilities of any other banking institution.

an office or to merge or consolidate with or acquire the assets and assume the liabilities of any other banking institution.

Eastern Bank’s most recent 2022 CRA performance rating under Massachusetts law was “Outstanding.”

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The guidance also provides that enforcement actions may be taken against a banking organization if its incentive compensation arrangements or related risk management, control or governance processes pose a risk to the organization’s safety and financial weakness.

The federal banking and other responsible federal agencies, including the SEC, have yet to adopt regulations implementing the executive compensation provisions of the Dodd Frank Act.

The federal banking agencies have yet to adopt regulations implementing the executive compensation provisions of the Dodd Frank Act.

In August 2022, the SEC adopted new rules requiring public companies to disclose in future proxy statements the relationship between executive pay and company financial performance.

Among other items, the new rules require:

(1) tabular disclosure of compensation actually paid to certain executive officers, along with certain company and peer performance metrics;

(2) a graphical or narrative explanation of the relationship between compensation paid and applicable performance measures;

and (3) a tabular list of financial performance measures applied to executive compensation for the most recent fiscal year.

Consumer Protection and Fair Lending Regulations.

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Federal Reserve System

The Federal Reserve Board regulations ordinarily require depository institutions to maintain interest-earning reserves against their transaction accounts (primarily, negotiable order of withdrawal (“NOW”) accounts and regular checking accounts).

The Federal Reserve Board regulations generally require that reserves be maintained against net transaction accounts as follows:

as of January 1, 2022, for that portion of transaction accounts aggregating $640.6 million or less (which may be adjusted by the Federal Reserve Board) the reserve requirement is 3.0% and the amounts greater than $640.6 million require a 10.0% reserve (which may be adjusted annually by the Federal Reserve Board between 8.0% and 14.0%).

As of January 1, 2022, the first $32.4 million of otherwise reservable balances (which may be adjusted by the Federal Reserve Board) are exempted from the reserve requirements.

However, in response to the COVID-19 pandemic, the Federal Reserve Board temporarily eliminated reserve requirements and therefore there was no minimum reserve requirement as of December 31, 2021.

The current annual interest rate on both reserves is 0.15%.

Historically, the Federal Reserve Board regulations required depository institutions to maintain interest-earning reserves against their transaction accounts.

However, in March of 2020, the Federal Reserve Board eliminated reserve requirements and therefore there was no minimum reserve requirement as of December 31, 2022.

The Federal Reserve Board has stated that it has no plans to re-impose reserve requirements.

However, they may adjust reserve requirement ratios in the future if conditions warrant.

The annual interest rate on reserve balances was 4.40% as of December 31, 2022.

Federal Home Loan Bank System

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These requirements could reduce the amount of dividends that the FHLBs pay to their members and result in the FHLBs imposing a higher rate of interest on advances to their members.

During the year ended December 31, 2021, the FHLBB paid quarterly dividends equal to yields of 1.6%, 1.5%, 1.5% and 2.1% in the first, second, third and fourth quarter, respectively.

Dividend income from the FHLB during the year ended December 31, 2022 was $0.3 million.

There can be no assurance that such dividends will continue in the future.

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is subject to the Federal Reserve Board’s capital adequacy guidelines for bank holding companies (on a consolidated basis) which have historically been similar to, though less stringent than, those of the FDIC for Eastern Bank.

The Dodd-Frank Act, however, required the Federal Reserve Board to promulgate consolidated capital requirements for depository institution holding companies that are no less stringent, both quantitatively and in terms of

components of capital, than those applicable to the depository institutions themselves.

Consolidated regulatory capital requirements identical to those applicable to the subsidiary banks apply to bank holding companies.

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meets the current public information requirements of Rule 144, each affiliate of Eastern Bankshares, Inc.

that complies with the other conditions of Rule 144, including those that require the affiliate’s sale to be aggregated with those of other persons, would be able to sell in the public market, without registration, a number of shares not to exceed, in any three-month period, the greater of 1% of the outstanding shares of Eastern Bankshares,

Inc., or the average weekly volume of trading in the shares during the preceding four calendar weeks.

