What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-26 compared with 2023-02-24 · 1013 added, 1039 removed, 2080 unchanged (50% 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, 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”).

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

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.

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, 2023, 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 February 26, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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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.

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 judgments.

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.

Allowance for loan losses

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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.

We tested management’s quantitative model including evaluating the model validation procedures performed over conceptual soundness of model methodology, and with the assistance of EY Specialists, we assessed model governance policies and procedures, as well as 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.

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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.

Further, we performed an independent test over the existence of potential 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.

Goodwill Impairment Assessment of the Company's Reporting Business Reporting Unit

Description of the matter The Company’s Goodwill related to the banking business reporting unit totaled $566.2 million as of December 31, 2023.

As of December 31, 2023, management determined that goodwill of the banking business reporting unit was not impaired.

As described in Note 2 and Note 7 to the consolidated financial statements, the Company evaluates goodwill for impairment at least annually, as of September 30, or more often if warranted, using a quantitative impairment approach.

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

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

Specifically, the Company’s annual assessment performed as of September 30, 2023 included a comparison of the banking business’ book value to the implied fair value using an average of the income and market approaches.

The Company performed a qualitative assessment as of December 31, 2023 to update their goodwill impairment assessment of the banking business.

Auditing the Company’s goodwill impairment assessment of the banking business unit was complex due to the significant estimation involved in determining the fair value of the business unit.

In particular, the fair value was sensitive to certain assumptions used by management to develop the projected financial information used in the income approach, including the terminal forecasted net interest income assumption.

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 goodwill impairment evaluation process, which included, among others, controls over the appropriateness of the methodology, management’s evaluation and oversight of external specialists, and management’s identification and review of significant assumptions utilized in the quantitative impairment test.

With the assistance of EY Specialists we tested management’s quantitative impairment assessment including evaluating the impairment methodology, performing a sensitivity analysis to identify significant assumptions, independently testing a selection of significant assumptions used in the model, and independently testing the completeness and accuracy of the Company’s fair value determination utilized in the goodwill impairment test.

Additionally, for both the annual impairment test as of September 30, 2023 and the qualitative impairment assessment performed as of December 31, 2023, we have compared the significant assumptions used by management to recent financial performance, the company's peer group and economic trends.

/s/ Ernst & Young LLP

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Held to maturity (fair value $ 404,822 and $ 423,226 , respectively)

449,721 476,647

Total securities 4,857,242 7,167,425

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Other assets 536,267 426,863

Assets of discontinued operations — 128,219

Total assets $ 21,133,278 $ 22,646,858

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Other liabilities 513,990 424,951

Liabilities of discontinued operations — 34,930

Total liabilities 18,158,423 20,175,068

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Interest on federal funds sold and other short-term investments 37,395 3,271 1,886

Interest and dividends on trading securities — — 6

Total interest and dividend income 796,459 605,181 435,159

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Provision for (release of) allowance for loan losses 20,052 17,925 ( 9,686 )

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

Noninterest income:

Insurance commissions 99,232 94,704 94,495

Net interest income after provision for (release of) allowance for loan losses 530,357 550,129 439,513

Noninterest (loss) income:

Service charges on deposit accounts 28,631 30,392 24,271

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Debit card processing fees 13,469 12,644 12,118

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

(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

Interest rate swap income 1,536 6,009 5,634

Income (losses) from investments held in rabbi trusts 9,305 ( 10,762 ) 10,217

Losses on sale of commercial and industrial loans ( 2,738 ) — —

(Losses) gains on sales of mortgage loans held for sale, net ( 507 ) 248 3,605

(Losses) gains on sales of securities available for sale, net ( 333,170 ) ( 3,157 ) 1,166

Other 21,457 17,783 15,838

Total noninterest income 176,161 193,155 178,373

Total noninterest (loss) income ( 237,753 ) 76,750 97,437

Noninterest expense:

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Professional services 17,385 15,805 21,283

Charitable contributions — — 95,272

Marketing 7,592 9,294 8,500

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FDIC insurance 21,874 6,250 4,226

Amortization of intangible assets 3,864 2,512 2,857

Amortization of core deposit intangible asset 1,804 1,198 219

Other 21,144 26,238 6,313

Total noninterest expense 418,602 388,649 360,955

Income before income tax expense 256,688 188,712 35,901

Income tax expense 56,929 34,047 13,163

(Loss) income from continuing operations before income tax expense ( 125,998 ) 238,230 175,995

Income tax (benefit) expense ( 63,309 ) 51,719 30,464

Net (loss) income from continuing operations $ ( 62,689 ) $ 186,511 $ 145,531

Net income from discontinued operations 294,866 13,248 9,134

Net income $ 232,177 $ 199,759 $ 154,665

Basic earnings per share

Basic (loss) earnings per share from continuing operations $ ( 0.39 ) $ 1.13 $ 0.85

Basic earnings per share from discontinued operations 1.82 0.08 0.05

Basic earnings per share $ 1.43 $ 1.21 $ 0.90

Diluted earnings per share:

Diluted (loss) earnings per share from continuing operations $ ( 0.39 ) $ 1.13 $ 0.85

Diluted earnings per share from discontinued operations 1.82 0.08 0.05

Diluted earnings per share $ 1.43 $ 1.21 $ 0.90

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

EASTERN BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Year Ended December 31,

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Net income $ 232,177 $ 199,759 $ 154,665

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Net change in fair value of securities available for sale 295,913 ( 821,570 ) ( 104,258 )

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339 12,594 15,782

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

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

Total other comprehensive income (loss) 314,840 ( 866,496 ) ( 110,930 )

Total comprehensive income (loss) $ 547,017 $ ( 666,737 ) $ 43,735

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

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Comprehensive

Income Unallocated Common Stock Held by ESOP Total

Income (Loss) Unallocated Common Stock Held by ESOP Total

(In thousands, except share data)

Balance at December 31, 2020 186,758,154 $ 1,868 $ 1,854,068 $ 1,665,607 $ 54,234 $ ( 147,725 ) $ 3,428,052

Cumulative effect accounting adjustment (1)

— — — ( 1,131 ) — — ( 1,131 )

Dividends to common shareholders — — — ( 51,619 ) — — ( 51,619 )

Repurchased common stock ( 1,135,878 ) ( 12 ) ( 23,212 ) — — — ( 23,224 )

Issuance of restricted stock awards 683,056 7 ( 7 ) — — — —

Net income — — — 154,665 — — 154,665

Other comprehensive income, net of tax — — — — 98,081 — 98,081

Proceeds of stock offering and issuance of common shares (net of costs of $ 28.9 million)

179,287,828 1,793 1,762,187 — — — 1,763,980

Issuance of common shares donated to the Eastern Bank Foundation 7,470,326 75 91,212 — — — 91,287

Purchase of common shares by the ESOP ( 14,940,652 shares)

— — — — — ( 149,407 ) ( 149,407 )

Other comprehensive loss, net of tax — — — — ( 110,930 ) — ( 110,930 )

ESOP shares committed to be released — — 4,392 — — 5,016 9,408

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 (1)

— — — ( 20,098 ) — — ( 20,098 )

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

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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 — — — — ( 110,930 ) — ( 110,930 )

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

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

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Dividends to common shareholders — — — ( 67,020 ) — — ( 67,020 )

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

Issuance of restricted stock awards 47,820 1 ( 1 ) — — — —

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

Issuance of common stock under share-based compensation arrangements (3)

207,100 4 ( 1,400 ) — — — ( 1,396 )

Share-based compensation — — 16,513 — — — 16,513

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Balance at December 31, 2023 176,426,993 $ 1,767 $ 1,666,441 $ 2,047,754 $ ( 608,352 ) $ ( 132,755 ) $ 2,974,855

(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.

(1) 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.

Refer to Note 4, “Loans and Allowance for Credit Losses” for additional discussion.

(2) Represents gross transition adjustment amount of $ 1.1 million, net of taxes of $ 0.3 million, to reflect the cumulative impact on retained earnings pursuant to the Company’s adoption of Accounting Standards Update 2022-02.

Refer to Note 4, “Loans and Allowance for Credit Losses” for additional discussion.

(3) Represents shares issued, net of employee tax withheld, during the year ended December 31, 2023 upon the vesting of restricted stock units.

Refer to Note 16, “Share-Based Compensation” for additional discussion.

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

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Operating activities

Net (loss) income from continuing operations $ ( 62,689 ) $ 186,511 $ 145,531

Net income from discontinued operations 294,866 13,248 9,134

Net income 232,177 199,759 154,665

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Depreciation and amortization 12,295 11,985 11,900

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 (accretion) of of deferred loan fees and premiums, net 6,445 ( 1,441 ) ( 27,991 )

Deferred income tax (benefit) expense ( 18,267 ) 5,262 ( 5,663 )

Amortization of investment security premiums and discounts, net 6,281 18,274 16,713

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Loss on lease termination/modification, net 395 593 2,582

Amortization of gains from terminated interest rate swaps ( 10,193 ) ( 31,234 ) ( 15,889 )

ESOP expense 9,923 9,408 2,351

Issuance of common shares donated to the Eastern Bank Foundation (1)

Accretion of gains from terminated interest rate swaps ( 46 ) ( 10,193 ) ( 31,234 )

Employee Stock Ownership Plan expense 7,129 9,923 9,408

Loss on sales of commercial loans 2,738 — —

Proceeds from sale of commercial loan transferred to held for sale 22,126 — —

Other 25 17 ( 106 )

Trading securities — — 961

Loans held for sale 3,403 ( 3,354 ) ( 47 )

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Other liabilities 39,035 ( 52,800 ) ( 16,132 )

Net cash provided by operating activities - continuing operations 385,441 213,119 169,155

Net cash (used in) provided by operating activities - discontinued operations ( 123,749 ) 16,823 5,335

Net cash provided by operating activities 261,692 229,942 174,490

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Proceeds from life insurance policies — 20,446 —

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

Net (increase) decrease in outstanding loans, excluding loan purchases and sales ( 586,584 ) ( 926,255 ) 380,807

Proceeds from sales of commercial loans held for investment 189,296 — —

Purchases of loans ( 31,980 ) ( 380,234 ) —

Acquisitions, net of cash and cash equivalents acquired — — ( 9,085 )

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

Purchased banking premises and equipment ( 8,140 ) ( 8,627 ) ( 5,728 )

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

Proceeds from sale of other real estate owned — — 125

Net cash used in investing activities ( 1,076,655 ) ( 1,985,744 ) ( 2,390,183 )

Net cash provided by (used in) investing activities - continuing operations 1,911,760 ( 1,063,255 ) ( 1,981,390 )

Net cash provided by (used in) investing activities - discontinued operations 488,505 ( 13,400 ) ( 4,354 )

Net cash provided by (used in) investing activities 2,400,265 ( 1,076,655 ) ( 1,985,744 )

Financing activities

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Net increase (decrease) in time deposits 1,084,655 1,098,001 ( 58,144 )

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

Net (decrease) increase in borrowed funds ( 692,612 ) 706,550 2,580

Repayment of acquired subordinated debentures (1)

— — ( 36,277 )

Contingent consideration paid ( 668 ) ( 263 ) ( 165 )

Proceeds from issuance of common shares — — 1,792,878

Purchase of shares by the ESOP — — ( 149,407 )

Payment of deferred offering costs — — ( 28,552 )

Payments for repurchases of common stock — ( 201,618 ) ( 23,224 )

Dividends declared and paid to common shareholders ( 66,671 ) ( 65,886 ) ( 51,564 )

Net cash (used in) provided by financing activities - continuing operations ( 2,137,425 ) ( 214,906 ) 989,239

Net cash used in financing activities - discontinued operations ( 961 ) ( 668 ) ( 263 )

Net cash (used in) provided by financing activities ( 2,138,386 ) ( 215,574 ) 988,976

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

Net increase (decrease) in cash, cash equivalents, and restricted cash 523,571 ( 1,062,287 ) ( 822,278 )

Cash, cash equivalents, and restricted cash at beginning of period 169,505 1,231,792 2,054,070

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Cash paid during the period for:

Interest paid $ 35,241 $ 5,354 $ 13,684

Interest paid on deposits and borrowings $ 231,765 $ 35,241 $ 5,354

Income taxes 65,921 41,751 43,299

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Net increase in capital commitments relating to low income housing tax credit projects $ 102,001 $ 55,233 $ 28,291

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)

Initial recognition of operating lease right-of-use assets upon adoption of ASU 2016-02 — — 92,948

Initial recognition of operating lease liabilities upon adoption of ASU 2016-02 — — 96,426

(1) Represents a non-cash common stock donation of 7,470,326 shares at a fair value of $ 91.3 million to the Eastern Bank Foundation.

The donation is included in charitable contributions as a non-interest expense in the Consolidated Income Statement for the year ended December 31, 2020.

(2) Includes non-cash item representing maturity of acquired securities sold under agreements to repurchase which were converted to deposits upon maturity.

Net decrease in operating lease right of use assets and operating lease liabilities relating to lease remeasurements 3,881 14,836 —

(1) The Company deposited funds into escrow prior to the Century acquisition date to pay the balance of subordinated debentures assumed in the Century acquisition which was considered to be a defeasance of the debt.

