What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-24 compared with 2022-02-25 · 1023 added, 803 removed, 2096 unchanged (47% of the section changed)

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We have audited the accompanying consolidated balance sheets of Eastern Bankshares, Inc.

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 24, 2023 expressed an unqualified opinion thereon.

Adoption of ASU No.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for credit losses in 2022 due to the adoption of Accounting Standards Update (ASU) No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , and the related amendments.

See below for discussion of our related critical audit matter.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.

Allowance for loan losses

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As of December 31, 2022, management established an allowance for loan losses of $142.2 million.

The allowance for loan losses represents management’s estimate of incurred losses inherent in the loan portfolio at the balance sheet date.

As described in Note 2 and Note 5 to the consolidated financial statements, the Company uses both a formula-based approach and an analysis of certain individual loans to develop its allowance for loan losses estimate.

As part of developing the formula-based reserve, management considers both the Company’s historical loss experience and qualitative factors to determine the allowance for loan losses.

The Company’s qualitative factor methodology considers factors that may impact the loss experience during the incurred loss horizon period, including internal infrastructure factors, external macroeconomic factors, internal credit quality factors and external industry data, all customized to loan pools that include loans with similar characteristics.

Auditing the allowance for loan losses was challenging due to the subjectivity involved in assessing the judgment management applied in determining the adjustments to the formula-based reserve attributable to the qualitative risk factors for the Company’s commercial real estate, commercial and industrial, and residential real estate loan portfolios.

Management’s identification and measurement of the qualitative adjustments was highly judgmental and could have a significant effect on the allowance for loan losses.

How we addressed the matter in our audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the allowance for loan losses process, which included, among others, controls over management’s review of the adjustments to the formula-based reserve attributable to the qualitative risk factors identified.

We also evaluated other key allowance for loan losses controls including the review and approval of calculations used to estimate the allowance for loan losses.

We assessed management’s determination of qualitative risk factors for the Company’s commercial real estate, commercial and industrial, and residential real estate loan portfolios and tested these factors by comparing conclusions reached to independently-obtained third-party data or internally available Company-specific data.

We evaluated the measurement of the qualitative adjustments by performing procedures including, among others, recalculating management’s application of qualitative risk factors to the allowance for loan losses calculation in a manner consistent with the Company’s approved allowance for loan losses methodology.

Certain qualitative risk factors including management’s application of external macroeconomic factors and external industry data were more subjective in nature given an increased reliance on management judgement.

For these qualitative risk factors, we evaluated the identification and measurement of the qualitative adjustments, including the basis for concluding an adjustment was warranted when considering historical loss experience utilized in the formula-based reserve.

Additionally, we considered the existence of new or contrary evidence in evaluating the qualitative risk factors based on macroeconomic or external industry data.

Fair value of loans recognized as part of the acquisition of Century Bancorp

Description of the matter In 2021, the Company completed its acquisition of Century Bancorp (Century) for total consideration of $642 million, which was accounted for as a business combination.

As disclosed in Note 3 to the consolidated financial statements, the Company recognized acquired loans of $2.9 billion, net of a fair value adjustment of $13.5 million.

Auditing the Company's estimate of the fair value adjustment to acquired loans was complex due to the sensitivity of the fair values to underlying assumptions determined by management in estimating the fair values.

With the assistance of an external specialist, the Company utilized a discounted cash flow model to measure the fair values of acquired loans.

The most significant judgmental assumptions in measuring the fair values of the acquired loans included the estimates of future credit losses and prepayments along with the application of a market-based discount rate applied to those cash flows.

These assumptions were primarily based on market data and the Company’s industry experience.

These assumptions are forward looking and could be affected by future economic and market conditions.

How we addressed the matter in our audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for business combinations.

Our tests included controls supporting the recognition and measurement of consideration transferred along with acquired assets and liabilities.

We also tested management’s review controls over the assumptions used in the valuation models for acquired loans.

To test the estimated fair values of acquired loans, we involved our valuation specialists to assist with our evaluation of the methodology used by the Company, significant assumptions included in the fair value estimates, and assessment of the competence and objectivity of management’s external specialist.

We assessed the significant assumptions included in the fair value estimates by performing procedures over the estimates of future credit losses and prepayments and the market-based discount rate for the acquired loans.

In our assessment, we considered economic information and historical Company-specific information.

We tested, on a sample basis, both the market data and the internally-developed assumptions used by management to calculate the fair values and, on a sample basis, performed independent comparative calculations of the fair value adjustment to the acquired loans.

As described in Note 2 and Note 5 to the consolidated financial statements, the Company uses its allowance methodology to systematically estimate the amount of expected lifetime losses in the loan portfolio.

Expected lifetime losses are estimated on a collective basis for loans sharing similar risk characteristics and are determined using a quantitative model based on management’s determination of a loan’s probability of default, loss given default and exposure at default, which are derived from the Company’s historical loss experience, industry loss experience and other factors, adjusted for economic forecasts.

The quantitative model is combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output.

Auditing the Company’s allowance for loan losses was complex due to the quantitative modeling used and involved subjective judgment to evaluate management’s assessment of qualitative factors in determining adjustments to the quantitative model output.

How we addressed the matter in our audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s allowance for loan losses process, which included, among others, controls over the appropriateness of the methodology, the development, operation and monitoring of the quantitative model, management’s review of the qualitative adjustments to the quantitative model output and overall model result.

With the assistance of EY Specialists, we tested management’s quantitative model including evaluating the model validation procedures performed over conceptual soundness of model methodology, assessing model governance policies and procedures, and assessing the conceptual soundness of the Company’s qualitative factor framework utilized in determining the overall allowance for loan losses.

To test the qualitative risk factors, among other procedures, we assessed management’s methodology and considered whether relevant risks were reflected in the models and whether adjustments to the model output were appropriate.

We tested the completeness, accuracy and relevance of the underlying data used to estimate the qualitative adjustments.

We evaluated whether qualitative adjustments were reasonable based on changes in economic conditions, the loan portfolio, management’s policies and procedures, external legal and regulatory factors, and lending personnel.

We tested whether management’s final qualitative factor weighting was consistent with the external and internal evidence obtained.

Further, we performed an independent search for the existence of new or contrary information relating to risks impacting the qualitative adjustments to validate that management’s considerations were appropriate.

Additionally, we performed an analysis examining quarter-over-quarter changes to the Company’s qualitative factor adjustments to test reasonableness and timing of changes to the Company’s qualitative factors.

/s/ Ernst & Young LLP

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As of December 31,

(In thousands)

(In thousands, except per share data) 2022 2021

Cash and due from banks $ 106,040 $ 144,634

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Cash and cash equivalents 169,505 1,231,792

Available for sale securities 8,511,224 3,183,861

Available for sale (amortized cost $ 7,825,435 and $ 8,587,179 , respectively)

6,690,778 8,511,224

Held to maturity (fair value $ 423,226 and $ — , respectively)

Total securities 7,167,425 8,511,224

Loans held for sale 4,543 1,206

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Allowance for loan losses ( 142,211 ) ( 97,787 )

unamortized premiums, net of unearned discounts and deferred fees ( 26,442 ) ( 23,536 )

Unamortized premiums, net of unearned discounts and deferred fees, net of costs ( 13,003 ) ( 26,442 )

Net loans 13,420,317 12,157,281

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Borrowed funds:

Federal Home Loan Bank advances 14,020 14,624

Short-term Federal Home Loan Bank advances 691,297 17

Escrow deposits of borrowers 22,314 20,258

Interest rate swap collateral funds 14,430 —

Long-term Federal Home Loan Bank advances 12,787 14,003

Total borrowed funds 740,828 34,278

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Total liabilities 20,175,068 20,105,776

Commitments and contingencies (see footnote 17) — —

Commitments and contingencies (see Note 18) — —

Shareholders’ equity

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Net interest income 568,054 429,827 401,251

(Release of) provision for loan losses ( 9,686 ) 38,800 6,300

Net interest income after (release of) provision for loan losses 439,513 362,451 404,964

Provision for (release of) allowance for loan losses 17,925 ( 9,686 ) 38,800

Net interest income after provision for (release of) loan losses 550,129 439,513 362,451

Noninterest income:

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Interest rate swap income (losses) 6,009 5,634 ( 1,381 )

Income from investments held in rabbi trusts 10,217 10,337 9,866

(Losses) gains on trading securities, net — ( 4 ) 1,297

(Losses) income from investments held in rabbi trusts ( 10,762 ) 10,217 10,337

Losses on trading securities, net — — ( 4 )

Gains on sales of mortgage loans held for sale, net 248 3,605 7,066

Gains on sales of securities available for sale, net 1,166 288 2,016

(Losses) gains on sales of securities available for sale, net ( 3,157 ) 1,166 288

Other 17,962 16,852 14,633

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Marketing 9,540 8,741 8,879

Operational losses 7,786 2,493 3,215

Loan expenses 6,384 9,114 9,184

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Total other comprehensive (loss) income ( 866,496 ) ( 110,930 ) 98,081

Total comprehensive income $ 43,735 $ 120,819 $ 167,012

Total comprehensive (loss) income $ ( 666,737 ) $ 43,735 $ 120,819

The accompanying notes are an integral part of these Consolidated Financial Statements.

EASTERN BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Shares of Common Stock Outstanding Common Stock Additional Paid in Capital Retained

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Balance at December 31, 2019 — $ — $ — $ 1,644,000 $ ( 43,847 ) $ — $ 1,600,153

Net income — — — 135,098 — — 135,098

Other comprehensive income, net of tax — — — — 31,914 — 31,914

Balance at December 31, 2019 — — — 1,644,000 ( 43,847 ) — 1,600,153

Cumulative effect accounting adjustment (1)

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Balance at December 31, 2021 186,305,332 1,863 1,835,241 1,768,653 ( 56,696 ) ( 142,709 ) 3,406,352

Cumulative effect accounting adjustment (2)

— — — ( 20,098 ) — — ( 20,098 )

Dividends to common shareholders — — — ( 66,539 ) — — ( 66,539 )

Repurchased common stock ( 10,112,272 ) ( 101 ) ( 201,517 ) — — — ( 201,618 )

Issuance of restricted stock awards 31,559 1 ( 1 ) — — — —

Unvested restricted stock awards forfeited and subsequently cancelled ( 52,546 ) ( 1 ) 1 —

Share-based compensation — — 10,507 — — — 10,507

Net income — — — 199,759 — — 199,759

Other comprehensive income, net of tax — — — — ( 866,496 ) — ( 866,496 )

ESOP shares committed to be released — — 4,910 — — 5,013 9,923

Balance at December 31, 2022 176,172,073 $ 1,762 $ 1,649,141 $ 1,881,775 $ ( 923,192 ) $ ( 137,696 ) $ 2,471,790

(1) Represents cumulative impact on retained earnings pursuant to the Company’s adoption of Accounting Standards Update 2016-02 Leases .

The transition adjustment to the opening balance of retained earnings on January 1, 2020 amounted to $ 1.1 million, net of tax, related to an incremental accrued rent adjustment calculated as a result of electing the hindsight practical expedient.

(2) Represents gross transition adjustment amount of $ 28.0 million, net of taxes of $ 7.9 million, to reflect the cumulative impact on retained earnings pursuant to the Company’s adoption of Accounting Standards Update 2016-13 Financial Instruments–Credit Losses on Financial Instruments and relevant amendments.

Refer to Note 5, “Loans and Allowance for Credit Losses” within the Notes to the Consolidated Financial Statements included in this Item 8 in this Annual Report on Form 10-K for additional discussion.

The accompanying notes are an integral part of these Consolidated Financial Statements.

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Adjustments to reconcile net income to net cash provided by operating activities

(Release of) provision for allowance for loan losses ( 9,686 ) 38,800 6,300

Provision for (release of) allowance for loan losses 17,925 ( 9,686 ) 38,800

Depreciation and amortization 14,957 14,479 15,827

(Accretion) amortization of deferred loan fees and premiums, net ( 27,991 ) ( 14,574 ) 5,130

Deferred income tax (benefit) expense ( 5,313 ) ( 20,359 ) 1,376

Accretion of deferred loan fees and premiums, net ( 1,441 ) ( 27,991 ) ( 14,574 )

Deferred income tax expense (benefit) 6,023 ( 5,313 ) ( 20,359 )

Amortization of investment security premiums and discounts, net 18,274 16,713 5,585

Right-of-use asset amortization 13,016 12,703 12,082

Share-based compensation 10,507 — —

Increase in cash surrender value of bank-owned life insurance ( 3,699 ) ( 2,348 ) ( 2,188 )

Gain on life insurance benefits ( 1,813 ) ( 174 ) —

Gain on sale of securities available for sale, net ( 1,166 ) ( 288 ) ( 2,016 )

Loss on bank premises and equipment, net 4,715 73 271

Loss (gain) on life insurance benefits 663 ( 1,813 ) ( 174 )

Loss (gain) on sales of securities available for sale, net 3,157 ( 1,166 ) ( 288 )

(Gain) loss on sales of bank premises and equipment, net ( 1,412 ) 4,715 73

Loss on lease termination/modification, net 593 2,182 —

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Purchases of securities available for sale ( 740,770 ) ( 3,323,893 ) ( 2,111,773 )

Proceeds from maturities and principal paydowns of securities held to maturity 17,399 — —

Purchases of securities held to maturity ( 493,678 ) — —

Proceeds from sale of Federal Home Loan Bank stock 63,715 6,692 749

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Proceeds from life insurance policies 20,446 — 1,347

Net decrease (increase) in outstanding loans 380,807 ( 719,041 ) ( 135,666 )

Net (increase) decrease in outstanding loans, excluding loan purchases ( 926,255 ) 380,807 ( 719,041 )

Purchases of loans ( 380,234 ) — —

Acquisitions, net of cash and cash equivalents acquired ( 13,400 ) ( 13,439 ) ( 1,363 )

Purchased banking premises and equipment, net ( 8,627 ) ( 5,728 ) ( 5,144 )

Proceeds from sale of premises held for sale 21,981 — —

Proceeds from sale of bank premises and equipment 17,313 21,981 —

Proceeds from sale of other real estate owned — 125 646

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Financing activities

Net increase in demand, savings, interest checking, and money market investment deposit accounts (2)

1,155,868 2,674,672 297,708

Net decrease in time deposits ( 58,144 ) ( 70,280 ) ( 145,809 )

Net (decrease) increase in demand, savings, interest checking, and money market investment deposit accounts ( 1,751,953 ) 1,155,868 2,674,672

Net increase (decrease) in time deposits 1,098,001 ( 58,144 ) ( 70,280 )

Net increase (decrease) in borrowed funds 706,550 2,580 ( 207,346 )

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Dividends declared and paid to common shareholders ( 65,886 ) ( 51,564 ) —

Net cash provided by financing activities 988,976 4,011,800 51,945

Net cash (used in) provided by financing activities ( 215,574 ) 988,976 4,011,800

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 1,062,287 ) ( 822,278 ) 1,691,468

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Net increase in capital commitments relating to low income housing tax credit projects $ 55,233 $ 28,291 $ 25,816

Net decrease in operating lease right-of-use assets and operating lease liabilities relating to lease remeasurements (see Note 8, “Leases” within the Notes to the Consolidated Financial Statements)

Maturity of acquired securities sold under agreements to repurchase (2)

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Eastern Bankshares, Inc., a Massachusetts corporation (the “Company”), is a bank holding company.

Through its wholly-owned subsidiaries, Eastern Bank (the “Bank”) and Eastern Insurance Group LLC, the Company provides a variety of banking services, trust and investment services, and insurance services, through its full-service bank branches and insurance offices, located primarily in Eastern Massachusetts, southern and coastal New Hampshire and Rhode Island.

Eastern Insurance Group LLC is a wholly-owned subsidiary of the Bank.

Through its wholly-owned subsidiaries, Eastern Bank (the “Bank”) and Eastern Insurance Group LLC (“Eastern Insurance Group”), the Company provides a variety of banking services, trust and investment services, and insurance services, through its full-service bank branches and insurance offices, located primarily in eastern Massachusetts, southern and coastal New Hampshire and Rhode Island.

Eastern Insurance Group is a wholly-owned subsidiary of the Bank.

The activities of the Company are subject to the regulatory supervision of the Board of Governors of the Federal Reserve System (“Federal Reserve”).

The activities of the Bank are subject to the regulatory supervision of the Massachusetts Commissioner of Banks, the Federal Deposit Insurance Corporation (“FDIC”) and the Consumer Financial Protection Bureau (“CFPB”).

The Company and the activities of the Bank are also subject to various Massachusetts and New Hampshire and Rhode Island business and banking regulations.

The Company and the activities of the Bank and its subsidiaries are also subject to various Massachusetts, New Hampshire and Rhode Island business, banking and insurance regulations.

Conversion and Reorganization

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All intercompany accounts and transactions have been eliminated in consolidation.

Certain previously reported amounts have been reclassified to conform to the current year’s presentation.

Certain previously reported amounts have been reclassified to conform to the current year’s presentation which includes:

• Certain loan servicing-related costs have been reclassified from professional services to loan expense;

• Operational losses have been reclassified to other non-interest expense.

Summary of Significant Accounting Policies

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Actual results could differ from those estimates based on changing conditions, including economic conditions and future events.

Material estimates that are particularly susceptible to change relate to the determination of the allowance for loan losses, valuation and fair value measurements, other-than-temporary impairment on investment securities, the liabilities for benefit obligations (particularly pensions), the provision for income taxes and impairment of goodwill and other intangibles.

Material estimates that are particularly susceptible to change relate to the determination of the allowance for loan losses, valuation and fair value measurements, allowance for credit losses on investment securities, the liabilities for benefit obligations (particularly pensions), the provision for income taxes and impairment of goodwill and other intangibles.

Cash and Cash Equivalents

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Cash and cash equivalents includes $ 1.0 million and $ 21.3 million of restricted cash pledged as collateral at December 31, 2022 and 2021, respectively, which for purposes of the Company’s Consolidated Statements of Cash Flows, is included in cash, cash equivalents and restricted cash.

Debt securities are classified at the time of purchase as either “trading,” “available for sale” or “held to maturity.” Equity securities are measured at fair value with changes in the fair value recognized through net income.

Debt securities are classified at the time of purchase as either “trading,” “available for sale” (“AFS”) or “held to maturity” (“HTM”).

Equity securities are measured at fair value with changes in the fair value recognized through net income.

Debt securities that are bought and held principally for the purpose of resale in the near term are classified as trading securities and recorded at fair value, with subsequent changes in fair value included in net income.

Debt securities that the Company has the positive intent and the ability to hold to maturity are classified as held to maturity securities and recorded at amortized cost.

Debt securities not classified as either trading or held to maturity are classified as available for sale and recorded at fair value, with changes in fair value excluded from net income and reported in other comprehensive income, net of related tax.

Debt securities that the Company has the positive intent and the ability to hold to maturity are classified as HTM securities and recorded at amortized cost.

Debt securities not classified as either trading or HTM are classified as AFS and recorded at fair value, with changes in fair value excluded from net income and reported in other comprehensive income, net of related tax.

Amortization of premiums and accretion of discounts are computed using the effective interest rate method.

Management evaluates impaired securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.

Consideration is given to the length of time and the extent to which the fair value has been less than cost, current market conditions, the financial condition and near-term prospects of the issuer, performance of collateral underlying the securities, the ratings of the individual securities, the interest rate environment, the Company’s intent to sell the security or whether it is more likely than not that the Company will be required to sell the debt security before its anticipated recovery, as well as other qualitative factors.

If a decline in fair value below the amortized cost basis of an investment is judged to be other than temporary, the investment is written down to fair value.

The portion of the impairment related to credit losses is included in net income, and the portion of the impairment related to other factors is included in other comprehensive income.

ASU 2016-13 made targeted changes to ASC 320 to eliminate the concept of “other than temporary” from the impairment loss estimation model for AFS securities.

A summary of the changes made by the Company to the existing impairment model (previously referred to as the “OTTI” model) as a result of adoption of ASU 2016-13 is as follows:

• The use of an allowance approach, rather than a permanent write-down of a security’s cost basis upon determination of an impairment loss.

• The amount of the allowance is limited to the amount at which the security’s fair value is less than its amortized cost basis.

• The Company may not consider the length of time a security’s fair value has been less than amortized cost.

• The Company may not consider recoveries in fair value after the balance sheet date when assessing whether a credit loss exists.

The Company’s AFS securities are carried at fair value.

For AFS securities in an unrealized loss position, management will first evaluate whether there is intent to sell a security, or if it is more likely than not that the Company will be required to sell a security prior to anticipated recovery of its amortized cost basis.

If either of these criteria are met, the Company will record a write-down of the security’s amortized cost basis to fair value through income.

For those AFS securities which do not meet the intent or requirement to sell criteria, management will evaluate whether the decline in fair value is a result of credit related matters or other factors.

In performing this assessment, management considers the creditworthiness of the issuer including whether the security is guaranteed by the U.S.

federal government or other government agency, the extent to which fair value is less than amortized cost, and changes in credit rating during the period, among other factors.

If this assessment indicates the existence of credit losses, an allowance for credit losses will be established, as determined by a discounted cash flow analysis.

To the extent the estimated cash flows do not support the amortized cost, the deficiency is considered to be due to credit loss and is recognized in earnings.

Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense.

Losses are charged against the allowance when the security is determined to be uncollectible, or when either of the aforementioned criteria surrounding intent or requirement to sell have been met.

On January 1, 2022, the date on which the Company adopted ASU 2016-13, no allowance for credit losses was recorded for AFS securities.

Gains and losses on sales of securities are recognized at the time of sale on the specific-identification basis.

Loans are reported at their principal amount outstanding, net of deferred loan fees and any unearned discount or unamortized premium for acquired loans.

Prior to the adoption of ASU 2016-13, management evaluated impaired securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market concerns warranted such evaluation.

Consideration was given to the length of time and the extent to which the fair value was less than cost, current market conditions, the financial condition and near-term prospects of the issuer, performance of collateral underlying the securities, the ratings of the individual securities, the interest rate environment, the Company’s intent to sell the security or whether it was more likely than not that the Company would be required to sell the debt security before its anticipated recovery, as well as other qualitative factors.

If a decline in fair value below the amortized cost basis of an investment was judged to be other than temporary, the investment was written down to fair value.

The portion of the impairment related to credit losses was included in net income, and the portion of the impairment related to other factors was included in other comprehensive income.

Refer to Note 4, “Securities” for additional information regarding the measurement of impairment losses on AFS securities.

Allowance for Credit Losses - Held to Maturity Securities

The Company measures expected credit losses on HTM securities on a collective basis by major security type which, as of December 31, 2022, included government-sponsored residential and commercial mortgage-backed securities.

Securities in the Company’s HTM portfolio are guaranteed by either the U.S.

federal government or other government sponsored agencies with a long history of no credit losses.

As a result, management has determined that these securities have a zero loss expectation and therefore does not record an allowance for credit losses on these securities.

The Company held no securities classified as HTM at December 31, 2021.

Refer to Note 4, “Securities” for additional information regarding the measurement of credit losses on HTM securities.

Loans are reported at their principal amount outstanding, net of deferred loan fees and costs and any unearned discount or unamortized premium for acquired loans.

Unearned discount and unamortized premium are accreted and amortized, respectively, to interest and dividend income on a basis that results in level rates of return over the terms of the loans.

2 unchanged sentences

Interest income on loans is accrued based upon the daily principal amount outstanding except for loans on non-accrual status.

For acquired loans with no signs of credit deterioration at acquisition, interest income is also accrued based upon the daily principal amount outstanding, adjusted further by the accretion of any discount or amortization of any premium associated with the loan.

For acquired loans, interest income is also accrued based upon the daily principal amount outstanding and is adjusted further by the accretion of any discount or amortization of any premium associated with the loan.

Non-performing Loans (“NPLs”)

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Interest accruals are generally discontinued when management has determined that the borrower may be unable to meet contractual obligations and/or when loans are 90 days or more past due.

Exceptions may be made if management believes that collateral held by the Company is clearly sufficient and in full satisfaction of both principal and interest or the loan is accounted for as a purchased credit-impaired loan.

When a loan is placed on non-accrual, all interest previously accrued but not collected is reversed against current period income and amortization of deferred loan fees is discontinued.

Exceptions may be made if management believes that collateral held by the Company is clearly sufficient and in full satisfaction of both principal and interest.

When a loan is placed on non-accrual, all interest previously accrued but not collected is reversed against current period income and amortization of deferred loan fees and costs is discontinued.

Interest received on non-accrual loans is either applied against principal or reported as income according to management’s judgment as to the collectability of principal.

2 unchanged sentences

Non-accrual loans and loans that are more than 90 days past due but still accruing interest are considered NPLs.

Impaired Loans

Impaired loans consist of all loans for which management has determined it is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan agreements.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.

The Company measures impairment of loans using a discounted cash flow method, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent.

Troubled Debt Restructured (“TDR”) Loans

Loans Individually Assessed for Impairment

ASU 2016-13 indicates that a loan should be measured for impairment individually if that loan shares no similar risk characteristics with other loans.

For the Company, loans which have been identified as those to be individually assessed for

impairment under CECL include loans that do not share similar risk characteristics with other loans in the corresponding reserve segment.

Characteristics of loans meeting this definition may include, but are not limited to:

• Loans previously restructured and determined to be TDR loans;

• Loans on non-accrual status;

• Loans with a risk rating of 12 under the Company’s risk rating scale, substandard (well-defined weakness) or worse.

Collateral-Dependent Loans

Management considers a loan to be collateral-dependent when foreclosure of the underlying collateral is probable.

In addition, in accordance with ASU 2016-13, the Company elected to apply the collateral-dependent practical expedient whereby the Company measures expected credit losses using the fair value of the collateral, less any estimated costs to sell, when foreclosure is not probable but repayment of the loan is expected to be provided substantially through the operation or sale of the collateral, and the borrower is experiencing financial difficulty.

Troubled Debt Restructured Loans

In cases where a borrower experiences financial difficulties and the Company makes certain concessionary modifications to contractual terms, the loan is classified as a TDR.

Modifications may include adjustments to interest rates, extensions of maturity, consumer loans where the borrower’s obligations have been effectively discharged through Chapter 7 bankruptcy and the borrower has not reaffirmed the debt to the Company, and other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral.

All TDR loans are considered impaired and therefore are subject to a specific review for impairment loss.

Prior to the Company’s adoption of ASU 2016-13, all TDR loans were subject to a specific review for impairment loss each period beginning in the period in which the modification was executed.

Subsequent to the adoption of ASU 2016-13, management identifies loans as TDR loans when it has a reasonable expectation that it will execute a TDR modification with a borrower.

In addition, subsequent to adoption of ASU 2016-13, management estimates expected credit losses on a collective basis if a group of TDR loans share similar risk characteristics.

If a TDR loan’s risk characteristics are not similar to those of any of the Company’s other TDR loans, expected credit losses on the TDR loan are measured individually.

The impairment analysis discounts the present value of the anticipated cash flows by the loan’s contractual rate of interest in effect prior to the loan’s modification or the fair value of collateral if the loan is collateral dependent.

The amount of impairment loss, if any, is recorded as a specific loss allocation to each individual loan in the allowance for loan losses.

Commercial loans (commercial and industrial, commercial real estate, commercial construction, and business banking loans) and residential loans that have been classified as TDRs and which subsequently default are reviewed to determine if the loan should be deemed collateral dependent.

