What changed in this filing

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Item 1. Business

2024-02-26 compared with 2023-02-24 · 165 added, 190 removed, 646 unchanged (35% of the section changed)

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We are the sole shareholder of Eastern Bank, which we sometimes refer to as the “Bank,” a Massachusetts-chartered bank founded in 1818.

Through the Bank and its wholly owned subsidiary, Eastern Insurance Group LLC (“Eastern Insurance Group”), we provide a variety of banking, trust and investment, and insurance services.

We have two reportable business segments:

banking and insurance agency.

Through the Bank, we provide a variety of banking and trust and investment services.

As of December 31, 2022, we had two reportable business segments:

banking and insurance agency, which we conducted under the name Eastern Insurance Group LLC (“Eastern Insurance Group”).

In the third quarter of 2023, we announced the sale of substantially all of the assets and transfer of substantially all of the liabilities of our insurance agency business.

We completed the sale on October 31, 2023.

Accordingly, as of December 31, 2023, we had one reportable segment:

our banking business.

As of December 31, 2023, we had total consolidated assets of $21.1 billion, total gross loans of $14.0 billion, total deposits of $17.6 billion and total shareholders’ equity of $3.0 billion.

We are subject to comprehensive regulation and examination by the Massachusetts Commissioner of Banks, the Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve Board and the Consumer Financial Protection Bureau.

Our diversified products and services include lending, deposit, wealth management and insurance products.

Our diversified products and services include lending, deposit, and wealth management.

Deposits obtained through the branch banking network have traditionally been the principal source of funds for use in lending and for other general business purposes.

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Through Eastern Bank’s wealth management offering, we provide a wide range of trust services.

Eastern Insurance Group acts as an agent in offering insurance solutions for clients with personal, commercial or employee benefits-related insurance needs.

In addition, we offer automated lock box collection services, cash management services and account reconciliation services to our corporate and institutional customers, as well as cash management services to our municipal clients.

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is Eastern Bank, which is a wholly owned subsidiary.

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

Eastern Bank controls five active subsidiaries as follows:

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

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

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

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

Eastern Insurance Group, a wholly owned subsidiary that previously acted as an agent in offering insurance solutions for clients with personal, commercial or employee benefits-related insurance needs.

Substantially all of the assets and certain liabilities of Eastern Insurance Group were sold in the fourth quarter of 2023, and Eastern Insurance Group no longer conducts operations.

Market Area and Competition

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The estimated median age of the population in the Boston–Worcester–Providence CSA is 40.4 years, compared to 39.0 years for the United States as a whole.

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

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

For the fourteen counties in eastern Massachusetts, southern Maine, and southern New Hampshire in which our branches are located and from which we gather

most of our deposits, the average unemployment rate as of December 2023 was 3.2%, as compared to 3.5% for the United States as a whole.

For the statistical area consisting of Boston and Cambridge, Massachusetts, and Nashua, New Hampshire, which is a subset of the Boston–Worcester–Providence CSA, the unemployment rate as of December 2023, the most recent date for which data was available, was 3.2%, according to the U.S.

Bureau of Labor Statistics.

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

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

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

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

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

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

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

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

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

Eastern Insurance Group Acquisitions

In 2002, we acquired Allied American Insurance Agency, Inc.

from the Arbella Insurance Group, which became Eastern Insurance Group.

From 2004 through 2022, we expanded Eastern Insurance Group by acquiring 37 independent insurance agencies, the purchase prices for which ranged from less than $1.0 million to $17.1 million with an average purchase price of $3.8 million.

In 2022, we acquired two independent insurance agencies, the purchase prices for which were $5.2 million and $8.2 million, respectively.

Since 1997, we have completed eight mergers or acquisitions of banking businesses, the most recent of which was Century Bancorp, Inc., which we acquired in November 2021.

On September 19, 2023, we entered into a definitive merger agreement with Cambridge Bancorp (“Cambridge”) and Cambridge Trust Company pursuant to which we have agreed to acquire Cambridge through a stock for stock merger, with us as the surviving entity.

The closing of the Cambridge acquisition remains subject to required shareholder and regulatory approvals and satisfaction of other customary closing conditions set forth in the merger agreement.