Accordingly, Century recorded a payable to the Company in the amount of the escrow deposit and the Company recorded a receivable from Century in the same amount.

The payable was reclassified to other assets upon acquisition and is reflected as such balance in the summary of net assets acquired included in Note 3 to the Consolidated Financial Statements.

The payable was reclassified to other assets upon acquisition and is reflected as such balance in the summary of net assets acquired.

Subsequent to the closing of the acquisition and prior to December 31, 2021, the amounts placed in escrow were disbursed to the holders of the subordinated debentures resulting in a full pay-off of the outstanding balance of the debt.

(2) Includes non-cash item representing maturity of acquired securities sold under agreements to repurchase which were converted to deposits upon maturity.

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

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Corporate Structure and Nature of Operations;

Conversion and Reorganization;

Basis of Presentation

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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 (“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.

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

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

On September 19, 2023, the Company and the Bank entered into an asset purchase agreement in which Arthur J.

Gallagher & Co.

(“Gallagher”) agreed to purchase substantially all of Eastern Insurance Group’s assets for cash consideration and to assume certain liabilities.

On October 31, 2023, the Company completed its sale of its insurance agency business to Gallagher.

Substantially all of the historical results of our previously reported insurance agency business segment have been reflected as discontinued operations in our Consolidated Financial Statements for all periods presented herein, including, as of December 31, 2022 and 2021, the assets and liabilities associated with the discontinued operations being classified as assets and liabilities of discontinued operations in our Consolided Balance Sheets.

Refer to Note 23, “Discontinued Operations” for further discussion regarding discontinued operations.

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 and its subsidiaries are also subject to various Massachusetts, New Hampshire and Rhode Island business, banking and insurance regulations.

Conversion and Reorganization

Pursuant to a Plan of Conversion (the “Plan”), Eastern Bank Corporation, the predecessor of the Company, reorganized from a mutual holding company into a publicly traded stock form of organization on October 14, 2020.

In connection with the reorganization, Eastern Bank Corporation transferred to the Company 100 % of Eastern Bank’s common stock, and immediately thereafter merged into the Company.

Pursuant to the Plan, the Company sold 179,287,828 shares of common stock in a public offering at $ 10.00 per share, including 14,940,652 shares of common stock purchased by the Bank’s employee stock ownership plan (the “ESOP”), for gross offering proceeds of approximately $ 1,792,878,000 .

The Company completed the offering on October 14, 2020.

Effective as of October 15, 2020, the Company donated 7,470,326 shares of common stock to the Eastern Bank Charitable Foundation (now known as the Eastern Bank Foundation, or the “Foundation”).

A total of 186,758,154 shares of common stock of the Company were issued and outstanding immediately after the donation to the Foundation.

The purchase of common stock by the ESOP was financed by a loan from the Company.

Pursuant to the Plan, eligible account holders have received an interest in a liquidation account maintained by the Company in an amount equal to (i) Eastern Bank Corporation’s ownership interest in the Bank’s total shareholders’ equity as of March 31, 2020, the date of the latest statement of financial position included in the latest prospectus filed with the U.S.

Securities and Exchange Commission (“SEC”) for the Company's initial public offering (“IPO”), plus (ii) the value of the net assets of Eastern Bank Corporation as of March 31, 2020 (excluding its ownership of Eastern Bank).

Also pursuant to the Plan, a parallel liquidation account maintained at the Bank was established to support the Company’s liquidation account in the event the Company does not have sufficient assets to fund its obligations under its liquidation account.

The Company and the Bank hold the liquidation accounts for the benefit of eligible account holders who continue to maintain deposits in the Bank.

The Company is not permitted to pay dividends on its capital stock if the shareholders’ equity of the Company would be reduced below the amount of the liquidation account.

The liquidation account will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits.

Subsequent increases will not restore an eligible account holder’s interest in the liquidation accounts.

In the event of a complete liquidation of the Bank, and only in such event, each account holder will be entitled to receive a distribution from the liquidation account in an amount proportionate to the adjusted qualifying account balances then held.

See “Regulation—Liquidation Account Effect on Dividends” included in Item 1A in this Annual Report on Form 10-K.

The Company and the activities of the Bank and its subsidiaries are also subject to various Massachusetts, New Hampshire and Rhode Island business and banking regulations and, with regard to Eastern Insurance Group and through October 31, 2023, applicable insurance regulations.

Basis of Presentation

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

As a result of the decision to sell substantially all of the assets and transfer certain liabilities of Eastern Insurance Group, the Company reclassified certain amounts previously reported including:

• certain assets and liabilities previously reported in the insurance agency business were reclassified to assets and liabilities of discontinued operations, respectively, on the Consolidated Balance Sheets;

• certain components of noninterest income and noninterest expense, including the associated income tax effects, previously reported in the insurance agency business were reclassified to net income from discontinued operations on the Consolidated Statements of Income;

• certain operating, investing, and financing cash flows previously reported on their applicable lines within the Consolidated Statements of Cash Flows were reclassified to cash flows used in/provided by operating activities of, investment activities of and financing activities of discontinued operations, respectively.

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, 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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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.

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.

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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 3, “Securities” for additional information regarding the measurement of credit losses on HTM securities.

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

• Loans previously restructured and determined to be TDR loans;

• Loans determined to be collateral dependent as defined below;

• 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;

• Loans to borrowers actively involved in bankruptcy proceeds;

• Loans that have been partially charged-off.

Collateral-Dependent Loans

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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.

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 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 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.

Modifications of Loans to Borrowers Experiencing Financial Difficulty

The amendments in ASU 2022-02 eliminated the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors , while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

Thus, as a result of adoption of this standard on January 1, 2023, rather than applying the recognition and measurement guidance for TDRs, the Company now applies the loan refinancing and restructuring guidance codified in paragraphs 310-20-35-9 through 35-11 of the Accounting Standards Codification to determine whether a modification results in a new loan or a continuation of an existing loan.

Modifications to borrowers experiencing financial difficulty include principal forgiveness, interest rate reductions, term extensions, other-than-insignificant payment delays and combinations thereof.

Expected losses or recoveries related to loans where modifications have been granted to borrowers experiencing financial difficulty have been included in the Company’s determination of the allowance for loan losses.

Upon adoption of ASU 2022-02, the Company is no longer required to use a discounted cash flow method to measure the allowance for loan losses resulting from a modification to a borrower experiencing financial difficulty.

Accordingly, the Company now applies the same credit methodology it uses for similar loans that were not modified.

The Company adopted ASU 2022-02 using the modified retrospective transition method.

Accordingly, upon adoption, commercial loan TDRs existing at that time which were measured using a discounted cash flow methodology and all residential real estate and consumer home equity loan TDRs were transitioned to the applicable segment of loans collectively evaluated for impairment based upon their risk characteristics.

Commercial loan TDRs determined to be collateral dependent continue to be assessed for impairment on an individual basis.

Prior to the Company’s adoption of ASU 2022-02, in cases where a borrower was experiencing financial difficulties and the Company made certain concessionary modifications to contractual terms, the loan was classified as a TDR.

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

Management identified loans as TDR loans when it had a reasonable expectation that it would execute a TDR modification with a borrower.

In addition, management estimated expected credit losses on a collective basis if a group of TDR loans shared similar risk characteristics.

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

The impairment analysis discounted 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 was collateral dependent.

The amount of credit loss, if any, was 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 was 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 had been classified as a TDR and which subsequently defaulted was 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 was determined by measuring the recorded investment in the loan against the fair value of the collateral less costs to sell.

Refer to Note 4, “Loans and Allowance for Credit Losses” for additional information regarding the Company’s measurement of the allowance for loan losses as of December 31, 2023 and information regarding the Company’s TDR loans as of December 31, 2022 and for the year then ended.

Purchased Credit-Deteriorated Loans

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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.

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.

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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.”

Refer to Note 4, “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, 2023 and 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).

Mortgage Banking Activities

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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.

As of December 31, 2022 and 2021, the Company’s OREO was immaterial.

As of December 31, 2023 and 2022, the Company held no OREO.

Federal Home Loan Bank Stock

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Banking premises and equipment held for sale are carried at the lower of cost or estimated fair value, less estimated costs to sell.

Goodwill and Other Intangible Assets

Goodwill and Core Deposit Intangible

Acquisitions of businesses are accounted for using the acquisition method of accounting.

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Other intangible assets represent acquired assets that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights, or because the asset is capable of being sold or exchanged either on its own, or in combination with a related contract, asset, or liability.

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 Company evaluates goodwill for impairment at least annually, as of September 30, 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.

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

Management has identified two reporting units for purposes of testing goodwill for impairment:

the banking business and the insurance agency business.

Other intangible assets, all of which are definite-lived, are stated at cost less accumulated amortization.

The Company evaluates other intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be fully recovered.

Management has identified one reporting unit for purposes of testing goodwill for impairment which is referred to as “the banking business.”

The Company’s other intangible asset, which is a core deposit intangible, a definite-lived intangible asset, is stated at cost less accumulated amortization.

The Company evaluates its core deposit intangible asset for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be fully recovered.

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 income.

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

The estimated useful lives of core deposit identifiable intangible assets fall within a range of seven to ten years and the estimated useful life of customer lists from insurance agency acquisitions is ten years .

The estimated useful life of non-compete agreements resulting from insurance agency acquisitions are dependent upon the terms of the agreement.

The Company reassesses the useful lives of other intangible assets at least annually, or more frequently based on specific events or changes in circumstances.

The Company amortizes its core deposit intangible over its estimated useful life.

The original estimated useful life of the core deposit identifiable intangible asset was ten years .

The Company reassesses the useful life of its core deposit intangible asset at least annually, or more frequently based on specific events or changes in circumstances.

Retirement Plans

The Company provides benefits to its employees and executive officers through various retirement plans, including a defined benefit plan, a defined benefit supplemental executive retirement plan, a defined contribution plan, a benefit equalization plan, and an outside directors’ retainer continuance plan.

Effective November 1, 2020, the defined benefit plan (“Defined Benefit Plan”) and the benefit equalization plan (“BEP”) were amended to convert the plans from a traditional final average earnings plan design to a cash balance plan design.

Benefits earned under the final average earnings plan design were frozen at October 31, 2020.

Starting November 1, 2020, future benefits are earned under the cash balance plan design.

The defined benefit plan benefits are provided through membership in the Savings Banks Employees’ Retirement Association (“SBERA”).

The Defined Benefit Plan is a noncontributory, defined benefit plan.

The Company provides pension benefits for its employees using a noncontributory, qualified defined benefit plan, through membership in the Savings Banks Employees Retirement Association (“SBERA”).

The Qualified Defined Benefit Pension Plan (“Defined Benefit Plan”) is a noncontributory, defined benefit plan.

The Company’s employees become eligible after attaining age 21 and completing one year of service.

Effective November 1, 2020, the Defined Benefit Plan, sponsored by the Company, was amended to convert the plan from a traditional final average earnings plan design to a cash balance plan design.

Under the final average earnings plan design, benefits became fully vested after three years of eligible service for individuals employed on or before October 31, 1989.

For individuals employed subsequent to October 31, 1989 and who were already in the Defined Benefit Plan as of November 1, 2020, benefits became fully vested after five years of eligible service.

Under the cash balance plan design and for employees who were not already in the Defined Benefit Plan as of November 1, 2020, benefits become fully vested after three years of eligible service.

The annual contribution to the Defined Benefit Plan is based upon standards established by the Pension Protection Act.

Under the cash balance plan design, hypothetical account balances are established for each participant and pension benefits are generally stated as the lump sum amount in that hypothetical account.

Contribution credits equal to a percentage of a participant’s annual compensation (if the participant works at least 1,000 hours during the year) and interest credits equal to the greater of the 30-Year Treasury rate for September preceding the current plan year or 3.5 % are added to a participant’s account each year.

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 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.

However, under the Defined Benefit Plan, participants may elect, with the consent of their spouses if they are married, to have the benefits distributed as a lump sum rather than an annuity.

The lump sum is equal to the sum of the actuarial equivalent of their frozen benefit under the final average earnings plan design, plus their cash balance account.

Under the Company’s non-Qualified Benefit Equalization Plan (“BEP”), which is described further below, benefits are generally only payable as a lump sum, which is equal to the sum of the actuarial equivalent of their frozen benefit

under the final average earnings plan design, plus their cash balance account.

The Company’s annual contribution to the plan is based upon standards established by the Pension Protection Act.

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.

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The BEP has a plan year end of October 31.

Effective November 1, 2020, the BEP, sponsored by the Company, was amended to convert the plan from a traditional final average earnings plan design to a cash balance plan design.

The Company also has an unfunded Outside Directors’ Retainer Continuance Plan (“ODRCP”) that provides pension benefits to outside directors who retire from service.

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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.

Service cost for all plans is included in salaries and employee benefits 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 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 purchases and sells investments which track the deemed investment choices, so that it has available funds to meet its payment liabilities.

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.

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 these plans are included in other liabilities on the Company’s Consolidated Balance Sheets.