The amount of credit loss, if any, is recorded as a specific loss allocation to each individual loan or as a loss allocation to the pool of loans, for those loans for which credit loss is measured on a collective basis, in the allowance for credit losses.

Any commercial (commercial and industrial, commercial real estate, commercial construction, and business banking loans) or residential loan that has been classified as a TDR and which subsequently defaults is reviewed to determine if the loan should be deemed collateral-dependent.

In such an instance, any shortfall between the value of the collateral and the book value of the loan is determined by measuring the recorded investment in the loan against the fair value of the collateral less costs to sell.

The Company’s policy is to retain any restructured loans, which are on non-accrual status prior to being modified, on non-accrual status for approximately six months subsequent to being modified before the Company considers its return to accrual status.

The Company’s policy is to retain any restructured loan, which is on non-accrual status prior to being modified, on non-accrual status for approximately six months subsequent to being modified before the Company considers its return to accrual status.

If the restructured loan is on accrual status prior to being modified, the Company reviews it to determine if the modified loan should remain on accrual status.

Purchased Credit-impaired (“PCI”) Loans

At acquisition, loans that have evidence of deterioration in credit quality since origination and for which it is probable that all contractually required payments will not be collected are initially recorded at fair value with no valuation allowance.

Such loans are deemed to be PCI loans.

Under the accounting model for PCI loans, the excess of cash flows expected to be collected over the carrying amount of the loans, referred to as the “accretable yield,” is accreted into interest income over the life of the loans using the effective yield method.

Accordingly, PCI loans are not subject to classification as non-accrual in the same manner as originated loans.

Rather, acquired loans are considered to be accruing loans because their interest income relates to the accretable yield recognized and not to contractual interest payments at the loan level.

The difference between contractually required principal and interest payments and the cash flows expected to be collected, referred to as the “non-accretable difference,” includes estimates of both the impact of prepayments and future credit losses expected to be incurred over the life of the loans.

The estimate of cash flows expected to be collected is regularly re-assessed subsequent to acquisition.

These re-assessments involve updates, as necessary, of the key assumptions and estimates used in the initial estimate of fair value.

Generally speaking, expected cash flows are affected by:

• Changes in the expected principal and interest payments over the estimated life – Changes in expected cash flows may be driven by the credit outlook and actions taken with borrowers.

Changes in expected future cash flows resulting from loan modifications are included in the assessment of expected cash flows.

• Change in prepayment assumptions – Prepayments affect the estimated life of the loans, which may change the amount of interest income expected to be collected.

• Change in interest rate indices for variable rate loans – Expected future cash flows are based, as applicable, on the variable rates in effect at the time of the assessment of expected cash flows.

A decrease in expected cash flows in subsequent periods may indicate that the loan is impaired which would require the establishment of an allowance for loan losses by a charge to the provision for loan losses.

An increase in expected cash flows in subsequent periods serves, first, to reduce any previously established allowance for loan losses by the increase in the present value of cash flows expected to be collected, and results in a recalculation of the amount of accretable yield for the loan.

The adjustment of accretable yield due to an increase in expected cash flows is accounted for as a change in estimate.

The additional cash flows expected to be collected are reclassified from the non-accretable difference to the accretable yield, and the amount of periodic accretion is adjusted accordingly over the remaining life of the loans.

A PCI loan may be resolved either through receipt of payment (in full or in part) from the borrower, the sale of the loan to a third party, or foreclosure of the collateral.

For PCI loans accounted for on an individual loan basis and resolved directly with the borrower, any amount received from resolution in excess of the carrying amount of the loan is recognized and reported within interest income.

A refinancing or modification of a PCI loan accounted for individually is assessed to determine whether the modification represents a TDR.

If the loan is considered to be a TDR, it will be included in the total impaired loans reported by the Company.

The loan will continue to recognize interest income based upon the excess of cash flows expected to be collected over the carrying amount of the loan.

Allowance for Loan Losses

The allowance for loan losses is established to provide for probable losses incurred in the Company’s loan portfolio at the balance sheet date and is established through a provision for loan losses charged to net income.

The allowance is based on management’s assessment of many factors, including the risk characteristics of the loan portfolio, current economic conditions, and trends in loan delinquencies and charge-offs.

Charge-offs, net of recoveries, are charged directly to the allowance.

Purchased Credit-Deteriorated Loans

The Company applied the prospective transition approach with respect to PCD assets upon adoption of ASU 2016-13.

Under this approach, loans previously determined to be PCI loans are considered to be PCD loans as of January 1, 2022.

PCD loans are acquired individual loans (or acquired groups of loans with similar risk characteristics) that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by the Company’s assessment.

A PCD loan is recorded at its purchase price plus the allowance for loan losses expected at the time of acquisition, or “gross up” of the amortized cost basis, if any.

Changes in the current estimate of the allowance for loan losses subsequent to acquisition from the estimated allowance previously recorded are recognized in the income statement as provision for credit losses or reversal of provision for credit losses in subsequent periods as they arise.

A purchased loan that does not qualify as a PCD asset is accounted for similar to the Company’s method of accounting for originated assets, whereby an allowance for loan losses is recognized with a corresponding increase to the income statement provision for loan losses.

Evidence that purchased loans, measured at amortized cost, have more-than-insignificant deterioration in credit quality since origination and, therefore meet the PCD definition, may include past-due status, non-accrual status, risk rating and other standard indicators (i.e., TDRs, charge-offs, bankruptcy).

Allowance for Credit Losses

Through December 31, 2021, the allowance for loan losses represented management’s best estimate of incurred probable losses in the Company’s loan portfolios based upon management’s assessment of various factors, including the risk characteristics of its loan portfolio, current economic conditions, and trends in loan delinquencies and charge-offs.

The Company’s methodology for determining the qualitative component through December 31, 2021 included an assessment of factors affecting the determination of incurred losses in the loan portfolio.

Such factors included trends in economic conditions, loan growth, credit underwriting policy exceptions, regulatory and audit findings, and peer comparisons, among others.

Upon adoption of ASU 2016-13, effective January 1, 2022, the Company changed its reserve methodology to estimate expected credit losses over the contractual life of loans and leases.

The allowance for credit losses, or “ACL,” is established to provide for the Company’s current estimate of expected lifetime credit losses on loans measured at amortized cost and unfunded lending commitments at the balance sheet date and is established through a provision for credit losses charged to net income.

Credit losses are charged directly to the ACL.

Subsequent recoveries, if any, are credited to the ACL.

Commercial and residential loans are charged-off in the period in which they are deemed uncollectible.

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In addition to those events, the charge-off determination includes other loan quality indicators, such as collateral position and adequacy or the presence of other repayment sources.

The allowance for loan losses is evaluated on a regular basis by management.

While management uses current information in establishing the allowance for losses, future adjustments to the allowance may be necessary if economic conditions or conditions relative to borrowers differ substantially from the assumptions used in making the evaluation.

Management uses a methodology to systematically estimate the amount of loss incurred in the portfolio.

The Company’s commercial real estate, commercial and industrial, commercial construction and business banking loans are evaluated using a loan rating system, historical losses and other factors which form the basis for estimating incurred losses.

Homogeneous populations of loans, including residential mortgages and consumer loans, are analyzed as groups taking into account delinquency ratios, historical loss experience and charge-offs.

The allowance consists of specific and general components.

The specific component consists of reserves for impaired loans (defined as those where management has determined it is probable it will not collect all payments when due), typically classified as either doubtful or substandard.

For impaired loans, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the loan is lower than the carrying value of the loan.

The general component covers non-impaired, non-classified loans and is based on the Company’s historical loss experience adjusted for qualitative factors, including internal infrastructure factors, external macroeconomic factors, internal portfolio factors and external industry data, all customized to loan pools that include loans with similar characteristics.

The ACL is evaluated on a regular basis by management.

Management uses a methodology to systematically estimate the amount of expected lifetime losses in the portfolio.

Expected lifetime losses are estimated on a collective basis for loans sharing similar risk characteristics and are determined using a quantitative model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output.

For commercial and industrial, commercial real estate, commercial construction and business banking portfolios, the quantitative model uses a loan rating system which is comprised of management’s determination of a financial asset’s probability of default (“PD”), loss given default (“LGD”) and exposure at default (“EAD”), which are derived from both the Company’s and industry historical loss experience and other factors.

For residential real estate, consumer home equity and other consumer portfolios, the Company’s quantitative model uses historical loss experience.

The quantitative model estimates expected credit losses using loan level data over the estimated life of the exposure, considering the effect of prepayments.

Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period, beyond which is a reversion to the Company’s and/or industry historical loss average.

Management has determined that a reasonable and supportable forecast period of eight quarters, and a straight-line reversion period of four quarters, are appropriate forecast periods for purposes of estimating expected credit losses.

As described above, quantitative model results are adjusted for risk factors not considered within the model but which are relevant in estimating the expected credit losses within the loan portfolio.

The qualitative risk factors impacting the expected risk of loss within the loan portfolio include the following:

• Lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices;

• Nature and volume of the portfolio;

• Volume and severity of past-due, non-accrual and classified loans;

• The value of the underlying collateral for loans that are not collateral dependent;

• Concentrations of credit risk;

• Model and data limitations;

• Other external factors, such as changes in legal, regulatory or competitive environments.

Loans that do not share similar risk characteristics with any pools of assets are subject to individual evaluation and are removed from the collectively assessed pools.

For loans that are individually evaluated, the Company uses either a discounted cash flow (“DCF”) approach or, for loans deemed to be collateral dependent or when foreclosure is probable, a fair value of collateral approach.

Accrued interest receivable amounts are excluded from balances of loans held at amortized cost and are included within other assets on the consolidated balance sheet.

Management has elected not to measure an allowance for credit losses on

these amounts as the Company employs a timely write-off policy.

Consistent with the Company's policy for non-accrual loans, accrued interest receivable is typically written off when loans reach 90 days past due and are placed on non-accrual status.

In the ordinary course of business, the Company enters into commitments to extend credit and standby letters of credit.

Such financial instruments are recorded in the financial statements when they become payable.

The credit risk associated with these commitments is evaluated in a manner similar to the allowance for loan losses.

The reserve for unfunded lending commitments is included in other liabilities in the balance sheet.

Additionally, various regulatory agencies, as an integral part of the Company’s examination process, periodically assess the appropriateness of the allowance for loan losses and may require the Company to increase its provision for loan losses or recognize further loan charge-offs, in accordance with GAAP.

The credit risk associated with these commitments is evaluated in a manner similar to the reserving method for loans receivable previously described.

The reserve for unfunded lending commitments is included in other liabilities in the Consolidated Balance Sheets.

Additionally, various regulatory agencies, as an integral part of the Company’s examination process, periodically assess the appropriateness of the allowance for credit losses and may require the Company to increase its allowance for loan losses or recognize further loan charge-offs, in accordance with GAAP.

Refer to Note 5, “Loans and Allowance for Credit Losses” for additional information regarding the Company’s measurement of credit losses on loans receivable and off-balance sheet commitments to lend as of December 31, 2022.

For comparative allowance for loan loss information for which ASC 450, “Contingencies” and ASC 310, “Receivables” were applied (i.e., prior to the Company’s adoption of the CECL methodology previously described), refer to Note 6, “Loans and Allowance for Loan Losses.”

Mortgage Banking Activities

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OREO consists of properties and other assets acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure.

OREO is recorded in other assets in the consolidated balance sheets, on an individual asset basis at the fair value less estimated costs to sell on the date we obtain control.

OREO is recorded in other assets in the Consolidated Balance Sheets, on an individual asset basis at the fair value less estimated costs to sell on the date control is obtained.

Any write-downs to the cost of the related asset upon transfer to OREO to reflect the asset at fair value less estimated costs to sell is recorded through the allowance for loan losses.

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The Company evaluates goodwill for impairment at least annually, during the third quarter, or more often if warranted, using a quantitative impairment approach.

The quantitative impairment test compares the book value to the fair value of each reporting unit.

The quantitative impairment test compares the book value to the fair

value of each reporting unit.

If the book value exceeds the fair value, an impairment is charged to net income.

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The Company considers factors including, but not limited to, changes in legal factors and business climate that could affect the value of the intangible asset.

Any impairment losses are charged to net

Any impairment losses are charged to net income.

The Company amortizes other intangible assets over their respective estimated useful lives.

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The contribution is based on an actuarial method intended to provide not only for benefits attributable to service to date, but also for those expected to be earned in the future.

The Company also has an unfunded Defined Benefit Supplemental Executive Retirement Plan (“DB SERP”) that provides certain retired and currently employed officers with defined pension benefits in excess of qualified plan limits imposed by U.S.

The Company also has an unfunded Defined Benefit Supplemental Executive Retirement Plan (“DB SERP”) that provides certain retired officers with defined pension benefits in excess of qualified plan limits imposed by U.S.

federal tax law.

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Periodic pension expense (or income) includes service costs, interest costs based on the assumed discount rate, the expected return on plan assets, if applicable, based on the market value of assets and amortization of actuarial gains and losses.

Net period benefit cost excluding service cost is included within other noninterest expense in the consolidated statements of income.

Net periodic benefit cost excluding service cost is included within other noninterest expense in the consolidated statements of income.

Service cost for all plans except the ODRCP is included in salaries and employee benefits in the consolidated statements of income.

Service cost for the ODRCP is included in professional services in the consolidated statements of income.

The amortization of actuarial gains and losses for the DB SERP and ODRCP is determined using the 10% corridor minimum amortization approach and is taken over the average remaining future service of the plan participants for the ODRCP, and over the average remaining future life expectancy of plan participants for the DB SERP.

The amortization of actuarial gains and losses for the DB SERP and ODRCP is

determined using the 10% corridor minimum amortization approach and is taken over the average remaining future service of the plan participants for the ODRCP, and over the average remaining future life expectancy of plan participants for the DB SERP.

The amortization of actuarial gains and losses for the Defined Benefit Plan and BEP is determined without using the 10% corridor minimum amortization approach and is taken over the average remaining future service of the plan participants.

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The Company recognizes compensation expense ratably over the year based upon the Company’s estimate of the number of shares committed to be allocated by the ESOP.

When the shares are released, unallocated common stock held by ESOP is reduced by the cost of the ESOP shares released and the difference between the average fair market value and the cost of the shares committed to be allocated by the ESOP is recorded as an adjustment to additional paid-in capital.

The loan receivable from the ESOP is not reported as an asset nor is the Company’s guarantee to fund the ESOP reported as a liability on the Company’s consolidated balance sheet.

When the shares are committed to be released, unallocated common stock held by ESOP is reduced by the cost of the ESOP shares released and the difference between the average fair market value and the cost of the shares committed to be allocated by the ESOP is recorded as an adjustment to additional paid-in capital.

The Company’s ESOP is classified as an internally leveraged plan as defined by ASC 718, “Compensation-Stock Compensation.” Accordingly, the loan receivable from the ESOP is not reported as an asset nor is the Company’s guarantee to fund the ESOP reported as a liability on the Company’s consolidated balance sheet.

Share-Based Compensation

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Reductions in compensation expense associated with forfeited awards are accounted for as incurred.

Upon vesting, the fair value of the award in excess of recorded expense is recognized as a component of income tax expense.

Upon vesting, the tax effect of the difference between the fair value of the award and the recorded expense is recognized as a component of income tax expense.

Refer to Note 17, “Employee Benefits” for additional information regarding the Company’s shares-based compensation plan.

Variable Interest Entities (“VIE”) and Voting Interest Entities (“VOE”)

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The primary beneficiary analysis is a qualitative analysis based on power and economics.

An enterprise has a controlling financial interest in a VIE if it has both 1) the power to direct the activities of a VIE that most significantly impact the VIE’s

economic performance and 2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE.

An enterprise has a controlling financial interest in a VIE if it has both 1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and 2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE.

VOEs are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities.

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These rabbi trust investments consist primarily of cash and cash equivalents, U.S.

government agency obligations, equity securities, mutual funds and other exchange-traded funds, and are recorded at fair value in the Company’s consolidated balance sheet.

Changes in fair value are recorded in noninterest income in the statements of income.

These rabbi trust assets are included within other assets in the Company’s consolidated balance sheet.

government agency obligations, equity securities, mutual funds and other exchange-traded funds, and are recorded at fair value in the Company’s Consolidated Balance Sheets.

Changes in fair value are recorded in noninterest income in the Consolidated Statements of Income.

These rabbi trust assets are included within other assets in the Company’s Consolidated Balance Sheets.

Tax Credit Investment

Through a wholly-owned subsidiary, the Company is the sole member of a tax credit investment company through which it consolidates a community development entity (“CDE”) that is considered a VIE.

The CDE is considered a VIE because as a group, the holders of the equity investment at risk lack any of the characteristics of a controlling financial interest.

The tax credit investment company is considered the primary beneficiary of the CDE as it has the power to direct the activities of a VIE that most significantly impact the VIEs economic performance and the obligation to absorb losses of and the right to receive benefits from the VIE that potentially could be significant to the VIE.

Through a wholly-owned subsidiary, the Company was the sole member of a tax credit investment company through which it consolidated a community development entity (“CDE”) that was considered a VIE.

The CDE was considered a VIE because as a group, the holders of the equity investment at risk lacked any of the characteristics of a controlling financial interest.

The tax credit investment company was considered the primary beneficiary of the CDE as it had the power to direct the activities of a VIE that most significantly impact the VIEs economic performance and the obligation to absorb losses of and the right to receive benefits from the VIE that potentially could be significant to the VIE.

As of December 31, 2022, the Company no longer had a legal interest in this tax credit investment company.

Bank Owned Life Insurance

The Company holds bank-owned life insurance on the lives of certain participating executives, primarily as a result of mergers and acquisitions.

The amount reported as an asset on the balance sheet is the sum of the cash surrender values reported to the Company by the various insurance carriers.

The amount reported as an asset on the Consolidated Balance Sheets is the sum of the cash surrender values reported to the Company by the various insurance carriers.

Certain policies are split-dollar life insurance policies whereby the Company recognizes a liability for the postretirement benefit related to the arrangement.

This postretirement benefit is included in other liabilities on the balance sheet.

This postretirement benefit is included in other liabilities on the Consolidated Balance Sheets.

The Company accounts for income taxes under the asset and liability method.

Under this method, deferred tax assets and liabilities are established for the temporary differences between the accounting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when the amounts related to such temporary differences are realized or settled.

A valuation allowance is established if it is considered more likely than not that all or a portion of the deferred tax assets will not be realized.

A valuation allowance is established if it is considered more likely than not that all or a

portion of the deferred tax assets will not be realized.

Interest and penalties paid on the underpayment of income taxes are classified as income tax expense.

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Therefore, the Company does not recognize revenue until it has concluded that a significant revenue reversal will not occur in future periods.

Refer to Note 22, “Revenue from Contracts with Customers” for additional information regarding the Company’s insurance commissions.

Trust Operations

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The fees charged are variable based on various factors such as the Company’s responsibility, the type of account, and account size.

Customers are also charged a base fee which is prorated over a twelve-month period.

Fees for additional or special services are generally fixed in nature and are charged as services are rendered.

Revenue from administrative and management activities associated with these assets is recognized as performance obligations of underlying agreements are satisfied.

Derivative Financial Instruments

Derivative instruments are carried at fair value in the Company’s financial statements.

Derivative instruments are carried at fair value in the Company’s Consolidated Financial Statements.

The accounting for changes in the fair value of a derivative instrument is determined by whether it has been designated and qualifies as part of a hedging relationship, and further, by the type of hedging relationship.

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The Company leases certain office space and equipment under various non-cancelable operating leases, some of which have renewal options to extend lease terms.

At lease inception, the Company evaluates the lease terms to determine if the lease should be classified as an operating lease or a finance lease and recognizes a right of use (“ROU”) asset and corresponding lease liability.

At lease inception, the Company evaluates the lease terms to determine if the

lease should be classified as an operating lease or a finance lease and recognizes a right of use (“ROU”) asset and corresponding lease liability.

The Company makes the decision on whether to renew an option to extend a lease by considering various factors.

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Common Share Repurchases

Shares repurchased by the Company under our share repurchase program have been classified as authorized but unissued shares.

Shares repurchased by the Company under the Company's share repurchase program have been classified as authorized but unissued shares.

The cost of shares repurchased by the Company has been accounted for as a reduction to common stock and additional paid in capital balances.

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ESOP shares committed to be released are considered to be outstanding for purposes of the earnings per share computation.

ESOP shares that have not been legally released, but that relate to employee services rendered during an

accounting period (interim or annual) ending before the related debt service payment is made, are considered committed to be released.

ESOP shares that have not been legally released, but that relate to employee services rendered during an accounting period (interim or annual) ending before the related debt service payment is made, are considered committed to be released.

Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance.

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Recent Accounting Pronouncements

Until December 31, 2021, the Company had qualified as an emerging growth company under the Jumpstart Our Business Act of 2012 (“JOBS Act”) and had elected to defer the adoption of new or revised accounting standards until the nonpublic company effective dates.

Relevant standards that were recently issued but not yet adopted as of December 31, 2022:

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting ( “ASU 2020-04”) .

This update addresses optional expedients and exceptions for applying GAAP to certain contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The new guidance applies only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

For public and nonpublic entities, the guidance is effective as of March 12, 2020 through December 31, 2022 and does not apply to contract modifications made after December 31, 2022.

The Company will adopt this standard on the nonpublic company effective date and is currently in the process of reviewing its contracts and existing processes in order to assess the risks and potential impact of the transition away from LIBOR.

As of December 31, 2021, there has been no material impact from reference rate discontinuation.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses on Financial Instruments and relevant amendments (Topic 326) (“ASU 2016-13”).

This update was created to replace the current GAAP method of calculating credit losses.

Specifically, the standard replaces the existing incurred loss impairment guidance by requiring immediate recognition of expected credit losses.

For financial assets carried at amortized cost that are held at the reporting date (including trade and other receivables, loans and commitments, held-to-maturity debt securities and other financial assets), credit losses are measured based on historical experience, current conditions and reasonable supportable forecasts.

The standard also amends existing impairment guidance for available for sale securities, in which credit losses will be recorded as an allowance versus a write-down of the amortized cost basis of the security.

It will also allow for a reversal of impairment loss when the credit of the issuer improves.

The guidance requires a cumulative effect of the initial application to be recognized in retained earnings at the date of initial application.

In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses ( “Update 2018-19”).

The amendments in Update No.

2018-19 were intended to clarify that receivables arising from operating leases are not within the scope of Subtopic 326-20.

Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases .

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses .

This update requires entities to include expected recoveries of the amortized cost basis previously written off or expected to be written off in the valuation account for purchased financial assets with credit deterioration.

In addition, the amendments in this update clarify and improve various aspects of the guidance for ASU 2016-13.

For public entities that meet the definition of an SEC filer (excluding smaller reporting entities) the guidance is effective for annual reporting periods beginning after December 15, 2019.

Early adoption is permitted for all entities as of the fiscal years beginning after December 15, 2018.

For all other entities, the guidance is effective for annual reporting periods beginning after December 15, 2022, including interim periods within those fiscal years.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic in the United States to provide economic relief measures including the option to defer adoption of ASU 2016-13 to the earlier of the ending of the national emergency declaration related to the COVID-19 crisis or

December 31, 2020.

On December 27, 2020, the Consolidated Appropriations Act (the “Appropriations Act”) was enacted to fund the federal government through their fiscal year, extend certain expiring tax provisions and provide additional emergency relief to individuals and businesses related to the COVID-19 pandemic in the United States.

Included within the provisions of the Appropriations Act is an extension of the adoption date for ASU 2016-13 from December 31, 2020 to the earlier of January 1, 2022 or 60 days after the date on which the COVID-19 national emergency terminates.

The Company deferred adoption of this standard to January 1, 2022.

On January 1, 2022, the Company adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures.

For purchased credit-deteriorated (“PCD”) financial assets that were previously classified as purchased-credit impaired (“PCI”) and accounted for under ASC 310-30, the Company adopted ASU 2016-13 using the prospective transition approach.

Accordingly, the Company did not assess whether PCI assets met the criteria of PCD assets as of the date of adoption.

To address the impact of ASU 2016-13, the Company formed a committee, including the Chief Credit Officer, the Chief Financial Officer, and Chief Information Officer, to assist in identifying, implementing, and evaluating the impact of the required changes to loan loss estimation models and processes.

Additionally, a third party was engaged to assist the Company in project management, documentation, model governance and related internal controls implementation.

As of December 31, 2021, the Company has evaluated portfolio segmentation and is finalizing model validation, model calibration, qualitative factors, new disclosures, formal policies and procedures, and other governance and control enhancements.

For regulatory capital purposes, the Company has elected to delay certain effects of the adoption of ASU 2016-13 on regulatory capital for two years, followed by a three-year transition period during which it will phase-in, over a period of three years, the day-one regulatory capital effects of adoption of ASU 2016-13 in accordance with the federal banking agencies interim final rule issued in March 2020.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

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The amendments in this update should be applied prospectively to business combinations occurring on or after the effective date of the amendments with early adoption permitted.

The Company expects the adoption of this standard will not have a material impact on its consolidated financial statements.

The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments–Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”).

The amendments in this update eliminate the accounting guidance on troubled debt restructurings (“TDRs”) for creditors in ASC 310-40 and amends the guidance on vintage disclosures, referenced in ASC 326-20-50, to require disclosure of current-period gross write-offs by year of origination.

This update supersedes the existing accounting guidance for TDRs in ASC 310-40 in its entirety and requires entities to evaluate all

receivable modifications under existing accounting guidance in ASC 310-20 to determine whether a modification made to a borrower results in a new loan or a continuation of an existing loan.

In addition to the elimination of TDR accounting guidance, entities that adopt this update will no longer consider renewals, modifications and extensions that result from reasonably expected TDRs in their calculation of the allowance for credit losses.

Further, if an entity employs a discounted cash flow method to calculate the allowance for credit losses, it will be required to use a post-modification-derived effective interest rate as part of its calculation.

The update also requires new disclosures for receivables for which there has been a modification in their contractual cash flows resulting from borrowers experiencing financial difficulties.

For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Entities may elect to apply the updated guidance on TDR recognition and measurement by using a modified retrospective transition method.

The amendments on TDR disclosures and vintage disclosures should be adopted prospectively.

On January 1, 2023, the Company adopted this standard using the modified retrospective method with respect to the updated guidance on TDR recognition and measurement and the prospective approach with regard to the TDR and vintage disclosures.

The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.

Relevant standards that were adopted during the year ended December 31, 2022:

In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20) Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”).

This update modifies the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans.

The guidance eliminates requirements for certain disclosures that are no longer considered cost beneficial and requires new ones that the FASB considers pertinent.

For public companies, ASU 2018-14 is effective for fiscal years ending after December 15, 2020.

For nonpublic companies, ASU 2018-14 is effective for fiscal years ending after December 15, 2021.

The adoption of this standard on December 31, 2021 did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles–Goodwill and Other–Internal-use software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (“ASU 2018-15”).

This update addresses accounting for fees paid by a customer for implementation, set-up and other upfront costs incurred in a cloud computing arrangement that is hosted by the vendor (i.e., a service contract).

The new guidance aligns treatment for capitalization of implementation costs with guidance on internal-use software.

For public entities, the guidance is effective for annual reporting periods beginning after December 15, 2019.

For nonpublic entities, the guidance is effective for annual reporting periods beginning after December 15, 2020, and for all interim periods beginning after December 15, 2021.

The adoption of this standard on January 1, 2021 did not have a material impact on the Company's consolidated financial statements.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848) (“ASU 2021-01”) which expands the scope of guidance in ASC 848 so that companies can apply the optional expedients to derivative instruments affected by the clearing house changes.