There can be no assurances as to whether, or when, we and Cambridge will obtain the required approvals or complete the merger.

additional discussion, refer to the “Outlook and Trends” section included in Part II, Item 7 in this Annual Report on Form 10-K.

Business Strategy

Our goal is to enhance our position as one of the leading community banking institutions in our market, providing a broad array of banking and other financial services to retail, commercial and small business customers.

Our goal is to enhance our position as one of the leading banking institutions in our market, providing a broad array of banking and other financial services to retail, commercial and small business customers.

In recent years, we have focused significant effort on and invested heavily in our infrastructure to create sophisticated and competitive products and services, a strong, experienced work force, and awareness of our banking brand.

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

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

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

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

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

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

Pursue opportunistic acquisitions.

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

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

In addition, we intend to continue to pursue opportunistic acquisitions of additional insurance agencies in existing and contiguous markets.

Leverage technology to enhance customer experience and drive operating efficiencies.

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

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

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

Lending Activities

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

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

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

We believe our loan portfolio is well diversified with approximately 9,600 commercial relationships at December 31, 2023.

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

In connection with our

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

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

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

As of December 31, 2023, the remaining recorded investment balance of loans acquired in connection with our Century acquisition and which were outside of our traditional lending area was $401.7 million.

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

Beginning in the third quarter of 2022 and ending in the first quarter of 2023, we purchased mortgage loans, specifically one- to four-family residential real estate loans, a portion of which were outside of our traditional lending area.

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

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

From the third quarter

of 2022 to the first quarter of 2023, we purchased a total of $412.2 million of residential real estate loans.

As of December 31, 2023, $355.9 million of those acquired loans were outside of our traditional lending area.

Our lending focuses on the following categories of loans:

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

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

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

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

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

The average tenure of our commercial and industrial portfolio varies according to market conditions but at December 31, 2023 it was approximately 6 years.

In managing the commercial and industrial loan portfolio, we focus on the size of the customer’s lending relationship, which we view as the aggregate amount of all loans and loan commitments outstanding to a commercial borrower and any related borrowers or guarantors.

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As of December 31, 2023, our commercial and industrial SNC Program portfolio totaled $606.2 million, or 20.0%, of our commercial and industrial portfolio, and 45.1% of our commercial and industrial SNC Program portfolio were loans to borrowers headquartered in our primary lending market.

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

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

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

During the year ended December 31, 2023 we sold $214.2 million commercial and industrial loans that were previously included in the SNC program portfolio.

Our commercial and industrial portfolio also includes our Asset Based Lending Portfolio (“ABL Portfolio”) and IRBs, which are municipal bonds issued to finance major capital projects.

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

As of December 31, 2023, our ABL and commercial and industrial IRB portfolios totaled $203.1 million and $934.5 million, respectively.

Commercial Real Estate Loans.

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

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

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

A portion of our commercial real estate loans were included in the SNC program portfolio discussed above.

As of December 31, 2023, our commercial real estate SNC Program portfolio totaled $86.3 million, or 1.6% of our of our commercial real estate portfolio.

Our commercial real estate loan portfolio includes IRB loans of $591.0 million, or 10.8% of our commercial real estate portfolio, as of December 31, 2023.

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

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

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

If we foreclose on a commercial real estate loan, the marketing and liquidation period to convert the real estate asset to cash can be a lengthy process with substantial holding costs.

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At December 31, 2023, our ten largest construction loans had an average exposure of $33.8 million, ranging from $27.8 million to $50.0 million.

A portion of our commercial construction loans were included in the SNC program portfolio discussed above.

As of December 31, 2023, our commercial construction SNC Program portfolio totaled $10.2 million, or 2.6% of our of our commercial construction portfolio.

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

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

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

Land development loans and IRB loans within the construction portfolio totaled $2.6 million and $63.8 million, respectively, as of December 31, 2023.

Small Business Loans.

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

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

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

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

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

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As of December 31, 2023, our SBA portfolio held approximately 1,437 loans with $112.6 million outstanding.

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

As of December 31, 2022, the amount of PPP loans included in our business banking portfolio was $6.2 million.

One- to Four-Family Residential Real Estate Loans.

Our one- to four-family residential real estate loan portfolio consists of mortgage loans that enable borrowers to purchase or refinance existing homes, most of which serve as the primary residence of the owner.