Employee Stock Ownership Plan (“ESOP”)

ESOP shares are shown as a reduction of equity and are presented in the consolidated statements of shareholders’ equity as unallocated common stock held by ESOP.

Unallocated ESOP shares are shown as a reduction of equity and are presented in the Consolidated Statements of Shareholders’ Equity as unallocated common stock held by ESOP.

Compensation expense for the Company’s ESOP is recorded at an amount equal to the shares committed to be allocated by the ESOP multiplied by the average fair market value of the shares during the year.

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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.

Refer to Note 16, “Share-Based Compensation” for additional information regarding the Company’s share-based compensation plan.

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

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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.

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 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

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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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All advertising costs are expensed in the period in which they are incurred.

Advertising costs were not significant for any periods presented.

Insurance Commissions

Through Eastern Insurance Group LLC, the Company acts as an agent in offering property, casualty, and life and health insurance to both consumer and commercial customers.

Insurance commissions consist of the several types of insurance revenue related to insurance policy sales.

The Company earns a fixed commission on the sale of these insurance products and services and may occasionally earn a bonus commission if certain volume thresholds are met.

The Company recognizes insurance commission revenues as performance obligations of underlying agreements are satisfied, which is typically the effective date of the insurance policy.

Additionally, for certain types of insurance products, the Company may earn and recognize revenue related to the annual residual commissions commensurate with annual premiums being paid.

The Company’s contracts typically contain a single, material distinct performance obligation, therefore the Company does not estimate standalone selling prices as the entire transaction price is allocated to the single performance obligation.

The Company also earns profit sharing revenue from insurers whom they place into business.

Such revenues are considered performance bonuses based upon certain performance metrics.

This amount can vary from period to period and is difficult to predict.

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.

Advertising costs were not significant for any period presented.

Trust Operations

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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.

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.

At the inception of a hedge, the Company documents certain items, including, but not limited to, the following:

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As such, changes in the fair value of the designated hedging instrument that is included in the assessment of hedge effectiveness are recorded in other comprehensive income and reclassified into net income in the same period or periods during which the hedged forecasted transaction affects net income.

Such reclassifications shall be presented in the same income statement line item as the net income effect of the hedged item.

Such reclassifications are presented in the same income statement line item as the net income effect of the hedged item.

If the hedging instrument is not highly effective at achieving offsetting cash flows attributable to the revised contractually specified interest rate(s), hedge accounting will be discontinued.

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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.

The Company will recognize an adjustment to its ROU asset and lease liability when lease agreements are amended and executed.

The Company will recognize an adjustment to its ROU asset and lease liability when lease agreements are

amended and executed.

The discount rate used in determining the present value of lease payments is based on the Company’s incremental borrowing rate for borrowings with terms similar to each lease at commencement date.

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Common Share Repurchases

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

Shares repurchased by the Company under the Company’s share repurchase programs 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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GAAP states that the accounting for share repurchases shall conform to state law where applicable.

The Company’s most recent authorized program expired during the third quarter of 2023.

Earnings Per Share

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An operating segment is defined as a component of a business for which separate financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and evaluate performance.

The Company has determined that its CODM is its President and Chief Executive Officer.

The Company has two reportable segments:

The Company has determined that its CODM is its Chair and Chief Executive Officer.

The Company has one reportable segment:

its banking business, which consists of a full range of banking lending, savings, and small business offerings, and its wealth management and trust operations.

and its insurance agency business, which consists of insurance-related activities.

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 earlier of the nonpublic company effective dates and the date on which the Company ceased to qualify as an emerging growth company.

Relevant standards that were recently issued but not yet adopted as of December 31, 2023:

In March 2023, the FASB issued ASU 2023-02, Investments–Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (“ASU 2023-02”).

This update permits reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if the following conditions are met:

It is probable that the income tax credits allocable to the tax equity investor will be available.

The tax equity investor does not have the ability to exercise significant influence over the operating and financial policies of the underlying project.

Substantially all of the projected benefits are from income tax credits and other income tax benefits.

Projected benefits include income tax credits, other income tax benefits, and other non-income-tax-related benefits.

The projected benefits are determined on a discounted basis, using a discount rate that is consistent with the cash flow assumptions used by the tax equity investor in making its decision to invest in the project.

The tax equity investor’s projected yield based solely on the cash flows from the income tax credits and other income tax benefits is positive.

The tax equity investor is a limited liability investor in the limited liability entity for both legal and tax purposes, and the tax equity investor’s liability is limited to its capital investment.

Under existing accounting standards, the proportional amortization method is allowable only for equity investments in low-income-housing tax credit structures.

Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the income tax credits and other income tax benefits received and recognizes the net amortization and income tax credits and other income tax benefits in the income statement as a component of income tax expense (benefit).

Updates made by ASU 2023-02 allow a reporting entity to make an accounting policy election to apply the proportional amortization method on a tax-credit-program-by-tax-credit-program basis.

The Company had previously made an accounting

policy election to account for its investments in low-income-housing tax credit investments using the proportional amortization method.

This election was made upon the Company’s adoption of ASU 2014-01, Investments–Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Qualified Affordable Housing Projects , which introduced the option to apply proportional amortization to low-income-housing tax credit investments .

For public business entities, the amendments in ASU 2023-02 are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted for all entities in an interim period.

The Company adopted this standard on January 1, 2024 using the modified retrospective method.

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

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements–Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”) .

The amendments in this update modify the disclosure or presentation requirements for a variety of topics in the codification.

Certain amendments represent clarifications to or technical corrections of the current requirements.

The following is a summary of the topics included in the update and which pertain to the Company:

Statement of cash flows (Topic 230):

Requires an accounting policy disclosure in annual periods of where cash flows associated with derivative instruments and their related gains and loses are presented in the statement of cash flows;

Accounting changes and error corrections (Topic 250):

Requires that when there has been a change in the reporting entity, the entity disclose any material prior-period adjustment and the effect of the adjustment on retained earnings in interim financial statements;

Earnings per share (Topic 260):

Requires disclosure of the methods used in the diluted earnings-per-share computation for each dilutive security and clarifies that certain disclosures should be made during interim periods, and amends illustrative guidance to illustrate disclosure of the methods used in the diluted earnings per share computation;

Commitments (Topic 440):

Requires disclosure of assets mortgaged, pledged, or otherwise subject to lien and the obligations collateralized;

Debt (Topic 470):

Requires disclosure of amounts and terms of unused lines of credit and unfunded commitments and the weighted-average interest rate on outstanding short-term borrowings.

For public business entities, the amendments in ASU 2023-06 are effective on the date which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective.

If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation and S-X or Regulation S-K, the pending content of the related amendment will be removed from the codification and will not become effective for any entity.

Early adoption is not permitted and the amendments are required to be applied on a prospective basis.

The Company expects the adoption of this standard will not have a material impact on its Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The amendments in this update are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The amendments in this update:

Require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”).

Require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition.

The other segment items category is the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss.

Require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by ASC 280, Segment Reporting in interim periods.

Clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit.

However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements.

In other words, in addition to the measure that is most consistent with the measurement principles under U.S.

GAAP, a public entity is not precluded from reporting additional measures of a segment’s profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources.

Require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

Require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this update and all existing segment disclosures in Topic 280.

For public business entities, the amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted and adoption is required to be done on a retrospective basis.

The Company expects the adoption of this standard will not have a material impact on its Consolidated Financial Statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in this update are intended to improve income tax disclosure requirements, primarily through enhanced disclosures related to the existing requirements to disclose a rate reconciliation, income taxes paid and certain other required disclosures.

Specifically, the amendments in this update:

Require that a public entity disclose, on an annual basis:

(1) specific categories in the rate reconciliation and (2) additional information for reconciling items that meet a quantitative threshold.

The update requires disclosure of such reconciling items according to requirements indicated in the update.

Require that all entities disclose certain disaggregated information regarding income taxes paid.

Require that all entities disclose certain disaggregated information regarding income tax expense.

Eliminate the requirement to:

(1) disclose the nature and estimate of the range of reasonably possible changes in the unrecognized tax benefits balance in the next 12 months or (2) make a statement that an estimate of the range cannot be made.

Remove the requirement to disclose the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures.

For public business entities, the amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024.

Adoption should be done on a prospective basis and retrospective application is permitted.

Relevant standards that were adopted during the year ended December 31, 2023:

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

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ASU 2021-08 improves comparability of recognition and measurement of revenue contracts with customers both before and after a business combination.

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

For public business entities, the amendments in this update were effective for fiscal years beginning after December 15, 2022.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023.

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

The adoption of this standard on January 1, 2023 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):

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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.

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.

This 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 were 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.

On January 1, 2023, the Company adopted this standard by using the modified retrospective transition method, except with regard to amendments on TDR and vintage disclosures which were adopted prospectively.

Accordingly, the Company recorded a cumulative-effect adjustment to retained earnings as of January 1, 2023.

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 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.

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 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 .

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.

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”).

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 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

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

Under the terms of the Merger Agreement, each holder of Century Class A and B common stock received a cash payment of $ 115.28 per share.

The total consideration paid in the acquisition of Century was $ 641.9 million in cash.

In connection with the acquisition, Century Bank and Trust Company, a wholly owned subsidiary of Century, was merged with and into the Bank.

The acquisition added $ 7.1 billion to total assets, including goodwill and intangible assets, $ 2.9 billion to total loans, which included PCI loans totaling $ 67.3 million and $ 6.1 billion to total deposits, and added 29 full-service banking offices in Massachusetts, as of the date of closing.

The acquisition was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations .

Under this method of accounting, the respective assets acquired and liabilities assumed were recorded at their estimated fair values.

The excess of consideration paid over the estimated fair value of the net assets acquired totaled $ 259.0 million and was recorded as goodwill.

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

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:

Net Assets Acquired at Fair Value

(In thousands)

Cash and due from banks $ 56,831

Short-term investments 575,953

Investment securities 3,117,022

Loans 2,906,491

FHLB stock 6,690

Premises and equipment 64,521

Bank owned life insurance 95,478

Goodwill 259,024

Core deposit intangible 11,633

Other assets 18,915

Total assets acquired 7,112,558

Deposits 6,099,821

Securities sold under agreements to repurchase 274,982

Escrow deposits of borrowers 3,649

Other liabilities 92,237

Total liabilities assumed 6,470,689

Purchase price $ 641,869

Fair Value Measurement of Assets Assumed and Liabilities Assumed

The methods used to determine the fair value of the assets acquired and liabilities assumed in the Century acquisition were as follows:

Investment Securities

The estimated fair values of the available for sale debt securities and held-to-maturity debt securities, primarily comprised of U.S.

Government agency mortgage-backed securities, U.S.

government agencies, Small Business Administration (“SBA”) pooled securities, and municipal bonds carried on Century’s balance sheet, was confirmed using open market pricing provided by multiple independent securities brokers.

Based upon management’s determination, a fair value adjustment of $( 37.3 ) million, reflecting a net discount, was recorded on acquired securities and reflects the net unrealized loss position of such securities at the date of acquisition.

Securities acquired that were classified on Century’s balance sheet as held-to-maturity were reclassified as available for sale upon acquisition, reflecting management’s intent with respect to such securities.

Loans acquired in the Century acquisition were recorded at fair value, and there was no carryover of the allowance for loan losses.

The fair value of the loans acquired from Century was determined using market participant assumptions in estimating the amount and timing of both principal and interest cash flows expected to be collected, as adjusted for an estimate of future credit losses and prepayments, and then applying a market-based discount rate to those cash flows.

Management retained a third-party valuation specialist to assist with the determination of future credit losses, prepayments and a market-based discount rate, the results of which were reviewed by management.

A fair value adjustment of $( 13.3 ) million, reflecting a net discount, was recorded on the loans acquired in this transaction and was due primarily to anticipated credit loss, as well as considerations for liquidity and market interest rates.

A portion of the acquired loans exhibited evidence of more-than-insignificant deterioration in credit quality since origination and thus were reviewed to determine if any loans would be deemed PCI.

The following is a summary of the PCI loans identified as a result of the review performed as of the date acquired:

As of November 12, 2021

(In thousands)

Contractually required principal and interest at acquisition (1) $ 82,900

Contractual cash flows not expected to be collected 6,746

Expected cash flows at acquisition 76,154

Interest component of expected cash flows 8,896

Basis in PCI loans at acquisition - estimated fair value $ 67,258

(1) Contractually required principal and interest at acquisition includes interest not expected to be collected due to estimated prepayments.

Premises and Equipment

The Company acquired 29 branches from Century as of the date of closing, 13 of which were owned premises.

The fair value of properties acquired was derived by valuations prepared by an independent third party utilizing a combination of the cost approach and the sales comparison approach to value the property as improved.

Included in the acquired premises and equipment of $ 64.5 million was real estate previously owned by Century and located at 400 Mystic Avenue, Medford, Massachusetts (the “400 Mystic Parcel”).

On September 30, 2021, the Company executed a definitive Purchase and Sale Agreement that provided for Eastern Bank to sell the 400 Mystic Parcel, where Century maintained its executive offices.