ASU 2021-01 also clarifies and updates several items in ASU 2020-04 as part of the FASB’s monitoring of global reference rate reform activities.

ASU 2021-01 permits entities to elect certain optional expedients and exceptions to modifications of interest rate indexes used for computing when accounting derivative contracts and certain hedging relationships impacted by changes in interest rates used for discounting, margining, or contract price alignment.

ASU 2021-01 clarifies other aspects of the guidance in ASC 848 and provides new guidance on how to address the effects of the cash

compensation adjustment that is provided as part of the above change on certain aspects of hedge accounting.

The guidance was effective upon issuance and allows for retrospective or prospective application with certain conditions.

The Company did not elect retrospective application.

Changes made in connection with the adoption of this update did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses on Financial Instruments and relevant amendments (Topic 326) (“ASU 2016-13”).

This update was created to replace the then-current GAAP method of calculating credit losses.

Specifically, the standard replaced the previous incurred loss impairment guidance by requiring immediate recognition of expected credit losses.

The standard also amends previous impairment guidance for available for sale securities, in which credit losses are recorded as an allowance versus a write-down of the amortized cost basis of the security.

It also allows for a reversal of impairment loss when the credit of the issuer improves.

The guidance requires a cumulative effect of the initial application to be recognized in retained earnings at the date of initial application.

In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses (“ASU 2018-19”).

The amendments in ASU 2018-19 were intended to clarify that receivables arising from operating leases are not within the scope of Subtopic 326-20.

Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases .

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses .

In addition, the amendments in this update clarify and improve various aspects of the guidance for ASU 2016-13.

On January 1, 2022, the Company adopted ASUs 2016-13, 2018-19 and 2019-11 (codified in ASC 326, “Financial Instruments-Credit Losses” ), which replaced the incurred loss methodology (codified in ASC 450, “Contingencies,” ASC 310, “Receivables” and ASC 320, “Debt Securities” ) with an expected loss methodology that is referred to as current expected credit losses methodology (“CECL methodology”).

The Company adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures by means of a cumulative-effect adjustment to the opening retained earnings balance on the Company’s consolidated balance sheet as of the Company’s date of adoption of January 1, 2022.

Accordingly, results for reporting periods beginning after December 31, 2021 are presented under ASU 2016-13, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

The Company recorded a net decrease to retained earnings of $ 20.1 million, net of deferred taxes of $ 7.9 million, as of January 1, 2022, for the cumulative effect of adopting ASU 2016-13.

The Company adopted ASU 2016-13 using the prospective transition approach for purchased credit-deteriorated (“PCD”) financial assets that were previously classified as purchased credit-impaired (“PCI”) financial assets and accounted for under ASC 310-30.

In accordance with ASU 2016-13, the Company did not reassess whether its assets previously classified as PCI assets met the criteria of PCD assets as of the date of adoption.

Rather, loans previously determined to be PCI loans are considered to be PCD loans as of January 1, 2022.

On January 1, 2022, the amortized cost basis of the PCD assets was adjusted to reflect the addition of the allowance for loan losses on PCD loans.

The remaining noncredit discount will be accreted into the Company’s interest income at the then-effective interest rate as of January 1, 2022.

The amount of the adjustment for PCD assets was not material to the Company.

In March 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).

The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships that exist as of December 31, 2022, for which an entity has elected certain optional expedients for and that are

retained through the end of the hedging relationship.

For public and nonpublic entities, the guidance is effective as of March 12, 2020 through December 31, 2022 and does not apply to contract modifications made after December 31, 2022.

The Company performed a review its contracts and existing processes to assess the risks and potential impact of the transition away from LIBOR and noted no material impact to the Company’s Consolidated Financial Statements as of December 31, 2022.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”).

This update defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief of Topic 848.

The adoption of this standard as of December 31, 2022 did not have a material impact on the Company's Consolidated Financial Statements.

Mergers and Acquisitions

Century Bancorp, Inc.

On November 12, 2021, the Company completed its acquisition of Century Bancorp, Inc.

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The results of Century’s operations were included in the Company’s Consolidated Financial Statements subsequent to the acquisition date.

The calculation of goodwill is subject to change for up to one year after the closing date of the transaction as additional information relative to closing date estimates and uncertainties becomes available.

As the Company finalizes its analysis of these assets and liabilities, there may be adjustments to the recorded carrying values.

The calculation of goodwill was subject to change for up to one year after the closing date of the transaction as additional information relative to closing date estimates and uncertainties became available.

As of December 31, 2022, the Company finalized its analysis of these assets and liabilities and no adjustments to the recorded carrying values were considered necessary.

The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition from Century:

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The fair value of the core deposit intangible was determined based on a discounted cash flow analysis using a discount rate commensurate with market participants.

To calculate cash flows, deposit account servicing costs (net of deposit

fee income) and interest expense on deposits were compared to the cost of alternative funding sources available through FHLBB borrowing rates and national brokered CD offering rates.

To calculate cash flows, deposit account servicing costs (net of deposit fee income) and interest expense on deposits were compared to the cost of alternative funding sources available through FHLBB borrowing rates and national brokered CD offering rates.

The projected cash flows were developed using projected deposit attrition rates.

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The core deposit intangible totaled $ 11.6 million and is being amortized on a straight-line basis over its estimated useful life of approximately 10 years.

The calculation of goodwill is subject to change for up to one year after the date of acquisition as additional information relative to the closing date estimates and uncertainties become available.

As the Company finalizes its review of the acquired assets and liabilities, certain adjustments to the recorded carrying values may be required.

The goodwill will be evaluated annually for impairment.

The calculation of goodwill was subject to change for up to one year after the date of acquisition as additional information relative to the closing date estimates and uncertainties became available.

As the Company finalized its review of the acquired assets and liabilities, certain adjustments to the recorded carrying values could have been required.

No adjustments were considered necessary in connection with this review.

The goodwill is evaluated annually for impairment.

The goodwill is no t deductible for tax purposes.

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Insurance Agency Acquisitions

During the year ended December 31, 2021, the Company completed acquisitions of two insurance agencies for aggregate total consideration of $ 4.4 million in cash which is comprised of cash consideration paid for each insurance agency of $ 3.9 million and $ 0.5 million, respectively.

Both acquisitions were considered to be business combinations and were accounted for using the acquisition method.

The following table summarizes the estimate fair value of the assets acquired and liabilities assumed for the business combinations described above:

During the year ended December 31, 2022, the Company completed acquisitions of two insurance agencies for cash consideration of $ 5.2 million and $ 8.2 million, respectively, for aggregate total cash consideration of $ 13.4 million.

Both acquisitions were categorized as business combinations and were accounted for using the acquisition method.

The following table summarizes the aggregate estimated fair value of the assets acquired and liabilities assumed for these acquisitions:

Acquisition Date Balance

(In thousands)

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Goodwill $ 8,726

In connection with these acquisitions, the Company recorded a contingent consideration liability related to attainment of revenue targets over a period of time after the acquisition date.

The amount of contingent consideration recorded was based upon management’s best estimate of possible outcomes as of the date of acquisition.

The Company recorded a contingent consideration liability of $ 0.4 million, and per the purchase agreement, the payouts ranged from $ 0 to $ 0.5 million.

During the year ended December 31, 2020 the Company did not have any material charges to expense or payments to adjust the acquisition-related contingent consideration liability recorded.

In connection with these acquisitions, the Company recorded contingent consideration liabilities related to attainment of revenue targets over a period of time after the respective acquisition dates.

The amounts of contingent consideration liabilities recorded were based upon management’s best estimate of possible outcomes as of the date of the respective acquisitions.

The Company recorded contingent consideration liabilities of $ 0.7 million and $ 1.2 million and per the purchase agreements, the payouts ranged from $ 0 to $ 0.8 million and $ 0 to $ 1.4 million, respectively.

During the year ended December 31, 2022, the Company did not have any material charges to expense or payments to adjust the acquisition-related contingent consideration liabilities recorded.

For tax purposes, the acquisitions were considered asset acquisitions and as such, the amortization of goodwill and intangible assets is deductible for tax purposes.

Acquisition-related legal and professional fee costs of less than $ 0.1 million were charged to expense during the year ended December 31, 2021, and was included in the professional services line item of the consolidated statements of income.

Acquisition-related legal and professional fee costs of $ 0.3 million were charged to expense during the year ended December 31, 2022, and were included in the professional services line item of the consolidated statements of income.

These acquisitions were not considered significant to the Company’s Consolidated Financial Statements and, therefore, pro forma data and certain other disclosures have been excluded.

During the year ended December 31, 2020, the Company completed an acquisition of an insurance agency for total consideration of $ 1.4 million in cash.

This acquisition was considered to be a business combination and was accounted for using the acquisition method.

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed for the business combination described above:

During the year ended December 31, 2021, the Company completed acquisitions of two insurance agencies for cash consideration of $ 0.5 million and $ 3.9 million, respectively, for aggregate total cash consideration of $ 4.4 million.

Both acquisitions were categorized as business combinations and were accounted for using the acquisition method.

The following table summarizes the aggregate estimated fair value of the assets acquired and liabilities assumed for these acquisitions:

Acquisition Date Balance

(In thousands)

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Contingent consideration ( 449 )

Other liabilities assumed ( 355 )

Total fair value of consideration ( 5,158 )

Goodwill $ 2,995

In connection with this acquisition, the Company recorded a contingent consideration liability related to attainment of revenue targets over a period of time after the acquisition date.

The amount of contingent consideration recorded was based upon management’s best estimate of possible outcomes as of the date of acquisition.

The Company recorded a contingent consideration liability of $ 0.3 million, and per the purchase agreement, the payouts ranged from $ 0 to $ 0.3 million.

In connection with one of these acquisitions, the Company recorded a contingent consideration liability related to attainment of revenue targets over a period of time after the acquisition date.

The amount of contingent consideration liability recorded was based upon management’s best estimate of possible outcomes as of the date of acquisition.

The Company recorded a contingent consideration liability of $ 0.4 million, and per the purchase agreement, the payout ranged from $ 0 to $ 0.5 million.

During the year ended December 31, 2021, the Company did not have any material charges to expense or payments to adjust the acquisition-related contingent consideration liability recorded.

For tax purposes, the acquisition was considered an asset acquisitions and as such, the amortization of goodwill and intangible assets is deductible for tax purposes.

Acquisition-related legal and professional fee costs of $ 0.1 million was charged to expense during the year ended December 31, 2020, and were included in the professional services line item of the consolidated statements of income.

This acquisition was not considered significant to the Company’s Consolidated Financial Statements and, therefore, pro forma data and certain other disclosures have been excluded.

For tax purposes, the acquisitions were considered asset acquisitions and as such, the amortization of goodwill and intangible assets is deductible for tax purposes.

Acquisition-related legal and professional fee costs of less than $ 0.1 million were charged to expense during the year ended December 31, 2021, and were included in the professional services line item of the Consolidated Statements of Income.

These acquisitions were not considered significant to the Company’s Consolidated Financial Statements and, therefore, pro forma data and certain other disclosures have been excluded.

Available for Sale Securities

3 unchanged sentences

Gains Unrealized

Losses Allowance for Credit Losses Fair

(In thousands)

5 unchanged sentences

State and municipal bonds and obligations 198,039 9 ( 14,956 ) — 183,092

Small Business Administration pooled securities 31,821 282 — 32,103

Other debt securities 1,299 — ( 14 ) — 1,285

10 unchanged sentences

State and municipal bonds and obligations 263,910 16,460 ( 41 ) 280,329

Small Business Administration pooled securities 31,821 282 — 32,103

Other debt securities 1,597 — — 1,597

$ 8,587,179 $ 36,492 $ ( 112,447 ) $ 8,511,224

The amortized cost and estimated fair value of available for sale securities by contractual maturities as of December 31, 2021 and 2020 are shown below.

Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without prepayment penalties.

The scheduled contractual maturities of available for sale securities as of the dates indicated were as follows:

As of December 31, 2021

Due in one year or less Due after one year to five years Due after five to ten years Due after ten years Total

Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value

The Company did no t record a provision for credit losses on any AFS securities during the year ended December 31, 2022.

Accrued interest receivable on AFS securities totaled $ 12.9 million and $ 14.3 million as of December 31, 2022 and December 31, 2021, respectively, and is included within other assets on the Consolidated Balance Sheets.

The Company did no t record any write-offs of accrued interest income on AFS securities during the year ended December 31, 2022.

No AFS securities held by the Company were delinquent on contractual payments as of December 31, 2022, nor were any such securities placed on non-accrual status for the period then ended.

As of December 31, 2022 and 2021, the Company had no investments in obligations of individual states, counties, or municipalities which exceeded 10% of consolidated shareholders’ equity.

The following table summarizes gross realized gains and losses from sales of AFS securities for the periods indicated:

For the Years Ended December 31,

2022 2021 2020

(In thousands)

Gross realized gains from sales of AFS securities $ 1,775 $ 1,166 $ 288

Gross realized losses from sales of AFS securities ( 4,932 ) — —

Net (losses) gains from sales of AFS securities $ ( 3,157 ) $ 1,166 $ 288

Prior to the Company’s adoption of ASU 2016-13, management prepared an estimate of the Company’s expected cash flows for AFS investment securities that potentially may be deemed to have been an OTTI.

This estimate began with the contractual cash flows of the security which was then reduced by an estimate of probable credit losses associated with the security.

When estimating the extent of probable losses on the securities, management considered the credit quality and the ability to pay of the underlying issuers.

Indicators of diminished credit quality of the issuers included defaults, interest deferrals, or “payments in kind.” Management also considered those factors listed in the “Investments – Debt and Equity Securities” topic of the FASB ASC when estimating the ultimate realizability of the cash flows for each individual security.

The resulting estimate of expected cash flows after considering credit was then subject to a present value computation using a discount rate equal to the current yield used to accrete the beneficial interest or the effective interest rate implicit in the security at the date of acquisition.

If the present value of the estimated expected cash flows was less than the current amortized cost basis, an OTTI was considered to have occurred and the security was written down to the fair value indicated by the cash flow analysis.

As part of the analysis, management considered whether it intended to sell the security or whether it was more than likely that it would be required to sell the security before the expected recovery of its amortized cost basis.

There was no OTTI recorded during the years ended December 31, 2021 and 2020.

Information pertaining to AFS securities with gross unrealized losses as of December 31, 2022, for which the Company did not recognize a provision for credit losses under CECL, and as of December 31, 2021, for which the Company did not deem to be OTTI under its prior methodology, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

As of December 31, 2022

Less than 12 Months 12 Months or Longer Total

Holdings Gross

(Dollars in thousands)

Government-sponsored residential mortgage-backed securities 322 $ 42,196 $ 435,690 $ 701,659 $ 3,676,218 $ 743,855 $ 4,111,908

3 unchanged sentences

State and municipal bonds and obligations 237 14,942 179,614 14 225 14,956 179,839

Small Business Administration pooled securities — — 4,062 4,092 — — 27,759 28,011 31,821 32,103

Other debt securities 2 — — 14 1,285 14 1,285

Total $ 51,955 $ 51,932 $ 784,326 $ 773,349 $ 2,023,620 $ 1,994,423 $ 5,727,278 $ 5,691,520 $ 8,587,179 $ 8,511,224

802 $ 98,038 $ 968,376 $ 1,036,628 $ 5,719,149 $ 1,134,666 $ 6,687,525

As of December 31, 2021

Due in one year or less Due after one year to five years Due after five to ten years Due after ten years Total

Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value

(In Thousands)

Government-sponsored residential mortgage-backed securities $ — $ — $ 46,293 $ 48,925 $ 96,338 $ 100,278 $ 1,964,027 $ 1,999,597 $ 2,106,658 $ 2,148,800

Government-sponsored commercial mortgage-backed securities — — — — 17,054 17,081 — — 17,054 17,081

Agency bonds — — 99,772 99,834 570,696 566,875 — — 670,468 666,709

Treasury securities 50,023 50,251 20,083 20,118 — — — — 70,106 70,369

State and municipal bonds and obligations 406 408 20,511 21,431 74,980 79,635 165,001 179,428 260,898 280,902

Total $ 50,429 $ 50,659 $ 186,659 $ 190,308 $ 759,068 $ 763,869 $ 2,129,028 $ 2,179,025 $ 3,125,184 $ 3,183,861

Mortgage-backed securities include investments in securities that are insured or guaranteed by Freddie Mac, Ginnie Mae or Fannie Mae.

Mortgage-backed securities are purchased to achieve positive interest rate spread with minimal administrative expense, and to lower the Company’s credit risk.

Mortgage-backed securities and callable securities are shown at their contractual maturity dates.

However, both are expected to have shorter average lives due to expected prepayments and callable features, respectively.

Included in the available for sale securities as of December 31, 2021 and 2020 were $ 1.1 billion, and $ 0.7 billion, respectively, of callable securities at fair value.

As of December 31, 2021 and 2020, the Company had no investments in obligations of individual states, counties, or municipalities which exceeded 10% of consolidated shareholders’ equity.

Gross realized gains from sales of available for sale securities were $ 1.2 million, $ 0.3 million and $ 2.1 million during the years ended December 31, 2021, 2020, and 2019, respectively.

The Company had no significant gross realized losses from sales of securities available for sale during the years ended December 31, 2021, 2020, and 2019.

No other-than-temporary impairment (“OTTI”) was recorded during the years ended December 31, 2021, 2020, and 2019.

Management prepares an estimate of the expected cash flows for investment securities available for sale that potentially may be deemed to have been an OTTI.

This estimate begins with the contractual cash flows of the security.

This amount is then reduced by an estimate of probable credit losses associated with the security.

When estimating the extent of probable losses on the securities, management considers the credit quality and the ability to pay of the underlying issuers.

Indicators of diminished credit quality of the issuers include defaults, interest deferrals, or “payments in kind.” Management also considers those factors listed in the Investments – Debt and Equity Securities topic of the FASB ASC when estimating the ultimate realizability of the cash flows for each individual security.

The resulting estimate of cash flows after considering credit is then subject to a present value computation using a discount rate equal to the current yield used to accrete the beneficial interest or the effective interest rate implicit in the security at the date of acquisition.

If the present value of the estimated cash flows is less than the current amortized cost basis, an OTTI is considered to have occurred and the security is written down to the fair value indicated by the cash flow analysis.

As part of the analysis, management considers whether it intends to sell the security or whether it is more than likely that it would be required to sell the security before the expected recovery of its amortized cost basis.

Information pertaining to available for sale securities with gross unrealized losses as of December 31, 2021 and 2020, which the Company has not deemed to be OTTI, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

December 31, 2021

Less than 12 Months 12 Months or Longer Total

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470 $ 85,764 $ 5,993,147 $ 26,683 $ 810,035 $ 112,447 $ 6,803,182

December 31, 2020

Less than 12 Months 12 Months or Longer Total

Holdings Gross

(Dollars in thousands)

Agency bonds 6 $ 3,872 $ 416,824 $ — $ — $ 3,872 $ 416,824

6 $ 3,872 $ 416,824 $ — $ — $ 3,872 $ 416,824

As of December 31, 2022, the Company does not intend to sell these investments and has determined based upon available evidence that it is more likely than not that the Company will not be required to sell each security before the expected recovery of its amortized cost basis.

As a result, the Company does not consider these investments with gross unrealized losses to be OTTI.

As a result, the Company did not recognize an ACL on these investments as of December 31, 2022.

As it relates to AFS securities with gross unrealized losses as of December 31, 2021, the Company did not consider these investments to be OTTI under its prior methodology.

The Company made this determination by reviewing various qualitative and quantitative factors regarding each investment category, such as current market conditions, extent and nature of changes in fair value, issuer rating changes and trends, and volatility of earnings.

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• Government-sponsored commercial mortgage-backed securities – The securities with unrealized losses in this portfolio have contractual terms that generally do not permit the issuer to settle the security at a price less than the current par value of the investment.

The decline in market value of these securities is attributable to changes in interest rates and not credit quality.

The decline in market value of these securities is attributable to

changes in interest rates and not credit quality.

Additionally, these securities are implicitly guaranteed by the U.S.

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The decline in market value of these securities is attributable to changes in interest rates and not credit quality.

Loans and Allowance for Loan Losses

• Other debt securities – This securities portfolio consists of two foreign debt securities which are performing in accordance with the terms of the respective contractual agreements.

The decline in market value of these securities is attributable to changes in interest rates and not credit quality.

Held to Maturity Securities

The amortized cost, gross unrealized gains and losses, and fair value of HTM securities as of December 31, 2022 were as follows:

As of December 31, 2022

Cost Unrealized

Gains Unrealized

Losses Allowance for Credit Losses Fair

(In thousands)

Debt securities:

Government-sponsored residential mortgage-backed securities $ 276,493 $ — $ ( 30,150 ) $ — $ 246,343

Government-sponsored commercial mortgage-backed securities 200,154 — ( 23,271 ) — 176,883

$ 476,647 $ — $ ( 53,421 ) $ — $ 423,226

The Company held no HTM securities as of December 31, 2021.

The Company did no t record a provision for estimated credit losses on any HTM securities during the year ended December 31, 2022.

The accrued interest receivable on HTM securities totaled $ 1.0 million as of December 31, 2022 and is included within other assets on the Consolidated Balance Sheets.

The Company did no t record any write-offs of accrued interest receivable on HTM securities during the year ended December 31, 2022.

No HTM securities held by the Company were delinquent on contractual payments as of December 31, 2022, nor were any such securities placed on non-accrual status for the period then ended.

Available for Sale and Held to Maturity Securities Contractual Maturity

The amortized cost and estimated fair value of AFS and HTM securities by scheduled contractual maturities as of dates indicated were as follows:

As of December 31, 2022

Due in one year or less Due after one year to five years Due after five to ten years Due after ten years Total

Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value

(In thousands)

AFS securities

Government-sponsored residential mortgage-backed securities $ — $ — $ 21,221 $ 20,284 $ 727,908 $ 648,132 $ 4,106,634 $ 3,443,492 $ 4,855,763 $ 4,111,908

Government-sponsored commercial mortgage-backed securities — — 191,762 171,992 649,659 556,641 728,698 620,321 1,570,119 1,348,954

Agency bonds — — 877,371 767,464 223,520 185,018 — — 1,100,891 952,482

Treasury securities — — 99,324 93,057 — — — — 99,324 93,057

State and municipal bonds and obligations 213 209 22,100 21,283 42,554 40,970 133,172 120,630 198,039 183,092

Other debt securities 1,299 1,285 — — — — — — 1,299 1,285

Total available for sale securities 1,512 1,494 1,211,778 1,074,080 1,643,641 1,430,761 4,968,504 4,184,443 7,825,435 6,690,778

HTM securities

Government-sponsored residential mortgage-backed securities — — — — — — 276,493 246,343 276,493 246,343

Government-sponsored commercial mortgage-backed securities — — — — 200,154 176,883 — — 200,154 176,883

Total held to maturity securities — — — — 200,154 176,883 276,493 246,343 476,647 423,226

Total $ 1,512 $ 1,494 $ 1,211,778 $ 1,074,080 $ 1,843,795 $ 1,607,644 $ 5,244,997 $ 4,430,786 $ 8,302,082 $ 7,114,004

As of December 31, 2021

Due in one year or less Due after one year to five years Due after five to ten years Due after ten years Total

Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value

(In Thousands)

Government-sponsored residential mortgage-backed securities $ — $ — $ 24,935 $ 25,962 $ 899,169 $ 892,029 $ 4,653,188 $ 4,606,717 $ 5,577,292 $ 5,524,708

Government-sponsored commercial mortgage-backed securities — — 139,095 137,755 387,177 378,414 894,476 892,699 1,420,748 1,408,868

Agency bonds 5,508 5,515 531,821 520,935 665,048 648,564 — — 1,202,377 1,175,014

Treasury securities 40,010 40,001 49,424 48,604 — — — — 89,434 88,605

State and municipal bonds and obligations 6,137 6,116 33,692 34,704 72,226 75,416 151,855 164,093 263,910 280,329

Small Business Administration pooled securities — — 4,062 4,092 — — 27,759 28,011 31,821 32,103

Other debt securities 300 300 1,297 1,297 — — — — 1,597 1,597

Total $ 51,955 $ 51,932 $ 784,326 $ 773,349 $ 2,023,620 $ 1,994,423 $ 5,727,278 $ 5,691,520 $ 8,587,179 $ 8,511,224

Mortgage-backed securities include investments in securities that are insured or guaranteed by Freddie Mac, Ginnie Mae or Fannie Mae.

Mortgage-backed securities are purchased to achieve positive interest rate spread with minimal administrative expense, and to lower the Company’s credit risk.

Mortgage-backed securities and callable securities are shown at their contractual maturity dates.

However, both are expected to have shorter average lives due to expected prepayments and callable features, respectively.

Included in the above maturity tables as of December 31, 2022 and 2021 were $ 0.9 billion, and $ 1.1 billion, respectively, of callable securities at fair value.

Loans and Allowance for Credit Losses

The following table provides a summary of the Company’s loan portfolio as of the dates indicated:

8 unchanged sentences

Other consumer (2) 194,098 214,485

Gross loans before unamortized premiums, unearned discounts and deferred fees 12,281,510 9,730,525

Gross loans before unamortized premiums, unearned discounts and deferred fees and costs 13,575,531 12,281,510

Allowance for loan losses (1) ( 142,211 ) ( 97,787 )

Unamortized premiums, net of unearned discounts and deferred fees ( 26,442 ) ( 23,536 )

Loans after the allowance for loan losses, unamortized premiums, unearned discounts and deferred fees $ 12,157,281 $ 9,593,958

(1) Home improvement loans and automobile loans are included in the other consumer portfolio above and amounted to $ 104.4 million and $ 53.3 million at December 31, 2021, respectively, and $ 81.8 million and $ 126.7 million at December 31, 2020, respectively.

Unamortized premiums, net of unearned discounts and deferred fees, net of costs ( 13,003 ) ( 26,442 )

Loans after the allowance for loan losses, unamortized premiums, unearned discounts and deferred fees and costs $ 13,420,317 $ 12,157,281

(1) The Company adopted ASU 2016-13 on January 1, 2022 with a modified retrospective approach.

Accordingly, at December 31, 2022 the allowance for loan losses was determined in accordance with ASC 326, “Financial Instruments-Credit Losses” and ASC 310, “ Receivables,” as amended.

At December 31, 2021 the allowance for loan losses was determined in accordance with ASC 450, “ Contingencies” and ASC 310, “Receivables.”

(2) Automobile loans are included in the other consumer portfolio above and amounted to $ 18.1 million and $ 53.3 million at December 31, 2022 and December 31, 2021, respectively.

There are no other loan categories that exceed 10% of total loans not already reflected in the preceding table.

The Company’s lending activities are conducted principally in the New England area with the exception of its Shared National Credit Program (“SNC Program”) portfolio.

The Company’s lending activities are conducted principally in the New England area with the exception of its Shared National Credit Program (“SNC Program”) portfolio and certain purchased loans.

The Company participates in the SNC Program in an effort to improve its industry and geographical diversification.

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The balance of funds borrowed from the FHLBB were $ 704.1 million and $ 14.0 million at December 31, 2022 and 2021, respectively.

The carrying value of loans pledged to secure advances from the Federal Reserve Bank (“FRB”) were $ 784.0 million and $ 884.1 million at December 31, 2021 and 2020, respectively.