In the future, Eastern Bankshares, Inc.

may permit affiliates to have their shares registered for sale under the Securities Act.

In December 2021, the Securities and Exchange Commission (“SEC”) proposed rules related to corporate share repurchase programs, which include extensive disclosure requirements for issuers that engage in share repurchasing.

Our future share repurchase programs will likely be subject to such future regulations.

The Jumpstart Our Businesses Act, or JOBS Act, which was enacted in 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets.

Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year qualifies as an “emerging growth company.” Following the IPO, Eastern Bankshares, Inc.

qualified as an emerging growth company, and we continued to qualify as an emerging growth company under the JOBS Act until December 31, 2021.

Eastern Bankshares Inc.

ceased to qualify as an emerging growth company under the JOBS Act as of December 31, 2021, the last day of the fiscal year in which Eastern Bankshares, Inc.

was classified as a “large accelerated filer,” under Securities and Exchange Commission regulations.

As a result, we are no longer entitled to the exemptions for emerging growth companies provided in the JOBS Act.

In December 2021, the SEC proposed rules related to corporate share repurchase programs, which include extensive disclosure requirements for public companies that engage in share repurchasing.

Our future share repurchase programs will likely be subject to these or other share repurchase disclosure requirements.

The proposed rules would require an issuer to provide a new Form SR disclosing the amount of purchased shares, share price, and other information on the first business day following the execution date.

The proposed amendments also would enhance existing periodic disclosure requirements requiring an issuer to disclose:

the objective or rationale for the share repurchases and the process or criteria used to determine the repurchase amounts;

any policies and procedures relating to purchases and sales of the issuer’s securities by its officers and directors during a repurchase program, including any restriction on such transactions;

and whether the issuer is making its repurchases pursuant to a plan that it intends to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c) and/or the conditions of the Exchange Act Rule 10b-18 non-exclusive safe harbor.

Sarbanes-Oxley Act of 2002

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Control, as defined under the applicable regulations, means the power, directly or indirectly, to direct the management or policies of us or to vote 25% or more of any class of voting securities of ours.

Acquisition of more than 10% of any class of a bank holding company’s voting securities constitutes a rebuttable presumption of control under certain circumstances, including where, as will be the case with Eastern Bankshares, Inc., the issuer has registered securities under Section 12 of the Exchange Act.(Substantially similar requirements are imposed under Massachusetts law with respect to the acquisition of control, directly or indirectly, of Eastern Bank.)

Substantially similar requirements are imposed under Massachusetts law with respect to the acquisition of control, directly or indirectly, of Eastern Bank.

In addition, federal regulations provide that no company may acquire control (as defined in the Bank Holding Company Act) of a bank holding company without the prior approval of the Federal Reserve Board.

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Compliance with all applicable laws and regulations involves a significant investment in time and resources.

Any new laws or regulations applicable to our business, any changes to existing laws or regulations, or any changes to the

interpretations or enforcement of those laws or regulations, may affect our operations and/or financial condition.

Any new laws or regulations applicable to our business, any changes to existing laws or regulations, or any changes to the interpretations or enforcement of those laws or regulations, may affect our operations and/or financial condition.

For additional information, see Note 18, “Commitments and Contingencies” within the Notes to the Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K.

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In addition, Eastern Bank may face formal administrative enforcement actions from its federal and other governmental supervisory agencies, including the assessment of civil monetary penalties and restitution, relating to consumer products, and could also face potential civil litigation.

For further information regarding risks related to regulatory actions and litigation, please refer to “Risk Factors—Risks Related to Our Business—Operational risks are inherent in our businesses,” “Risk Factors—Risks Related to Regulations—Our business is highly regulated, which could limit or restrict our activities and impose financial requirements or limitations on the conduct of our business,” and “Risk Factors—Risks Related to Regulations—We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions” in Part I, Item 1A of this Annual Report on Form 10-K.