As of December 31, 2022, we had total residential loans of $2.5 billion, representing 18.1% of our total loans.

As of December 31, 2023, we had total residential real estate loans of $2.6 billion, representing 18.4% of our total loans.

Underwriting considerations include, among others, income sources and their reliability, willingness to repay as evidenced by credit repayment history, financial resources including cash reserves and the value of the collateral.

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At December 31, 2023, our ten largest one- to four-family residential real estate loans had an average balance of $2.8 million, ranging from $2.2 million to $5.2 million.

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

As previously indicated, we began purchasing mortgage loans, specifically one- to four-family residential mortgages, in the third quarter of 2022 and we stopped purchasing these loans in the first quarter of 2023.

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

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

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

Beginning in the third quarter of 2022 and ending in the first quarter of 2023, we purchased mortgage loans, specifically one- to four-family residential real estate loans.

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

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

From the third quarter of 2022 to the first quarter of 2023, we purchased a total of $412.2 million of residential real estate loans.

We purchase loan participations from other financial institutions and during the year ended December 31, 2023, we purchased $366.7 million of loan participations.

As of December 31, 2023, we held loan participation interests, including SNCs, totaling $1.6 billion in loans originated by other lenders, consisting of $1.0 billion of commercial and industrial loan participations, $447.6 million of commercial real estate loan participations, $146.0 million of commercial construction loan participations, and less than $0.1 million of business banking loan participations.

In the third and

fourth quarters of 2023 we sold commercial and industrial loans totaling $214.2 million which were previously included in the SNC program portfolio.

Loan Approval Procedures and Authority

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Agency bonds, U.S.

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

Treasury securities, and state and municipal bonds and obligations.

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

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This policy dictates that investment decisions be made based on the safety of the investment, liquidity requirements, potential returns and market risk considerations.

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

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

At December 31, 2023, our securities portfolio totaled $4.9 billion, and generated interest and dividends of 13.4% of total interest income for the year ended December 31, 2023.

Sources of Funds

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Interest rates on deposits are based on factors that include loan demand, deposit maturities, alternative costs of funds, and interest rates offered by competing financial institutions in our market area.

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

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

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

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

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

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

We believe we have been able to attract and maintain satisfactory levels of deposits based on the level of service

we provide to our customers, the convenience of our banking locations, our electronic banking options, and our interest rates, all of which are generally competitive with those of competing financial institutions.

We also participate in the IntraFi Network, which allows us to provide access to FDIC deposit insurance protection on deposits for consumers, businesses and public entities that exceed same-bank FDIC insurance thresholds.

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

As of December 31, 2023, we had repurchased $1.3 billion reciprocal deposits from other IntraFi Network banks and had no additional capacity.

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

As of December 31, 2023, the balance of purchased brokered certificates of deposit was $50.0 million.

At December 31, 2023, total borrowings were $48.2 million.

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Maintaining available borrowing capacity with the FHLB provides us with a contingent source of liquidity.

Eastern Bank is a member of the FHLB of Boston.

The primary reason for our FHLBB membership is to gain access to a reliable source of wholesale funding, particularly term funding, as a tool to manage liquidity and interest rate risk.

Eastern Bank is a member of the FHLB of Boston, sometimes referred to herein as the “FHLBB.” The primary reason for our FHLBB membership is to gain access to a reliable source of wholesale funding, particularly term funding, as a tool to manage liquidity and interest rate risk.

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

Accordingly, we had invested $5.9 million in shares of the FHLBB and had $17.7 million outstanding in FHLBB borrowings with original maturities ranging from 1 week to 20 years at December 31, 2023.

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

See Note 11, “Borrowed Funds” within the Notes to the Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K for more information regarding borrowings.

We had $2.9 billion of borrowing capacity remaining with the FHLBB at December 31, 2023.

See Note 9, “Borrowed Funds” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K for more information regarding borrowings.

Eastern Wealth Management

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These assets are not assets of Eastern Bank and therefore are not included in the Consolidated Balance Sheets included in this Annual Report on Form 10-K.

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

Eastern Insurance Group LLC

Eastern Insurance Group, a wholly owned subsidiary of Eastern Bank, acts as an independent agent in offering personal, business and employee benefits insurance products to individual and commercial clients.

Personal insurance products include life, accident and health, automobile, and property and liability insurance including fire, condominium, home and tenants, among others.