The carrying value of loans pledged to secure advances from the Federal Reserve Bank (“FRB”) were $ 1.1 billion and $ 784.0 million at December 31, 2022 and 2021, respectively.

There were no funds borrowed from the FRB outstanding at December 31, 2022 and 2021.

1 unchanged sentence

At December 31, 2022 and 2021, mortgage loans partially or wholly-owned by others and serviced by the Company amounted to approximately $ 84.0 million and $ 95.8 million, respectively.

The increase in serviced loans at December 31, 2021 compared to December 31, 2020 is primarily attributable to our acquisition of Century.

Accordingly, we acquired mortgage servicing rights (“MSRs”) which amounted to $ 0.6 million at December 31, 2021.

MSRs are included in other assets on the consolidated balance sheets.

Purchased Loans

The Company began purchasing mortgage loans during the year ended December 31, 2022.

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

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

Allowance for Loan Losses

Charge-offs, net of recoveries, are charged directly to the allowance.

The allowance for loan losses is established to provide for management’s estimate of expected lifetime credit losses on loans measured at amortized cost at the balance sheet date and is established through a provision for loan losses charged to net income.

Charge-offs, net of recoveries, are charged directly to the allowance for loan losses.

Commercial and residential loans are charged-off in the period in which they are deemed uncollectible.

1 unchanged sentence

For consumer loans, policies and procedures exist that require charge-off consideration upon a certain triggering event depending on the product type.

The following tables summarize changes in the allowance for loan losses by loan category and bifurcates the amount of allowance allocated to each loan category based on collective impairment analysis and loans evaluated individually for impairment:

For the Year Ended December 31, 2021

Industrial Commercial

Real Estate Commercial

Construction Business

Banking Residential

Real Estate Consumer

Home Equity Other

Consumer Other Total

(In thousands)

Allowance for loan losses:

Beginning balance $ 26,617 $ 54,569 $ 4,553 $ 13,152 $ 6,435 $ 3,744 $ 3,467 $ 494 $ 113,031

Charge-offs ( 1,558 ) ( 247 ) — ( 5,091 ) ( 35 ) ( 24 ) ( 2,047 ) — ( 9,002 )

Recoveries 935 4 — 1,524 122 185 674 — 3,444

(Release of) provision ( 7,976 ) ( 1,953 ) ( 1,968 ) 1,398 34 ( 183 ) 1,214 ( 252 ) ( 9,686 )

Ending balance $ 18,018 $ 52,373 $ 2,585 $ 10,983 $ 6,556 $ 3,722 $ 3,308 $ 242 $ 97,787

Ending balance:

individually evaluated for impairment

$ 1,540 $ — $ — $ 450 $ 1,549 $ 270 $ 161 $ — $ 3,970

Ending balance:

acquired with deteriorated credit quality

$ 5 $ 298 $ — $ — $ 243 $ — $ — $ — $ 546

Ending balance:

collectively evaluated for impairment

$ 16,473 $ 52,075 $ 2,585 $ 10,533 $ 4,764 $ 3,452 $ 3,147 $ 242 $ 93,271

Loans ending balance:

Individually evaluated for impairment

$ 16,145 $ 3,520 $ — $ 12,060 $ 22,378 $ 3,922 $ 179 $ — $ 58,204

Acquired with deteriorated credit quality

19,028 47,553 — — 3,058 — — — 69,639

Collectively evaluated for impairment 2,925,354 4,471,440 222,328 1,322,634 1,901,374 1,096,231 214,306 — 12,153,667

Total loans by group $ 2,960,527 $ 4,522,513 $ 222,328 $ 1,334,694 $ 1,926,810 $ 1,100,153 $ 214,485 $ — $ 12,281,510

For the Year Ended December 31, 2020

Industrial Commercial

Real Estate Commercial

Construction Business

Banking Residential

Real Estate Consumer

Home Equity Other

Consumer Other Total

(In thousands)

Allowance for loan losses:

Beginning balance $ 20,919 $ 34,730 $ 3,424 $ 8,260 $ 6,380 $ 4,027 $ 4,173 $ 384 $ 82,297

Charge-offs ( 1,770 ) ( 24 ) — ( 5,147 ) — ( 574 ) ( 2,338 ) — ( 9,853 )

Recoveries 778 230 — 292 125 153 209 — 1,787

Provision (release of) 6,690 19,633 1,129 9,747 ( 70 ) 138 1,423 110 38,800

Ending balance $ 26,617 $ 54,569 $ 4,553 $ 13,152 $ 6,435 $ 3,744 $ 3,467 $ 494 $ 113,031

Ending balance:

individually evaluated for impairment

$ 4,555 $ 210 $ — $ 1,435 $ 1,565 $ 289 $ — $ — $ 8,054

Ending balance:

acquired with deteriorated credit quality

$ 1,283 $ 822 $ — $ — $ 327 $ — $ — $ — $ 2,432

Ending balance:

collectively evaluated for impairment

$ 20,779 $ 53,537 $ 4,553 $ 11,717 $ 4,543 $ 3,455 $ 3,467 $ 494 $ 102,545

Loans ending balance:

Individually evaluated for impairment

$ 17,343 $ 4,435 $ — $ 21,901 $ 27,056 $ 4,845 $ 29 $ — $ 75,609

Acquired with deteriorated credit quality

3,432 2,749 — — 3,116 — — — 9,297

Collectively evaluated for impairment

1,974,241 3,566,446 305,708 1,317,263 1,340,785 863,425 277,751 — 9,645,619

Total loans by group $ 1,995,016 $ 3,573,630 $ 305,708 $ 1,339,164 $ 1,370,957 $ 868,270 $ 277,780 $ — $ 9,730,525

The following table summarizes the change in the allowance for loan losses by loan category for the year ended December 31, 2022:

For the Year Ended December 31, 2022

9 unchanged sentences

Beginning balance $ 18,018 $ 52,373 $ 2,585 $ 10,983 $ 6,556 $ 3,722 $ 3,308 $ 242 $ 97,787

Cumulative effect of change in accounting principle (1) 11,533 ( 6,655 ) 1,485 6,160 13,489 1,857 ( 541 ) ( 242 ) 27,086

Charge-offs ( 269 ) — — ( 2,292 ) — ( 1 ) ( 2,269 ) — ( 4,831 )

Recoveries 1,322 91 — 2,069 94 24 644 — 4,244

Provision (release of) ( 1,027 ) 2,318 ( 1,182 ) 5,463 ( 718 ) 67 1,384 ( 5 ) 6,300

Ending balance $ 20,919 $ 34,730 $ 3,424 $ 8,260 $ 6,380 $ 4,027 $ 4,173 $ 384 $ 82,297

Ending balance:

individually evaluated for impairment

$ 2,337 $ 40 $ — $ 571 $ 1,399 $ 322 $ — $ — $ 4,669

Ending balance:

acquired with deteriorated credit quality

$ 936 $ — $ — $ — $ 256 $ — $ — $ — $ 1,192

Provision (release) ( 3,745 ) 8,921 3,015 ( 731 ) 7,990 852 1,623 — 17,925

Ending balance (2) $ 26,859 $ 54,730 $ 7,085 $ 16,189 $ 28,129 $ 6,454 $ 2,765 $ — $ 142,211

collectively evaluated for impairment

$ 17,646 $ 34,690 $ 3,424 $ 7,689 $ 4,725 $ 3,705 $ 4,173 $ 384 $ 76,436

Loans ending balance:

Individually evaluated for impairment

$ 32,370 $ 7,641 $ — $ 11,658 $ 29,532 $ 6,555 $ — $ — $ 87,756

Acquired with deteriorated credit quality

3,571 6,459 — — 3,421 — — — 13,451

Collectively evaluated for impairment

1,606,243 3,521,341 273,774 759,840 1,395,677 926,533 402,431 — 8,885,839

Total loans by group $ 1,642,184 $ 3,535,441 $ 273,774 $ 771,498 $ 1,428,630 $ 933,088 $ 402,431 $ — $ 8,987,046

Management uses a methodology to systematically estimate the amount of loss incurred in the portfolio.

Commercial real estate, commercial and industrial, commercial construction and business banking loans are evaluated using a loan rating system, historical losses and other factors which form the basis for estimating incurred losses.

Portfolios of more homogeneous populations of loans, including residential mortgages and consumer loans, are analyzed as groups taking into account delinquency ratios, historical loss experience and charge-offs.

For the purpose of estimating the allowance for loan losses, management segregates the loan portfolio into the categories noted in the above tables.

Each of these loan categories possesses unique risk characteristics such as the purpose of the loan, repayment source, and collateral.

(1) Represents the adjustment needed to reflect the cumulative day one impact pursuant to the Company’s adoption of ASU 2016-13 (i.e., cumulative effect adjustment related to the adoption of ASU 2016-13 as of January 1, 2022).

The adjustment represents a $ 27.1 million increase to the allowance attributable to the change in accounting methodology for estimating the allowance for loan losses resulting from the Company’s adoption of the standard.

The adjustment also includes the adjustment needed to reflect the day one reclassification of the Company’s PCI loan balances to PCD and the associated gross-up of $ 0.1 million, pursuant to the Company’s adoption of ASU 2016-13.

(2) The balance of accrued interest receivable excluded from amortized cost and the calculation of the allowance for loan losses amounted to $ 45.2 million at December 31, 2022.

The allowance for loan losses increased by $ 44.4 million to $ 142.2 million at December 31, 2022 from $ 97.8 million at December 31, 2021 and the allowance for loans losses as a percentage of total loans (“reserve rate”) increased by 25 basis points to 1.05 % at December 31, 2022 from 0.80 % at December 31, 2021.

The increase was partially due to the $ 27.1 million transition adjustment recorded upon adoption of ASU 2016-13 which is further described above.

The transition adjustment increased the allowance for loan losses to $ 124.9 million as of January 1, 2022 which resulted in an increase in the allowance for loans losses as a percentage of total loans (“reserve rate”) to 1.02 % at that time based upon loan balances as of December 31, 2021.

Subsequently, the allowance for loan losses increased by $ 17.3 million as of December 31, 2022 and the reserve rate increased three basis points to 1.05 % at December 31, 2022.

The increase in the reserve amount subsequent to the transition adjustment was primarily due to increased loan balances.

The increase in the reserve rate subsequent to the transition adjustment was primarily due to changes in macroeconomic conditions.

Management used the Oxford Economics Baseline forecast (“the forecast”) for each respective date in determining its estimate of current expected credit losses.

The forecast at December 31, 2022 assumed a high likelihood of the U.S.

economy entering a recession in the second quarter of 2023 while the forecast at December 31, 2021 assumed more stable economic conditions based upon facts and circumstances observed by management at that time.

As a result of the more adverse forecasted economic conditions as of December 31, 2022, management determined that an increase to the reserve rate was appropriate.

Reserve for Unfunded Commitments

Management evaluates the need for a reserve on unfunded lending commitments in a manner consistent with loans held for investment.

Upon adoption of ASU 2016-13 on January 1, 2022, the Company recorded a transition adjustment related to the reserve for unfunded lending commitments of $ 1.0 million, resulting in a total reserve for unfunded lending commitments of $ 11.1 million as of January 1, 2022.

As of December 31, 2022, the Company’s reserve for unfunded lending commitments was $ 13.2 million which is recorded within other liabilities.

Portfolio Segmentation

Management uses a methodology to systematically estimate the amount of expected losses in each segment of loans in the Company’s portfolio.

Commercial and industrial business banking, investment commercial real estate, and commercial and industrial loans are evaluated based upon loan-level risk characteristics, historical losses and other factors which form the basis for estimating expected losses.

Other portfolios, including owner occupied commercial real estate (which includes business banking owner occupied commercial real estate), commercial construction, residential mortgages, home equity and consumer loans, are analyzed as groups taking into account delinquency ratios, and the Company’s and peer banks’ historical loss experience.

For the purposes of estimating the allowance for loan losses, management segregates the loan portfolio into loan categories that share similar risk characteristics such as the purpose of the loan, repayment source, and collateral.

These characteristics are considered when determining the appropriate level of the allowance for each category.

3 unchanged sentences

The primary risk associated with commercial and industrial loans is the ability of borrowers to achieve business results consistent with those projected at origination.

Collateral frequently consists of a first lien position on business assets including, but not limited to accounts receivable, inventory, airplanes and equipment.

Collateral frequently consists of a first lien position on business assets including, but not limited to, accounts receivable, inventory, aircraft and equipment.

The primary repayment source is operating cash flow and, secondarily, the liquidation of assets.

The Company often obtains personal guarantees from individuals holding material ownership in the borrowing entity.

Under its lending guidelines, the Company generally requires a corporate or personal guarantee from individuals that hold material ownership in the borrowing entity when the loan-to-value of a commercial and industrial loan is in excess of a specified threshold.

Commercial real estate :

1 unchanged sentence

Primary repayment sources include operating income generated by the real estate, permanent debt refinancing, sale of the real estate and, secondarily, liquidation of the collateral.

The Company often obtains personal guarantees from individuals holding material ownership in the borrowing entity.

Under its lending guidelines, the Company generally requires a corporate or personal guarantee from individuals that hold material ownership in the borrowing entity when the loan-to-value of a commercial real estate loan is in excess of a specified threshold.

Commercial construction :

10 unchanged sentences

Residential Lending

Residential real estate :

These loans are made to borrowers who demonstrate the ability to repay principal and interest on a monthly basis.

2 unchanged sentences

Collateral consists of mortgage liens on 1-4 family residential dwellings.

The policy standards applied to loans originated by the Company are the same as those applied to purchased loans.

The Company does not originate or purchase sub-prime or other high-risk loans.

9 unchanged sentences

Other consumer :

The Company’s policy and underwriting in this category, which is comprised primarily of home improvement and automobile loans, include the following factors, among others:

The Company’s policy and underwriting in this category, which is comprised primarily of home improvement, automobile and aircraft loans, include the following factors, among others:

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

These are typically granted on an unsecured basis, with the exception of airplane and automobile loans.

These are typically granted on an unsecured basis, with the exception of aircraft and automobile loans.

Credit Quality

Commercial Lending Credit Quality

The credit quality of the Company’s commercial loan portfolio is actively monitored and supported by a comprehensive credit approval process and all large dollar transactions are sent for approval to a committee of seasoned business line and credit professionals.

The Company maintains an independent credit risk review function that reports directly to the Risk Management Committee of the Board of Directors.

Credits that demonstrate significant deterioration in credit quality are transferred to a specialized group of experienced officers for individual attention.

The Company monitors credit quality indicators and utilizes portfolio scorecards to assess the risk of its commercial portfolio.

Specifically, the Company utilizes a 15-point credit risk-rating system to manage risk and identify potential problem loans.

Under this point system, risk-rating assignments are based upon a number of quantitative and qualitative factors that are under continual review.

Factors include cash flow, collateral coverage, liquidity, leverage, position within the industry, internal controls and management, financial reporting, and other considerations.

Commercial loan risk ratings are (re)evaluated for each loan at least once-per-year.

The risk-rating categories under the credit risk-rating system are defined as follows:

0 Risk Rating- Unrated

Certain segments of the portfolios are not rated.

These segments include airplane loans, business banking scored loan products, and other commercial loans managed by exception.

These segments include aircraft loans, business banking scored loan products, and other commercial loans managed by exception.

Loans within this unrated loan segment are monitored by delinquency status;

and for lines of credit greater than $ 100,000 in exposure, an annual review is conducted.

and for lines of credit greater than $ 100,000 in exposure, an annual review is conducted which includes the review of the business score and loan and deposit account performance.

The Company supplements performance data with current business credit scores for the business banking portfolio on a quarterly basis.

Unrated commercial and business banking loans are generally restricted to commercial exposure less than $ 1 million.

Loans included in this category have qualification requirements that include risk rating of 10 or better at time of recommendation for unrated status, acceptable management of deposit accounts, and no known negative changes in management, operations or financial performance.

Unrated commercial and business banking loans are generally restricted to commercial exposure of less than $ 1.5 million.

Loans included in this category generally are not required to provide regular financial reporting or regular covenant monitoring.

For purposes of estimating the allowance for loan losses, unrated loans are considered in the same manner as pass rated loans.

18 unchanged sentences

Serious problems exist such that a partial loss of principal is likely.

The probability of loss exists, however, because of reasonable specific pending factors that may work to strengthen the credit, estimated losses are deferred until a more exact status can be determined.

The probability of loss exists, but because of reasonably specific pending factors that may work to strengthen the credit, estimated losses are deferred until a more exact status can be determined.

Specific reserves will be the amount identified after specific review.

3 unchanged sentences

Loans to such borrowers are considered uncollectible and of such little value that continuance as active assets of the Company is not warranted.

This classification does not mean that the loans have no recovery or salvage value, but rather, it is not practical or desirable to defer writing off these

assets even though partial recovery may occur in the future.

This classification does not mean that the loans have no recovery or salvage value, but rather, it is not practical or desirable to defer writing off these assets even though partial recovery may occur in the future.

Loans in this category have a recorded investment of $0 at the time of the downgrade.

The credit quality of the commercial loan portfolio is actively monitored and supported by a comprehensive credit approval process;

and all large dollar transactions are sent for approval to a committee of seasoned business line and credit professionals.

Risk ratings are periodically reviewed and the Company maintains an independent credit risk review function that reports directly to the Risk Management Committee of the Board of Directors.

Credits that demonstrate significant deterioration in credit quality are transferred to a specialized group of experienced officers for individual attention.

The following tables detail the internal risk-rating categories for the Company’s commercial and industrial, commercial real estate, commercial construction and business banking portfolios:

As of December 31, 2021

Category Commercial and

Industrial Commercial

Real Estate Commercial

Construction Business

Banking Total

Residential and Consumer Lending Credit Quality

For the Company’s residential and consumer portfolios, the quality of the loan is best indicated by the repayment performance of an individual borrower.

Updated appraisals, broker opinions of value and other collateral valuation methods are employed in the residential and consumer portfolios, typically for credits that are deteriorating.

Delinquency status is determined using payment performance, while accrual status may be determined using a combination of payment performance, expected borrower viability and collateral value.

Delinquent consumer loans are handled by a team of seasoned collection specialists.

The following table details the amortized cost balances of the Company’s loan portfolios, presented by credit quality indicator and origination year as of December 31, 2022:

2022 2021 2020 2019 2018 Prior Revolving Loans Revolving Loans Converted to Term Loans (1) Total

(In thousands)

Unrated $ 171,537 $ 4,378 $ — $ 696,629 $ 872,544

Commercial and industrial

Pass $ 778,144 $ 479,317 $ 415,990 $ 199,865 $ 100,716 $ 639,825 $ 473,148 $ 50 $ 3,087,055

3 unchanged sentences

Loss — — — — — — — — —

Total $ 2,960,527 $ 4,522,513 $ 222,328 $ 1,334,694 $ 9,040,062

As of December 31, 2020

Category Commercial and

Industrial Commercial

Real Estate Commercial

Construction Business

Banking Total

(In thousands)

Unrated $ 655,346 $ 6,585 $ — $ 918,921 $ 1,580,852

Total commercial and industrial 780,736 490,827 425,901 204,752 103,461 647,702 478,083 1,066 3,132,528

Commercial real estate

Pass 1,510,675 825,620 586,567 581,840 461,296 1,006,160 52,590 4,187 5,028,935

3 unchanged sentences

Loss — — — — — — — — —

Total commercial real estate 1,510,675 825,620 589,959 605,840 501,194 1,053,298 60,590 4,187 5,151,363

Commercial construction

Pass 91,397 178,648 28,956 20,767 — — 12,130 — 331,898

Special Mention — — 2,361 — — — — — 2,361

Substandard — — — — — — — — —

Doubtful — — — — — — — — —

Loss — — — — — — — — —

Total commercial construction 91,397 178,648 31,317 20,767 — — 12,130 — 334,259

Business banking

Pass 178,806 202,230 170,088 128,282 59,452 233,484 78,080 4,770 1,055,192

Special Mention — 991 4,635 4,605 3,740 7,584 145 — 21,700

Substandard — 3,482 1,424 2,663 570 7,505 2,230 221 18,095

Doubtful — — — 181 — 70 — — 251

Loss — — — — — — — — —

Total business banking 178,806 206,703 176,147 135,731 63,762 248,643 80,455 4,991 1,095,238

Residential real estate

Current and accruing 761,442 696,959 382,262 99,494 66,702 434,720 — — 2,441,579

30-89 days past due and accruing 4,652 5,470 1,245 2,762 2,951 11,646 — — 28,726

Loans 90 days or more past due and still accruing — — — — — — — — —

Non-accrual — — 144 1,491 1,015 7,100 — — 9,750

Total residential real estate 766,094 702,429 383,651 103,747 70,668 453,466 — — 2,480,055

Consumer home equity

Current and accruing 97,395 10,774 5,840 5,015 21,092 73,927 953,829 7,320 1,175,192

30-89 days past due and accruing 559 — — — 72 944 7,239 247 9,061

Loans 90 days or more past due and still accruing — — — — — — — — —

Non-accrual — — — 61 274 1,303 5,120 296 7,054

Total consumer home equity 97,954 10,774 5,840 5,076 21,438 76,174 966,188 7,863 1,191,307

Other consumer

Current and accruing 55,414 32,390 17,641 18,298 18,832 16,603 17,476 — 176,654

30-89 days past due and accruing 143 68 43 61 240 178 58 7 798

Loans 90 days or more past due and still accruing — — — — — — — — —

Non-accrual 31 93 39 2 92 44 15 10 326

Total other consumer 55,588 32,551 17,723 18,361 19,164 16,825 17,549 17 177,778

Total $ 3,481,250 $ 2,447,552 $ 1,630,538 $ 1,094,274 $ 779,687 $ 2,496,108 $ 1,614,995 $ 18,124 $ 13,562,528

(1) The amounts presented represent the amortized cost as of December 31, 2022 of revolving loans that were converted to term loans during the year ended December 31, 2022.

Paycheck Protection Program (“PPP”) loans are included within the unrated category of the commercial and industrial and business banking portfolios in the table above.

Commercial and industrial PPP and business banking PPP loans amounted to $ 112.8 million and $ 218.6 million, respectively, at December 31, 2021 and $ 568.8 million and $ 457.4 million, respectively, at December 31, 2020.

Commercial and industrial PPP and business banking PPP loans amounted to $ 3.6 million and $ 6.2 million, respectively, at December 31, 2022.

The Company does not have an allowance for loan losses for PPP loans as they are 100% guaranteed by the SBA.

Residential and Consumer Lending Credit Quality

For the Company’s residential and consumer portfolios, the quality of the loan is best indicated by the repayment performance of an individual borrower.

Updated appraisals, broker opinions of value and other collateral valuation methods are employed in the residential and consumer portfolios, typically for credits that are deteriorating.

Delinquency status is determined using payment performance, while accrual status may be determined using a combination of payment performance, expected borrower viability and collateral value.

Delinquent consumer loans are handled by a team of seasoned collection specialists.

Asset Quality

1 unchanged sentence

As a general rule, loans more than 90 days past due with respect to principal and interest are classified as non-accrual loans.

Exceptions may be made if management believes that collateral held by the Company is clearly sufficient and in full satisfaction of both principal and interest, or the loan is accounted for as a PCI loan.

In addition, as permitted by banking regulations, certain consumer loans past due 90 days or more may continue to accrue interest.

Exceptions may be made if management believes that collateral held by the Company is clearly sufficient and in full satisfaction of both principal and interest.

The Company may also use discretion regarding other loans over 90 days delinquent if the loan is well secured and in the process of collection.

3 unchanged sentences

A loan is expected to remain on non-accrual status until it becomes current with respect to principal and interest, the loan is liquidated, or the loan is determined to be uncollectible and is charged-off against the allowance for loan losses.

The following is a summary pertaining to the breakdown of the Company’s non-accrual loans:

The following tables show the age analysis of past due loans as of the dates indicated:

As of December 31, 2022

Due 90 or More

Due Total Past

Due Current Total

(In thousands)

6 unchanged sentences

Other consumer 634 170 320 1,124 176,654 177,778

Total non-accrual loans $ 32,993 $ 41,005

The following tables show the age analysis of past due loans as of the dates indicated:

Total $ 42,715 $ 6,360 $ 18,892 $ 67,967 $ 13,494,561 $ 13,562,528

As of December 31, 2021

2 unchanged sentences

Due Current Total

Loans Recorded

(In thousands)

7 unchanged sentences

Total $ 53,510 $ 7,393 $ 18,511 $ 79,414 $ 12,202,096 $ 12,281,510

As of December 31, 2020

Due 90 or More

Due Total Past

Due Current Total

Loans Recorded

The following table presents information regarding non-accrual loans as of the dates indicated:

As of December 31, 2022 As of December 31, 2021

Non-Accrual Loans With ACL Non-Accrual Loans Without ACL (3) Total Non-Accrual Loans Amortized Cost of Loans >90 DPD and Still Accruing (2) Total Non-Accrual Loans (1) Recorded Investment >90 DPD and Still Accruing

(In thousands)

6 unchanged sentences

Other consumer 326 — 326 — 950 —

Total $ 18,251 $ 7,250 $ 22,121 $ 47,622 $ 9,682,903 $ 9,730,525 $ 2,247

In the normal course of business, the Company may become aware of possible credit problems in which borrowers exhibit potential for the inability to comply with the contractual terms of their loans, but which currently do not yet meet the criteria for classification as non-performing loans (which consist of non-accrual loans and loans that are more than 90 days past due but still accruing interest).

Based upon the Company’s past experiences, some of these loans with potential weaknesses will ultimately be restructured or placed in non-accrual status.

As of both December 31, 2021 and December 31, 2020, we are unable to reasonably estimate the amount of these loans that will be restructured or placed on non-accrual status.

Total non-accrual loans $ 26,244 $ 12,360 $ 38,604 $ — $ 32,993 $ 1,990

(1) The amounts presented represent the recorded investment balance of loans as of December 31, 2021.

(2) “DPD” indicated in the table above refers to “days past due.”

(3) The loans on non-accrual status and without an ACL as of December 31, 2022, were primarily comprised of collateral dependent loans for which the fair value of the underlying loan collateral exceeded the loan carrying value.

The amount of interest income recognized on non-accrual loans during the year ended December 31, 2022 was not significant.

It is the Company’s policy to reverse any accrued interest when a loan is put on non-accrual status and, generally, to record any payments received from a borrower related to a loan on non-accrual status as a reduction of the amortized cost basis of the loan.

Accrued interest reversed against interest income for the year ended December 31, 2022 was insignificant.

For collateral values for residential mortgage and home equity loans, the Company relies primarily upon third-party valuation information from certified appraisers and values are generally based upon recent appraisals of the underlying collateral, brokers’ opinions based upon recent sales of comparable properties, or estimated auction or liquidation values less estimated costs to sell.

As of both December 31, 2022 and December 31, 2021, the Company had collateral-dependent residential mortgage and home equity loans totaling $ 0.6 million.

For collateral-dependent commercial loans, the amount of the allowance for loan losses is individually assessed based upon the fair value of the collateral.

Various types of collateral are used, including real estate, inventory, equipment, accounts receivable, securities and cash, among others.

For commercial real estate loans, the Company relies primarily upon third-party valuation information from certified appraisers and values are generally based upon recent appraisals of the underlying collateral, brokers’ opinions based upon recent sales of comparable properties, estimated equipment auction or liquidation values, income capitalization, or a combination of income capitalization and comparable sales.

As of December 31, 2022 and December 31, 2021, the Company had collateral-dependent commercial loans totaling $ 16.2 million and $ 13.1 million, respectively.