Human Capital Management

Diversity, Equity & Inclusion (DE&I)

The Company, which employed 2,059 full- and part- time employees as of December 31, 2021, of whom 1,889 were full-time employees, is deeply committed to having a diverse workforce reflective of the communities we serve, where all feel included and supported.

Our strategy is to build and sustain diversity, equity and inclusion (“DE&I”) as a critical aspect of our work and workplace environment, which we believe makes us a better employer, a better provider of services to our customers, a better member of our communities and a better investment for our shareholders.

The Company has long been committed to and recognized as a leader in DE&I, as evidenced by:

• The Wall Street Journal featured Eastern’s work to drive a diverse and inclusive culture in December 2020.

The Company, which employed 2,146 employees as of December 31, 2022, including 1,950 full-time employees, is deeply committed to having a diverse workforce reflective of the communities we serve, where all feel included and

We seek to build and sustain diversity, equity and inclusion (“DEI”) as a critical aspect of our work and workplace environment, which we believe makes us a better employer, provider of services to our customers, member of our communities and investment for our shareholders.

The Company has long been committed to and recognized as a leader in DEI, as evidenced by:

• Our diverse Board of Directors.

DE&I starts with our diverse Board of Directors, which has long been led by professionals of color (Wendell Knox, Lead Director 2009-2017;

Deborah Jackson, Lead Director Jan.

2018 – present).

DEI starts with our diverse Board of Directors, which has long been led by professionals of color, including Lead Director Deborah Jackson.

Overall, 45% of our Board of Directors is comprised of women and people of color.

• Our DEI Governance.

Each committee of the Board, including the Compensation and Human Capital Management, Nominating and Governance, Audit and Risk Management Committees, has oversight of aspects of the Company’s DEI strategic priorities.

We also have a DEI Executive Committee led by the CEO, as well as a DEI Steering Committee comprised of executives, leaders of our employee resource groups and outside professionals.

• Our diverse leadership team.

Our Management Committee, which runs the Company, is comprised of 11 executives, about 40% of whom are women or people of color, including our President, Quincy Miller.

In 2021, Sujata Yadav, a woman of color, was promoted to Executive Vice President and Chief Marketing Officer.

It is anticipated that she will join our Management Committee on March 1, 2022 as the first woman of color to serve on the Management Committee.

• Our Company was built by women.

Our Management Committee, which runs the Company, is comprised of 14 executives, about 43% of whom are women or people of color, including our President, Quincy Miller, and Sujata Yadav, Executive Vice President and Chief Marketing Officer and the first woman of color to serve on this leadership team.

• Our history.

Our first customer was a woman, and for over 200 years women have played a key role in our Company’s success.

Women comprise 66% of our total workforce.

• Our recognition as a leader in DE&I.

We’ve been recognized in 2021 as a “Best Place to Work” for LGBTQ+ equality by the Human Rights Campaign for the ninth consecutive year.

• Our record of being and recognition as a DEI leader.

In 2022, we were recognized as a “Best Place to Work” for LGBTQ+ equality by the Human Rights Campaign for the ninth consecutive year.

We were the first company in the country to sign the Gay and Lesbian Alliance Against Defamation’s amicus brief that asked the U.S.

Supreme Court to strike down the Defense of Marriage Act and we expanded our health insurance to offer comprehensive transgender-inclusive coverage, including coverage for treatments and services related to sex affirmation or reassignment.

We also are a founding member of the Massachusetts LGBT Chamber of Commerce and the LGBT Business Network, working to promote opportunities for LGBT-owned businesses, corporations and professionals, and during the COVID-19 pandemic, helping to ensure LGBTQ+-owned businesses have access to loan assistance programs like the Paycheck Protection Program.

Supreme Court to strike down the Defense of Marriage Act.

We offer comprehensive transgender-inclusive healthcare coverage, including coverage for treatments and services related to sex affirmation or reassignment.

We also are a founding member of the Massachusetts LGBT Chamber of Commerce and the LGBT Business Network, working to promote opportunities for LGBT-owned businesses, corporations and professionals.