The purchase price for the 400 Mystic Parcel was $ 20.5 million in cash payable at the closing of the sale which occurred in the mid-fourth quarter of 2021 after the Company completed the acquisition.

The fair value of the property was initially recorded at an amount equal to the agreed upon purchase price.

Accordingly, no gain or loss was recognized as a result of the sale.

As part of the Century acquisition the Company added 20 lease obligations.

The Company recorded a $ 13.9 million right-of-use asset and lease liability for these lease obligations.

Core Deposit Intangible

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.

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

Management retained a third-party valuation specialist to assist with the determination of projected cash flows, the results of which were reviewed by management.

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 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.

Bank Owned Life Insurance (“BOLI”)

Century’s BOLI cash surrender value was $ 95.5 million with no fair value adjustment.

Time Deposits

The fair value adjustment for time deposits represents a discount from the value of the contractual repayments of fixed-maturity deposits using prevailing market interest rates for similar-term time deposits.

The time deposit discount of approximately $ 1.8 million is being amortized into income on a level yield amortization method over the contractual life of the deposits.

Securities Sold Under Agreements to Repurchase

Acquired securities sold under agreements to repurchase were $ 275.0 million with no fair value adjustment as the fair value approximates carrying value.

Such agreements reached their maturity prior to December 31, 2021.

Accordingly, the Company had no obligations related to securities sold under agreements to repurchase as of December 31, 2021.

Securities sold under agreements to repurchase were customer-related and were converted to deposits upon maturity.

Escrow Deposits of Borrowers

Century’s escrow deposits of borrowers was $ 3.6 million with no fair value adjustment.

Merger-Related Expenses

The Company recorded merger and acquisition expenses of $ 35.5 million during the year ended December 31, 2021 related to the Century acquisition.

These merger and acquisition expenses were included in the following line items of the consolidated statements of income:

For the Year Ended December 31, 2021

(In thousands)

Salaries and employee benefits $ 15,947

Office occupancy and equipment 7,198

Data processing 1,286

Professional services 9,223

The following table presents certain unaudited pro forma information for the years ended December 31, 2021 and 2020.

This unaudited estimated pro forma financial information was calculated as if Century had been acquired as of the beginning of the year prior to the date of acquisition.

This unaudited pro forma information combines the historical results of Century with the Company’s consolidated historical results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the respective periods.

The pro forma information is not indicative of what would have occurred had the acquisition occurred as of the beginning of the year prior to the acquisition.

The unaudited pro forma information does not consider any changes to the provision for loan losses resulting from recording loan assets at fair value, cost savings, or business synergies.

As a result, actual amounts would have differed from the unaudited pro forma information presented.

Unaudited Pro Forma Financial Information for the Years Ended December 31, 2021

(In thousands)

Net interest income $ 522,621 $ 502,853

Net income 174,603 61,858

Financial results of Century from the date of acquisition through December 31, 2021 are not presented as management considers the determination of such amounts to be impracticable.

Insurance Agency Acquisitions

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)

Assets acquired:

Customer list intangible $ 6,120

Non-compete intangible 440

Total assets acquired 6,600

Consideration:

Total cash paid ( 13,400 )

Contingent consideration ( 1,926 )

Other liabilities assumed —

Total fair value of consideration ( 15,326 )

Goodwill $ 8,726

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 $ 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, 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)

Assets acquired:

Customer list intangible $ 1,860

Non-compete intangible 170

Total assets acquired 2,163

Consideration:

Total cash paid ( 4,354 )

Contingent consideration ( 449 )

Other liabilities assumed ( 355 )

Total fair value of consideration ( 5,158 )

Goodwill $ 2,995

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 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

The amortized cost, gross unrealized gains and losses, and fair value of available for sale securities as of the dates indicated were as follows:

The amortized cost, gross unrealized gains and losses, ACL and fair value of available for sale securities as of the dates indicated were as follows:

As of December 31, 2023

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State and municipal bonds and obligations 197,704 172 ( 6,532 ) — 191,344

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

$ 5,161,904 $ 172 $ ( 754,555 ) $ — $ 4,407,521

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Gains Unrealized

Losses Allowance for Credit Losses Fair

(In thousands)

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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

$ 7,825,435 $ 9 $ ( 1,134,666 ) $ — $ 6,690,778

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

The Company did no t record a provision for credit losses on any AFS securities during either the year ended December 31, 2023 or 2022.

Accrued interest receivable on AFS securities totaled $ 9.2 million and $ 12.9 million as of December 31, 2023 and December 31, 2022, 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.

The Company did no t record any write-offs of accrued interest income on AFS securities during either the year ended December 31, 2023 or 2022.

No securities held by the Company were delinquent on contractual payments as of December 31, 2023 nor 2022, nor were any such securities placed on non-accrual status during the periods then ended.

As of December 31, 2023 and 2022, the Company had no investments in obligations of individual states, counties, or municipalities which exceeded 10% of consolidated shareholders’ equity.

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Net (losses) gains from sales of AFS securities $ ( 333,170 ) $ ( 3,157 ) $ 1,166

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:

Information pertaining to AFS securities with gross unrealized losses as of December 31, 2023 and 2022, for which the Company did not recognize a provision for credit losses under CECL, aggregated by investment category and length of time that individual securities have been in a continuous loss position, is as follows:

As of December 31, 2023

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State and municipal bonds and obligations 196 233 22,894 6,299 135,279 6,532 158,173

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

736 $ 269 $ 27,821 $ 754,286 $ 4,346,529 $ 754,555 $ 4,374,350

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

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

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

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 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.

As a result of the Company’s review of these qualitative and quantitative factors, the causes of the impairments listed in the tables above by category are as follows as of December 31, 2022 and 2021:

• Government-sponsored residential 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.

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

government or one of its agencies.

• 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.

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

government or one of its agencies.

Agency bonds – 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.

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

government or one of its agencies.

Treasury 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 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 did not recognize an ACL on these investments as of either December 31, 2023 or 2022.

The causes of the impairments listed in the tables above by category are as follows as of December 31, 2023 and 2022:

• Government-sponsored mortgage-backed securities, U.S.

Agency bonds and U.S.

Treasury securities – The securities with unrealized losses in these portfolios 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.

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

• 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.

• Other debt securities – As of December 31, 2022, there were two securities included in this portfolio in an unrealized loss position which consisted of two foreign debt securities.

Both securities were performing in accordance with the terms of their respective contractual agreements.

The decline in market value of these securities was 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:

The amortized cost, gross unrealized gains and losses, ACL and fair value of HTM securities as of the dates indicated were as follows:

As of December 31, 2023

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$ 449,721 $ — $ ( 44,899 ) $ — $ 404,822

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.

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 did no t record a provision for estimated credit losses on any HTM securities during either the year ended December 31, 2023 or 2022.

The accrued interest receivable on HTM securities totaled $ 0.9 million and $ 1.0 million as of December 31, 2023 and 2022, respectively, 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 either the year ended December 31, 2023 or 2022.

No HTM securities held by the Company were delinquent on contractual payments as of either December 31, 2023 or 2022, nor were any such securities placed on non-accrual status during the periods then ended.

Available for Sale and Held to Maturity Securities Contractual Maturity

10 unchanged sentences

State and municipal bonds and obligations 213 209 30,131 29,393 44,047 43,260 123,313 118,482 197,704 191,344

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

Total available for sale securities 213 209 651,654 603,469 446,531 391,693 4,063,506 3,412,150 5,161,904 4,407,521

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(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

3 unchanged sentences

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

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

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

3 unchanged sentences

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.

Included in the above maturity tables as of December 31, 2023 and 2022 were $ 394.4 million, and $ 852.9 million, respectively, of callable securities at fair value.

Securities Pledged as Collateral

As of December 31, 2023 and 2022, securities with a carrying value of $ 615.7 million and $ 437.9 million, respectively, were pledged to secure public deposits and for other purposes required by law.

As of December 31, 2023 and 2022, deposits with associated pledged collateral included cash accounts from the Company’s wealth management division (“Eastern Wealth Management”) and municipal deposit accounts.

In March 2023 the Federal Reserve created the Bank Term Funding Program (the “Program”) in order to support American businesses and households.

The Program helps make available additional funding to eligible depository institutions in order to help assure banks have the ability to meet the needs of their depositors.

The Program offers loans up to one year in

length to banks in return for any collateral eligible for purchase by the Federal Reserve Banks in open market operations, such as U.S.

Treasuries, U.S.

agency securities, and U.S.

agency mortgage-backed securities.

As of December 31, 2023, securities with a carrying value of $ 2.4 billion were pledged as collateral through the Program.

In addition, the Company pledged securities with a carrying value of $ 168.8 million to the Federal Reserve Discount Window (the “Discount Window”) as of December 31, 2023.

No securities were pledged to the Program or the Discount Window as of December 31, 2022.

Loans and Allowance for Credit Losses

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Loans after the allowance for loan losses, unamortized premiums, unearned discounts and deferred fees and costs $ 13,799,367 $ 13,420,317

(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.

(1) Automobile loans are included in the other consumer portfolio above and amounted to $ 7.2 million and $ 18.1 million at December 31, 2023 and 2022, respectively.

(2) Home improvement loans are included in the other consumer portfolio and amounted to $ 178.9 million and $ 121.1 million at December 31, 2023 and 2022, respectively.

(3) The balance of accrued interest receivable excluded from amortized cost and the calculation of the allowance for loan losses amounted to $ 53.9 million and $ 45.2 million as of December 31, 2023 and 2022 , respectively, and is included within other assets on the Consolidated Balance Sheets.

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

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

The SNC Program portfolio is included in the Company’s commercial and industrial portfolio.

The SNC Program portfolio is included in the Company’s commercial and industrial, commercial real estate and commercial construction portfolios.

The SNC Program portfolio is defined as loan syndications with exposure over $ 100 million and with three or more lenders participating.

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The balance of funds borrowed from the FHLBB were $ 17.7 million and $ 704.1 million at December 31, 2023 and 2022, 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.

The carrying value of loans pledged to secure advances from the Federal Reserve Bank (“FRB”) was $ 1.1 billion at both December 31, 2023 and 2022, respectively.

There were no funds borrowed from the FRB outstanding at December 31, 2023 and 2022.

Serviced Loans

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.

At December 31, 2023 and 2022, mortgage loans partially or wholly-owned by others and serviced by the Company amounted to $ 77.2 million and $ 84.0 million, respectively.

Purchased Loans

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

The Company began purchasing residential real estate mortgage loans during the third quarter of 2022 and ceased such purchases in the first quarter of 2023.

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.

During the year ended December 31, 2023, the Company purchased $ 32.0 million of residential real estate mortgage loans.

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

As of December 31, 2023 and 2022, the amortized cost balance of loans purchased was $ 385.5 million and $ 376.1 million, respectively.

Commercial Loan Sales

During the year ended December 31, 2023, the Company sold $ 214.2 million of commercial and industrial loans previously included in the SNC program portfolio and recognized a loss on sale of $ 2.7 million.

Allowance for Loan Losses

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.

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 through a provision for loan losses charged to net income.

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

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

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

The following tables summarize the change in the allowance for loan losses by loan category for the periods indicated:

For the Year Ended December 31, 2023

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Home Equity Other

Consumer Other Total

Consumer Total

(In thousands)

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(1) Represents the adjustment needed to reflect the cumulative day one impact pursuant to the Company’s adoption of ASU 2022-02 (i.e., cumulative effect adjustment related to the adoption of ASU 2022-02 as of January 1, 2023).

The adjustment represents a $ 1.1 million decrease 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.

For the Year Ended December 31, 2022

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

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

(1) R epresents 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.

The allowance for loan losses increased by $ 6.8 million to $ 149.0 million at December 31, 2023 from $ 142.2 million at December 31, 2022 and the allowance for loans losses as a percentage of total loans increased by 2 basis points to 1.07 % at December 31, 2023 from 1.05 % at December 31, 2022.

The increase in allowance for loan losses was primarily due to increased loan balances.

Total charge-offs increased by $ 10.3 million to $ 15.1 million during the year ended December 31, 2023 from $ 4.8 million during the year ended December 31, 2022.

The increase was primarily due to charge-offs on non-performing commercial real estate loans collateralized by properties in the office risk category taken in the fourth quarter of 2023.

Such loans had been previously reserved for on a specific reserve basis in the third quarter of 2023.

Reserve for Unfunded Commitments

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

The Company’s adoption of ASU 2022-02 on January 1, 2023 did not impact the reserve for unfunded lending commitments.

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.

As of December 31, 2023 and December 31, 2022, the Company’s reserve for unfunded lending commitments was $ 14.1 million and $ 13.2 million, respectively, which is recorded within other liabilities in the Company’s Consolidated Balance Sheets.

Portfolio Segmentation

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

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.

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 :

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Business banking scored loans are determined by utilizing the Company’s proprietary decision matrix that has a number of quantitative factors including, but not limited to, a guarantor’s credit score, industry risk, and time in business.

The Company also engages in Small Business Association (“SBA”) lending, both in the business banking and commercial banking divisions.

The Company also engages in Small Business Association (“SBA”) lending.