Appraisals for all loan types are obtained at the time of loan origination as part of the loan approval process and are updated at the time of a loan modification and/or refinance and as considered necessary by management for impairment review purposes.

In addition, appraisals are updated as required by regulatory pronouncements.

As of both December 31, 2022 and December 31, 2021, the Company had no residential real estate held in other real estate owned (“OREO”).

As of both December 31, 2022 and December 31, 2021, there were no mortgage loans collateralized by residential real estate property for which formal foreclosure proceedings were in-process.

Troubled Debt Restructurings (“TDR”)

In cases where a borrower experiences financial difficulty and the Company makes certain concessionary modifications to contractual terms, the loan is classified as a troubled debt restructured loan.

The objective is to aid in the resolution of non-performing loans by modifying the contractual obligation to avoid the possibility of foreclosure.

All TDR loans are considered impaired and therefore are subject to a specific review for impairment loss.

The amount of impairment loss, if any, is recorded as a specific loss allocation to each individual loan in the allowance for loan losses.

Commercial loans and residential loans that have been classified as TDRs and which subsequently default are reviewed to determine if the loan should be deemed collateral dependent.

As described previously in Note 2, “Summary of Significant Accounting Policies,” in cases where a borrower experiences financial difficulty and the Company makes certain concessionary modifications to contractual terms, the loan is classified as a TDR.

The process through which management identifies loans as TDR loans, the methodology employed to record any loan losses, and the calculation of any shortfall on collateral dependent loans, is also described within Note 2, “Summary of Significant Accounting Policies.”

In response to the novel coronavirus (“COVID-19”) pandemic, the Company has granted loan modifications to allow deferral of payments for borrowers negatively impacted by the COVID-19 pandemic.

Modifications granted to customers allowed for full payment deferrals (principal and interest) or deferral of only principal payments.

The balance of loans which underwent a modification and had not yet resumed payment as of December 31, 2021 and December 31, 2020 was $ 106.7 million and $ 332.7 million, respectively.

The Company defines a modified loan to have resumed payment if it is one month past the modification end date and not more than 30 days past due.

These modifications with active deferrals met the criteria of either Section 4013 of the CARES Act or the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) and therefore are not deemed TDRs.

These modifications with active deferrals met the criteria of either Section 4013 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) or the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) at the time of such modification, and therefore are not deemed TDRs.

Additionally, loans that are performing in accordance with the contractual terms of the modification are not reflected as being past due and therefore are not impacting non-accrual or delinquency totals as of December 31, 2022 and December 31, 2021.

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The Consolidated Appropriations Act, which was enacted on December 27, 2020, extended certain provisions related to the COVID-19 pandemic in the United States (which were due to expire) and provided additional emergency relief to individuals and businesses.

Included within the provisions of the Consolidated Appropriations Act is the extension to January 1, 2022 of Section 4013 of the CARES Act, which provides relief from a requirement to evaluate loans that had received a COVID-19 modification to determine if the loans required TDR treatment, provided certain criteria were met.

As such, the Company applied the TDR relief granted pursuant to such section to any qualifying loan modifications executed during the allowable time period.

The Company’s policy is to have any TDR loan which is on non-accrual status prior to being modified remain on non-accrual status for approximately six months subsequent to being modified before management considers its return to

accrual status.

Included within the provisions of the Consolidated Appropriations Act was the extension to January 1, 2022 of Section 4013 of the CARES Act, which provided relief from a requirement to evaluate loans that had received a COVID-19 modification to determine if the loans required TDR treatment, provided certain criteria were met.

As such, the Company applied the TDR relief granted pursuant to such section to any qualifying loan modification executed during the allowable time period.

If the TDR loan is on accrual status prior to being modified, it is reviewed to determine if the modified loan should remain on accrual status.

TDR loan information as of December 31, 2021 and the period then ended was prepared in accordance with GAAP effective for the Company as of December 31, 2021, or prior to the Company’s adoption of ASU 2016-13.

The following table shows the TDR loans on accrual and non-accrual status as of the dates indicated:

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Commercial and industrial 2 $ 4,449 9 $ 11,317 11 $ 15,766

Commercial real estate 1 3,520 — — 1 3,520

Business banking 11 4,124 22 2,101 33 6,225

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Total (1) 197 $ 33,336 52 $ 14,199 249 $ 47,535

The amount of specific reserve associated with the TDRs was $ 3.4 million and $ 3.5 million at December 31, 2021 and 2020, respectively.

(1) The amounts presented in the table above represent the recorded investment balance of loans as of December 31, 2021.

The amount of allowance for loan losses associated with the TDRs was $ 1.8 million and $ 3.4 million at December 31, 2022 and 2021, respectively.

There were no additional commitments to lend to borrowers who have been party to a TDR as of December 31, 2022 and 2021.

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At December 31, 2022 and 2021, the outstanding recorded investment of loans that were new TDR loans during the period was $ 11.0 million and $ 0.8 million, respectively.

The difference between such balances reported on an amortized cost basis and recorded investment basis at both December 31, 2022 and 2021 was not significant.

The following table shows the Company’s post-modification balance of TDRs listed by type of modification during the periods indicated:

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(In thousands)

Adjusted interest rate and extended maturity $ — $ — $ 1,513

Adjusted interest rate and principal deferred — — 39

Adjusted interest rate — — 3,352

Principal and interest deferred $ 3,353 $ — $ 422

Extended maturity and interest only/principal deferred 2,997 — 427

Covenant modification 2,418 — —

Interest only/principal deferred 1,499 — 1,305

Adjusted interest rate and extended maturity 1,088 — —

Extended maturity 1,011 200 35

Extended maturity and interest only/principal deferred — 427 47

Additional underwriting- increased exposure — — 10,822

Principal and interest deferred — 422 —

Court-ordered concession — 396 1,995

Subordination — — 11,032

Other 224 202 55

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The following table shows the number of loans and the recorded investment amount of those loans, as of the respective date, that have been modified during the prior 12 months which have subsequently defaulted during the periods indicated.

There were no TDRs that were modified during the prior 12 months which had subsequently defaulted during the year ended December 31, 2021.

The Company considers a loan to have defaulted when it reaches 90 days past due or is transferred to non-accrual:

For the Year Ended December 31,

2022 2021 2020

Contracts Recorded

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Contracts Recorded

Investment Number of

Contracts Recorded

(Dollars in thousands)

Troubled debt restructurings that subsequently defaulted (1):

Commercial and industrial

— $ — 10 $ 18,808

Commercial real estate — — 2 3,125

Residential real estate

Consumer home equity 1 $ 988 — $ — 1 $ 40

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During the year ended December 31, 2020, there were $ 0.2 million in charge-offs on TDRs modified in the prior 12 months.

Loan Participations

The Company occasionally purchases commercial loan participations, or participates in syndications through the SNC Program.

These participations meet the same underwriting, credit and portfolio management standards as the Company’s other loans and are applied against the same criteria to determine the allowance for loan losses as other loans.

The following table summarizes the Company’s loan participations:

As of and for the Year Ended December 31,

Balance Non-performing

Charge-offs Balance Non-performing

(Dollars in thousands)

Commercial and industrial

$ 1,024,131 0.83 % $ — $ 732,425 1.36 % $ —

Commercial real estate 422,042 0.00 % — 362,898 0.00 % —

Commercial construction 96,134 0.00 % — 37,081 0.00 % —

Business banking 51 0.00 % 3 98 0.00 % —

Total loan participations

$ 1,542,358 0.55 % $ 3 $ 1,132,502 0.88 % $ —

Loans and Allowance for Loan Losses

Allowance for Loan Losses

As described in Note 2, “Summary of Significant Accounting Policies,” the Company adopted ASU 2016-13 effective January 1, 2022.

The Company has included comparative prior period disclosures of its allowance for loan losses which were prepared in accordance with ASC 450, “Contingencies” and ASC 310, “Receivables” (i.e., prior to the Company’s adoption of ASU 2016-13).

Refer to the Company’s 2021 Form 10-K for significant accounting policies related to the Company’s allowance for loan losses as of December 31, 2021.

A discussion of the Company’s calculation of its allowance for loan losses for such prior periods follows.

The allowance for loan losses was established to provide for probable losses incurred in the Company’s loan portfolio at the balance sheet date and was established through a provision for loan losses charged to net income.

Charge-offs, net of recoveries, were charged directly to the allowance.

Commercial and residential loans were charged-off in the period in which they were deemed uncollectible.

Delinquent loans in these product types were subject to ongoing review and analysis to determine if a charge-off in the current period was appropriate.

For consumer loans, policies and procedures existed that required charge-off consideration upon a certain triggering event depending on the product type.

Management used a methodology to systematically estimate the amount of losses incurred in the portfolio.

Commercial real estate, commercial and industrial, commercial construction and business banking loans were evaluated using a loan rating system, historical losses and other factors which formed the basis for estimating incurred losses.

Portfolios of more homogeneous populations of loans, including residential mortgages and consumer loans, were analyzed as groups taking into account delinquency ratios, historical loss experience and charge-offs.

For the purpose of estimating the allowance for loan losses, management segregated the loan portfolio into the categories noted in the credit quality tables presented in the “Credit Quality” section below.

Each of these loan categories possessed unique risk characteristics such as the purpose of the loan, repayment source, and collateral.

These characteristics were considered when determining the appropriate level of the allowance for each category.

The Company’s historical approach to loan portfolio segmentation by risk characteristics and monitoring of credit quality for commercial loans under previous accounting guidance was consistent with that applied under the newly adopted CECL standard.

See Note 5, “Loans and Allowance for Credit Losses” for further discussion regarding the Company’s policies for loan segmentation and credit monitoring.

The following table summarizes the change in allowance for loan losses by loan category for the year ended December 31, 2021:

For the Year Ended December 31, 2021

Industrial Commercial

Real Estate Commercial

Construction Business

Banking Residential

Real Estate Consumer

Home Equity Other

Consumer Other Total

(In thousands)

Allowance for loan losses:

Beginning balance $ 26,617 $ 54,569 $ 4,553 $ 13,152 $ 6,435 $ 3,744 $ 3,467 $ 494 $ 113,031

Charge-offs ( 1,558 ) ( 247 ) — ( 5,091 ) ( 35 ) ( 24 ) ( 2,047 ) — ( 9,002 )

Recoveries 935 4 — 1,524 122 185 674 — 3,444

(Release of) Provision ( 7,976 ) ( 1,953 ) ( 1,968 ) 1,398 34 ( 183 ) 1,214 ( 252 ) ( 9,686 )

Ending balance

$ 18,018 $ 52,373 $ 2,585 $ 10,983 $ 6,556 $ 3,722 $ 3,308 $ 242 $ 97,787

The following table bifurcates the amount of loans and the allowance for loan losses allocated to each loan category based on the type of impairment analysis as of December 31, 2021:

As of December 31, 2021

Industrial Commercial

Real Estate Commercial

Construction Business

Banking Residential

Real Estate Consumer

Home Equity Other

Consumer Other Total

(In thousands)

Allowance for loan losses ending balance:

Individually evaluated for impairment $ 1,540 $ — $ — $ 450 $ 1,549 $ 270 $ 161 $ — $ 3,970

Acquired with deteriorated credit quality 5 298 — — 243 — — — 546

Collectively evaluated for impairment 16,473 52,075 2,585 10,533 4,764 3,452 3,147 242 93,271

Total allowance for loan losses by group $ 18,018 $ 52,373 $ 2,585 $ 10,983 $ 6,556 $ 3,722 $ 3,308 $ 242 $ 97,787

Loans ending balance:

Individually evaluated for impairment $ 16,145 $ 3,520 $ — $ 12,060 $ 22,378 $ 3,922 $ 179 $ — $ 58,204

Acquired with deteriorated credit quality 19,028 47,553 — — 3,058 — — — 69,639

Collectively evaluated for impairment 2,925,354 4,471,440 222,328 1,322,634 1,901,374 1,096,231 214,306 — 12,153,667

Total loans by group $ 2,960,527 $ 4,522,513 $ 222,328 $ 1,334,694 $ 1,926,810 $ 1,100,153 $ 214,485 $ — $ 12,281,510

Credit Quality

The following table details the internal risk-rating categories for the Company’s commercial and industrial, commercial real estate, commercial construction and business banking portfolios:

As of December 31, 2021

Category Commercial and

Industrial Commercial

Real Estate Commercial

Construction Business

Banking Total

(In thousands)

Unrated $ 171,537 $ 4,378 $ — $ 696,629 $ 872,544

Pass 2,656,873 4,199,803 213,744 569,956 7,640,376

Special mention 70,141 104,517 1,889 50,085 226,632

Substandard 50,339 213,815 6,695 17,814 288,663

Doubtful 11,637 — — 210 11,847

Loss — — — — —

Total $ 2,960,527 $ 4,522,513 $ 222,328 $ 1,334,694 $ 9,040,062

PPP loans are included within the unrated category of the commercial and industrial and business banking portfolios in the table above.

Commercial and industrial PPP and business banking PPP loans amounted to $ 112.8 million and $ 218.6 million, respectively, at December 31, 2021.

The Company does not have an allowance for loan losses for PPP loans as they are 100% guaranteed by the SBA.

Impaired Loans

Impaired loans consist of all loans for which management has determined it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreements.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.

The Company measures impairment of loans using a discounted cash flow method, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent.

The Company has defined the population of impaired

loans to include certain non-accrual loans, TDR loans and residential and home equity loans that have been partially charged off.

The following table summarizes the Company’s impaired loans by loan portfolio as of the dates indicated:

Under previous accounting guidance, impaired loans consisted of all loans for which management had determined it was probable that the Company would be unable to collect all amounts due according to the contractual terms of the loan agreements.

Factors considered by management in determining impairment included payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.

The Company measured impairment of loans using a discounted cash flow method, the loan’s observable market price, or the fair value of the collateral if the loan was collateral dependent.

The Company defined the population of impaired loans to include certain non-accrual loans, TDR loans, and residential and home equity loans that had been partially charged off.

The following table summarizes the Company’s impaired loans by loan portfolio as of December 31, 2021:

As of December 31, 2021

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Balance Related

Allowance Recorded

Investment Unpaid

Balance Related

(In thousands)

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Total $ 58,204 $ 65,116 $ 3,970

The following tables display information regarding interest income recognized on impaired loans, by portfolio, for the periods indicated:

For the Year Ended December 31,

2021 2020 2019

Investment Total

Recognized Average

The following table displays information regarding interest income recognized on impaired loans, by portfolio, for the years ended December 31, 2021 and 2020:

For the Years Ended December 31,

Investment Total

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Purchased Credit Impaired Loans

The following table displays the outstanding and carrying amounts of PCI loans as of the dates indicated:

The following table displays the outstanding and carrying amounts of PCI loans as of December 31, 2021 :

As of December 31, 2021

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Carrying amount 69,639

The excess of cash flows expected to be collected over the carrying amount of the loans, referred to as the “accretable yield,” is accreted into interest income over the life of the loans using the effective yield method.

Under previous accounting guidance, the excess of cash flows expected to be collected over the carrying amount of the loans, referred to as the “accretable yield,” was accreted into interest income over the life of the loans using the effective yield method.

The following table summarizes activity in the accretable yield for the PCI loan portfolio:

For the Year Ended December 31,

2021 2020 2019

For the Years Ended December 31,

(In thousands)

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Balance at end of period $ 10,371 $ 2,495

The estimate of cash flows expected to be collected is regularly re-assessed subsequent to acquisition.

An increase in expected cash flows in subsequent periods

serves, first, to reduce any previously established allowance for loan losses by the increase in the present value of cash flows expected to be collected, and results in a recalculation of the amount of accretable yield for the loan.

The adjustment of accretable yield due to an increase in expected cash flows is accounted for as a change in estimate.

Loan Participations

The Company occasionally purchases commercial loan participations, or participates in syndications through the SNC Program.

The following table summarizes the Company’s loan participations:

As of and for the Year Ended December 31,

Balance Non-performing

Charge-offs Balance Non-performing

(Dollars in thousands)

Commercial and industrial

$ 732,425 1.36 % 1.36 % $ — $ 598,873 1.11 % 1.11 % $ —

Commercial real estate 362,898 0.00 % 0.00 % — 306,202 0.00 % 0.00 % —

Commercial construction 37,081 0.00 % 0.00 % — 119,600 0.00 % 0.00 % —

Business banking 98 0.00 % 0.00 % — 34 0.00 % 0.00 % 15

Total loan participations

$ 1,132,502 0.88 % 0.88 % $ — $ 1,024,709 0.65 % 0.65 % 15

The estimate of cash flows expected to be collected was regularly re-assessed subsequent to acquisition.

A decrease in expected cash flows in subsequent periods may have indicated that the loan was impaired which would require the establishment of an allowance for loan losses by a charge to the provision for loan losses.

An increase in expected cash flows in subsequent periods served, first, to reduce any previously established allowance for loan losses by the increase in the present value of cash flows expected to be collected, and resulted in a recalculation of the amount of accretable yield for the loan.

The adjustment of accretable yield due to an increase in expected cash flows was accounted for as a change in estimate.

The additional cash flows expected to be collected were reclassified from the non-accretable difference to the accretable yield, and the amount of periodic accretion was adjusted accordingly over the remaining life of the loans.

Premises and Equipment

The following table summarizes the Company’s premises and equipment:

The following table summarizes the Company’s premises and equipment as of the dates indicated:

As of December 31, Estimated

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The Company recorded depreciation expense related to premises and equipment of $ 11.1 million, $ 12.0 million, and $ 13.0 million during the years ended December 31, 2022, 2021, and 2020, respectively.

Properties transferred to held for sale during the year ended December 31, 2021 amounted to $ 37.6 million and included five branch locations, of which four were acquired from Century.

During the year ended December 31, 2022, no properties were transferred to held for sale.

During the year ended December 31, 2022, the Company sold five properties, four of which were acquired in connection with the Company’s acquisition of Century.

The properties sold during year ended December 31, 2022 were included in premises and equipment

held for sale as of December 31, 2021.

The aggregate proceeds from such sales of premises and equipment were $ 17.3 million.

In connection with these sales, the Company recognized a gain on sale of $ 1.4 million, which is included in other non-interest income in the Consolidated Statements of Income.

Properties transferred to held for sale during the year ended December 31, 2021 amounted to $ 37.6 million, which included five branch locations, of which four were acquired in connection with the Company’s acquisition of Century.

The Company recorded a $ 1.2 million loss, representing estimated costs to sell, on properties transferred to held for sale during the year ended December 31, 2021.

In addition, proceeds from sales of premises and equipment were $ 22.0 million during the year ended December 31, 2021, which included the premises held for sale as of December 31, 2020.

During the year ended December 31, 2021, the Company sold three properties, two of which were acquired in connection with the Company’s acquisition of Century and one of which was included in premises held for sale as of December 31, 2020.

The aggregate proceeds from sales of premises and equipment were $ 22.0 million during the year ended December 31, 2021.

In connection with these sales, the Company recognized no significant gain or loss.

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The following table is a summary of the Company’s components of net lease cost for the periods indicated:

For the Year Ended December 31, 2021 For the Year Ended December 31, 2020

For the Year Ended December 31,

2022 2021 2020

(In thousands)

3 unchanged sentences

Total lease cost $ 17,591 $ 16,549 $ 16,455

During the years ended December 31, 2021 and 2020, the Company made $ 15.6 million and $ 14.2 million in cash payments for operating and finance leases, respectively.

The rent expense for operating leases for the year ended December 31, 2019 amounted to $ 16.2 million.

The rent expense for equipment operating leases amounted to $ 0.7 million for the year ended December 31, 2019.

During the years ended December 31, 2022, 2021, and 2020 the Company made $ 17.1 million, $ 15.6 million, and $ 14.2 million in cash payments for operating and finance leases, respectively.

Supplemental balance sheet information related to operating leases as of the dates indicated is as follows:

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Present value of future minimum lease payments $ 61,209

Lease Terminations:

As of December 31, 2021, management made the decision to terminate four leases, one of which was acquired from Century.

These leases are expected to be terminated in the first quarter of 2022.

Management is currently in the process of negotiating modifications to these leases to allow for a buyout of the leases.

Accordingly, the Company remeasured the ROU asset and lease liability which resulted in acceleration of the right of use asset amortization.

Lease Modifications and Terminations:

During the year ended December 31, 2022, management determined not to exercise a future lease term extension option related to three leases, which had previously been included in its determination of future lease payments, to exercise a future lease term extension option related to two leases, which had not previously been included in its determination of future lease payments, and to terminate four leases.

Accordingly, the Company remeasured the present value of the future lease payments related to such leases which resulted in a net reduction of the lease liabilities and a corresponding net reduction of the lease ROU assets of $ 14.8 million.

In connection with the lease terminations, the Company recorded an impairment charge of $ 0.6 million.

During the year ended December 31, 2021, management made the decision to terminate four leases, one of which was acquired in connection with the Company’s acquisition of Century.

Accordingly, the Company remeasured the ROU assets and lease liabilities which resulted in acceleration of the ROU asset amortization.

The additional amortization recorded as a result of the acceleration was $ 1.7 million during the year ended December 31, 2021.

These leases were terminated during the year ended December 31, 2022.

Lease Abandonments:

As of December 31, 2021, management made the decision to close three lease locations.

Management performed an analysis pursuant to ASC 360 and determined that such closures represent lease abandonments.

As of December 31, 2021, management made the decision to close three leased locations.

Management performed an analysis pursuant to ASC 360, “Property, Plant, and Equipment,” ( “ASC 360” ) and determined that such closures represented lease abandonments.

As a result of that analysis, the Company recognized an impairment charge on these leases of $ 0.3 million.

As of December 31, 2021, management made the decision to and is pursuing the sublet of five leases, two of which were acquired from Century.

During the year ended December 31, 2022, there were no lease abandonments.

As of December 31, 2021, management made the decision to and was pursuing the sublet of five leases, two of which were acquired in connection with the Company’s acquisition of Century.

In connection with this decision, management performed a recoverability analysis pursuant to ASC 360.

As a result of that analysis, the Company recorded an impairment charge of $ 0.5 million.

During the year ended December 31, 2022, there were no additional lease sublets.

Goodwill and Other Intangibles

33 unchanged sentences

Balance at end of year $ 557,635 $ 82,587 $ 640,222

(1) The goodwill recorded during the year relates to the acquisition of Century and two insurance agencies.

(1) The goodwill recorded during the year relates to the acquisition of two insurance agencies.

For additional information refer to Note 3, Mergers and Acquisitions .

7 unchanged sentences

Balance at end of year $ 557,635 $ 73,861 $ 631,496

(1) The goodwill recorded during the year relates to the acquisition of Century and two insurance agencies.

For additional information refer to Note 3, Mergers and Acquisitions .

The following table sets forth the carrying amount of the Company’s intangible assets, net of accumulated amortization, as of the dates indicated below:

As of December 31,

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Additionally, the Company did not record any impairment charges during the years ended December 31, 2021 and 2020.

The amortization expense of the Company’s intangible assets were $ 2.5 million, $ 2.9 million, and $ 3.5 million during the years ended December 31, 2021, 2020, and 2019, respectively.

The total weighted-average original amortization period for intangible assets is ten years .

The Company has estimated the remaining useful life of its insurance agency intangible assets, comprised primarily of customer lists and non-compete agreements, and its core deposit intangible assets to have a weighted-average life of seven years and ten years , respectively.

The amortization expense of the Company’s intangible assets was $ 3.9 million, $ 2.5 million, and $ 2.9 million during the years ended December 31, 2022, 2021, and 2020, respectively.

The total weighted-average original amortization period for intangible assets is 9.9 years.

The Company has estimated the remaining useful life of its insurance agency intangible assets, comprised primarily of customer lists and non-

compete agreements, and its core deposit intangible assets to have a weighted-average life of 7.8 years and 8.9 years, respectively.

The estimated amortization expense for each of the five succeeding years and thereafter is as follows:

3 unchanged sentences

Other intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

The Company considered the impact of the COVID-19 pandemic as it pertains to these intangible assets and determined that there was no indication of impairment related to other intangible assets during the year ended December 31, 2021.

The Company considered the economic conditions for the period, including the potential impact of the COVID-19 pandemic, as it pertains to these intangible assets and determined that there was no indication of impairment related to other intangible assets during the year ended December 31, 2022.

Additionally, the Company did not record any impairment charges during the years ended December 31, 2021 and 2020.

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Total certificates of deposit $ 1,624,382 100.0 %

At December 31, 2021 and 2020, securities with a carrying value of $ 2.2 billion and $ 31.3 million, respectively, were pledged to secure public deposits and for other purposes required by law.

At December 31, 2021 and 2020, securities pledged as collateral for deposits included Eastern Wealth Management cash accounts and municipal accounts which, at December 31, 2021, included approximately $ 2.1 billion in securities pledged as collateral for municipal accounts acquired from Century.

At December 31, 2022 and 2021, securities with a carrying value of $ 437.9 million and $ 2.2 billion, respectively, were pledged to secure public deposits and for other purposes required by law.

At December 31, 2022 and 2021, securities pledged as collateral for deposits included Eastern Wealth Management cash accounts and municipal accounts.

During the first quarter of 2022, the Company eliminated certain pledging arrangements acquired from Century which resulted in the decrease in securities pledged at December 31, 2022 compared to December 31, 2021.

The FDIC offers insurance coverage on deposits up to the federally insured limit of $250,000.

The amount of time deposits equal to or greater than $250,000, as of December 31, 2022 and 2021, was $ 239.1 million and $ 224.0 million, respectively.

Included in the certificates of deposit balances above were $ 928.6 million of brokered certificates of deposit at December 31, 2022.

Borrowed Funds

2 unchanged sentences

(In thousands)

FHLB advances $ 14,020 $ 14,624

Short-term FHLB advances $ 691,297 $ 17

Escrow deposits of borrowers 22,314 20,258

Interest rate swap collateral funds 14,430 —

Long-term FHLB advances 12,787 14,003

Total borrowed funds $ 740,828 $ 34,278

At December 31, 2022 and 2021, the Company had available and unused borrowing capacity of approximately $ 538.9 million and $ 455.3 million, respectively, at the Federal Reserve Discount Window.

At December 31, 2020, we also had the ability to borrow from the Federal Reserve Paycheck Protection Program Liquidity Facility (“PPPLF”).

As of December 31, 2020, the Company had $ 1.0 billion in PPP loans that could have been pledged to the PPPLF.

The Federal Reserve ended the PPPLF as of July 30, 2021.

Accordingly, at December 31, 2021, the Company no longer had additional capacity under the PPPLF.

Interest expense on borrowed funds was as follows:

18 unchanged sentences

Total Federal Home Loan Bank advances (1) $ 704,084 4.30 % $ 14,020 1.11 %

At December 31, 2021 and 2020, advances from the FHLBB were secured by stock in FHLBB, residential real estate loans and commercial real estate loans.

The collateral value of residential real estate and commercial real estate loans securing these advances was $ 1.0 billion and $ 888.3 million, respectively, at December 31, 2021, and $ 913.7 million and $ 741.5 million, respectively, at December 31, 2020.

At December 31, 2021 and 2020, the Bank had available and unused borrowing capacity of approximately $ 1.8 billion and $ 1.6 billion, respectively, with the FHLBB.

(1) The weighted average interest rate of long-term FHLB advances as of both December 31, 2022 and December 31, 2021 was 1.11 %.

At December 31, 2022 and 2021, advances from the FHLBB were secured by stock in the FHLBB, residential real estate loans and commercial real estate loans.