• Our 11 employee resource groups (“ERGs”).

Each group has an executive sponsor and serves as a source of support and inclusion for colleagues.

The groups also provide guidance to leadership on issues of importance to them, with ERG leaders serving on our DE&I Steering Committee alongside our senior executives, consultants and advisors.

The groups also provide guidance to leadership, with ERG leaders serving on our DEI Steering Committee.

ERG highlights in 2022 include:

◦ Our Asian American Professional Collective facilitated an employee-wide live bystander training to empower employees to appropriately respond to harassment in the wake of public violence against members of the Asian community;

◦ Our Latinos In Action group lead a number of colleague development sessions including roundtables that celebrated diversity inclusion and intersectionality.

◦ Our Women’s Interest Network leaders organized a live session co-lead by our CEO and an expert on mental health to address employee burnout and strategies for maintaining strong mental health;

◦ Our Veterans and Military Families ERG leaders facilitated a virtual event honoring Medal of Honor recipients and their families;

◦ As part of our Black History Month celebration, our Company held a virtual screening of “Grounded, a film presentation” highlighting the relationships of prominent Black Bostonian couples and their hopes for grounding the next generation of Black leaders.

We also hosted a virtual event honoring Medal of Honor recipients and their families with leadership from our Military Veterans and Families Network ERG.

◦ Our disAbility Advocacy Alliance facilitated a discussion with education law experts to help colleagues advocate for educational support and service for family members with special education needs;

◦ Our Latinos In Action group led a number of colleague development sessions, including roundtables that celebrated diversity, inclusion and intersectionality;

◦ Our Parents Network organized a live session led by experts on mental health to address the challenges of parenting children whose mental health has been affected by the pandemic;

◦ As part of our Black History Month celebration, our Black Professional Alliance group held a panel discussion with leaders from King Boston, the Black Economic Council of MA and the New Commonwealth Racial Equity and Social Justice Fund, moderated by President Quincy Miller, to discuss Martin Luther King Jr.’s roots in Boston and the groundbreaking work these organizations perform;

◦ Our Young Professionals Group, in collaboration with Latinos in Action, sponsored a peer mentoring program.

• The ERGs reflect the diversity of our workforce and the communities we serve, and include:

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◦ Parenting Networking Group;

▪ Veterans and Military Families;

◦ Military Veterans and Families Network;

◦ Women’s Interest Network;

◦ Young Professionals Network.

We are proud of our long standing commitment to DE&I but recognize that we have more work to do to improve DE&I at the most senior levels of our organization.

In 2021, the Company formally launched our “Road to Equity” action plan, which reflects greater intentionality in increasing DE&I across a number of areas of the Company, including talent acquisition, retention and development, supplier diversity, products and services, and philanthropic support from the Eastern Bank Foundation.

Our Company has been successful in recruiting diverse talent into our organization:

in 2021, 45% of our new hires in 2021 were racially diverse and 63% were women.

However, while we have extensive gender and ethnic diversity at the junior levels of our Company, we have less diversity at the more senior levels of our Company.

While some of our divisions, such as our Retail Division, are more diverse, other divisions remain predominately comprised of non-diverse colleagues.

In 2021, our senior management set a number of key objectives to help drive an enhanced focus on DE&I, including the development of a dashboard to ensure the Company measures and reports progress on the quantitative DE&I goals related to talent management, supplier diversity and philanthropic spend in underserved communities.

The Company also put in place programs and trainings to further support the Road to Equity.

Eastern Insurance Group, designed and launched a Career Development Rotational Program with a focus on providing an onramp for diverse talent into the insurance sector.

Our Commercial Credit Training Program enhanced its focus on serving as an onramp into Commercial Lending and Credit for women and people of color, who are underrepresented in these divisions at our Company.

Supplier diversity goals were expanded to all divisions in our Company while a team was formed to focus on products and services related to a

development of a WMBE (Women and Minority Owned Businesses) vertical.