The SBA guarantees reduce the Company’s loss due to default and are considered a credit enhancement to the loan structure.

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Residential loans are originated either for sale to investors or retained in the Company’s loan portfolio.

Decisions about whether to sell or retain residential loans are made based on the interest rate characteristics, pricing for loans in the secondary mortgage market, competitive factors and the Company’s capital needs.

Consumer Lending

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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.

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.

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For purposes of estimating the allowance for loan losses, unrated loans are considered in the same manner as “Pass” rated loans.

Unrated loans are included with “Pass” rated loans for disclosure purposes.

1-10 Risk Rating – Pass

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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, 2023, and gross charge-offs for the year ended December 31, 2023:

2023 2022 2021 2020 2019 Prior Revolving Loans Revolving Loans Converted to Term Loans (1) Total

(In thousands)

Commercial and industrial

Pass $ 477,138 $ 442,896 $ 350,782 $ 341,243 $ 140,641 $ 641,342 $ 485,448 $ 3,255 $ 2,882,745

Special Mention 4,229 25,796 14,994 13,563 89 553 51,106 455 110,785

Substandard 1,534 11,995 1,775 405 — 2,581 7,803 — 26,093

Doubtful — — — — — 8 — — 8

Loss — — — — — — — — —

Total commercial and industrial 482,901 480,687 367,551 355,211 140,730 644,484 544,357 3,710 3,019,631

Current period gross charge-offs — 2 — — — 11 — — 13

Commercial real estate

Pass 498,590 1,435,893 855,014 573,370 516,689 1,291,189 47,581 2,556 5,220,882

Special Mention 15,200 7,990 — 736 2,281 34,803 — — 61,010

Substandard 19,738 12,589 15,237 3,938 33,413 48,978 8,006 — 141,899

Doubtful 10,615 — — — — 19,441 — — 30,056

Loss — — — — — — — — —

Total commercial real estate 544,143 1,456,472 870,251 578,044 552,383 1,394,411 55,587 2,556 5,453,847

Current period gross charge-offs 2,008 — — — — 6,000 — — 8,008

Commercial construction

Pass 133,463 151,957 96,147 — — — 2,614 — 384,181

Special Mention 456 — — — — — — — 456

Substandard — — — — — — — — —

Doubtful — — — — — — — — —

Loss — — — — — — — — —

Total commercial construction 133,919 151,957 96,147 — — — 2,614 — 384,637

Current period gross charge-offs — — — — — — — — —

Business banking

Pass 139,237 165,247 182,606 146,180 110,638 229,636 73,054 3,996 1,050,594

Special Mention 1,474 2,553 1,009 4,294 4,692 11,479 23 27 25,551

Substandard 1,310 596 2,684 2,071 1,464 3,423 594 579 12,721

Doubtful — — — — 507 220 — — 727

Loss — — — — — — — — —

Total business banking 142,021 168,396 186,299 152,545 117,301 244,758 73,671 4,602 1,089,593

Current period gross charge-offs 188 161 1,596 86 654 590 — 1,370 4,645

Residential real estate

Current and accruing 257,671 728,997 665,811 354,003 93,817 451,812 — — 2,552,111

30-89 days past due and accruing 750 6,615 2,437 2,112 1,496 8,219 — — 21,629

Loans 90 days or more past due and still accruing — — — — — — — — —

Non-accrual — 1,755 1,433 291 288 4,958 — — 8,725

Total residential real estate 258,421 737,367 669,681 356,406 95,601 464,989 — — 2,582,465

Current period gross charge-offs — — — — — — — — —

Consumer home equity

Current and accruing 30,393 84,065 9,151 4,899 4,166 80,687 970,882 9,472 1,193,715

30-89 days past due and accruing 148 483 — — — 558 7,509 223 8,921

Loans 90 days or more past due and still accruing — — — — — — — — —

Non-accrual — 66 — — — 1,466 6,770 230 8,532

Total consumer home equity 30,541 84,614 9,151 4,899 4,166 82,711 985,161 9,925 1,211,168

Current period gross charge-offs — — — — — — 7 — 7

Other consumer

Current and accruing 93,659 36,601 23,962 12,427 11,367 14,609 13,353 85 206,063

30-89 days past due and accruing 170 271 153 25 12 92 40 — 763

Loans 90 days or more past due and still accruing — — — — — — — — —

Non-accrual 50 61 25 2 14 34 7 — 193

Total other consumer 93,879 36,933 24,140 12,454 11,393 14,735 13,400 85 207,019

Current period gross charge-offs 1,047 411 329 92 111 260 169 — 2,419

Total $ 1,685,825 $ 3,116,426 $ 2,223,220 $ 1,459,559 $ 921,574 $ 2,846,088 $ 1,674,790 $ 20,878 $ 13,948,360

(1) The amounts presented represent the amortized cost as of December 31, 2023 of revolving loans that were converted to term loans during the year ended December 31, 2023.

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:

49 unchanged sentences

(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 $ 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.

Asset Quality

36 unchanged sentences

As of December 31, 2023 As of December 31, 2022

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

Non-Accrual Loans With ACL Non-Accrual Loans Without ACL (1) Total Non-Accrual Loans Non-Accrual Loans With ACL Non-Accrual Loans Without ACL (1) Total Nonaccrual Loans

(In thousands)

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Total non-accrual loans $ 35,995 $ 16,562 $ 52,557 $ 26,244 $ 12,360 $ 38,604

(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.

(1) The loans on non-accrual status and without an ACL as of both December 31, 2023 and 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, 2023 and 2022 was not significant.

As of both December 31, 2023 and December 31, 2022, there were no loans greater than 90 days past due and still accruing.

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.

Accrued interest reversed against interest income for the years ended December 31, 2023 and 2022 was not significant.

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.

As of December 31, 2023 and December 31, 2022, the Company had collateral-dependent residential mortgage and home equity loans totaling $ 0.8 million and $ 0.6 million, respectively.

For collateral-dependent commercial loans, the amount of the allowance for loan losses is individually assessed based upon the fair value of the collateral.

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As of both December 31, 2023 and December 31, 2022, 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”)

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.

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.

The Company continued to accrue interest on these COVID-19 modified loans and evaluated the deferred interest for collectability as of December 31, 2022 and December 31, 2021.

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 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.

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.

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:

As of December 31, 2023, there were two residential real estate loans, which had a balance of $ 0.2 million, collateralized by residential real estate property for which formal foreclosure proceedings were in-process.

As of December 31, 2022, there were no mortgage loans collateralized by residential real estate property for which formal foreclosure proceedings were in-process.

As of December 31, 2023, there were three consumer home equity loans, which had a total balance of $ 0.2 million, collateralized by residential real estate property for which formal foreclosure proceedings were in-process.

As of December 31, 2022, there were no consumer home equity loans collateralized by residential real estate property for which formal foreclosure proceedings were in-process.

Loan Modifications to Borrowers Experiencing Financial Difficulty

The following table shows the amortized cost balance as of December 31, 2023 of loans modified during the year ended December 31, 2023 to borrowers experiencing financial difficulty by the type of concession granted:

As of December 31, 2023

TDRs on Accrual Status TDRs on Non-accrual Status Total TDRs

Number of Loans Balance of

Loans Number of

Loans Balance of

Loans Number of

Loans Balance of

Amortized Cost Balance % of Total Portfolio

(Dollars in thousands)

Commercial and industrial 2 $ 4,449 9 $ 11,317 11 $ 15,766

Interest Rate Reduction:

Business banking $ 43 0.00 %

1 unchanged sentence

Consumer home equity 1,883 0.16 %

Other consumer 1 11 — — 1 11

Total interest rate reduction $ 2,227 0.02 %

Other-than-Insignificant Delay in Repayment:

Business banking $ 20 0.00 %

Residential real estate 3,284 0.13 %

Consumer home equity 1,004 0.08 %

Total other-than-insignificant delay in repayment $ 4,308 0.03 %

Term Extension:

Business banking $ 274 0.03 %

Total term extension $ 274 0.00 %

Combination—Interest Rate Reduction & Other-than-Insignificant Delay in Repayment:

Commercial real estate $ 10,615 0.19 %

Business banking 86 0.01 %

Consumer home equity 603 0.05 %

Total combination—interest rate reduction & other-than-insignificant delay in repayment $ 11,304 0.08 %

Combination—Interest Rate Reduction & Term Extension:

Business banking $ 561 0.05 %

Consumer home equity 213 0.02 %

Total combination—interest rate reduction & term extension $ 774 0.01 %

Combination—Term Extension & Other-than-Insignificant Delay in Repayment:

Business banking $ 24 0.00 %

Residential real estate 140 0.01 %

Total combination—term extension & other-than-insignificant delay in repayment $ 164 0.00 %

Combination—Interest Rate Reduction, Term Extension & Other-than-Insignificant Delay in Repayment

Business banking $ 180 0.02 %

Residential real estate 81 0.00 %

Consumer home equity 51 0.00 %

Total combination—interest rate reduction, term extension & other-than-insignificant delay in repayment $ 312 0.00 %

Total by portfolio segment

Commercial real estate $ 10,615 0.19 %

Business banking 1,188 0.11 %

Residential real estate 3,806 0.15 %

Consumer home equity 3,754 0.31 %

Total $ 19,363 0.14 %

The following table describes the financial effect of the modifications made during the year ended December 31, 2023 to borrowers experiencing financial difficulty:

Loan Type Financial Effect (1)

Interest Rate Reduction

Commercial real estate Reduced weighted-average contractual interest rate from 7.4 % to 3.4 %.

Business banking Reduced weighted-average contractual interest rate from 9.8 % to 7.6 %.

Residential real estate Reduced weighted-average contractual interest rate from 5.4 % to 3.6 %.

Consumer home equity Reduced weighted-average contractual interest rate from 7.5 % to 4.5 %.

Other-than-Insignificant Delay in Repayment

Commercial real estate Interest-only period of 9 months for one borrower.

Principal deferred to the end of the loan life.

Business banking Deferred a weighted average of 4 payments.

For principal and interest deferrals, the loans were re-amortized over an extended payment period resulting in reduced monthly payment amounts for the borrowers.

For interest-only deferrals, interest accrued at the time of the modification was added to the end of the loan life.

Residential real estate Deferred a weighted average of 7 principal and interest payments which were added to the end of the loan life.

Consumer home equity Deferred a weighted average of 8 principal and interest payments which were added to the end of the loan life.

Term Extension

Business banking Added a weighted-average 4.3 years to the life of loans, which reduced monthly payment amounts for the borrowers.

Residential real estate Added a weighted-average 23.7 years to the life of loans, which reduced monthly payment amounts for the borrowers.

Consumer home equity Added a weighted-average 16.8 years to the life of loans, which reduced monthly payment amounts for the borrowers.

(1) Loans that were modified in more than one manner are included in each modification type corresponding to the type of modifications performed.

As of December 31, 2023, no loans to borrowers experiencing financial difficulty modified during the year ended December 31, 2023 had a payment default during the 12-month period ended December 31, 2023.

Management closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table shows the age analysis of past due loans to borrowers experiencing financial difficulty as of December 31, 2023 that were modified during the 12-month period ended December 31, 2023:

As of December 31, 2023

Due 90 or More

Due Total Past

Due Current Total

(In thousands)

Commercial real estate $ — $ — $ — $ — $ 10,615 $ 10,615

Business banking — — — — 1,188 1,188

Residential real estate 366 227 — 593 3,213 3,806

Consumer home equity 51 — 400 451 3,303 3,754

Total $ 417 $ 227 $ 400 $ 1,044 $ 18,319 $ 19,363

As of December 31, 2023, there were no additional commitments to lend to borrowers experiencing financial difficulty and which were modified during the year ended December 31, 2023 in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant delay in repayment, or a term extension.

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 $ 985,394 0.00 % $ — $ 1,024,131 0.83 % $ —

Commercial real estate 447,550 0.00 % — 422,042 0.00 % —

Commercial construction 146,043 0.00 % — 96,134 0.00 % —

Business banking 72 0.00 % 22 51 0.00 % 3

Total loan participations $ 1,579,059 0.00 % $ 22 $ 1,542,358 0.55 % $ 3

Troubled Debt Restructurings (“TDR”)

As described previously in Note 2, “Summary of Significant Accounting Policies,” the Company adopted ASU 2022-02 on January 1, 2023 which eliminated TDR accounting.

Previously, in cases where a borrower experienced financial difficulty and the Company made certain concessionary modifications to contractual terms, the loan was classified as a TDR.

The process through which management identified loans as TDR loans, the methodology employed to record any loan losses, and the calculation of any shortfall on collateral dependent loans is described within Note 2, “Summary of Significant Accounting Policies.” The below disclosures regarding TDRs relate to prior periods and were included for comparative purposes.

The Company’s policy was to have any TDR loan which was on non-accrual status prior to being modified remain on non-accrual status for approximately six months subsequent to being modified before management considered its return to accrual status.

If the TDR loan was on accrual status prior to being modified, it was reviewed to determine if the modified loan should remain on accrual status.