Commercial insurance products include group life and health, commercial property and liability, surety, and workers compensation insurance, among others.

Eastern Insurance Group also offers a wide range of employee benefits products and services, including professional advice related to health care cost management, employee engagement and executive services.

As an agency business, Eastern Insurance Group does not assume any underwriting or insurance risk.

The commissions we earn on the sale of these insurance products and services, which totaled $99.2 million or 56.3% of our total noninterest income during the year ended December 31, 2022, is the most significant portion of our noninterest income.

Eastern Insurance Group represents many leading insurance companies.

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

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

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

Eastern Wealth Management had 47 full-time equivalent employees as of December 31, 2023 and revenue of $24.3 million during the year ended December 31, 2023.

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

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Eastern Bankshares, Inc.

is also subject to examination by the Massachusetts Commissioner of Banks.

is also subject to examination

by the Massachusetts Commissioner of Banks.

In addition, Eastern Bankshares, Inc.

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The Massachusetts Commissioner of Banks may suspend or remove directors or officers of a Massachusetts-chartered bank who have violated the law, conducted a bank’s business in a manner that is unsafe, unsound or contrary to the depositors’ interests, or been negligent in the performance of their duties.

In addition, the Massachusetts Commissioner of Banks has the authority to appoint the FDIC as a receiver or conservator if the Massachusetts Commissioner of Banks or the FDIC determine that we are conducting our business in an unsafe or unauthorized manner, and under certain other circumstances.

In addition, the Massachusetts Commissioner of Banks has the authority to appoint the FDIC as a receiver or conservator if the Massachusetts Commissioner of Banks or the FDIC determine that a Massachusetts-chartered bank is conducting business in an unsafe or unauthorized manner, and under certain other circumstances.

The powers that Massachusetts-chartered banks can exercise under these laws include, but are not limited to, the following:

Lending Activities.

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

accordance with applicable regulations.

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

Consumer and personal loans may also be made with or without security.

Insurance Sales.

Massachusetts-chartered banks may engage in insurance sales activities if the Massachusetts Commissioner of Banks has approved a plan of operation for insurance activities and the bank obtains a license from the Massachusetts Division of Insurance.

Massachusetts-chartered banks may be licensed directly or indirectly through an affiliate or a subsidiary corporation established for this purpose.

Eastern Bank has received approval for insurance sales activities, and offers a variety of personal and business insurance products and services through its wholly-owned subsidiary, Eastern Insurance Group, a licensed insurance agency.

Eastern Insurance Group has also obtained all licenses required by various state insurance regulatory authorities in other states that license, regulate and supervise insurance producers, brokers and agents.

Investment Activities.

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

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

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

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

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

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(to the extent applicable).

In addition, under Massachusetts regulations, Eastern Bankshares, Inc.

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

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

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

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

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

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

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

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

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

The program expired in August 2023.

We made no repurchases of shares during the year ended December 31, 2023.

Protection of Personal Information.

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The Massachusetts Commissioner of Banks may, under certain circumstances, suspend or remove officers or directors who have violated the law, conducted the bank’s business in a manner which is unsafe, unsound or contrary to the depositors’ interests or been negligent in the performance of their duties.

In addition, upon finding that a bank has engaged in an unfair or deceptive act or practice, the Massachusetts Commissioner of Banks may issue an order to cease and desist and impose a fine on the bank concerned.

In addition, upon finding that a bank has engaged in an unfair or

deceptive act or practice, the Massachusetts Commissioner of Banks may issue an order to cease and desist and impose a fine on the bank concerned.

Massachusetts consumer protection and civil rights statutes applicable to Eastern Bank permit private individual and class action lawsuits and provide for the rescission of consumer transactions, including loans, and the recovery of statutory and punitive damage and attorney’s fees in the case of certain violations of those statutes.

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

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

For further discussion of these requirements, see Note 14, “Minimum Regulatory Capital Requirements” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

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

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Transactions between banks and their affiliates are governed by federal law.

An affiliate of a bank is any company or entity that controls, is controlled by or is under common control with the bank.

An affiliate of a bank is any company or entity that controls, is

controlled by or is under common control with the bank.

In a holding company context, the parent bank holding company and any companies which are controlled by such parent holding company are affiliates of the bank (although subsidiaries of the bank itself, except financial subsidiaries, are generally not considered affiliates).