Approximately 80 of our most senior executives from across the Company set DE&I goals related to talent acquisition, management and supplier diversity and met twice in 2021 as a large group to learn about best practices in DE&I recruiting, mentoring and professional development.

To help drive diverse recruiting, management partners with external organizations to develop diverse candidate pipelines and supply diverse talent, regularly reports on diverse hiring to the Board of Directors, and has a talent acquisition team led by and comprised of diverse colleagues.

In 2021, we enhanced our focus on diverse candidate slates and, as a result, achieved record diversity hiring (racial diversity).

Year-over-year, we increased racial diversity in our total workforce by two percentage points.

Our hiring at the Senior Vice President level included 17% diverse hires and 50% women hires and our hiring at the Vice President level included 33% diverse hires and 54% women hires.

Diversity at these senior levels will continue to be an area of enhanced focus.

To further enhance our culture and commitment to DE&I, the Company provides DE&I training across all divisions with the assistance and leadership of experienced external DE&I professionals.

This training includes mandatory training on the Company’s DE&I strategy for all employees;

training for our middle managers on understanding social identity;

and training for senior management on effecting organizational change aligned with the Road to Equity.

The Company also formed a DE&I steering committee chaired by the Chief Executive Officer, whose members include executives, leaders of our ERGs, and external advisors who are leaders on and experts in DE&I issues.

In 2021, the DE&I steering committee helped develop and execute on key DE&I objectives, such as the enhanced DE&I training and programs.

The Board of Directors also engaged an independent DE&I consultant, who reports directly to the Lead Director, serves on our DE&I steering committee and provides guidance and best practices to senior management and the Board to further drive our success on the Road to Equity.

The tables below depict the Company’s demographics as of December 31, 2021 for our Board of Directors, our Management Committee (which consists of our senior most leaders at the Company), our total workforce, and new hires in 2021 who remained employed as of December 31, 2021:

We are proud of our longstanding commitment to DEI.

Yet, we also recognize that we have more work to do to improve DEI, including at senior leadership levels.

In 2022, we continued to implement our “Road to Equity” action plan that was launched in 2021, which reflects efforts to increase DEI across the Company, including talent acquisition, retention and development, supplier diversity, products and services, and philanthropic support from the Eastern Bank Foundation.

In 2022, our senior management set key objectives to help drive an enhanced focus on DEI, including measuring and reporting progress on quantitative DEI goals related to human capital management, supplier diversity and philanthropic spend in underserved communities.

We also continued to invest in programs and trainings to further support the Road to Equity.

Eastern Insurance Group launched a Career Development Rotational Program providing diverse talent opportunities in the insurance sector.

Our Commercial Credit Training Program enhanced its focus on serving as an on-ramp into Commercial Lending and Credit for women and people of color, who are underrepresented in these divisions at our Company.

Supplier diversity goals were tracked across all divisions in our Company while we formed a team to focus on business products and services related to historically underserved business owners.

Management partners with external organizations to develop diverse candidate pipelines, regularly reports on diverse hiring to the Board of Directors and the Compensation and Human Capital Management Committee, and has a talent acquisition team comprised of diverse colleagues.

In 2022, despite a competitive labor market, we achieved record racial diversity hiring, with 47% of new hires racially diverse.

Also in 2022, 60% of new hires were women.

Our hiring at the Vice President and above level continues to be a focus area.

In 2022, 25% of our hires at those senior levels were diverse, and 40% were women.

We provide DEI training across all divisions with the assistance and leadership of experienced external DEI professionals.

This has included mandatory training on our DEI strategy for all employees;

a live facilitated discussion called Understanding Racism offered to all employees;

and a pilot focused on understanding and preventing microaggressions.