The collateral value of residential real estate and commercial real estate loans securing these advances was $ 1.5 billion and $ 1.2 billion, respectively, at December 31, 2022, and $ 1.0 billion and $ 888.3 million, respectively, at December 31, 2021.

At December 31, 2022 and 2021, the Bank had available and unused borrowing capacity with the FHLBB of approximately $ 2.0 billion and $ 1.8 billion, respectively.

As a member of the FHLBB, the Company is required to hold FHLBB stock.

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Included in other noninterest income in the Consolidated Statements of Income are dividends received of $ 0.3 million, $ 0.2 million, and $ 0.4 million during the years ended December 31, 2022, 2021, and 2020, respectively.

Earnings Per Share ( “ EPS ” )

Basic EPS represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the year.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares (such as stock options) were exercised or converted into additional common shares that would then share in the earnings of the Company.

Diluted EPS is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding for the year, plus the effect of potential dilutive common share equivalents computed using the treasury stock method.

Shares held by the ESOP that have not been allocated to employees in accordance with the terms of the ESOP, referred to as “unallocated ESOP shares,” are not deemed outstanding for earnings per share calculations.

Earnings per share data is not applicable for the year ended December 31, 2019 as the Company had no shares outstanding.

For the Year Ended

December 31, 2021 December 31, 2020

(Dollars in thousands, except per share data)

Net income applicable to common shares $ 154,665 $ 22,738

Average number of common shares outstanding 186,713,020 186,663,593

Average unallocated ESOP shares ( 14,520,684 ) ( 14,851,058 )

Average number of common shares outstanding used to calculate basic earnings per common share 172,192,336 171,812,535

Common stock equivalents - restricted stock awards 59,721 —

Average number of common shares outstanding used to calculate diluted earnings per common share 172,252,057 171,812,535

Earnings per common share

Basic $ 0.90 $ 0.13

Diluted $ 0.90 $ 0.13

All unallocated ESOP shares have been excluded from the calculation of basic and diluted EPS.

The following table sets forth information regarding the Company’s tax provision and applicable tax rates for the periods indicated:

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The Company’s provision for income taxes was $ 56.9 million, $ 34.0 million and $ 13.2 million for the years ended December 31, 2022, 2021, and 2020, respectively.

The Company’s effective tax rate was 18.0 % and is lower than the effective tax rate of 36.7 % for the prior year ending December 31, 2020.

The increase in income tax expense and the decrease in the effective tax rate during the year ended December 31, 2021 compared to the year ended December 31, 2020, was primarily due to higher income before income tax expense, decreasing the impact on the effective rate related to favorable permanent differences, including investment tax credits and tax-exempt income.

The reduction in the effective tax rate during the year ended December 31, 2021 compared to the year ended December 31, 2020 was primarily due to a $ 11.3 million release of a $ 12.0 million valuation allowance against the Company’s 2020 charitable contribution carryover deferred tax asset which was established as of December 31, 2020.

The Company’s effective tax rate was 22.2 % and was higher than the effective tax rate of 18.0 % for the prior year ending December 31, 2021.

The increase in income tax expense during the year ended December 31, 2022 compared to the year ended December 31, 2021, was primarily due to higher income before income tax expense and an increase in the effective tax rate.

The increase in the effective tax rate resulted primarily from a partial release of $ 11.3 million during the year ended December 31, 2021 related to a valuation allowance established as of December 31, 2020 against the Company’s charitable contribution carryover deferred tax asset in connection with the Company’s 2020 charitable contribution to the Eastern Bank Foundation compared to a release of $ 0.7 million during the year ended December 31, 2022.

Also contributing to the increase in the effective tax rate, was a decrease of the impact on the effective rate related to favorable permanent differences, including investment tax credits and tax-exempt income, resulting from higher income before income tax expense.

The increase was partially offset by an increase in tax-exempt income resulting from the Company’s acquisition of Century and the release of uncertain tax positions of $ 2.1 million in the fourth quarter of 2022.

The provision for income taxes is comprised of the following components:

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State 2,779 2,434 ( 6,623 )

Total deferred tax (benefit) expense ( 5,313 ) ( 20,359 ) 1,376

Total deferred tax expense (benefit) 6,023 ( 5,313 ) ( 20,359 )

Total income tax expense $ 56,929 $ 34,047 $ 13,163

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Deferred tax assets:

Unrealized loss on available for sale securities $ 254,502 $ 17,370

Allowance for loan losses 43,686 30,335

Cash flow hedges 18,192 —

Leases 17,447 25,389

Charitable contribution limitation carryover 12,273 18,278

Employee benefits 13,996 —

Unrealized loss on available for sale securities 17,370 —

Investment losses 7,918 10,680

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Loan basis difference fair value adjustments 4,009 3,949

Employee benefits 354 13,996

PPP loans fee income 58 2,967

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Amortization of intangibles 17,565 17,339

Unrealized gain on available for sale securities — 13,005

Lease obligation 16,383 23,849

Partnerships 2,340 3,324

Cash flow hedges 2,878 11,658

Trading securities 938 6,482

Lease obligation 23,849 23,048

Employee benefits — 1,613

Cash flow hedges — 2,878

Other 2,229 4,327

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Additionally, in determining the availability of operating loss carrybacks and other tax attributes, both projected future taxable income and tax planning strategies are considered in making this assessment.

As of December 31, 2020, the Company established a valuation allowance of $ 12.0 million related to the $ 91.3 million stock donation and the $ 3.7 million cash contribution to the Foundation.

Based upon the level of available historical taxable income and projections for future taxable income over the periods for which the deferred tax assets are realizable, a release of $ 11.3 million was recorded as of December 31, 2021.

Management believes it is more likely than not that the Company will realize the remainder of the net deferred tax asset of $ 76.5 million at December 31, 2021.

Management has performed an evaluation of the Company’s uncertain tax positions and determined that a liability for unrecognized tax benefits at December 31, 2021 of $ 8.2 million, which includes accrued interest and penalties, was needed related to state tax positions taken.

Management performed a similar evaluation as of December 31, 2020 and determined that no ne was needed.

As of December 31, 2020, the Company had established a valuation allowance of $ 12.0 million related to the $ 91.3 million stock donation and the $ 3.7 million cash contribution to the Eastern Bank Foundation.

As of December 31, 2022, management made a similar determination and, accordingly, recorded a release of $ 0.7 million during the year then ended.

As of December 31, 2022, management believes it is more likely than not that the Company will realize the entirety of its net deferred tax assets.

Management performed an evaluation of the Company’s uncertain tax positions as of December 31, 2022 and 2021 and determined that liabilities for unrecognized tax benefits of $ 6.0 million and $ 8.2 million, respectively, was needed related to state tax positions.

The decrease was primarily due to a reversal of $ 2.3 million recognized during the year ended December 31, 2022.

The following table presents a reconciliation of the beginning and ending amount of unrecognized tax benefits:

As of December 31, 2021

For the Years Ended December 31,

(In thousands)

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The Company recognizes penalties and accrued interest related to unrecognized tax benefits in tax expense.

Accrued penalties and interest amounted to $ 2.0 million at December 31, 2021.

There were no tax reserves recorded as of December 31, 2020.

The change in accrued penalties and interest for the current year impacted goodwill by $ 1.9 million and the consolidated statements of income as a component of the provision for income taxes by less than $ 0.1 million.

Management anticipates that approximately $ 2.1 million in unrecognized state tax benefits and $ 0.6 million of interest and penalties will reverse in 2022 upon expiration of the statute of limitations for the tax year to which the reserve is related.

Accrued penalties and interest amounted to $ 1.5 million and $ 2.0 million at December 31, 2022 and 2021, respectively.

The change in accrued penalties and interest for the current year impacted the Consolidated Statements of Income as a component of income tax expense by $ 0.5 million.

During the year ended December 31, 2022, $ 2.1 million of unrecognized state tax benefits and $ 0.6 million of interest and penalties reversed upon expiration of the statute of limitations for the tax year to which the reserve was related.

Management anticipates that approximately $ 2.3 million of unrecognized state tax benefits and $ 0.7 million of interest and penalties will reverse in 2023 upon expiration of the statute of limitations for the tax year to which the reserve is related.

The Company had no net operating loss carryforwards for federal or state income tax purposes at December 31, 2022 and 2021, respectively.

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During the years ended December 31, 2022 and 2021, the Company generated federal tax credits primarily from LIHTC investments of $ 7.3 million and $ 6.5 million, respectively.

During the year ended December 31, 2021, the Company generated no state tax credits from LIHTC investments and generated $ 0.3 million of state tax credits from LIHTC investments during the year ended December 31, 2020.

During the years ended December 31, 2022 and 2021, the Company generated state tax credits from LIHTC investments of less than $ 0.1 million.

The Company treats the investment tax credits received as a reduction of federal income taxes for the year in which the credit arises using the flow-through method (i.e., the credit flows directly through the statement of income in the year of purchase).

For additional information on these investments, refer to Note 14, “Low Income Housing Tax Credits and Other Tax Credit Investments.

Earnings Per Share ( “ EPS ” )

Basic EPS represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the year.

There were no securities that had a dilutive effect during the year ended December 31, 2020.

Shares held by the ESOP that have not been allocated or committed to be allocated to employees in accordance with the terms of the ESOP, referred to as “unallocated ESOP shares,” are not deemed outstanding for earnings per share calculations.

For the Year Ended December 31,

2022 2021 2020

(Dollars in thousands, except per share data)

Net income applicable to common shares $ 199,759 $ 154,665 $ 22,738

Average number of common shares outstanding 179,529,613 186,713,020 186,663,593

Average unallocated ESOP shares ( 14,019,256 ) ( 14,520,684 ) ( 14,851,058 )

Average number of common shares outstanding used to calculate basic earnings per common share 165,510,357 172,192,336 171,812,535

Common stock equivalents - restricted stock awards and units 138,214 59,721 —

Average number of common shares outstanding used to calculate diluted earnings per common share 165,648,571 172,252,057 171,812,535

Earnings per common share

Basic $ 1.21 $ 0.90 $ 0.13

Diluted $ 1.21 $ 0.90 $ 0.13

Low Income Housing Tax Credits and Other Tax Credit Investments

The Community Reinvestment Act (“CRA”) encourages banks to meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate income.

The Company has primarily invested in separate LIHTC projects, also referred to as qualified affordable housing projects, which provide the Company with tax credits and operating loss tax benefits over a period of approximately 15 years.

The return on these investments is generally generated through tax credits and tax losses.

In addition to LIHTC projects, the Company invests in new market tax credit

projects that qualify for CRA credits and eligible projects that qualify for renewable energy and historic tax credits.

In addition to LIHTC projects, the Company invests in new market tax credit projects that qualify for CRA credits and eligible projects that qualify for renewable energy and historic tax credits.

As of December 31, 2022 and 2021, the Company had $ 131.3 million and $ 83.8 million, respectively, in tax credit investments that were included in other assets in the Consolidated Balance Sheets.

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The Company accounts for certain other investments in renewable energy projects using the equity method of accounting.

These investments in renewable energy projects are included in other assets on the consolidated balance sheet and totaled $ 2.8 million and $ 1.2 million at December 31, 2021 and 2020, respectively.

There were no outstanding commitments related to these investments as of December 31, 2021.

There were $ 1.7 million in outstanding commitments relating to these investments as of December 31, 2020.

These investments in renewable energy projects are included in other assets on the Consolidated Balance Sheets and totaled $ 2.6 million and $ 2.8 million at December 31, 2022 and 2021, respectively.

There were no outstanding commitments related to these investments as of both December 31, 2022 and December 31, 2021.

During the year ended December 31, 2020, in reviewing its tax credit equity investments for impairment, the Company identified an immaterial correction to the investment balances related to prior periods.

2 unchanged sentences

Management believes this correction is immaterial to both the previous consolidated quarterly and annual financial statements.

During the year ended December 31, 2021, the Company performed a similar review and, accordingly, recorded a net recovery of an impairment of $ 0.2 million.

Management evaluated the correction in relation to the year ended December 31, 2021, which is when the correction was recorded, as well as the preceding periods in which it originated.

Management believes this correction is immaterial to the previous consolidated quarterly and annual financial statements.

During the years ended December 31, 2022 and 2021, the Company performed a similar review and, accordingly, recorded a net recovery of an impairment of $ 0.2 million during the year ended December 31, 2021.

Management evaluated the correction in relation to such periods during which the correction was recorded, as well as the preceding periods in which it originated.

Management believes the correction is immaterial to the previous consolidated quarterly and annual financial statements.

The Company did not record any net recovery or a write-down related to impairment of tax credit equity investment balances during the year ended December 31, 2022.

Shareholders’ Equity

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On November 12, 2021, the Company announced receipt of a notice of non-objection from the Board of Governors of the Federal Reserve System to its previously announced share repurchase program which was approved by the Company’s Board of Directors on October 1, 2021.

The program authorizes the purchase of up to 9,337,900 shares, or 5 % of the Company’s then outstanding shares of common stock over a 12-month period.

The program authorized the purchase of up to 9,337,900 shares, or 5 % of the Company’s then-outstanding shares of common stock over a 12-month period.

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

The Company completed the repurchase of the total number of shares authorized through this program during the third quarter of 2022.

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

The program, which authorizes the purchase of up to 8,900,000 shares, or 5 % of the Company’s then-outstanding shares of common stock over a 12-month period, is limited to $ 200.0 million through August 31, 2023.

Repurchases are made at management’s discretion from time to time at prices management considers to be attractive and in the best interests of both the Company and its shareholders, subject to the availability of shares, general market conditions, the trading price of the shares, alternative uses for capital, and the Company’s financial performance.

Repurchases may be suspended, terminated or modified by the Company at any time for any reason.

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

Information regarding the shares repurchased under the plan is presented in the following table:

Period Total Number of Shares Repurchased Average Price Paid per Share Total Number of Shares Repurchased as Part of the Share Repurchase Program Maximum Number of Shares That May Yet Be Purchased Under the Share Repurchase Program

Information regarding the shares repurchased under the plans is presented in the following table:

Period Total Number of Shares Repurchased Average Price Paid per Share Total Number of Shares Repurchased as Part of the Share Repurchase Programs Maximum Number of Shares That May Yet Be Purchased Under the Share Repurchase Programs

December 1, 2021 - December 31, 2021 1,135,878 $ 20.42 1,135,878 8,202,022

During the year ended December 31, 2021, the Company declared and paid aggregate dividends of $ 51.6 million at a weighted average dividend per share of $ 0.07 .

January 1, 2022 – January 31, 2022

987,526 21.02 2,123,404 7,214,496

February 1, 2022 – February 28, 2022

1,109,697 21.08 3,233,101 6,104,799

March 1, 2022 – March 31, 2022

769,398 21.31 4,002,499 5,335,401

April 1, 2022 - April 30, 2022 1,194,185 20.19 5,196,684 4,141,216

May 1, 2022 - May 31, 2022 1,880,381 18.93 7,077,065 2,260,835

June 1, 2022 - June 30, 2022 1,141,903 18.78 8,218,968 1,118,932

July 1, 2022 - July 31, 2022 909,785 19.02 9,128,753 209,147

August 1, 2022 - August 31, 2022 — — 9,128,753 209,147

September 1, 2022 - September 30, 2022 571,463 20.33 9,700,216 8,537,684

October 1, 2022 - October 31, 2022 1,094,049 20.32 10,794,265 7,443,635

November 1, 2022 - November 30, 2022 453,885 18.91 11,248,150 6,989,750

December 1, 2022 – December 31, 2022 — — 11,248,150 6,989,750

Information regarding dividends declared and paid is presented in the following table:

Dividends Declared per Share Dividends Declared Dividends Paid

(In millions, except per share data)

Three Months Ended March 31, 2022 $ 0.10 $ 17.1 $ 16.9

Three Months Ended June 30, 2022 $ 0.10 $ 16.7 $ 16.5

Three Months Ended September 30, 2022 $ 0.10 $ 16.5 $ 16.3

Three Months Ended December 31, 2022 $ 0.10 $ 16.3 $ 16.1

Three Months Ended March 31, 2021 $ 0.06 $ 10.3 $ 10.3

Three Months Ended June 30, 2021 $ 0.08 $ 13.8 $ 13.8

Three Months Ended September 30, 2021 $ 0.08 $ 13.8 $ 13.8

Three Months Ended December 31, 2021 $ 0.08 $ 13.7 $ 13.7

Minimum Regulatory Capital Requirements

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Quantitative measures established by the regulators to ensure capital adequacy require the Company to maintain minimum capital amounts and ratios.

All banking companies are required to have core capital (“Tier 1”) of at least 6% of risk-weighted assets, total capital of at least 8% of risk-weighted assets and a minimum of Tier 1 leverage ratio of 4% of adjusted average assets.

All banking companies are required to have total regulatory capital of at least 8% of risk-weighted assets, common equity Tier 1 capital of at least 4.5% of risk-weighted assets, core capital (“Tier 1”) of at least 6% of risk-weighted assets, and a minimum Tier 1 leverage ratio of 4% of adjusted average assets.

As of December 31, 2022 and 2021, the Company was categorized as “well-capitalized” based on the regulatory framework for prompt corrective action.

To be categorized as well-capitalized, the Company must maintain (1) a minimum of total risk-based capital ratio of 10%;

(2) a minimum of Tier 1 risk-based capital ratio of 8%;

(3) a minimum of common equity Tier 1 capital ratio of 6.5%;

and (4) a minimum of Tier 1 leverage ratio of 5%.

Management believes that the Company met all capital adequacy requirements to which it is subject to as of December 31, 2021 and 2020.

To be categorized as well-capitalized, the Company must maintain (1) a minimum total regulatory capital ratio of 10%;

(2) a minimum common equity Tier 1 capital ratio of 6.5%;

(3) a minimum Tier 1 capital ratio

of 8% and (4) a minimum Tier 1 leverage ratio of 5%.

Management believes that the Company met all capital adequacy requirements to which it is subject as of December 31, 2022 and 2021.

There have been no conditions or events that management believes would cause a change in the Company’s categorization.

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Tier 1 capital (to risk-weighted assets) 2,751,694 16.94 974,743 ≥6 1,299,657 ≥8

Tier I capital (to average assets) 2,831,102 13.96 811,000 4 1,013,750 5

Tier 1 capital (to average assets) leverage 2,751,694 12.03 915,233 ≥4 1,144,041 ≥5

As of December 31, 2021

2 unchanged sentences

Tier 1 capital (to risk-weighted assets) 2,831,102 19.04 892,099 6 1,189,466 8

Tier 1 capital (to average assets) 3,013,079 19.53 617,049 4 771,312 5

Tier 1 capital (to average assets) leverage 2,831,102 13.96 811,000 4 1,013,750 5

The Company is subject to various capital requirements in connection with seller/servicer agreements that have been entered into with secondary market investors.

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For employees hired prior to November 1, 2020, annual contribution credits generally increase as the participant remains employed with the Company.

Employees hired on and after November 1, 2020 receive annual contribution credits equal 5 % of annual compensation, with no future increases.

Employees hired on and after November 1, 2020 receive annual contribution credits equal to 5 % of annual compensation, with no future increases.

Notwithstanding the preceding sentence, since a cash balance plan is a defined benefit plan, the annual retirement benefit payable at normal retirement (age 65 ) is an annuity, which is the actuarial equivalent of the participant’s account balance under the cash balance plan design, plus their frozen benefit under the final average earnings plan design.

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The Defined Benefit Plan has a plan year end of October 31.

In connection with the Company’s acquisition of Century, the Company acquired Century’s Qualified Defined Benefit Pension Plan.

In connection with the Company’s acquisition of Century during the year ended December 31, 2021, the Company acquired Century’s Qualified Defined Benefit Pension Plan.

At the time of the acquisition, the plan was frozen to new participants, which had occurred in 2006, and all participants in the plan were fully vested.

Additionally, all Century employees retained following the acquisition were eligible to join the Company’s Defined Benefit Plan to the extent that eligibility requirements were satisfied based upon such employees’ prior service with Century.

The Company has an unfunded Defined Benefit Supplemental Executive Retirement Plan (“DB SERP”) that provides certain retired and currently employed officers with defined pension benefits in excess of qualified plan limits imposed by U.S.

The Company has an unfunded Defined Benefit Supplemental Executive Retirement Plan (“DB SERP”) that provides certain retired officers with defined pension benefits in excess of qualified plan limits imposed by U.S.

federal tax law.

1 unchanged sentence

In connection with the Company’s acquisition of Century, the Company acquired Century’s Supplemental Executive Insurance/Retirement Plan (the “Supplemental Plan”).

Upon completion of the acquisition, the Supplemental Plan was merged for accounting purposes only into the Company’s DB SERP, but it will continue to be administered according to its terms.

Upon completion of the acquisition, the Supplemental Plan was merged for accounting purposes only into the Company’s DB SERP, but it continues to be administered according to its terms.

Further, the plan document of the Century Supplemental Plan contained change in control provisions which became effective upon the Company’s acquisition of Century.

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Fair value of plan assets at end of year 419,366 546,056 449,643

Overfunded (underfunded) status $ 44,549 $ 88,496 $ ( 17,890 )

Overfunded status $ 56,836 $ 44,549 $ 88,496

Reconciliation of funding status:

Past service credit (cost) $ 120,792 $ 131,482 $ ( 25 )

Past service credit $ 108,909 $ 120,792 $ 131,482

Unrecognized net loss ( 99,002 ) ( 128,402 ) ( 161,045 )

Prepaid benefit cost 46,929 52,159 118,059

Overfunded (underfunded) status $ 44,549 $ 88,496 $ ( 17,890 )

Overfunded status $ 56,836 $ 44,549 $ 88,496

Accumulated benefit obligation $ 362,530 $ 501,507 $ 361,147

Amounts recognized in accumulated other comprehensive income (“AOCI”), net of tax:

Unrecognized past service credit (cost) $ 86,837 $ 94,522 $ ( 18 )

Unrecognized past service credit $ 78,295 $ 86,837 $ 94,522

Unrecognized net loss ( 71,172 ) ( 92,308 ) ( 115,775 )

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In accordance with the Pension Protection Act, the Company was not required to make any contributions to the Defined Benefit Plan for the plan year beginning November 1, 2021.

however, the Company expects to make a contribution of

$ 7.2 million during such plan year.

During the year ended December 31, 2020, the Company made contributions to the Defined Benefit Plan of $ 32.5 million.

The net actuarial gain of $ 1.7 million during the year ended December 31, 2021 was primarily attributable to higher returns on plan assets than initially assumed and an increase in the discount rate assumption which was partially offset by changes in demographic assumptions and in the participant mortality rate assumption, which were revised to reflect management’s best estimate as of December 31, 2021, used for determining the benefit obligation.

The net actuarial loss of $ 78.1 million and $ 74.8 million during the years ended December 31, 2020 and 2019, was primarily attributable to a decrease in the discount rate assumption used for determining the benefit obligation in both years from the corresponding prior year.

However, the Company made a discretionary contribution to the Defined Benefit Plan of $ 7.2 million during the year ended December 31, 2022.

Similarly, in accordance with the Pension

Protection Act, the Company was not required to make any contributions to the Defined Benefit Plan for the plan year beginning November 1, 2020.

Accordingly, during the year ended December 31, 2021, there were no contributions to the Defined Benefit Plan.

The Company expects to make no contribution during the plan year beginning November 1, 2022.

The net actuarial gain of $ 133.3 million during the year ended December 31, 2022 was primarily attributable to an increase in the discount rate assumptions used for determining the benefit obligation which was partially offset by lower returns on plan assets than initially expected.

The net actuarial gain of $ 1.7 million during the year ended December 31, 2021 was primarily attributable to higher returns on plan assets than initially expected and an increase in the discount rate assumptions which were partially offset by changes in demographic assumptions and in the participant mortality rate assumption.

The net actuarial loss of $ 78.1 million during the year ended December 31, 2020 was primarily attributable to a decrease in the discount rate assumptions used for determining the benefit obligation in that year from the corresponding prior year.

Actuarial Assumptions

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Rate of increase in compensation levels 4.50 % 4.50 % 4.50 % 4.50 % — % — % — % — %

Interest rate credit for determining projected cash balance 3.50 % 3.50 % 3.50 % 3.50 % N/A N/A N/A N/A

Interest rate credit for determining projected cash balance 3.55 % 3.50 % 3.55 % 3.50 % — % — % — % — %

The assumptions used in determining the net periodic benefit cost for the years ended December 31, 2022, 2021, and 2020 were as follows:

4 unchanged sentences

Expected rate of return on plan assets 7.00 % 7.50 % 7.50 %

Interest rate credit for determining projected cash balance 3.50 % 3.50 % 3.50 %

For the Year Ended December 31,

2 unchanged sentences

Rate of compensation increase 4.50 % 5.25 % 5.25 %

Expected rate of return on plan assets — % — % — %

Interest rate credit for determining projected cash balance 3.50 % 3.50 % 3.50 %

For the Year Ended December 31,

1 unchanged sentence

Discount rate - benefit cost 2.68 % 1.63 % 2.72 %

Rate of compensation increase — % — % — %

Expected rate of return on plan assets — % — % — %

For the Year Ended December 31,

2 unchanged sentences

Rate of compensation increase — % — % 3.00 %

Expected rate of return on plan assets — % — % — %

In general, the Company has selected its assumptions with respect to the expected long-term rate of return based on prevailing yields on high quality fixed income investments increased by a premium for equity return expectations.

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Expected return on plan assets ( 35,486 ) ( 33,333 ) ( 29,610 )

Past service (credit) cost ( 11,796 ) ( 1,931 ) 44

Past service credit ( 11,882 ) ( 11,796 ) ( 1,931 )

Recognized net actuarial loss 11,032 13,400 10,787

Settlements (1) 12,045 — —

Net periodic benefit cost $ 17,673 $ 5,625 $ 14,873

Service costs for the Defined Benefit Plan, the BEP, and the DB SERP are recognized within salaries and employee benefits in the statement of income.

Service costs for the ODRCP are recognized within professional services in the statement of income.

The remaining components of net periodic benefit cost are recognized in other noninterest expense in the statement of income.

Service costs for the Defined Benefit Plan, the BEP, and the DB SERP are recognized within salaries and employee benefits in the consolidated statement of income.

Service costs for the ODRCP are recognized within professional services in the consolidated statement of income.

The remaining components of net periodic benefit cost are recognized in other noninterest expense in the consolidated statement of income.

Pension Settlement

As a practical expedient, ASC 715, “Compensation–Retirement Benefits,” permits employers to not apply pension plan settlement accounting and to treat settlement transactions as normal benefit payments if the cost of all settlements in the year is less than or equal to the sum of the service cost and interest cost components of net periodic benefit cost.

The Company has elected this practical expedient.

During the year ended December 31, 2022, lump sum payments from the Defined Benefit Plan exceeded the sum of the service cost and interest cost components (the “threshold”) of the Defined Benefit Plan’s net periodic pension cost.

ASC 715-20, “Compensation-Retirement Benefits - Defined Benefit Plans,” requires that upon determining it is probable that such

threshold will be met, an entity shall immediately recognize in earnings a pro rata portion of the aggregate unamortized gain or loss (e.g., “non-cash settlement charge”).

In accordance with the applicable accounting guidance, the Company elected to apply a practical expedient to remeasure the plan assets and obligations as of the nearest month-end date upon the triggering of the previously mentioned threshold.

Accordingly, the Company performed a remeasurement as of October 31, 2022 and, subsequently, as of December 31, 2022.