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

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

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

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

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

The FDIC has authority to increase insurance assessments.

On March 12 and 13, 2023, following the closures of Silicon Valley Bank (“SVB”) and Signature Bank and the appointment of the FDIC as the receiver for those banks, the FDIC announced that, under the systemic risk exception set forth in the Federal Deposit Insurance Act (“FDIA”), all insured and uninsured deposits of those banks were transferred to the respective bridge banks for SVB and Signature Bank.

The FDIC also announced that, as required by the FDIA, any losses to the Deposit Insurance Fund (“DIF”) to support uninsured depositors would be recovered by a special assessment.

On November 16, 2023, the FDIC published in the Federal Register its final rule that imposes special assessments to recover the loss to the DIF arising from the protection of uninsured depositors in connection with the systemic risk determination announced on March 12, 2023, following the closures of SVB and Signature Bank, as required by the FDIA.

The assessment base for the special assessments is equal to an insured depository institution’s (“IDI”) estimated uninsured deposits, reported as of December 31, 2022, adjusted to exclude the first $5 billion in estimated uninsured deposits from the IDI, or for IDIs that are part of a holding company with one or more subsidiary IDIs, at the banking organization level.

The final rule calls for the FDIC to collect special assessments at an annual rate of approximately 13.4 basis points, over eight quarterly assessment periods.

Because the estimated loss pursuant to the systemic risk determination will be periodically adjusted, the FDIC retains the ability to cease collection early, extend the special assessment collection period one or more quarters beyond the initial eight-quarter collection period to collect the difference between actual or estimated losses and the amounts collected, and impose a final shortfall special assessment on a one-time basis after the receiverships for SVB and Signature Bank terminate.

The final rule set an effective date of April 1, 2024, with special assessments collected beginning with the first quarterly assessment period of 2024 (i.e., January 1 through March 31, 2024, with an invoice payment date of June 28, 2024).

The FDIC has authority to further increase insurance assessments.

A significant increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of Eastern Bank.

Future insurance assessment rates cannot be predicted.

For further information regarding risks related to insurance assessments, please refer to “Risk Factors—Risks Related to Regulations—An increase in FDIC insurance assessments could significantly increase our expenses” in Part I, Item 1A of this Annual Report on Form 10-K

Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule order or regulatory condition imposed in writing.

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Community Reinvestment Act.

Under the Community Reinvestment Act, or CRA, as implemented by FDIC regulations, Eastern Bank as a non-member bank has a continuing and affirmative obligation, consistent with its safe and sound operation, to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods.

The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA.

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

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

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

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

On December 14, 2021, The Office of the Comptroller of the Currency issued a final rule to rescind its June 2020 Community Reinvestment Act (CRA) rule and replace it with a rule based on the rules adopted jointly by the Federal banking agencies in 1995, as amended.

The OCC’s action facilitates the planned future issuance of updated interagency CRA rules with the Federal Reserve Board and FDIC to modernize the CRA regulatory framework and promote consistency for all insured depository institutions.

It is unclear whether or when a final rule will be promulgated.

It is also unclear whether the Massachusetts Commissioner of Banks will adopt corresponding changes to its CRA regulations, which apply to all Massachusetts-chartered banks, including Eastern Bank.

On October 24, 2023, the FDIC, the Office of the Comptroller of the Currency (the “OCC”), and the Federal Reserve Board jointly issued a final rule that makes comprehensive amendments to the FDIC’s regulation implementing the CRA.

The amendments will change the ways that the agencies evaluate the engagement by Eastern Bank and other banks with assets of $2 billion or more with LMI individuals and communities, small businesses, and small farms, including conducting separate assessments of such banks’ activities using four tests:

(1) retail lending, (2) retail services and products, (3)

community development financing, and (4) community development services.

The amendments will update the CRA regulations to evaluate CRA performance outside traditional assessment areas generated by the growth of non–branch delivery systems, such as online and mobile banking.

The amendments also will require Eastern Bank and other banks with assets of $2 billion or more large banks to delineate their geographic CRA assessment areas on the basis of full counties, metropolitan divisions, or metropolitan statistical areas.

The final rule generally takes effect on April 1, 2024, with certain provisions becoming effective on January 1, 2026, and January 1, 2027.