The tables below depict our demographics as of December 31, 2022 for our Board of Directors, our Management Committee (which consists of our most senior executive leaders), our total workforce, and new hires in 2022:

2022 Board of Directors

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3 8 — 11 1 1 1 — — 8 11

27.3% 72.7% —% 100.0% 9.1% 9.1% 9.1% —% —% 72.7% 100.0%

2022 Management Committee

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5 9 — 14 1 1 — — — 12 14

35.7% 64.3% —% 100.0% 7.1% 7.1% —% —% —% 85.8% 100.0%

2022 Total Workforce

Gender Race & Ethnicity

Female Male Not Disclosed Total Asian Black Latinx Not Disclosed Other POC White Total

Female Male Non-binary Total Asian Black Latinx Not Disclosed Other POC White Total

1,421 722 3 2,146 182 142 256 44 38 1,484 2,146

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Pay & Benefits

The Company’s compensation and benefits programs are designed to attract, motivate and retain the talent we need to achieve short-term and long-term goals through the implementation of sound compensation principles and policies.

For compensation, this includes paying for performance, ensuring equity, fairness and nondiscrimination in pay as well as compensation risk mitigation.

To help ensure pay equity, the Company conducts pay equity analyses on an annual basis with the assistance of external advisors.

We also seek fairness in total compensation by utilizing market data, conducting internal compensation comparison analyses and engaging expert independent compensation and benefits consulting firms to help us benchmark against industry peers.

We believe that we offer an attractive and competitive benefits program that focuses on overall wellness in all areas of life, with a variety of options that allow employees to choose the plans that best meet their needs.

Our compensation and benefits programs are designed to attract, motivate and retain talent to achieve short-term and long-term goals through the implementation of sound compensation principles and policies.

For compensation, this includes paying for performance, and ensuring equity, fairness and nondiscrimination in pay as well as compensation risk mitigation.

To help ensure pay equity, we conduct pay equity analyses on an annual basis with the assistance of external advisors.

We believe we offer an attractive and competitive benefits program that focuses on overall wellness in all areas of life, with a variety of options to enhance employee choice.

Our benefits include:

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and wellness programming.

In 2021, we offered our employees three separate retirement benefits:

Among other benefits, in 2022, we offered our employees three separate retirement benefits:

a defined pension benefit plan, a 401(k) contribution, and an employee stock ownership plan (“ESOP”) through which Company stock is allocated to all eligible employees (based on age and hours worked).

COVID-19 Response

As the Company navigated the challenges of the COVID-19 pandemic in 2021, we were guided by our “people first” philosophy that we believe has served our Company, colleagues and communities well.

Our cross-functional pandemic response team continued to lead pandemic response efforts across the Company and prioritized the need to keep our essential, onsite, customer facing colleagues as safe as possible while continuing to serve our customers’ needs.

In 2021, our pandemic response team worked closely with executive management to mitigate risks of COVID-19 through a continuous vaccination education and support campaign.

• staffed a dedicated COVID-19 hotline to help colleagues report exposures and positive cases, contact trace and obtain support around illness and return to work;

• implemented a vaccination tracker to help measure COVID-19 risk within our employee population and required uses of a travel tracker before vaccinations became available to monitor travel and help ensure compliance with travel restrictions and quarantine requirements;

As we continued to navigate the challenges of the COVID-19 pandemic through 2022, we continued to be guided by our “people first” philosophy that we believe has served our Company, colleagues, communities and shareholders well.

Our cross-functional pandemic response team continued to prioritize keeping our essential, onsite, customer facing colleagues as safe as possible while continuing to serve our customers’ needs.

• continued to staff a dedicated COVID-19 hotline to help colleagues report positive cases and obtain support around illness and return to work;

• increased colleague communications around COVID-19 protocols to ensure employees understood best practices around COVID-19 risk mitigation;

vaccinations, boosters and general CDC guidance, which the Company continued to use as the basis for its protocol;

• continued to pay employees who could not work due to COVID-19-related illness, to get vaccinated and for family care needs without requiring employees to use their sick or personal time and offered additional time off to cover time quarantining due to COVID-19 exposure;

• instituted, for the second consecutive year, a carryover of 2021 unused vacation time to offer more flexibility to colleagues to take time off in 2022;

• procured rapid antigen tests for employees who did not have ready access to them during the winter holidays as the Omicron variant created enhanced risks of illness;

• held three vaccination and booster clinics for employees, and in some instances, their family members, both during work and after hours to accommodate our onsite workers.

vaccinations, boosters and general CDC guidance;

• continued to pay employees who could not work due to COVID-19-related illness and for time needed to get vaccinated without requiring employees to use their sick or personal time;

• instituted, for the second consecutive year, increased carryover of 2021 unused vacation time to offer more flexibility to colleagues to take time off in 2022;

• provided rapid antigen tests to employees who work on-site in our branches and lockbox location.