The Company determined, with assistance from its actuaries, the amount of the resulting non-cash settlement charge to be a loss of $ 12.0 million which was recorded in other noninterest expense in the consolidated statement of income .

Benefits expected to be paid

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Dividends on unallocated shares are used to pay the ESOP debt.

Total compensation expense recognized in connection with the ESOP was $ 9.4 million for the year ended December 31, 2021, compared with a $ 2.4 million expense recognized during the year ended December 31, 2020.

The ESOP made an upfront principal payment of $ 1.0 million on the loan during year ended December 31, 2020 which resulted in the release and allocation of 63,690 shares and compensation expense of $ 0.9 million.

The Company recorded additional compensation expense of $ 1.5 million related to the accrual of the loan payment during year ended December 31, 2020.

The ESOP made a loan payment during the year ended December 31, 2021 of $ 7.9 million, of which $ 3.0 million was allocated to the principal portion of the payment, while $ 4.9 million was allocated to the interest portion of the payment.

During the year ended December 31, 2021, the Company committed 501,444 shares to be allocated.

Total compensation expense recognized in connection with the ESOP was $ 9.9 million for the year ended December 31, 2022, compared to $ 9.4 million and $ 2.4 million recognized during the years ended December 31, 2021 and 2020, respectively.

The ESOP made a loan payment during the year ended December 31, 2022 of $ 7.9 million, of which $ 3.2 million was allocated to the principal portion of the payment and $ 4.7 million was allocated to the interest portion of the payment.

The ESOP made a loan payment during the year ended December 31, 2021 of $ 7.9 million, of which $ 3.0 million was allocated to the principal portion of the payment and $ 4.9 million was allocated to the interest portion of the payment.

The ESOP made an upfront principal payment of $ 1.0 million on the loan during year ended year ended December 31, 2020 which resulted in the release and allocation of 63,690 shares and compensation expense of $ 0.9 million.

The Company recorded additional compensation expense of $ 1.5 million related to the accrual of the loan payment during the year ended December 31, 2020.

The number of shares committed to be released per year is 501,426 through 2049 and 231,124 in the year 2050.

3 unchanged sentences

Allocated shares 1,046,850 565,134

Shares committed to be allocated 605,908 104,464

Unallocated shares 14,271,054 14,772,498

Shares committed to be released 104,464 104,464

Unallocated shares (suspense shares) 13,769,628 14,271,054

Total shares 14,920,942 14,940,652

Fair value of unallocated shares (in thousands) $ 287,847 $ 240,939

Fair value of unallocated shares $ 237,526 $ 287,847

Defined Contribution Supplemental Executive Retirement Plan

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Deferred amounts, adjusted for deemed investment performance, are paid at the time of a participant designated date or event, such as separation from service, death, or disability.

The total amounts due to participants under the three plans were included in other liabilities on the Company’s balance sheets and amounted to $ 31.5 million and $ 28.9 million at December 31, 2021 and 2020, respectively.

The total amounts due to participants under the three plans were included in other liabilities on the Company’s Consolidated Balance Sheets and amounted to $ 25.4 million and $ 31.5 million at December 31, 2022 and 2021, respectively.

Rabbi Trust Variable Interest Entity

The Company established a rabbi trust to meet its obligations under certain executive non-qualified retirement benefits and deferred compensation plans and to mitigate the expense volatility of the aforementioned retirement plans.

The rabbi trust is considered a VIE as the equity investment at risk is insufficient to permit the trust to finance its activities without additional subordinated financial support from the Company.

The Company is considered the primary beneficiary of the rabbi trust as it has the power to direct the activities of the rabbi trust that significantly affect the rabbi trust’s economic performance and it has the obligation to absorb losses of the rabbi trust that could potentially be significant to the rabbi trust by virtue of its contingent call options on the rabbi trust’s assets in the event of the Company’s bankruptcy.

As the primary beneficiary of this VIE, the Company consolidates the rabbi trust investments.

The Company established rabbi trusts to meet its obligations under certain executive non-qualified retirement benefits and deferred compensation plans and to mitigate the expense volatility of the aforementioned retirement plans.

The rabbi trusts are considered a VIEs as the equity investment at risk is insufficient to permit the trusts to finance their activities without additional subordinated financial support from the Company.

The Company is considered the primary beneficiary of the rabbi trusts as it has the power to direct the activities of the rabbi trusts that significantly affect the rabbi trusts’ economic performance and it has the obligation to absorb losses of the rabbi trusts that could potentially be significant to the rabbi trusts by virtue of its contingent call options on the rabbi trusts’ assets in the event of the Company’s bankruptcy.

As the primary beneficiary of these VIEs, the Company consolidates the rabbi trust investments.

In general, the rabbi trust investments and any earnings received thereon are accumulated, reinvested and used exclusively for trust purposes.

11 unchanged sentences

Total rabbi trust assets $ 76,286 $ 104,372

Investments in rabbi trust accounts are recorded at fair value within the Company’s consolidated balance sheets with changes in fair value recorded through noninterest income.

The following tables present the book value, net unrealized gain or loss, and market value of assets held in rabbi trust accounts by asset type for each of the plans included in the rabbi trust:

As of December 31, 2021 As of December 31, 2020

Book Value Unrealized

Gain/(Loss) Fair Value Book Value Unrealized

Gain/(Loss) Fair Value

Asset Type (In thousands)

Cash and cash equivalents $ 831 $ — $ 831 $ 1,208 $ — $ 1,208

Equities (1) 9,993 5,788 15,781 10,822 5,508 16,330

Fixed income 4,174 24 4,198 4,854 224 5,078

Total assets $ 14,998 $ 5,812 $ 20,810 $ 16,884 $ 5,732 $ 22,616

(1) Equities include mutual funds and other exchange-traded funds.

As of December 31, 2021 As of December 31, 2020

Book Value Unrealized

Gain/(Loss) Fair Value Book Value Unrealized

Gain/(Loss) Fair Value

Asset Type (In thousands)

Cash and cash equivalents $ 567 $ — $ 567 $ 320 $ — $ 320

Equities (1) 6,207 3,412 9,619 3,504 1,730 5,234

Fixed income 2,993 23 3,016 1,565 79 1,644

Total assets $ 9,767 $ 3,435 $ 13,202 $ 5,389 $ 1,809 $ 7,198

(1) Equities include mutual funds and other exchange-traded funds.

As of December 31, 2021 As of December 31, 2020

Book Value Unrealized

Gain/(Loss) Fair Value Book Value Unrealized

Gain/(Loss) Fair Value

Asset Type (In thousands)

Cash and cash equivalents $ 123 $ — $ 123 $ 230 $ — $ 230

Equities (1) 2,093 1,132 3,225 1,985 959 2,944

Fixed income 959 9 968 1,022 55 1,077

Total assets $ 3,175 $ 1,141 $ 4,316 $ 3,237 $ 1,014 $ 4,251

(1) Equities include mutual funds and other exchange-traded funds.

As of December 31, 2021 As of December 31, 2020

Book Value Unrealized

Gain/(Loss) Fair Value Book Value Unrealized

Gain/(Loss) Fair Value

Asset Type (In thousands)

Cash and cash equivalents $ 229 $ — $ 229 $ 240 $ — $ 240

Equities (1) 24,837 8,936 33,773 20,966 6,928 27,894

Fixed income — — — — — —

Total assets $ 25,066 $ 8,936 $ 34,002 $ 21,206 $ 6,928 $ 28,134

(1) Equities include mutual funds and other exchange-traded funds.

Deferred Compensation Plans

The following tables present the book value, net unrealized gain or loss, and market value of assets held in rabbi trust accounts by asset type:

As of December 31, 2022 As of December 31, 2021

1 unchanged sentence

Gain/(Loss) Fair Value Book Value Unrealized

Gain/(Loss) Fair Value

Gain Fair Value

Asset Type (In thousands)

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The 2021 Plan provides for the issuance of up to 26,146,141 shares of common stock pursuant to grants of restricted stock, restricted stock units (“RSUs”), non-qualified stock options and incentive stock options, any or all of which can be granted with performance-based vesting conditions.

Under the 2021 Plan, 7,470,326 shares may be issued as restricted stock or RSUs and 18,675,815 shares may be issued upon the exercise of stock options.

Under the 2021 Plan, 7,470,326 shares may be issued as restricted stock or RSUs, including those issued as performance shares and performance share units (“PSUs”), and 18,675,815 shares may be issued upon the exercise of stock options.

These shares may be awarded from the Company’s authorized but unissued shares.

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The maximum term for stock options is ten years .

As of December 31, 2021, there were 6,787,270 shares available for issuance as restricted stock awards and 18,675,815 shares that remain available for issuance upon the exercise of stock options.

As of December 31, 2021, no stock options had been awarded under to the 2021 Plan.

The following table summarizes the Company’s restricted stock activity for the year ended December 31, 2021:

Number of Shares Weighted-Average Grant Price Per Share

On March 1, 2022, the Company granted to all of the Company’s executive officers and certain other employees a total of 978,364 RSUs, which vest pro-rata on an annual basis over a period of three or five years , and a total of 533,676 PSUs, for which vesting is contingent upon the Compensation Committee of the Board of Director’s certification, after the conclusion of a three-year period, that the Company has attained a threshold level of certain performance criteria over such period.

On May 17, 2022, the Company granted a total of 31,559 shares of restricted stock to the Company’s non-employee directors which vest after approximately one year from the date of grant.

As of December 31, 2022 and 2021, there were 5,302,256 shares and 6,787,270 shares that remained available for issuance as restricted stock or RSU awards, respectively, and 18,675,815 shares that remain available for issuance upon the exercise of stock options at both dates.

As of both December 31, 2022 and 2021, no stock options had been awarded under the 2021 Plan.

The following table summarizes the Company’s restricted stock award activity for the periods indicated:

For the Years Ended December 31,

Restricted Stock Awards Number of Shares Weighted-Average Grant Price Per Share Number of Shares Weighted-Average Grant Price Per Share

Non-vested restricted stock at beginning of year 683,056 $ 20.13 — $ —

Granted 31,559 19.17 683,056 20.13

Vested ( 136,609 ) 20.13 — —

Forfeited ( 52,546 ) 20.08 — —

Non-vested restricted stock at end of year 525,460 $ 20.08 683,056 $ 20.13

As of December 31, 2021, no restricted stock associated with the non-employee director stock awards was vested.

The following table summarizes the Company’s restricted stock unit activity for the periods indicated:

For the Years Ended December 31,

Restricted Stock Units Number of Shares Weighted-Average Grant Price Per Share Number of Shares Weighted-Average Grant Price Per Share

Non-vested restricted stock at beginning of year — $ — — $ —

Granted 978,364 21.08 — —

Forfeited ( 6,039 ) 21.08 — —

Non-vested restricted stock at end of year 972,325 $ 21.08 — $ —

The following table summarizes the Company’s performance stock unit activity for the periods indicated:

For the Years Ended December 31,

Performance Stock Units Number of Shares Weighted-Average Grant Price Per Share Number of Shares Weighted-Average Grant Price Per Share

Non-vested restricted stock at beginning of year — $ — — $ —

Granted 533,676 21.12 — —

Non-vested restricted stock at end of year 533,676 $ 21.12 — $ —

As of December 31, 2022, no RSU or PSU awards had vested.

As of December 31, 2021, no awards had vested.

For the year ended December 31, 2022, share-based compensation expense under the 2021 Plan and the related tax benefit totaled $ 10.5 million and less than $ 3.0 million, respectively.

As of December 31, 2021, there was $ 13.5 million of total unrecognized compensation expense related to non-vested restricted stock granted and issued under the 2021 Plan.

This cost is expected to be recognized over a weighted average remaining period of approximately 4.9 years.

For the year ended December 31, 2021, share-based compensation expense under the 2021 Plan and the related tax benefit totaled $ 0.2 million and less than $ 0.1 million, respectively.

As of December 31, 2022 and 2021, there was $ 34.6 million and $ 13.5 million, respectively, of total unrecognized compensation expense related to non-vested restricted stock granted and issued under the 2021 Plan.

As of December 31, 2022, this cost is expected to be recognized over a weighted average remaining period of approximately 3.3 years.

As of December 31, 2021, this cost was expected to be recognized over a weighted average remaining period of approximately 4.9 years.

Commitments and Contingencies

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Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party.

In the event the customer does not perform in accordance with terms of agreement with the third party, the Company would be required to fund the commitment.

In the event the customer does not perform in accordance with the terms of agreement with the third party, the Company would be required to fund the commitment.

The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount of the commitment.

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In the second quarter of 2021, the Company entered into a preliminary settlement of two purported class action matters concerning overdraft and nonsufficient funds fees.

The matters were filed in the Massachusetts Superior Court in November 2019 and April 2021, respectively, and are expected to be consolidated into one matter for final settlement purposes.

As of December 31, 2021, the Company estimated the settlement expense, including related costs, to be $ 3.3 million.

In addition, the Company’s regulators have been conducting inquiries and reviewing data related to one of these class action matters.

In February 2022, the Company's regulators made an additional request for data and notified management that they may require additional restitution for certain matters associated with the nonsufficient funds fees matter.

Based on this discussion, management believes a loss contingency for this restitution is probable but is not currently able to determine a reasonable estimate for the loss.

The matters were filed in the Massachusetts Superior Court in November 2019 and April 2021, respectively, and were consolidated into one matter for final settlement purposes.

The matters were settled during the first quarter of 2022 and the total settlement expense, including related costs, was $ 3.3 million.

The Company incurred no costs in 2022 related to these matters as the total settlement expense had been accrued in 2021 when management determined the loss contingency to be both probable and estimable.

The Company’s regulators conducted inquiries and reviewed data related to one of these class action matters and, in February 2022, made an additional request for data and notified management that they may require additional restitution for certain matters associated with the nonsufficient funds fees matter.

Based on this discussion, management believed that a loss contingency for this restitution was probable but was not able to determine a reasonable estimate for the loss.

However, later during the first quarter of 2022, the Company was informed by its regulators that no additional remediation on this issue would be required.

As a result, as of December 31, 2022, management no longer believes that a loss contingency for restitution associated with this issue is probable.

As a member of the Federal Reserve System, the Bank is required to maintain certain reserves of vault cash and/or deposits with the Federal Reserve Bank of Boston.

3 unchanged sentences

Additionally, the Company enters into interest rate derivatives and foreign exchange contracts to accommodate the business requirements of its customers (“customer-related positions”) and risk participation agreements entered into as financial guarantees of performance on customer-related interest rate swap derivatives.

Derivative instruments are carried at fair value in the Company’s financial statements.

The Company also enters into residential mortgage loan

commitments to fund mortgage loans at specified rates and times in the future and enters into forward sale commitments to sell such residential mortgage loans at specified prices and times in the future, both of which are considered derivative instruments.

Derivative instruments are carried at fair value in the Company’s Consolidated Financial Statements.

The accounting for changes in the fair value of a derivative instrument is dependent upon whether or not the instrument qualifies as a hedge for accounting purposes, and further, by the type of hedging relationship.

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As such, management believes the risk of incurring credit losses on derivative contracts with those counterparties is remote.

The Company’s discounting methodology and interest calculation of cash margin uses the Secured Overnight Financing Rate, or SOFR, for U.S.

dollar cleared interest rate swaps.

Interest Rate Positions

1 unchanged sentence

The amounts relating to the notional principal amount are not actually exchanged.

The Company may enter into interest rate swaps in which they pay floating and receive fixed interest in order to manage its interest rate risk exposure to the variability in interest cash flows on certain floating-rate commercial loans.

The Company has entered into interest rate swaps in which it pays floating and receives fixed interest in order to manage its interest rate risk exposure to the variability in interest cash flows on certain floating-rate loans.

Such interest rate swaps include those which effectively convert the floating rate one-month LIBOR, SOFR or overnight indexed swap rate, or prime rate interest payments received on the loans to a fixed rate and consequently reduce the Company’s exposure to variability in short-term interest rates.

For interest rate swaps that are accounted for as cash flow hedges, changes in fair value are included in other comprehensive income and reclassified into net income in the same period or periods during which the hedged forecasted transaction affects net income.

As of December 31, 2021 and 2020, the Company does not have any active interest rate swaps which qualify as cash flow hedges for accounting purposes.

The following table reflects the Company’s derivative positions as of December 31, 2022 for interest rate swaps which qualify as cash flow hedges for accounting purposes:

Weighted Average Rate

Amount Weighted Average

Maturity Current

Rate Paid Receive Fixed

Swap Rate Fair Value (1)

(In thousands) (In Years) (In thousands)

Interest rate swaps on loans $ 2,400,000 4.57 4.07 % 3.02 % $ ( 2,401 )

Total $ 2,400,000 $ ( 2,401 )

(1) The fair value included a net accrued interest payable balance of $ 1.5 million as of December 31, 2022.

In addition, the fair value includes netting adjustments which represent the amounts recorded to convert derivative assets and liabilities cleared through the CME from a gross basis to a net basis in accordance with applicable accounting guidance.

As of December 31, 2021, the Company did not have any active interest rate swaps which qualified as cash flow hedges for accounting purposes.

The maximum amount of time over which the Company is currently hedging its exposure to the variability in future cash flows of forecasted transactions related to the receipt of variable interest on existing financial instruments is five years .

The Company expects approximately $ 42.0 million will be reclassified into interest income, as a reduction of such income, from other comprehensive income related to the Company’s active cash flow hedges in the next 12 months as of December 31, 2022.

The reclassification is due to anticipated net payments on the swaps based upon the forward curve as of December 31, 2022.

Due to the phase-out, and eventual discontinuation, of the LIBOR, central clearinghouses have begun to transition to alternative rates for valuation purposes.

2 unchanged sentences

dollar cleared interest rate swaps.

The Company believes that it’s improvements to its valuation methodology will result in valuations for cleared interest rate swaps that better reflect prices obtainable in the markets in which the Company transacts.

The changes in valuation methodology are applied prospectively as a change in accounting estimate and are immaterial to the Company’s financial statements.

The following table presents the pre-tax impact of terminated cash flow hedges on AOCI for the years ended December 31, 2021 and 2020.

The Company believes that its improvements to its valuation methodology will result in valuations for cleared interest rate swaps that better reflect prices obtainable in the markets in which the Company transacts.

The changes in valuation methodology are applied prospectively as a change in accounting estimate and are immaterial to the Company’s Consolidated Financial Statements.

The Company discontinues cash flow hedge accounting if it is probable that the forecasted hedged transactions will not occur in the initially identified time period.

At such time, the associated gains and losses deferred in accumulated other

comprehensive income (“AOCI”) are reclassified immediately into earnings and any subsequent changes in the fair value of such derivatives are recognized directly in earnings.

The following table presents the pre-tax impact of terminated cash flow hedges on AOCI for the periods indicated:

Year Ended December 31,

2022 2021 2020

(In thousands)

4 unchanged sentences

The balance of terminated cash flow hedges in AOCI will be amortized into earnings through January 2023.

The Company expects approximately $ 10.2 million to be reclassified into interest income from other comprehensive income related to the Company’s terminated cash flow hedges in the next 12 months as of December 31, 2021.

The Company expects less than $ 0.1 million to be reclassified into interest income from other comprehensive income related to the Company’s terminated cash flow hedges in the next 12 months as of December 31, 2022.

Customer-Related Positions

1 unchanged sentence

These swaps allow the Company to retain variable rate commercial loans while allowing the commercial customer to synthetically fix the loan rate by entering into a variable-to-fixed rate interest rate swap.

The Company believes that its exposure to commercial customer derivatives is limited to non-performance by either the customer or the dealer because these contracts are simultaneously matched at inception with an offsetting dealer transaction.

Risk participation agreements are entered into as financial guarantees of performance on interest rate swap derivatives.

4 unchanged sentences

Exposure with respect to these derivatives is largely limited to non-performance by either the customer or the other counterparty.

Neither the Company nor the correspondent-bank counterparty

are required to post collateral but each has established foreign-currency transaction limits to manage the exposure risk.

Neither the Company nor the correspondent-bank counterparty are required to post collateral but each has established foreign-currency transaction limits to manage the exposure risk.

The Company requires its customers to post collateral to minimize risk exposure.

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The level of interest rate swaps, risk participation agreements and foreign currency exchange contracts at the end of each period noted above was commensurate with the activity throughout those periods.

The table below presents the fair value of the Company’s derivative financial instruments, as well as their classification on the balance sheet for the periods indicated.

There were no derivatives designated as hedging instruments at December 31, 2021 and 2020.

The table below presents the fair value of the Company’s derivative financial instruments, as well as their classification on the Consolidated Balance Sheets for the periods indicated:

Asset Derivatives Liability Derivatives

6 unchanged sentences

(In thousands)

Derivatives designated as hedging instruments

Interest rate swaps Other assets $ 16 $ — Other liabilities $ 2,417 $ —

Derivatives not designated as hedging instruments

4 unchanged sentences

Foreign currency exchange contracts — foreign currency loan Other assets 2 — Other liabilities 93 87

$ 23,845 $ 64,714 $ 79,005 $ 18,593

Total $ 23,861 $ 64,714 $ 81,422 $ 18,593

The table below presents the net effect of the Company’s derivative financial instruments on the consolidated income statements as well as the effect of the Company’s derivative financial instruments included in other comprehensive income (“OCI”) as follows:

There were no derivatives designated as hedging instruments at December 31, 2021.

The table below presents the net effect of the Company’s derivative financial instruments on the Consolidated Statements of Income as well as the effect of the Company’s derivative financial instruments included in other comprehensive income (“OCI”) as follows:

For the Year Ended December 31,

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Cleared derivative transactions are with CME and exposure is settled to market daily, with additional credit exposure related to initial-margin collateral pledged to CME at trade execution.

At December 31, 2021 and 2020, the Company’s exposure to CME for settled variation margin in excess of the customer-related interest rate swap termination values was $ 0.4 million, and less than $ 0.1 million, respectively.

At December 31, 2022, the Company had no exposure to CME for settled variation margin in excess of the customer-related and non-customer-related interest rate swap termination values.

At December 31, 2021, the Company had exposure to CME for settled variation margin in excess of the customer-related and non-customer-related interest rate swap termination values of $ 0.4 million.

In addition, at December 31, 2022 and 2021, the Company had posted initial-margin collateral in the form of U.S.

Treasury notes amounting to $ 84.1 million and $ 48.9 million, respectively, to CME for these derivatives.

Treasury notes were considered restricted assets and were included in available for sale securities.

At December 31, 2021 and 2020 the fair value of all customer-related interest rate swap derivatives with credit-risk related contingent features that were in a net liability position, which includes accrued interest but excludes any adjustment for non-performance risk, was $ 13.7 million and $ 42.6 million, respectively.

Treasury notes were considered restricted assets and were included in available for sale securities on the Company’s Consolidated Balance Sheets.

At December 31, 2022, there were no interest rate swap derivatives with credit-risk contingent features in a net liability position.

At December 31, 2021, the fair value of interest rate swap derivatives with credit-risk related contingent features that were in a net liability position, which includes accrued interest but excludes any adjustment for non-performance risk, totaled $ 13.7 million.

The Company has minimum collateral posting thresholds with its customer-related interest rate swap derivative correspondent-bank counterparties to the extent that the Company has a liability position with the correspondent-bank counterparties.

At December 31, 2021 and 2020, the Company had posted collateral in the form of cash amounting to $ 21.3 million and $ 49.2 million, respectively, which was considered to be a restricted asset and was included in other short-term investments.

If the Company had breached any of these provisions at December 31, 2021 or 2020, it would have been required to settle its obligations under the agreements at the termination value.

At December 31, 2022 and 2021, the Company had posted collateral in the form of cash amounting to $ 1.0 million and $ 21.3 million, respectively, which was considered to be a restricted asset and was included in other short-term investments within the Company’s Consolidated Balance Sheets.

If the Company had breached any of these provisions at

December 31, 2022 or 2021, it would have been required to settle its obligations under the agreements at the termination value.

In addition, the Company had cross-default provisions with its commercial customer loan agreements which provide cross-collateralization with the customer loan collateral.

Mortgage Banking Derivatives

The Company enters into residential mortgage loan commitments in connection with its consumer mortgage banking activities to fund mortgage loans at specified rates and times in the future.

In addition, the Company enters into forward sale commitments to sell such residential mortgage loans at specified prices and times in the future.

These commitments are short-term in nature and generally expire in 30 to 60 days.

The residential mortgage loan commitments that relate to the origination of mortgage loans that will be held for sale and the related forward sale commitments are considered derivative instruments under ASC Topic 815, “Derivatives and Hedging” and are reported at fair value.

Changes in fair value are reported in earnings and included in other non-interest income on the Consolidated Statements of Income.

As of December 31, 2022 and December 31, 2021, the Company had an outstanding notional balance of residential mortgage loan origination commitments of $ 8.3 million and $ 31.9 million, respectively, and forward sale commitments of $ 10.0 million and $ 24.4 million, respectively.

During the years ended December 31, 2022, 2021 and 2020, the Company recorded net (losses)/gains related to the change in fair value of commitments to originate and sell mortgage loans of $( 0.2 ) million, $( 0.7 ) million and $ 0.9 million, respectively.

The aggregate fair value of the Company’s mortgage banking derivative asset and liability as of December 31, 2022 was $ 0.1 million and $ 0.1 million, respectively.

The aggregate fair value of the Company’s mortgage banking derivative asset and liability as of December 31, 2021 was $ 0.3 million and $ 0.1 million, respectively.

Mortgage banking derivative assets and liabilities are included in other assets and other liabilities, respectively, on the Consolidated Balance Sheets.

Residential mortgages sold are generally sold with servicing rights released.

Mortgage banking derivatives do not qualify as hedges for accounting purposes.

Balance Sheet Offsetting

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Derivative Assets

Interest rate swaps designated as cash flow hedges $ 16 $ — $ 16 $ — $ — $ 16

Customer-related positions:

5 unchanged sentences

Derivative Liabilities

Interest rate swaps designated as cash flow hedges $ 2,417 $ — $ 2,417 $ — $ 2,417 $ —

Customer-related positions:

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For these financial instruments, which have original maturities of 90 days or less, their carrying amounts reported in the Consolidated Balance Sheets approximate fair value.

Available for Sale Securities

Available for sale securities recorded at fair value consisted of U.S.

Securities consisted of U.S.

Treasury securities, U.S.

government-sponsored residential and commercial mortgage-backed securities, U.S.

Agency bonds and state and municipal bonds.

Agency bonds (including SBA pooled securities), U.S.

government-sponsored residential and commercial mortgage-backed securities, state and municipal bonds, and other debt securities.

AFS securities are recorded at fair value.

The Company’s U.S.

1 unchanged sentence

The fair value of U.S.

Agency bonds, including Small Business Administration pooled securities, are evaluated using relevant trade data, benchmark quotes and spreads obtained from publicly available trade data, and generated on a price, yield or spread basis as determined by the observed market data.

Agency bonds, including Small Business Administration pooled securities, were evaluated using relevant trade data, benchmark quotes and spreads obtained from publicly available trade data, and generated on a price, yield or spread basis as determined by the observed market data.

Therefore, these securities were categorized as Level 2 given the use of observable inputs.

15 unchanged sentences

The fair value of PPP loans, which are fully guaranteed by the SBA, approximates the carrying amount.

Loans that are deemed to be impaired were recorded at the fair value of the underlying collateral, if the loan is collateral-dependent, or at a carrying value based upon expected cash flows discounted using the loan’s effective interest rate.

Loans are classified as Level 3 since the valuation methodology utilizes significant unobservable inputs.