Compensation Practices.

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

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

Among other items, the new rules require:

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

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

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

Additionally, federal securities regulations promulgated by the Securities and Exchange Commission require disclosures pertaining to executive compensation, including executive compensation paid to certain executive officers, the relationship of executive compensation to company financial performance, and our executive compensation policies and practices.

Consumer Protection and Fair Lending Regulations.

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Certain of these statutes authorize private individual and class action lawsuits and the award of actual, statutory and punitive damages and attorneys’ fees for certain types of violations.

Department of Justice also has authority to enforce federal fair lending laws, and has recently brought a number of enforcement actions against banks for discriminatory lending practices in violation of the Fair Housing Act and the Equal Credit Opportunity Act since announcing its Combatting Redlining Initiative in October 2021.

Consumer Financial Protection Bureau Supervision.

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Further, certain provisions of Title III impose affirmative obligations on a broad range of financial institutions, including banks, thrifts, brokers, dealers, credit unions, money transfer agents, and parties registered under the Commodity Exchange Act.

Eastern Bank has been impacted by provisions of the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, containing, among other provisions, certain temporary regulatory forbearance measures applicable during the COVID-19 pandemic state of emergency and temporary relief from troubled debt restructurings.

Consolidated Appropriations Act.

Eastern Bank has been impacted by provisions of the Consolidated Appropriations Act, which was enacted on December 27, 2020.

These provisions extend certain provisions related to the COVID-19 pandemic in the United States (which were due to expire) and provides additional emergency relief to individuals and businesses.

Included within the provisions of the Consolidated Appropriations Act was the extension of Section 4013 of the CARES Act to January 1, 2022, which provided relief from a requirement to evaluate loans that had received COVID-19 modifications to determine if the loans required troubled debt restructuring (“TDR”) treatment provided certain criteria were met.

Accordingly, we applied the TDR relief granted pursuant to such section to any qualifying loan modifications executed during the allowable time period.

Other Regulations

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(v) leasing personal or real property;

(vi) making investments in corporations or projects designed primarily to promote community welfare;

(vi) making investments in corporations or projects designed primarily to

promote community welfare;

and (vii) acquiring a savings and loan association whose direct and indirect activities are limited to those permitted for bank holding companies.

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is not a “bank holding company” under the Massachusetts banking laws, because Eastern Bank is our sole bank subsidiary.

Regulation of Eastern Insurance Group LLC

Eastern Insurance Group LLC is subject to regulation and supervision by the Massachusetts Division of Insurance, and various state insurance regulatory authorities in other states that license, regulate and supervise insurance producers, brokers and agents.

In connection with our pending acquisition of Cambridge Bancorp and its wholly owned depository subsidiary Cambridge Trust Company, we may elect to operate Cambridge Trust Company as a separate bank subsidiary for a relatively brief period, in which case Eastern Bankshares, Inc.

would be subject to regulation as a bank holding company for purposes of Massachusetts law.

Our pending acquisition of Cambridge Bancorp and Cambridge Trust Company remains subject to the receipt of regulatory approvals and the approvals of the shareholders of Eastern Bankshares, Inc.

and Cambridge Bancorp.

Federal Securities Laws

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

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

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

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

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

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

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

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

Sarbanes-Oxley Act of 2002

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Any company that acquires such control becomes a “bank holding company” subject to registration, examination and regulation by the Federal Reserve Board.

Through October 14, 2023, no person may acquire beneficial ownership of more than 10% of our common stock without prior approval of the Federal Reserve Board and the Massachusetts Commissioner of Banks.

If any person exceeds this 10% beneficial ownership threshold, shares in excess of 10% will not be counted as shares entitled to vote through October 14, 2023.

Legal and Regulatory Proceedings

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

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

For additional information, see Note 17, “Commitments and Contingencies” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

In part as a result of the extensive regulation, supervision and examination of our business described elsewhere in this Annual Report on Form 10-K, we are also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding our business, certain of which may result in adverse judgments, settlements, fines, penalties, public or private censure, increased costs, required remediation, restriction on business activities or other impacts on us.