TDR loan information as of December 31, 2022 and the year ended December 31, 2021 was prepared in accordance with GAAP effective for the Company prior to the Company’s adoption of ASU 2022-02.

The following table shows the TDR loans on accrual and non-accrual status as of December 31, 2022 :

TDRs on Accrual Status TDRs on Non-accrual Status Total TDRs

4 unchanged sentences

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

3 unchanged sentences

Total 179 $ 28,834 78 $ 19,351 257 $ 48,185

(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.

The following tables show the modifications which occurred during the periods and the change in the recorded investment subsequent to the modifications occurring:

For the Year Ended December 31,

2022 2021 2020

At December 31, 2022, the outstanding recorded investment of loans that were new TDR loans during the year ended December 31, 2022 was $ 11.0 million.

The amount of allowance for loan losses associated with the TDR loans was $ 1.8 million at December 31, 2022.

There were no additional commitments to lend to borrowers who have been party to a TDR as of December 31, 2022.

The following tables show the modifications which occurred during the periods indicated and the change in the recorded investment subsequent to the modifications occurring:

For the Years Ended December 31,

Contracts Pre-

3 unchanged sentences

Investment Post-

Contracts Pre-

Investment Post-

(Dollars in thousands)

Investment (1)

Commercial and industrial 4 $ 5,415 $ 5,415 — $ — $ —

Commercial real estate — — — — — — 1 506 506

Business banking 30 2,779 2,798 — — —

1 unchanged sentence

Consumer home equity 7 1,535 1,535 3 300 300

Other consumer — — — — — — 4 58 58

Total 51 $ 12,571 $ 12,590 5 $ 798 $ 798

1 unchanged sentence

These amounts may show an increase when modification includes capitalization of interest.

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:

For the Year Ended December 31,

2022 2021 2020

For the Years Ended December 31,

(In thousands)

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

Adjusted interest rate and extended maturity 1,088 —

Interest only/principal deferred 1,499 —

Covenant modification 2,418 —

Court-ordered concession — 396

Principal and interest deferred 3,353 —

Extended maturity and interest only/principal deferred 2,997 —

Other 224 202

Total $ 12,590 $ 798

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.

One loan totaling approximately $ 1.0 million that was modified during the preceding 12 months subsequently defaulted during the year ended December 31, 2022.

No loans were modified during the preceding 12 months which 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

Investment Number of

Contracts Recorded

Investment Number of

Contracts Recorded

(Dollars in thousands)

Troubled debt restructurings that subsequently defaulted (1):

Consumer home equity 1 $ 988 — $ — 1 $ 40

Total 1 $ 988 — $ — 1 $ 40

(1) This table does not reflect any TDRs which were fully charged off, paid off, or otherwise settled during the period.

During the years ended December 31, 2022 and 2021, no amounts were charged-off on TDRs modified in the prior 12 months.

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.

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

2 unchanged sentences

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.

A discussion of the Company’s calculation of its allowance for loan losses for the year ended December 31, 2021 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.

6 unchanged sentences

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:

15 unchanged sentences

$ 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

As described in Note 2, “Summary of Significant Accounting Policies,” the Company adopted ASU 2016-13 effective January 1, 2022.

The Company has included certain prior period disclosures related to impaired loans for comparative purposes.

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.

Refer to the Company’s 2021 Form 10-K for significant accounting policies related to impaired loans.

A discussion of the Company’s calculation of its loan impairment for the year ended December 31, 2021 follows.

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

Investment Unpaid

Balance Related

(In thousands)

With no related allowance recorded:

Commercial and industrial $ 12,309 $ 13,212 $ —

Commercial real estate 3,520 3,520 —

Business banking 4,199 5,069 —

Residential real estate 11,217 12,587 —

Consumer home equity 1,924 1,924 —

Other consumer 18 18 —

Sub-total 33,187 36,330 —

With an allowance recorded:

Commercial and industrial 3,836 4,226 1,540

Commercial real estate — — —

Business banking 7,861 11,240 450

Residential real estate 11,161 11,161 1,549

Consumer home equity 1,998 1,998 270

Other consumer 161 161 161

Sub-total 25,017 28,786 3,970

Total $ 58,204 $ 65,116 $ 3,970

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

Recognized Average

The following table displays information regarding interest income recognized on impaired loans, by portfolio, for the year ended December 31, 2021:

For the Year Ended December 31, 2021

Investment Total

18 unchanged sentences

Purchased Credit Impaired Loans

The following table displays the outstanding and carrying amounts of PCI loans as of December 31, 2021 :

As of December 31, 2021

(In thousands)

Outstanding balance $ 78,074

Carrying amount 69,639

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.

As described in Note 2, “Summary of Significant Accounting Policies,” the Company adopted ASU 2016-13 effective January 1, 2022.

The Company has included prior period disclosures related to PCI loans for comparative purposes.

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

The adoption of ASU 2016-13 eliminated the concept of and accounting related to PCI loans.

The following table summarizes activity in the accretable yield for the PCI loan portfolio:

For the Years Ended December 31,

For the Year Ended December 31, 2021

(In thousands)

11 unchanged sentences

Premises and Equipment

The information presented within this Note excludes discontinued operations.

Refer to Note 23, “Discontinued Operations” for further discussion regarding discontinued operations.

The following table summarizes the Company’s premises and equipment as of the dates indicated:

12 unchanged sentences

Net premises and equipment $ 60,133 $ 62,493

(1) In connection with the Company’s acquisition of Century, the Company acquired $ 64.5 million in premises and equipment.

The Company recorded depreciation expense related to premises and equipment of $ 10.5 million, $ 10.7 million, and $ 11.6 million during the years ended December 31, 2023, 2022, and 2021, respectively.

During the year ended December 31, 2023, no properties were transferred to held for sale, no r were any properties sold.

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.

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 Bancorp, Inc.

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.

In connection with these sales, the Company recognized a gain on sale of $ 1.4 million, which is included in other noninterest 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, four of which 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.

2 unchanged sentences

In connection with these sales, the Company recognized no significant gain or loss.

No premises and equipment was transferred to held for sale or sold during the year ended December 31, 2020.

The Company leases certain office space and equipment under various non-cancelable operating leases.

2 unchanged sentences

Operating lease liabilities are recorded within other liabilities and ROU assets are recorded within other assets in the Company’s Consolidated Balance Sheets.

The information presented within this Note excludes discontinued operations.

Refer to Note 23, “Discontinued Operations” for further discussion regarding discontinued operations.

As of the dates indicated, the Company had the following related to operating leases:

27 unchanged sentences

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.

During the year ended December 31, 2023, management determined not to exercise future lease term extension options related to four leases, which had previously been included in its determination of future lease payments, to exercise future lease term extension options related to ten leases, which had not previously been included in its determination of future lease payments, and to terminate one lease.

Accordingly, the Company remeasured the present value of the future lease payments related to such leases which resulted in a net increase of the lease liabilities and a corresponding net increase of the lease ROU assets of $ 2.4 million.

In connection with the lease termination, the Company recorded an impairment charge of $ 0.4 million.

During the year ended December 31, 2022, management determined not to exercise future lease term extension options related to two leases, which had previously been included in its determination of future lease payments, to exercise future lease term extension options 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 $ 14.4 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 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.

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

The following tables set forth the carrying amount of goodwill and other intangible assets, net of accumulated amortization by reporting unit at the dates indicated below:

As of December 31, 2022

Business Insurance

Agency Business Net

(In thousands)

Balances not subject to amortization

Goodwill $ 557,635 $ 82,587 $ 640,222

Balances subject to amortization

Insurance agency (1) — 10,530 10,530

Core deposits 10,374 — 10,374

Total other intangible assets 10,374 10,530 20,904

Total goodwill and other intangible assets $ 568,009 $ 93,117 $ 661,126

(1) Insurance agency intangible assets include customer list, non-compete agreement and supplier relationship intangible assets.

Goodwill and Core Deposit Intangible Asset

The table below sets forth the carrying amount of goodwill and other intangible assets, net of accumulated amortization, for the banking business as of the dates indicated below.

The information presented within this Note excludes discontinued operations.

Refer to Note 23, “Discontinued Operations” for further discussion regarding discontinued operations.

As of December 31,

Business Insurance

Agency Business Net

(In thousands)

2 unchanged sentences

Balances subject to amortization

Insurance agency (1) — 6,635 6,635

Core deposits 11,572 — 11,572

Total other intangible assets 11,572 6,635 18,207

Core deposit intangible 8,570 10,374

Total goodwill and other intangible assets $ 566,205 $ 568,009

(1) Insurance agency intangible assets include customer list, non-compete agreement and supplier relationship intangible assets.

The changes in the carrying value of goodwill for the periods indicated were as follows:

For the Year Ended December 31, 2022

Business Insurance

Agency Business Net

(In thousands)

Balance at beginning of year $ 557,635 $ 73,861 $ 631,496

Goodwill recorded during the year (1) — 8,726 8,726

Goodwill disposed of during the year — — —

Balance at end of year $ 557,635 $ 82,587 $ 640,222

(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 .

For the Year Ended December 31, 2021

Business Insurance

Agency Business Net

For the Years Ended December 31,

(In thousands)

1 unchanged sentence

Goodwill recorded during the year — —

Goodwill disposed of during the year — — —

Balance at end of year $ 557,635 $ 557,635

(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:

The following table sets forth the carrying amount of the Company’s core deposit intangible asset, net of accumulated amortization, as of the dates indicated below:

As of December 31,

2 unchanged sentences

(In thousands)

Insurance agency (1) $ 37,105 $ ( 26,575 ) $ 10,530 $ 30,545 $ ( 23,910 ) $ 6,635

Core deposits 15,969 ( 5,595 ) 10,374 18,212 ( 6,640 ) 11,572

Core deposit intangible $ 11,633 $ ( 3,063 ) $ 8,570 $ 15,969 $ ( 5,595 ) $ 10,374

Total $ 11,633 $ ( 3,063 ) $ 8,570 $ 15,969 $ ( 5,595 ) $ 10,374

(1) Insurance agency intangible assets include customer list, non-compete agreement and supplier relationship intangible assets.

The Company quantitatively assesses goodwill for impairment at the reporting unit level on an annual basis or sooner if an event occurs or circumstances change which might indicate that the fair value of a reporting unit is below its carrying amount.

The Company has identified and assigned goodwill to two reporting units - the banking business and insurance agency business.

The quantitative assessments for both the banking business and insurance agency business were most recently performed as of September 30, 2022.

The assessment for the banking business included a market capitalization analysis, as well as a comparison of the banking business’s book value to the implied fair value using a pricing multiple of the Company’s tangible book value.

The assessment for the insurance agency business included a price-to-earnings analysis, as well as an earnings before interest, taxes, depreciation, and amortization (“EBITDA”) multiplier valuation based upon recent and observed agency mergers and acquisitions.

The Company considered the economic conditions for the period including the potential impact of the COVID-19 pandemic as it pertains to the goodwill above and determined that there was no indication of impairment related to goodwill 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.

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:

The Company has identified and assigned goodwill to one reporting unit - the banking business unit.

In accordance with the accounting guidance codified in ASC 350-20, the Company performs a test of goodwill for impairment at least on an annual basis.

An assessment is also required to be performed to the extent relevant events and/or circumstances occur which may indicate it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount.

The failure of several banks in early 2023 led to economic uncertainty and an increase in volatility in the capital markets, particularly in the banking industry.

Accordingly, the Company performed a qualitative assessment as of March 31, 2023 which included an assessment of current industry conditions and the impacts of those conditions on the Company’s financial position and results of operations.

As a result of that assessment, the Company determined it was not more-likely-than-not that the carrying value of goodwill was greater than the fair value as of March 31, 2023.

Therefore, a quantitative goodwill impairment test was not considered necessary at that time.

During the second quarter of 2023, as the economic uncertainty impacting the banking industry persisted, the Company exercised the option afforded by ASC 350-20 and bypassed the qualitative assessment, opting to perform the quantitative impairment assessment irrespective of qualitative factors.

The assessment included a comparison of the banking business’ book value to the implied fair value using a pricing multiple of the Company’s tangible book value as well as a comparison of the banking business’ book value to its estimated fair value based upon its discounted cash flows.

The assessment also included a market capitalization analysis.

Based upon the assessment, it was determined there was no impairment of the Company’s goodwill as of June 30, 2023.

The Company performed its annual assessment for the banking business as of September 30, 2023.

Similar to the assessment performed as of June 30, 2023, the assessment included a comparison of the banking business’ book value to the

implied fair value using a pricing multiple of the Company’s tangible book value as well as a comparison of the banking business’ book value to its estimated fair value based upon its discounted cash flows.

The assessment also included a market capitalization analysis.

Based upon the assessment, it was determined there was no impairment of the Company’s goodwill as of September 30, 2023.

Management performed an additional qualitative assessment as of December 31, 2023, to analyze changes in factors impacting assumptions used in its September 30, 2023 assessment.

Based upon that assessment, management concluded that it was not more-likely-than-not that the carrying value of the goodwill of the banking business unit was greater than the fair value as of December 31, 2023 and a quantitative goodwill impairment test was not necessary as of December 31, 2023.