Employee Well Being

Given our 2020 IPO, 2021 acquisition of Century and other large strategic matters, we have asked our employees for a tremendous commitment to their jobs over the last two years.

In addition, more than half of our colleagues have continued to work remotely and have less ability to separate work from home and are thus prone to work more than ever before.

During this time period, we have also experienced turnover in some divisions, which has compounded employee stress related to COVID-19-related staffing challenges in those same divisions.

As a result of these collective challenges, the Company became focused on burnout amongst our employees in 2021.

To better support our employees, the Company enhanced its wellness offerings and focused more on mental health support.

We increased minimum vacation time from two to three weeks, which provided more time off for over 400 employees, many of whom work in customer-facing or on-site positions that have historically had high levels of burnout.

After closing the Century acquisition and to provide employees with additional downtime, the Company received regulatory approval to close on the day after Thanksgiving for a first-ever Company-wide “day of rest” and any employees who had to work that day received a floating holiday.

Management believes that its recognition of the ongoing need to address employee burnout was well received by our colleagues and demonstrated our Company’s commitment to employee well-being.

As mentioned above, our CEO also co-lead with a mental health expert a

session with our Women’s Interest Network on preventing burnout and best practices for mental health well-being.

The session was held in the fourth quarter, was widely attended by employees and we believe set the groundwork for management’s continued focus on addressing employee burnout in 2022.

Finally, in 2022, to further support our employees, we created a fund that provides grants to eligible employees experiencing an unexpected financial hardship.

Given our 2020 IPO, 2021 acquisition of Century, the adjustment to COVID-19, and other large strategic matters, we have asked our employees for a tremendous commitment to their jobs over the last three years.

In addition, more than half of our colleagues have continued to work remotely and may have less ability to separate work from home.

We have also experienced higher than usual turnover in a competitive labor market.

To help address these challenges, we focused on burnout amongst our employees in 2022.

We enhanced our wellness offerings, including mental health support.

We facilitated “healing circles” led by mental health experts to help colleagues process racial traumas and incidents of hate and gun violence.

To assist with talent attraction and retention, and to further support employee well-being, we increased minimum vacation time from two to three weeks, which provided more time off for about 400 employees (33% of our non-exempt population), many of whom work in customer-facing or on-site positions.

To provide employees with additional downtime, we closed on the day after Thanksgiving for a second annual Company-wide “day of rest”.

We offered live trainings on remote work best practices to help hybrid employees better balance work with life.

In 2022, we also continued to support a fund that provides cash grants to eligible employees experiencing an unexpected financial hardship.

Employee Engagement

We are dedicated to engaging our workforce to better understand how we can improve our culture and workplace In 2021, we continued to virtually host a significant number of Town Hall meetings, led by the CEO.

At each meeting, time was reserved for employees to ask questions and engage directly with the CEO and Management Committee members.

We held 12 Town Halls in 2021, which represented a significant increase from the numbers held in pre-COVID-19 years.

We are dedicated to engaging our workforce to better understand how we can improve our culture and workplace.

In 2022, we virtually hosted eight Town Hall meetings, led by the CEO.

At each meeting, employees were able to ask questions anonymously and engage directly with the CEO and Management Committee members.

We also engage our employees through more formal measures.

Annually, we engage an independent third party consultant to conduct an employee engagement survey, and based on employee feedback, management identifies areas to address.

In 2021, we added questions to the survey about the Company’s COVID-19 response and DE&I.