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

We have received demand letters from purported shareholders generally alleging that the registration statement we initially filed with the SEC on November 13, 2023 to register the shares of our common stock that we expect to issue upon the acquisition of Cambridge Bancorp, and the related joint proxy statement/prospectus, dated January 16, 2024, for our special meeting of shareholders on February 28, 2024, omits material information in violation of the federal securities laws.

The shareholders have demanded disclosure of certain additional information pertaining to certain financial projections for each of us and Cambridge, certain information with respect to the analysis and opinion of our financial advisors, and other requested disclosures.

We received four demand letters in November 2023 prior to the date of the joint proxy statement/prospectus, and we received four other demand letters in February 2024 after we distributed the joint proxy statement/prospectus.

We believe that the allegations in the demand letters are meritless and no additional disclosure was or is required in this joint proxy statement/prospectus.

However, in order to avoid nuisance, cost and distraction, and to preclude any efforts to delay the closing of the merger, we and Cambridge voluntarily made additional disclosures in the definitive joint proxy statement/prospectus dated January 16, 2024, including supplemental disclosure contained in our Current Report on Form 8-K dated February 20, 2024.

To the extent that we acquire other companies, including Cambridge Bancorp and its subsidiary Cambridge Trust Company, our business may be negatively impacted by certain risks inherent with such acquisitions, including assumption of or potential exposure to significant liabilities of the acquired business, some of which may be unknown or contingent at the time of acquisition, including, without limitation, liabilities for regulatory and compliance issues.

For further information regarding risks related to regulatory actions and litigation, please refer to “Risk Factors—Risks Related to Our Business—Operational risks are inherent in our businesses,” “Risk Factors—Risks Related to Regulations” in Part I, Item 1A of this Annual Report on Form 10-K.

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Diversity, Equity & Inclusion (DE&I)

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

The Company, which employed 1,744 employees as of December 31, 2023, including 1,562 full-time employees, is deeply committed to having a diverse workforce reflective of the communities we serve, where all feel included and supported.

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

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

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

Overall, 54% of our Board of Directors is

comprised of women and people of color.

In 2023, two women with valuable banking, risk management and audit experience joined our Board of Directors.

• Our DEI Governance.

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

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

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

• Our diverse leadership team.

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

Our Management Committee, which plays a key role in managing the Company, is comprised of 12 executives, about 50% of whom are women and/or people of color, including our President, Quincy Miller, and Sujata Yadav, Executive Vice President and Chief Marketing Officer and the first woman of color to serve on this leadership team.

• Our history.

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

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

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

We received the 2023 National Association of Corporate Directors (NACD) Diversity, Equity & Inclusion Award in the Public Company – Small Cap Category.

The annual award recognizes boards that have improved their governance and created long-term value for stakeholders by implementing forward-thinking DE&I practices.

We were also recognized as a “Best Place to Work” for LGBTQ+ equality by the Human Rights Campaign for the 10th consecutive year.

Our long-standing support through the years includes being the first company in the country to sign the Gay and Lesbian Alliance Against Defamation’s amicus brief that asked the U.S.

Supreme Court to strike down the Defense of Marriage Act.

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ERG highlights in 2023 include:

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

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

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

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

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

◦ Our Black Professional Alliance group spearheaded our colleagues’ participation in volunteerism, events, and activities for the historic 114th National Association for the Advancement of Colored People National Convention held in Boston.

◦ Our disAbility Advocacy Alliance network led a panel discussion focused on recognizing barriers and building bridges to inclusion.

The panelists shared personal stories, views and perspectives on the importance of disability inclusion.

◦ Our Latinos In Action group led a number of colleague development sessions, including engagement activities celebrating diversity, inclusion and intersectionality;

◦ Throughout the year, our Heart of Eastern Volunteer group organized and supported various volunteer activities in our communities including:

women's rights, voting, nonprofit management, faith and fellowship, LGBTQ+ rights, children and families, and financial literacy.

◦ As part of our Black History Month celebration, our Black Professional Alliance and Military Veterans and Families Network organized a fireside chat with one of the last surviving Tuskegee Airmen, Brigadier General Enoch “Woody” Woodhouse, and Chair & CEO Bob Rivers.

◦ Our Asian American Professional Collective competed in the Annual Dragon Boat Race during the Boston Hong Kong Dragon Boat Festival.

The network has participated in this event since 2016.

◦ Equality Under the Blue organized colleague participation in five Pride events across different cities in Massachusetts.