The amortization expense of the Company’s core deposit intangible asset was $ 1.8 million, $ 1.2 million, and $ 0.2 million during the years ended December 31, 2023, 2022, and 2021, respectively.

The original amortization period and remaining useful life of the Company’s core deposit intangible asset is 10.0 years and 4.3 years, respectively.

Management performs an assessment of the remaining useful lives of the Company’s intangible assets on a quarterly basis to determine if such lives remain appropriate.

As a result of the assessment performed during the second quarter of 2023, management reduced the remaining useful life of its core deposit intangible asset to five years which resulted in an increase in quarterly amortization expense.

The effect of the increase on annual amortization expense was not material.

The estimated amortization expense for the remaining useful life of the Company’s core deposit intangible asset is as follows:

Year (In thousands)

Thereafter 6,265

Total amortization expense $ 8,570

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 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.

The Company has established overnight programs which sweep certain demand and interest checking accounts into money market investment accounts.

Reported deposit balances do not reflect the impact of the overnight sweep programs.

At December 31, 2022 and 2021, the Company swept $ 9.5 billion, and $ 10.5 billion, respectively, from demand deposit and interest checking balances into money market investments.

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

As of December 31,

(In thousands)

Demand $ 5,162,218 $ 6,240,637

Interest checking accounts 3,737,361 4,568,122

Savings accounts 1,323,126 1,831,123

Money market investment 4,664,475 4,710,095

Certificates of deposit 2,709,037 1,624,382

Total deposits $ 17,596,217 $ 18,974,359

At December 31, 2023 and 2022, the Company had a balance of $ 2.4 million and $ 2.3 million, respectively, in overdrafts.

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Total certificates of deposit $ 2,709,037 100.0 %

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.

The amount of certificates of deposit equal to or greater than $250,000, as of December 31, 2023 and 2022, was $ 867.6 million and $ 239.1 million, respectively.

Included in the certificates of deposit balances above were $ 50.0 million and $ 928.6 million of brokered certificates of deposit at December 31, 2023 and 2022, respectively.

Borrowed Funds

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At December 31, 2023 and 2022, the Company had available and unused borrowing capacity of approximately $ 775.9 million and $ 538.9 million, respectively, at the Federal Reserve Discount Window.

At December 31, 2023 and 2022, loans with collateral value of $ 636.8 million and $ 538.9 million, respectively, and securities with a collateral value of $ 139.1 million at December 31, 2023 were pledged to the Discount Window.

No securities were pledged as collateral to the Federal Reserve Discount Window at December 31, 2022.

At December 31, 2023, the Company had a $ 2.4 billion collateralized line of credit from the Federal Reserve Bank of Boston through the Bank Term Funding Program.

Securities with a collateral value of $ 2.4 billion at December 31, 2023 were pledged to the Federal Reserve Bank of Boston under the Bank Term Funding Program .

The Bank Term Funding Program was created by the Federal Reserve in March 2023.

Interest expense on borrowed funds was as follows:

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Total Federal Home Loan Bank advances (1) $ 17,738 1.25 % $ 704,084 4.30 %

(1) The weighted average interest rate of long-term FHLB advances as of both December 31, 2022 and December 31, 2021 was 1.11 %.

(1) The weighted average interest rate of long-term FHLB advances as of December 31, 2023 and December 31, 2022 was 1.24 % and 1.11 %, respectively.

At December 31, 2023 and 2022, 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.

The collateral value of residential real estate and commercial real estate loans securing these advances was $ 1.4 billion and $ 1.5 billion, respectively, at December 31, 2023, and $ 1.5 billion and $ 1.2 billion, respectively, at December 31, 2022.

At December 31, 2023 and 2022, the Bank had available and unused borrowing capacity with the FHLBB of approximately $ 2.9 billion and $ 2.0 billion, respectively.

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Included in other noninterest income in the Consolidated Statements of Income are dividends received of $ 2.0 million, $ 0.3 million, and $ 0.2 million during the years ended December 31, 2023, 2022, and 2021, 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 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,

2023 2022 2021

(Dollars in thousands, except per share data)

Net income applicable to common shares:

Net (loss) income from continuing operations $ ( 62,689 ) $ 186,511 $ 145,531

Net income from discontinued operations 294,866 13,248 9,134

Total net income $ 232,177 $ 199,759 $ 154,665

Average number of common shares outstanding 175,814,954 179,529,613 186,713,020

Average unallocated ESOP shares ( 13,521,934 ) ( 14,019,256 ) ( 14,520,684 )

Average number of common shares outstanding used to calculate basic earnings per common share 162,293,020 165,510,357 172,192,336

Common stock equivalents - restricted stock awards and units 110,077 138,214 59,721

Average number of common shares outstanding used to calculate diluted earnings per common share 162,403,097 165,648,571 172,252,057

Basic earnings per share

Basic (loss) earnings per share from continuing operations $ ( 0.39 ) $ 1.13 $ 0.85

Basic earnings per share from discontinued operations 1.82 0.08 0.05

Basic earnings per share $ 1.43 $ 1.21 $ 0.90

Diluted earnings per share

Diluted (loss) earnings per share from continuing operations $ ( 0.39 ) $ 1.13 $ 0.85

Diluted earnings per share from discontinued operations 1.82 0.08 0.05

Diluted earnings per share $ 1.43 $ 1.21 $ 0.90

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 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.

As of December 31, 2023 and 2022, the Company had $ 223.4 million and $ 131.3 million, respectively, in tax credit investments that were included in other assets in the Consolidated Balance Sheets.

When permissible, the Company accounts for its investments in LIHTC projects using the proportional amortization method, under which it amortizes the initial cost of the investment in proportion to the amount of the tax credits and other tax benefits received and recognizes that amortization as a component of income tax expense.

The net investment in the housing projects is included in other assets on the Consolidated Balance Sheets.

The Company will continue to use the proportional amortization method on any new qualifying LIHTC investments.

The following table presents the Company’s investments in LIHTC projects using the proportional amortization method as of the dates indicated:

As of December 31,

(In thousands)

Current recorded investment included in other assets $ 221,190 $ 128,765

Commitments to fund qualified affordable housing projects included in recorded investment noted above

149,207 84,145

The following table presents additional information related to the Company’s investments in LIHTC projects for the periods indicated:

For the Year Ended December 31,

2023 2022 2021

(In thousands)

Tax credits and other tax benefits recognized $ 11,624 $ 9,146 $ 6,484

Amortization expense included in income tax expense

9,577 7,503 5,753

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 Sheets and totaled $ 2.2 million and $ 2.6 million at December 31, 2023 and 2022, respectively.

There were no outstanding commitments related to these investments as of either December 31, 2023 or December 31, 2022.

The information presented within this Note excludes discontinued operations.

Refer to Note 23, “Discontinued Operations” for further discussion regarding discontinued operations.

The following table sets forth information regarding the Company’s tax provision and applicable tax rates for the periods indicated:

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Effective income tax rates 50.25 % 21.71 % 17.32 %

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 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 Company recorded a net income tax benefit of $ 63.3 million for the year ended December 31, 2023 compared to net income tax expense of $ 51.7 million and $ 30.5 million for the years ended December 31, 2022 and 2021, respectively.

The income tax benefit for the year ended December 31, 2023 was primarily due to pretax losses which largely resulted from losses on sales of available for sale securities in the first quarter of 2023.

In addition, during the first quarter of 2023, the Company liquidated Market Street Securities Corporation (“MSSC”), a wholly owned subsidiary, and transferred all of MSSC’s assets to Eastern Bank.

In connection with the liquidation and subsequent transfer of securities previously held by MSSC to Eastern Bank, the Company recognized an additional deferred income tax benefit of $ 23.7 million during the first quarter of 2023.

This deferred income tax benefit resulted from a state tax rate change applied to the deferred tax asset related to the securities transferred to Eastern Bank.

The provision for income taxes is comprised of the following components:

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(In thousands)

Current tax expense:

Current tax (benefit) expense:

Federal $ ( 39,710 ) $ 36,436 $ 23,923

State ( 5,332 ) 10,021 12,204

Total current tax expense 50,906 39,360 33,522

Deferred tax expense (benefit):

Total current tax (benefit) expense ( 45,042 ) 46,457 36,127

Deferred tax (benefit) expense:

Federal 1,219 ( 1,028 ) ( 7,984 )

State ( 19,486 ) 6,290 2,321

Total deferred tax expense (benefit) 6,023 ( 5,313 ) ( 20,359 )

Total income tax expense $ 56,929 $ 34,047 $ 13,163

Total deferred tax (benefit) expense ( 18,267 ) 5,262 ( 5,663 )

Total income tax (benefit) expense $ ( 63,309 ) $ 51,719 $ 30,464

A reconciliation of the U.S.

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(Dollars in thousands)

Income tax expense at statutory rate $ 53,904 21.00 % $ 39,630 21.00 % $ 7,539 21.00 %

Increase (decrease) resulting from:

Income tax (benefit) expense at statutory rate $ ( 26,458 ) 21.00 % $ 50,029 21.00 % $ 36,959 21.00 %

(Decrease) increase resulting from:

State income tax, net of federal tax benefit (1) ( 19,606 ) 15.56 % 12,885 5.41 % 11,475 6.53 %

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Other, net ( 3,478 ) 2.76 % ( 400 ) ( 0.17 ) % ( 219 ) ( 0.12 ) %

Actual income tax expense $ 56,929 22.18 % $ 34,047 18.04 % $ 13,163 36.67 %

Actual income tax (benefit) expense $ ( 63,309 ) 50.25 % $ 51,719 21.71 % $ 30,464 17.32 %

(1) Includes state tax benefit associated with MSSC liquidation of $ 23.7 million for the year ended December 31, 2023 described above.

Significant components of the Company’s deferred tax assets and deferred tax liabilities are presented below:

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Other 2,061 2,083

Total deferred tax assets before valuation allowance 371,103 135,434

Valuation allowance — ( 700 )

Total deferred tax assets 298,172 367,646

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Trading securities 3,405 938

Cash flow hedges — 2,878

Employee benefits 824 —

Other 1,843 2,033

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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 during the year ended December 31, 2021.

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 made a similar determination and, accordingly, recorded a release of the remaining $ 0.7 million.

As of December 31, 2023, management believes it is more likely than not that the Company will realize the entirety of its net deferred tax assets.

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The decrease was primarily due to a reversal of $ 2.2 million recognized during the year ended December 31, 2023.

The following table presents a reconciliation of the beginning and ending amount of unrecognized tax benefits:

The following table presents a reconciliation of the beginning and ending amount of unrecognized tax benefits for the periods indicated:

For the Years Ended December 31,

2023 2022 2021

(In thousands)

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Ending $ 3,503 $ 5,782 $ 7,923

The amount that would reduce the effective tax rate, if recognized, is $ 6.0 million.

As of December 31, 2023, the amount that would reduce the effective tax rate, if recognized, is $ 3.8 million.

The reduction in the effective tax rate is inclusive of the federal benefit for unrecognized state tax benefits, and accrued interest and penalties.

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When permissible, the Company accounts for its investments in Low Income Housing Tax Credit (“LIHTC”) projects using the proportional amortization method, under which it amortizes the initial cost of the investment in proportion to the amount of the tax credits and other tax benefits received and recognizes that amortization as a component of income tax expense.

The net investment performance in the housing projects is included in other assets.

The net investment performance in the housing projects is included in other assets in the Consolidated Balance Sheets.

The Company will continue to use the proportional amortization method on any new qualifying LIHTC investments.

During the years ended December 31, 2023 and 2022, the Company generated federal tax credits primarily from LIHTC investments of $ 9.2 million and $ 7.3 million, respectively.

During the years ended December 31, 2022 and 2021, the Company generated state tax credits from LIHTC investments of less than $ 0.1 million.

During the years ended December 31, 2023 and 2022, the Company generated state tax credits from LIHTC investments of $ 0.4 million and less than $ 0.1 million, respectively.

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 11, “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.

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 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.

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.

The net investment in the housing projects is included in other assets in the Consolidated Balance Sheets.

The Company will continue to use the proportional amortization method on any new qualifying LIHTC investments.

The following table presents the Company’s investments in LIHTC projects using the proportional amortization method as of the dates indicated:

As of December 31,

(In thousands)

Current recorded investment included in other assets $ 128,765 $ 81,035

Commitments to fund qualified affordable housing projects included in recorded investment noted above

84,145 48,399

The following table presents additional information related to the Company’s investments in LIHTC projects for the periods indicated:

For the Year Ended December 31,

2022 2021 2020

(In thousands)

Tax credits and other tax benefits recognized $ 9,146 $ 6,484 $ 5,033

Amortization expense included in income tax expense

7,503 5,753 4,977

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 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.

During the year ended December 31, 2020, the Company wrote off $ 7.6 million of the tax credit equity investment balances as a component of noninterest expense and other assets to reflect the remaining benefits from these investments.

Management evaluated the correction in relation to the year ended December 31, 2020, which is when the correction was recorded, as well as the preceding periods in which it originated.