Loans that are deemed to be collateral-dependent, as described in Note 2, “Summary of Significant Accounting Policies” were recorded at the fair value of the underlying collateral.

The fair value of FHLB stock approximates the carrying amount based on the redemption provisions of the FHLB.

5 unchanged sentences

The fair value of other U.S.

government agency obligations was estimated using either a matrix or benchmarks.

government agency obligations were estimated using either a matrix or benchmarks.

The inputs used include benchmark yields, reported trades, broker/dealer quotes, and issuer spreads.

18 unchanged sentences

Escrow deposits of borrowers were classified as Level 2.

Interest Rate Swap Collateral Funds

The fair value of interest rate swap collateral funds approximates the carrying amount.

Interest rate swap collateral funds were classified as Level 2.

Interest Rate Swaps

11 unchanged sentences

The fair values of foreign currency forward contracts were based upon the remaining expiration period of the contracts and bid quotations received from foreign exchange contract dealers and were categorized as Level 2 within the fair value hierarchy.

Mortgage Derivatives

The fair value of mortgage derivatives was determined based upon current market prices for similar assets in the secondary market and therefore are classified as Level 2 within the fair value hierarchy.

Fair Value of Assets and Liabilities Measured on a Recurring Basis

14 unchanged sentences

State and municipal bonds and obligations 183,092 — 183,092 —

Small Business Administration pooled securities 32,103 — 32,103 —

Other debt securities 1,285 — 1,285 —

2 unchanged sentences

Interest rate swap contracts

Cash flow hedges - interest rate positions 16 — 16 —

Customer-related positions 23,567 — 23,567 —

2 unchanged sentences

Matched customer book 198 — 198 —

Foreign currency loan 2 — 2 —

Mortgage derivatives 62 — 62 —

Total $ 6,795,530 $ 162,314 $ 6,633,216 $ —

Interest rate swap contracts

Cash flow hedges - interest rate positions $ 2,417 $ — $ 2,417 $ —

Customer-related positions 78,577 — 78,577 —

3 unchanged sentences

Foreign currency loan 93 — 93 —

Mortgage derivatives 58 — 58 —

Total $ 81,480 $ — $ 81,480 $ —

13 unchanged sentences

State and municipal bonds and obligations 280,329 — 280,329 —

Small Business Administration pooled securities 32,103 — 32,103 —

Other debt securities 1,597 — 1,597

Rabbi trust investments 104,372 96,190 8,182 —

6 unchanged sentences

Foreign currency loan — — — —

Mortgage derivatives 256 — 256 —

Total $ 8,681,772 $ 184,795 $ 8,496,977 $ —

5 unchanged sentences

Foreign currency loan 87 — 87 —

Mortgage derivatives 16 — 16 —

Total $ 18,609 $ — $ 18,609 $ —

11 unchanged sentences

(In thousands)

Collateral-dependent impaired loans whose fair value is based upon appraisals

$ 12,068 $ — $ — $ 12,068

Individually assessed collateral-dependent loans whose fair value is based upon appraisals $ 16,432 $ — $ — $ 16,432

Fair Value Measurements at Reporting Date Using

7 unchanged sentences

$ 12,068 $ — $ — $ 12,068

For the valuation of collateral-dependent impaired loans, the Company relies primarily upon third-party valuation information from certified appraisers and values are generally based upon recent appraisals of the underlying collateral, brokers’ opinions based upon recent sales of comparable properties, estimated equipment auction or liquidation values, income capitalization, or a combination of income capitalization and comparable sales.

For the valuation of the collateral-dependent loans, the Company relies primarily on third-party valuation information from certified appraisers and values are generally based upon recent appraisals of the underlying collateral, brokers’ opinions based upon recent sales of comparable properties, estimated equipment auction or liquidation values, income capitalization, or a combination of income capitalization and comparable sales.

Depending on the type of underlying collateral, valuations may be adjusted by management for qualitative factors such as economic factors and estimated liquidation expenses.

The range of these possible adjustments may vary.

Impaired loans in which a reserve was established based upon expected cash flows discounted at the loan’s effective interest rate are not deemed to be measured at fair value.

Refer to Note 2, “Summary of Significant Accounting Policies” and Note 5, “Loans and Allowance for Credit Losses” for further discussion regarding the Company’s adoption of ASU 2016-13 and the effect of that adoption on the management’s process for estimating the allowance for loan losses.

Loans for which a reserve was established based upon expected cash flows discounted at the loan’s effective interest rate are not deemed to be measured at fair value.

Disclosures about Fair Value of Financial Instruments

6 unchanged sentences

Inputs (Level 3)

(Dollars in thousands)

(In thousands)

Held to maturity securities:

Government-sponsored residential mortgage-backed securities $ 276,493 $ 246,343 $ — $ 246,343 $ —

Government-sponsored commercial mortgage-backed securities 200,154 176,883 — 176,883 —

Loans, net of allowance for loan losses 13,420,317 13,149,096 — — 13,149,096

3 unchanged sentences

FHLB advances 704,084 702,954 — 702,954 —

Escrow deposits from borrowers 20,258 20,258 — 20,258 —

Escrow deposits of borrowers 22,314 22,314 — 22,314 —

Interest rate swap collateral funds 14,430 14,430 — 14,430 —

Fair Value Measurements at Reporting Date Using

4 unchanged sentences

Inputs (Level 3)

(Dollars in thousands)

(In thousands)

Loans, net of allowance for loan losses $ 12,157,281 $ 12,282,323 $ — $ — $ 12,282,323

3 unchanged sentences

FHLB advances 14,020 13,558 — 13,558 —

Escrow deposits from borrowers 13,425 13,425 — 13,425 —

Escrow deposits of borrowers 20,258 20,258 — 20,258 —

This summary excludes certain financial assets and liabilities for which the carrying value approximates fair value.

4 unchanged sentences

Revenue from Contracts with Customers

The Company adopted the new revenue recognition standard under ASC 606 on January 1, 2019 using the modified retrospective approach.

Revenue recognition remained substantially unchanged following adoption of ASC 606 and, therefore, there were no material changes to the Company’s Consolidated Financial Statements as of or for the year ended December 31, 2019, as a result of adopting the new guidance.

Revenue from contracts with customers within the scope of ASC 606, Revenue from Contracts with Customers (Topic 606) (“ASC 606”) is recognized when control of goods or services is transferred to the customer, in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.

22 unchanged sentences

Total noninterest income in-scope of ASC 606 176,583 164,196 154,745

Total noninterest income out-of-scope of ASC 606 28,959 23,628 26,081

Total noninterest (loss) income out-of-scope of ASC 606 ( 422 ) 28,959 23,628

Total noninterest income $ 176,161 $ 193,155 $ 178,373

2 unchanged sentences

The Company acts as an agent in offering property, casualty, and life and health insurance to both commercial and consumer customers though Eastern Insurance Group.

The Company earns a fixed commission on the sales of these products and services.

The Company may also earn bonus commissions based upon meeting certain volume thresholds.

In general, the Company recognizes commission revenues when earned based upon the effective date of the policy.

For certain insurance products, the Company may also earn and recognize annual residual commissions commensurate with annual premiums being paid.

The Company also earns profit-sharing, or contingency revenues from the insurers with whom the Company places business.

The Company earns a fixed commission rate on the sales of these products and services.

The Company may also earn additional commissions from the insurers based upon meeting certain criteria, such as premium levels, growth rates, new business volume and loss experience.

The Company recognizes commission revenues when earned based upon the effective date of the policy or when services are rendered.

Certain revenues are deferred to reflect delivery of services over the contract period.

Commissions are earned on the contract effective date and generally are based upon a percentage of premiums for insurance coverage.

Commission rates depend upon a large number of factors, including the type of risk being placed, the particular underwriting enterprise’s demand, the expected loss experience of the particular risk coverage, and historical benchmarks surrounding the level of effort necessary for the Company to place and service the insurance contract.

The vast majority of the Company’s services and revenues are associated with the placement of an insurance contract.

Insurance commissions earned but not yet received amounted to $ 15.1 million and $ 15.6 million as of December 31, 2022, and 2021, respectively, and were included in other assets on the Consolidated Balance Sheets.

The Company also earns profit-sharing revenues, also referred to as contingency revenue, from the insurers with whom the Company places business.

These profit-sharing revenues are performance bonuses from the insurers based upon certain performance metrics such as floors on written premiums, loss rates, and growth rates.

Because the Company’s expectation of the ultimate profit-sharing revenue amounts to be earned can vary from period to period, the Company does not recognize this revenue until it has concluded that, based on all the facts and information available, it is probable that a significant revenue reversal will not occur in future periods.

Insurance commissions earned but not yet received amounted to $ 15.6 million and $ 15.8 million as of December 31, 2021, and 2020 respectively, and were included in other assets.

These amounts are in excess of the commission revenues discussed above, and not all business placed with underwriting enterprises is eligible for contingent revenues.

Contingent revenues are variable and generally based upon the Company’s expectation of the ultimate profit-sharing revenue amounts to be earned and can vary from period to period.

The Company’s contracts are generally calendar year contracts whereby revenues from underwriting enterprises are received in the calendar year following placement, generally the first and second quarters, after verification of the performance indicators outlined in the contracts.

Accordingly, during each reporting period, management must make its best estimate of the amounts that have been earned using historical averages and other factors to project revenues.

The Company bases its estimates each period on a contract-by-contract basis.

As estimates may change significantly from period to period, the Company does not recognize this revenue until it has concluded that, based on all the facts and information available, it is probable that a significant revenue reversal will not occur in future periods.

Deposit Service Charges

3 unchanged sentences

These transactional services are primarily those that are identified in the standard fee schedule, and include, but are not limited to, services such as overdraft protection, wire transfer, and check collection.

The Company charges monthly fixed service fees associated with the customer having access to the deposit account as well as separate fixed fees associated with and at the time specific transactions are entered into by the customer.

The Company may charge monthly fixed service fees associated with the customer having access to the deposit account as well as separate fixed fees associated with and at the time specific transactions are entered into by the customer.

As such, the Company considers that its performance obligations are fulfilled when customers are provided deposit account access or when the requested deposit transaction is completed.

25 unchanged sentences

safe deposit rent, ATM surcharge fees and customer checkbook fees.

Individually, these sources of noninterest income are immaterial.

Individually, these sources of noninterest income are not material.

Other Comprehensive Income

The following tables present a reconciliation of the changes in the components of other comprehensive income (loss) for the dates indicated including the amount of income tax (expense) benefit allocated to each component of other comprehensive income (loss):

The following tables present a reconciliation of the changes in the components of other comprehensive income (loss) for the dates indicated including the amount of income tax benefit (expense) allocated to each component of other comprehensive (loss) income:

For the Year Ended December 31, 2022

Amount Tax (Expense)

Benefit After Tax

Amount Tax Benefit (Expense) After Tax

(In thousands)

Unrealized (losses) gains on securities available for sale:

Unrealized losses on securities available for sale:

Change in fair value of securities available for sale $ ( 1,061,859 ) $ 238,005 $ ( 823,854 )

reclassification adjustment for gains included in net income 1,166 ( 257 ) 909

reclassification adjustment for losses included in net income ( 3,157 ) 873 ( 2,284 )

Net change in fair value of securities available for sale ( 1,058,702 ) 237,132 ( 821,570 )

Unrealized (losses) gains on cash flow hedges:

Unrealized losses on cash flow hedges:

Change in fair value of cash flow hedges (1)

( 69,010 ) 18,377 ( 50,633 )

net cash flow hedge gains reclassified into interest income (1)

2 unchanged sentences

Defined benefit pension plans:

Change in actuarial net gain (loss) 19,243 ( 5,409 ) 13,834

Change in actuarial net loss 6,323 ( 1,777 ) 4,546

amortization of actuarial net loss ( 11,032 ) 3,101 ( 7,931 )

Plan amendment – Century acquisition lump sum distribution option 1,106 ( 311 ) 795

Defined Benefit Plan settlement loss ( 12,045 ) 3,386 ( 8,659 )

net accretion of prior service credit 11,882 ( 3,340 ) 8,542

Net change in other comprehensive income for defined benefit postretirement plans 21,953 ( 6,171 ) 15,782

Total other comprehensive income $ ( 143,913 ) $ 32,983 $ ( 110,930 )

Net change in other comprehensive income for defined benefit pension plans 17,518 ( 4,924 ) 12,594

Total other comprehensive loss $ ( 1,119,774 ) $ 253,278 $ ( 866,496 )

For the Year Ended December 31, 2021

Amount Tax (Expense)

Benefit After Tax

Amount Tax Benefit (Expense) After Tax

(In thousands)

Unrealized gains (losses) on securities available for sale:

Unrealized (losses) gains on securities available for sale:

Change in fair value of securities available for sale $ ( 133,466 ) $ 30,117 $ ( 103,349 )

1 unchanged sentence

Net change in fair value of securities available for sale ( 134,632 ) 30,374 ( 104,258 )

Unrealized gains (losses) on cash flow hedges:

Unrealized gains on cash flow hedges:

Change in fair value of cash flow hedges (1)

46,871 ( 13,175 ) 33,696

net cash flow hedge gains reclassified into interest income (1)

2 unchanged sentences

Defined benefit pension plans:

Change in actuarial net loss ( 58,811 ) 16,532 ( 42,279 )

Change in actuarial net gain 19,243 ( 5,409 ) 13,834

amortization of actuarial net loss ( 13,400 ) 3,767 ( 9,633 )

Plan amendment - prior service credit 133,439 ( 37,510 ) 95,929

net accretion of prior service cost 1,931 ( 543 ) 1,388

Net change in other comprehensive income for defined benefit postretirement plans 83,484 ( 23,468 ) 60,016

Total other comprehensive income $ 133,862 $ ( 35,781 ) $ 98,081

Plan amendment - Century acquisition lump sum distribution option 1,106 ( 311 ) 795

net accretion of prior service credit 11,796 ( 3,316 ) 8,480

Net change in other comprehensive income for defined benefit pension plans 21,953 ( 6,171 ) 15,782

Total other comprehensive loss $ ( 143,913 ) $ 32,983 $ ( 110,930 )

For the Year Ended December 31, 2020

2 unchanged sentences

(Dollars in thousands)

Unrealized gains (losses) on securities available for sale:

Unrealized gains on securities available for sale:

Change in fair value of securities available for sale $ 30,926 $ ( 6,828 ) $ 24,098

3 unchanged sentences

Change in fair value of cash flow hedges (1)

46,871 ( 13,175 ) 33,696

net cash flow hedge gains reclassified into interest income (1)

27,131 ( 7,626 ) 19,505

Net change in fair value of cash flow hedges 19,740 ( 5,549 ) 14,191

Defined benefit pension plans:

Change in actuarial net loss ( 37,722 ) 10,603 ( 27,119 )

Change in actuarial net gain ( 58,811 ) 16,532 ( 42,279 )

amortization of actuarial net loss ( 10,787 ) 3,033 ( 7,754 )

amortization of prior service cost ( 44 ) 11 ( 33 )

Net change in other comprehensive income for defined benefit postretirement plans ( 30,436 ) 8,556 ( 21,880 )

Plan amendment - prior service credit 133,439 ( 37,510 ) 95,929

net accretion of prior service credit 1,931 ( 543 ) 1,388

Net change in other comprehensive income for defined benefit pension plans 83,484 ( 23,468 ) 60,016

Total other comprehensive income $ 133,862 $ ( 35,781 ) $ 98,081

(1) Includes amortization of $ 22.5 million and $ 11.4 million for the years ended December 31, 2021 and 2020, respectively, of the remaining balance of realized but unrecognized gains, net of tax, from the termination of interest rate swaps.

(1) Includes amortization of $ 7.3 million, $ 22.5 million, and $ 11.4 million for the years ended December 31, 2022, 2021, and 2020, respectively, of the remaining balance of realized but unrecognized gains, net of tax, from the termination of interest rate swaps.

The total realized gain of $ 41.2 million, net of tax, will be recognized in earnings through January 2023.

The balance of this gain had amortized to $ 7.4 million and $ 29.8 million, net of tax, at December 31, 2021 and December 31, 2020, respectively.

The balance of this gain had amortized to less than $ 0.1 million, $ 7.4 million, and $ 29.8 million, net of tax, at December 31, 2022, December 31, 2021, and December 31, 2020, respectively.

The following table illustrates the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax:

1 unchanged sentence

Sale Securities Unrealized

(Losses) and Gains on

Hedges Defined Benefit

3 unchanged sentences

January 1, 2020 $ 21,798 $ 15,624 $ ( 81,269 ) $ ( 43,847 )

Other comprehensive income (loss) before reclassifications 42,715 14,576 ( 27,119 ) 30,172

Other comprehensive income before reclassifications 24,098 33,696 53,650 111,444

Amounts reclassified from accumulated other comprehensive income 224 19,505 ( 6,366 ) 13,363

2 unchanged sentences

December 31, 2020 $ 45,672 $ 29,815 $ ( 21,253 ) $ 54,234

Other comprehensive income (loss) before reclassifications 24,098 33,696 53,650 111,444

Other comprehensive (loss) income before reclassifications ( 103,349 ) — 14,629 ( 88,720 )

Amounts reclassified from accumulated other comprehensive income 909 22,454 ( 1,153 ) 22,210

Net current-period other comprehensive income 23,874 14,191 60,016 98,081

Net current-period other comprehensive (loss) income ( 104,258 ) ( 22,454 ) 15,782 ( 110,930 )

Ending balance:

December 31, 2021 $ ( 58,586 ) $ 7,361 $ ( 5,471 ) $ ( 56,696 )

Other comprehensive income (loss) before reclassifications ( 103,349 ) — 14,629 ( 88,720 )

Other comprehensive (loss) income before reclassifications ( 823,854 ) ( 50,633 ) 4,546 ( 869,941 )

Amounts reclassified from accumulated other comprehensive income ( 2,284 ) 6,887 ( 8,048 ) ( 3,445 )

Net current-period other comprehensive income ( 104,258 ) ( 22,454 ) 15,782 ( 110,930 )

Net current-period other comprehensive (loss) income ( 821,570 ) ( 57,520 ) 12,594 ( 866,496 )

Ending balance:

December 31, 2022 $ ( 880,156 ) $ ( 50,159 ) $ 7,123 $ ( 923,192 )

The following table illustrates the significant amounts reclassified out of each component of accumulated other comprehensive income, net of tax:

The following table illustrates the significant amounts reclassified out of each component of accumulated other comprehensive (loss)/income, net of tax:

Year Ended December 31,

Details about Accumulated Other Comprehensive Income Components 2021 2020 2019 Affected Line Item in the Statement Where Net Income is Presented

Details about Accumulated Other Comprehensive (Loss)/Income Components 2022 2021 2020 Affected Line Item in the Statement Where Net Income is Presented

(In thousands)

Unrealized gains and losses on available-for-sale securities $ 1,166 $ 288 $ 2,016 Gain/(loss) on sale of securities

Unrealized (losses) and gains on available-for-sale securities $ ( 3,157 ) $ 1,166 $ 288 (Losses) gains on sales of securities available for sale, net

( 3,157 ) 1,166 288 Total before tax

( 257 ) ( 64 ) ( 459 ) Tax (expense) or benefit

873 ( 257 ) ( 64 ) Tax benefit or (expense)

$ ( 2,284 ) $ 909 $ 224 Net of tax

Unrealized gains and losses on cash flow hedges $ 31,234 $ 27,131 $ 2,698 Interest income

Unrealized gains on cash flow hedges $ 9,580 $ 31,234 $ 27,131 Interest income

9,580 31,234 27,131 Total before tax

( 8,780 ) ( 7,626 ) ( 758 ) Tax (expense) or benefit

( 2,693 ) ( 8,780 ) ( 7,626 ) Tax expense

$ 6,887 $ 22,454 $ 19,505 Net of tax

Amortization of defined benefit pension items $ ( 13,400 ) $ ( 10,787 ) $ ( 7,242 ) Net periodic pension cost

Accretion (amortization) of prior service credit (cost) 11,796 1,931 ( 44 ) Employee Benefits footnote

Amortization of defined benefit pension items $ ( 23,077 ) $ ( 13,400 ) $ ( 10,787 ) Net periodic pension cost - see Note 17

Accretion of prior service credit 11,882 11,796 1,931 Net periodic pension cost - see Note 17

( 11,195 ) ( 1,604 ) ( 8,856 ) Total before tax

451 2,490 2,047 Tax benefit or (expense)

3,147 451 2,490 Tax benefit

$ ( 8,048 ) $ ( 1,153 ) $ ( 6,366 ) Net of tax

2 unchanged sentences

The Company’s primary reportable segment is its banking business, which offers a range of commercial, retail, wealth management and banking services, and consists primarily of attracting deposits from the general public and investing those deposits, together with borrowings and funds generated from operations, to originate loans in a variety of sectors and to invest in securities.

Revenue from the banking business consists primarily of interest earned on loans and investment securities.

Revenue from the banking business reportable segment consists primarily of interest earned on loans and investment securities.

In addition to its banking business reportable segment, the Company has an insurance agency business reportable segment, which consists of insurance-related activities, acting as an independent agent in offering commercial, personal and employee benefits insurance products to individual and commercial clients.

7 unchanged sentences

Net interest income $ 568,054 $ — $ — $ 568,054

Release of allowance for loan losses ( 9,686 ) — — ( 9,686 )

Provision for allowance for loan losses 17,925 — — 17,925

Net interest income after provision for loan losses 550,129 — — 550,129

1 unchanged sentence

Noninterest expense 390,880 83,208 ( 4,486 ) 469,602

Income before provision for income taxes 170,479 14,388 3,845 188,712

Income tax provision 29,994 4,053 — 34,047

Income before income tax expense 237,251 15,606 3,831 256,688

Income tax expense 52,521 4,408 — 56,929

Net income $ 184,730 $ 11,198 $ 3,831 $ 199,759

7 unchanged sentences

Net interest income $ 429,827 $ — $ — $ 429,827

Provision for loan losses 38,800 — — 38,800

Release of allowance for loan losses ( 9,686 ) — — ( 9,686 )

Net interest income after provision for loan losses 439,513 — — 439,513

1 unchanged sentence

Noninterest expense 365,410 82,780 ( 4,234 ) 443,956

Income before provision for income taxes 13,080 18,933 3,888 35,901

Income tax provision 7,870 5,293 — 13,163

Income before income tax expense 170,479 14,388 3,845 188,712

Income tax expense 29,994 4,053 — 34,047

Net income $ 140,485 $ 10,335 $ 3,845 $ 154,665

7 unchanged sentences

Net interest income $ 401,251 $ — $ — $ 401,251

Provision for loan losses 6,300 — — 6,300

Provision for allowance for loan losses 38,800 — — 38,800

Net interest income after provision for loan losses 362,451 — — 362,451

1 unchanged sentence

Noninterest expense 431,705 77,806 ( 4,588 ) 504,923

Income before provision for income taxes 157,481 13,662 3,436 174,579

Income tax provision 35,542 3,939 — 39,481

Income before income tax expense 13,080 18,933 3,888 35,901

Income tax expense 7,870 5,293 — 13,163

Net income $ 5,210 $ 13,640 $ 3,888 $ 22,738

19 unchanged sentences

Total liabilities and shareholders’ equity $ 2,472,445 $ 3,406,602

(1) Includes $ 133.5 million that is eliminated in consolidation as of December 31, 2021.

The entire balance as of December 31, 2020 is eliminated in consolidation.

(1) Includes $ 125.0 million and $ 133.5 that is eliminated in consolidation as of December 31, 2022 and 2021, respectively.

STATEMENTS OF INCOME

2 unchanged sentences

(In thousands)

Interest income $ 15 $ — $ —

Total income 15 — —

Professional services 899 7,393 1,485

3 unchanged sentences

Loss before income taxes and equity in undistributed income of subsidiaries ( 3,954 ) ( 7,615 ) ( 92,923 )

Income tax benefit ( 11,344 ) ( 13,933 ) ( 131 )

Income (loss) before equity in undistributed income of subsidiaries 3,729 ( 78,990 ) ( 334 )

Income tax expense (benefit) 269 ( 11,344 ) ( 13,933 )

(Loss) income before equity in undistributed income of subsidiaries ( 4,223 ) 3,729 ( 78,990 )

Equity in undistributed income of subsidiaries 203,982 150,936 101,728

4 unchanged sentences

(In thousands)

Cash flows provided by (used in) operating activities

Cash flows provided by operating activities

Net income $ 199,759 $ 154,665 $ 22,738

2 unchanged sentences

Issuance of common shares donated to the Eastern Bank Foundation — — 91,287

Share-based compensation 10,507 — —

ESOP expense 9,923 9,408 2,351

2 unchanged sentences

Net cash provided by operating activities 20,062 5,592 3,481

Cash flows used in investing activities

Cash flows provided by (used in) investing activities

Investment in Eastern Bank — — ( 882,096 )

1 unchanged sentence

Return of investments in subsidiary 240,000 140,000 —

Net cash used in investing activities ( 500,890 ) ( 882,096 ) —

Cash flows provided by (used in) financing activities

Contributions to other equity investments ( 788 ) — —

Net cash provided by (used in) investing activities 239,212 ( 500,890 ) ( 882,096 )

Cash flows (used in) provided by financing activities

Proceeds from issuance of common shares — — 1,792,878

3 unchanged sentences

— ( 36,277 ) —

Payments for shares repurchased under share repurchase plan ( 23,224 ) — —

Payments for shares repurchased under share repurchase plans ( 201,618 ) ( 23,224 ) —

Dividends declared and paid to common shareholders ( 65,886 ) ( 51,564 ) —

Net cash (used in) provided by financing activities ( 267,504 ) ( 111,065 ) 1,614,919

Net increase in cash and cash equivalents ( 606,363 ) 736,304 ( 655 )

Net (decrease) increase in cash and cash equivalents ( 8,230 ) ( 606,363 ) 736,304

Cash and cash equivalents at beginning of year 134,671 741,034 4,730

6 unchanged sentences

The Company has, and expects to have in the future, related party transactions in the ordinary course of business.

The transactions include, but are not limited to, lending activities and deposits services with directors and executive officers of the Company and their affiliates.

The transactions include, but are not limited to, lending activities and deposit services with directors and executive officers of the Company and their affiliates.

Based on the Company’s assessment, such transactions are consistent with prudent banking practices and are within applicable banking regulations.

Further details relating to certain party transactions are outlined below:

At December 31, 2021 and 2020, the amount of deposits from related parties held by the Company totaled $ 25.9 million and $ 10.4 million, respectively.

The amount of loans with related parties at December 31, 2021 and 2020 were $ 51.5 million and $ 21.0 million, respectively.

The increase in related party loans is primarily attributable to loans acquired from Century for which related party relationships exist.

In addition, the Company had commitments to lend to related parties of $ 35.0 million and $ 17.3 million at December 31, 2021 and 2020, respectively.

Subsequent Events

On January 14, 2022, the Company announced it had entered into an asset purchase agreement for the transfer of the Company’s cannabis-related and money service business deposits relationships, which were acquired from Century, to Needham Bank.

The transaction is expected to close in the first half of 2022, subject to regulatory approval and other customary

closing conditions.

As of December 31, 2021, the aggregate deposit balance of the accounts which are expected to be transferred to Needham Bank was $ 472.3 million.

The Company does not expect to recognize a material gain or loss in connection with this transaction.

During the years ended December 31, 2022, 2021 and 2020, no such transactions involved amounts in excess of 5% of the Company’s total shareholders’ equity.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data