Additionally, they hosted a panel discussion in partnership with the Young Professionals Coalition where our colleagues discussed their personal stories about coming out at work.

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

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◦ Young Professionals Network.

We are proud of our longstanding commitment to DEI.

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

We are proud of our longstanding commitment to DEI and continue to focus on this core value.

In 2023, we continued to implement our “Road to Equity” action plan that was launched in 2021, which reflects efforts to increase DEI across the Company, including talent acquisition, retention and development, supplier diversity, products and services, and philanthropic support from the Eastern Bank Foundation.

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

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

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

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

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

In 2023, we published our first comprehensive DEI report, covering elements of our strategy, metrics and progress.

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

We also continued to invest in programs and trainings to further support the Road to Equity, with a focus on building inclusion through our ERGs.

In April 2023, we led a month-long anti-racism campaign, sharing curated content and facilitating discussions among colleagues.

We expanded focus group discussions with our ERGs facilitated by our independent DEI consultant on inclusion and belonging to strengthen our culture across all employees.

We continued to track supplier diversity across all divisions in our Company.

In 2023, the newly formed Equity Alliance for Business, a team dedicated to providing business products and services to historically underserved business owners, implemented a special purpose credit program and other resources for underserved businesses in our communities.

In 2023, we continued to bring talent into our Company that reflects the communities we serve.

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

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

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

In 2023, despite a slowdown in hiring due to reduced turnover and the planned merger with Cambridge, 49% of new hires were racially diverse and 58% of new hires were women.

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

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

In 2023, 22% of our hires at those senior levels were racially diverse, and 48% were women.

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

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

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

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

and a pilot focused on understanding and preventing microaggressions.

and a workshop focused on understanding and preventing microaggressions.

The tables below depict our demographics as of December 31, 2023 for our Board of Directors, our Management Committee (which consists of our most senior executive leaders), our total workforce, and new hires in 2023:

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Gender Race & Ethnicity

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

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

119 80 2 201 17 21 54 2 3 104 201

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

COVID-19 Response

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

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

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

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

vaccinations, boosters and general CDC guidance;

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

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

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

Employee Well Being

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

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

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

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

We enhanced our wellness offerings, including mental health support.

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

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

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

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

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

Employee Engagement

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

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

In 2023, we virtually hosted six Town Hall meetings, led by the CEO.

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

We also engage our employees through more formal measures.

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

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

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

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

We also engage our employees through more formal and informal measures.

In 2023, we did not conduct our large-scale annual employee engagement survey due to the transition from our Company of over 400 colleagues from Eastern Insurance Group LLC.

Instead, we conducted more targeted engagement, including a pilot of engagement interviews, along with a survey of high performing talent that joined the Company during the “Covid years.” 93% reported they felt respected by team members and 90% reported their performance was appropriately rewarded.

The number one retention factor was work life balance, with employees who have flexibility in their schedules identifying that as a key reason to remain at our Company.

Two of our ERGs also participated in small group engagement discussions with our external DEI consultant to help us enhance inclusion and belonging at work.

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

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

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

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

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

In 2023, we continued supporting our employees’ commitment to engage with the communities by offering paid time off to volunteer.

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

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

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

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

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

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

We were named among the top 10 most charitable organizations in Massachusetts for the 11th year by the Boston Business Journal.

We also strive to engage employees during their most difficult times.

In 2023, we continued to support a fund that provides cash grants to eligible employees experiencing an unexpected financial hardship.

These grants provide a lifeline during a crisis for impacted recipients and the fund itself is highly valued by our colleagues.

During this past year, we also expanded our grief and loss policy to provide paid time off for the death of non-immediate family members including nieces, nephews and household members.

The policy also now provides paid time off for women who experience a pregnancy loss or unsuccessful in vitro fertilization (IVF) treatment.

In 2023, turnover was not a challenge for our Company, with turnover returning to a normalized, healthy rate.

Nonetheless, we continued to focus on development plans for high performing talent, with an emphasis on retention risk mitigation.

We believe the 2022 change to offer three weeks of vacation has also helped with talent retention.

Finally, our succession planning, particularly in our Commercial Credit and Lending Groups, has enabled us to further strengthen and engage our next generation of leaders.

Intellectual Property

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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 1. Business