Ninety-one percent of employees responded to the survey, with 90% of respondents reporting a favorable view of the Company’s response to COVID-19, 89% of respondents reporting they are proud to work for our Company and 87% reporting that the Company has created an environment where people with diverse backgrounds can succeed.

We revamped our onboarding program to ensure the approximately 252 colleagues joining us from Century could understand our Company, culture and their role within it by hosting a virtual welcome event hosted by our CEO.

We also assigned “buddy” mentors to new colleagues and offered enhanced people management training for managers of the new colleagues.

We continued to utilize our onboarding and offboarding engagement survey, which is administered through the same third party consultant that manages the annual engagement survey.

For onboarding, we engage with newly hired employees at the 30 day and 90 day mark to understand how they are integrating into the Company and how the Company can improve the onboarding process including new employee training, among other topics.

For offboarding, we survey colleagues to better understand why they left the Company, and ask specific questions to capture if the colleague chose to leave for reasons related to ethics, our culture, a lack of DE&I and other reasons.

We believe that this continued emphasis on employee surveying will provide us with data to improve the overall employee experience at our Company, thereby deepening engagement and retention.

In 2021, we supported our employees’ commitment to engage with the communities we serve through socially distanced and remote volunteer opportunities, offering eight hours of paid time off to volunteer.

We were named for the fifth consecutive year among the top 10 most charitable organizations in Massachusetts by the Boston Business Journal.

Our Company experienced an increase in employee turnover in the last two quarters of 2021, which management believes reflects pent up turnover, based on low turnover numbers for the prior 12 months (when COVID-19 vaccinations were not yet widely available), a competitive labor market and retirements.

However, overall Company turnover for 2021 was slightly less than in 2019, which was the last full year in which the labor market was unaffected by COVID-19.

To help alleviate the staffing stresses caused by this turnover, the Company engaged third parties to support talent acquisition in higher turnover divisions, which resulted in a reduction year over year in the time required to fill open positions, even despite the increased churn in some areas of the employee base.

We also believe that increased the number of weeks of vacation we offer (from two to three) may help us attract talent in this competitive environment.

Finally, the Company’s succession planning, particularly at Eastern Insurance Group and in our Commercial Lending Group, has enabled the Company to transition into its next generation of leaders, following the retirement of senior colleagues in 2021 (including the CEO and President of Eastern Insurance Group and the Vice Chair and Chief Commercial Banking Officer of the Bank).

In 2022, 92% of employees responded to the survey, with an overall engagement score of 86%.

Notably, 87% of respondents reported that they are proud to work for our Company and 87% reported that the Company has created an environment where people with diverse backgrounds can succeed.

We enhanced our onboarding program to ensure that new colleagues more quickly acclimate into our Company, culture and their role.

Our CEO holds small group sessions with new employees to strengthen their ties to leadership and the Company.

We use onboarding and offboarding engagement surveys.

For onboarding, we engage with newly hired employees at the 30 day and 90 day marks to understand how they are integrating into the Company and how the Company can improve the onboarding process.

For offboarding, we survey colleagues to better understand why they left the Company.

We believe these efforts will provide data that can help us improve the overall employee experience at our Company and deepen engagement and retention.

In 2022, we continued supporting our employees’ commitment to engage with the communities by offering paid time off to volunteer.

We were named for the sixth consecutive year among the top 10 most charitable organizations in Massachusetts by the Boston Business Journal.

Our Company experienced an increase in employee turnover in 2022, which management believes reflects the competitive labor market within our geographic footprint.

To help alleviate the staffing stresses caused by this turnover, we engaged third parties to support talent acquisition in higher turnover divisions.

We also increased the number of weeks of vacation we offer (from two weeks to three) to help attract more talent in this competitive environment and retain the talent we have.

We also focused on development plans for high performing talent, with an emphasis on retention risk mitigation.

Finally, our succession planning, particularly at Eastern Insurance Group and in our Commercial Lending Group, has enabled us to transition our next generation of leaders, with five new members joining the Management Committee in March of 2022.

Intellectual Property

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What changed 10-K

Item 1. Business