Management believes this correction is immaterial to both 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

Share Repurchases

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 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.

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

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:

Information regarding dividends declared and paid is presented in the following table for the periods indicated:

Dividends Declared per Share Dividends Declared Dividends Paid

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(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%.

(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, 2023 and 2022.

There have been no conditions or events that management believes would cause a change in the Company’s categorization.

The Company’s actual capital amounts and ratios are presented in the following table:

The Company’s actual capital amounts and ratios are presented in the following table as of the dates indicated:

Actual For Capital Adequacy To Be Well-

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Employee Benefits

Conversion of Defined Benefit Pension Plan and Benefit Equalization Plan to Cash Balance Plan Design

Effective November 1, 2020, each of the Qualified Defined Benefit Pension Plan (“Defined Benefit Plan”) and the Non-Qualified Benefit Equalization Plan, referred to as the BEP, sponsored by the Company were amended to convert the plans from a traditional final average earnings plan design to a cash balance plan design.

Benefits earned under the final average earnings plan design were frozen at October 31, 2020.

Starting November 1, 2020, future benefits are earned under the cash balance plan design.

Under the cash balance plan design, hypothetical account balances are established for each participant and pension benefits are generally stated as the lump sum amount in that hypothetical account.

Contribution credits equal to a percentage of a participant’s annual compensation (if the participant works at least 1,000 hours during the year) and interest credits equal to the greater of the 30 -Year Treasury rate for September preceding the current plan year or 3.5 % are added to a participant’s account each year.

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 to 5 % of annual compensation, with no future increases.

However, under the Defined Benefit Plan, participants may elect, with the consent of their spouses if they are married, to have the benefits distributed as a lump sum rather than an annuity.

The lump sum is equal to the sum of the actuarial equivalent of their frozen benefit under the final average earnings plan design, plus their cash balance account.

Under the BEP, benefits are generally only payable as a lump sum, which is equal to the sum of the actuarial equivalent of their frozen benefit under the final average earnings plan design, plus their cash balance account.

Pension Plans

The Company’s employees become eligible after attaining age 21 and completing one year of service.

Under the final average earnings plan design, benefits became fully vested after three years of eligible service for individuals employed on or before October 31, 1989.

For individuals employed subsequent to October 31, 1989 and who were already in the Defined Benefit Plan as of November 1, 2020, benefits became fully vested after five years of eligible service.

Under the new cash balance plan design and for employees who were not already in the Defined Benefit Plan as of November 1, 2020, benefits become fully vested after three years of eligible service.

The Company’s annual contribution to the plan is based upon standards established by the Pension Protection Act.

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 provides pension benefits for its employees using a noncontributory, qualified defined benefit plan, through membership in SBERA.

SBERA offers a common and collective trust as the underlying investment structure for pension plans participating in the association.

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The remainder of the common and collective trust’s portfolio is allocated to fixed income securities with a target range of 28 % to 42 % and other investments, including global asset allocation and hedge funds, from 3 % to 15 %.

The Trustees of SBERA, through the Association’s Investment Committee, select investment managers for the common and collective trust portfolio.

A professional investment advisory firm is retained by the Investment Committee to provide allocation analysis, performance measurement and to assist with manager searches.

The Trustees of SBERA, through SBERA's Investment Committee, select investment managers for the common and collective trust portfolio.

A professional investment advisory firm is retained by the Investment Committee to provide allocation analysis and performance measurement, and to assist with manager searches.

The overall investment objective is to diversify investments across a spectrum of investment types to limit risks from large market swings.

The Defined Benefit Plan has a plan year end of October 31.

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.

At the time of the acquisition, the plan had been frozen to new participants since 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 officers with defined pension benefits in excess of qualified plan limits imposed by U.S.

In connection with the sale of its insurance agency business, the Company amended its Defined Benefit Plan to allow for accelerated vesting for any employees of the insurance agency business and several employees of the Bank transitioning to Gallagher who were otherwise not vested in the Defined Benefit Plan at the time of sale.

The Company has a BEP to provide retirement benefits to certain employees whose retirement benefits under the Defined Benefit Plan are limited per the Internal Revenue Code.

In connection with the Company’s acquisition of Century, any Century employee retained following the acquisition and whose retirement benefits under the Defined Benefit Plan are limited per the Internal Revenue Code were added to the BEP.

Additionally, such Century employees were credited for prior service with Century for purposes of determining vesting and eligibility pursuant to the BEP.

In connection with the sale of its insurance agency business, the Company amended the BEP to allow for accelerated vesting for all employees of the insurance agency business and several employees of the Bank transitioning to Gallagher who were participating in the BEP and were otherwise not vested in the BEP at the time of sale.

In addition, the Company amended the vesting criteria for the BEP to align with that of the Defined Benefit Plan, so that all BEP participants have been credited with service vesting in the same manner and vest according to the same three year cliff vesting schedule as provided under the Defined Benefit Plan.

The Company has a DB SERP which provides certain retired officers with defined pension benefits in excess of qualified plan limits imposed by U.S.

federal tax law.

The DB SERP has a plan year end of December 31.

In connection with the Company’s acquisition of Century, the Company acquired Century’s Supplemental Executive Insurance/Retirement Plan (the “Supplemental Plan”).

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Accordingly, all participants of the Century Supplemental Plan were deemed to be fully vested upon the closing of the acquisition.

The Company has an unfunded Benefit Equalization Plan (“BEP”) to provide retirement benefits to certain employees whose retirement benefits under the Defined Benefit Plan are limited per the Internal Revenue Code.

The BEP has a plan year end of October 31.

Additionally, such Century employees were credited for prior service with Century for purposes of determining vesting and eligibility pursuant to the BEP.

The Company also has an unfunded Outside Directors’ Retainer Continuance Plan (“ODRCP”) that provides pension benefits to outside directors who retire from service.

The ODRCP has a plan year end of December 31.

The Company has a ODRCP which provides pension benefits to outside directors who retire from service.

Effective December 31, 2020, the Company closed the ODRCP to new participants and froze benefit accruals for active participants.

Refer to Note 2, Summary of Significant Accounting Policies , for additional discussion of the Company’s pension plans.

Obligations and Funded Status

The funded status and amounts recognized in the Company’s Consolidated Financial Statements for the Defined Benefit Plan, the DB SERP, the BEP and the ODRCP are set forth in the following table:

The funded status and amounts recognized in the Company’s Consolidated Financial Statements for the Defined Benefit Plan, the BEP, the DB SERP, and the ODRCP are set forth in the following table:

As of and for the Year Ended December 31,

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Amendments 1,351 — ( 1,106 )

Actuarial (gain) loss ( 133,282 ) ( 1,697 ) 78,095

Actuarial loss (gain) 13,943 ( 133,282 ) ( 1,697 )

Acquisitions — — 125,854

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Net amount $ 7,462 $ 7,123 $ ( 5,471 )

(1) Includes service costs related to employees of our insurance agency business.

Refer to the later discussion within the “Components of Net Periodic Benefit Cost” section within this Note for further discussion.

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, 2022.

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, 2023, there were no contributions to the Defined Benefit Plan.

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, 2021.

However, the Company made a discretionary contribution to the Defined Benefit Plan of $ 7.2 million during the year ended December 31, 2022.

The Company expects to make no contribution during the plan year beginning November 1, 2023.

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 $ 13.9 million during the year ended December 31, 2023 was primarily attributable to a decrease in the discount rate assumptions used for determining the benefit obligation which was partially offset by higher returns on plan assets than initially expected.

The net actuarial gain of $ 133.3 million during the year ended December 31, 2022 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

The net actuarial loss of $( 1.7 ) million during the year ended December 31, 2021 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.

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Discount rate - benefit cost 5.13 % 2.32 % 1.81 %

Rate of compensation increase — % — % 3.00 %

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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collective funds, equity securities, mutual funds, hedge funds and short-term investments.

The Fair Value Measurements and Disclosures Topic of the FASB ASC stipulates that an asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Fair Value Measurements and Disclosures Topic of the FASB ASC stipulates that an asset’s fair value measurement level within the fair

value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

As such, the Company classifies its interest in the common collective trust as a Level 3 asset.

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Benefits paid ( 14,813 ) ( 42,438 )

Acquisition — 63,469

Balance at end of year $ 468,364 $ 419,366

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Recognized net actuarial loss 9,563 11,032 13,400

Settlements (1) 12,045 — —

Curtailment (2) ( 15,908 ) — —

Settlement — 12,045 —

Net periodic benefit cost $ ( 5,999 ) $ 17,673 $ 5,625

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

(1) Includes service costs related to employees of our insurance agency business.

Such service costs were included in net income from discontinued operations as such costs are no longer incurred by the Company following the sale of the insurance agency business in October 2023.

All other costs included in the determination of the benefit obligation for the Defined Benefit Plan and the BEP were included in net income from continuing operations as the Bank will assume the related liability upon dissolution of its Eastern Insurance Group subsidiary.

Service costs included in net income from discontinued operations and included in the above table were $ 5.1 million, $ 7.5 million, and $ 7.7 million for the years ended December 31, 2023, 2022, and 2021, respectively.

(2) The pension curtailment gain recognized during the year ended December 31, 2023 is included in discounted operations.

Refer to the below discussion under “Pension Curtailment and Settlement” for further discussion.

Except as indicated above as it relates to service costs included in discontinued operations, 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.

In addition, as indicated above, the pension curtailment gain is also included in discontinued operations within the gain on sale of discontinued operations.

The remaining components of net periodic benefit cost are recognized in other noninterest expense in the Consolidated Statements of Income.

Pension Curtailment and Settlement

As discussed in the earlier “Pension Plans” section, during the year ended December 31, 2023 and in connection with the sale of its insurance agency business, the Company remeasured the plan assets and obligations of the Defined Benefit Plan and the obligations of the BEP to determine the resulting curtailment gain or loss.

As a result and in accordance with ASC 715-30, “Compensation-Retirement Benefits - Defined Benefit Plans,” the Company recognized a curtailment gain upon completion of the sale of the insurance agency business associated with the prior service credits attributable to the employees of the insurance agency business, all of which transferred to Gallagher.

The Company determined, with assistance from its actuaries, the amount of the resulting non-cash curtailment amount to be a gain of $ 15.9 million which was included in the gain on sale of the insurance agency business .

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.

1 unchanged sentence

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”).

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.

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The amounts contributed to the plan for the years ended December 31, 2023, 2022, and 2021, were $ 5.2 million, $ 5.0 million and $ 4.6 million, respectively.

Employee Stock Ownership Plan

As part of the IPO completed on October 14, 2020, the Company established a tax-qualified Employee Stock Ownership Plan to provide eligible employees the opportunity to own Company shares.

The ESOP borrowed $ 149.4 million from the Company to purchase 14,940,652 common shares during the IPO and in the open market.

The loan is payable in annual installments over 30 years at an interest rate equal to the Prime rate as published in the The Wall Street Journal .

As the loan is repaid to the Company, shares are released and allocated proportionally to eligible participants on the basis of each participant’s proportional share of compensation relative to the compensation of all participants.

The unallocated ESOP shares are pledged as collateral on the loan.

The Company accounts for its ESOP in accordance with FASB ASC 718-40, " Compensation – Stock Compensation" .

Under this guidance, unreleased shares are deducted from shareholders’ equity as unearned ESOP shares in the accompanying Consolidated Balance Sheets.

The Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they are committed to be released.

To the extent that the fair value of the Company’s ESOP shares differs from the cost of such shares, the difference will be credited or debited to equity.

As the loan is internally leveraged, the loan receivable from the ESOP to the Company is not reported as an asset nor is the debt of the ESOP shown as a liability in the Company’s Consolidated Balance Sheets.

Dividends on unallocated shares are used to pay the ESOP debt.

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.

The following table presents share information held by the ESOP:

As of December 31,

(Dollars in thousands)

Allocated shares 1,046,850 565,134

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 $ 237,526 $ 287,847

Defined Contribution Supplemental Executive Retirement Plan

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The Company recorded expense related to the DC SERP of $ 0.1 million, $ 0.4 million and $ 0.9 million in the years ended December 31, 2023, 2022, and 2021, respectively.

The total amount due to participants under this plan was included in other liabilities on the Company’s balance sheets and amounted to $ 17.3 million and $ 33.4 million at December 31, 2022 and 2021, respectively.

The total amount due to participants under this plan was included in other liabilities on the Company’s Consolidated Balance Sheets and amounted to $ 20.3 million and $ 17.3 million at December 31, 2023 and 2022, respectively.

Effective December 31, 2021, the Company closed the DC SERP to new participants and froze benefit accruals for active participants.

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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 rabbi trusts are considered 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.

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Included in the equity securities presented in the tables above are exchange-traded mutual funds which had a net asset value of $ 48.9 million and $ 38.9 million as of December 31, 2023 and 2022, respectively.

Share-Based Compensation

Employee Stock Ownership Plan

As part of the IPO completed on October 14, 2020, the Company established a tax-qualified Employee Stock Ownership Plan to provide eligible employees the opportunity to own Company shares.

The ESOP borrowed $ 149.4 million from the Company to purchase 14,940,652 common shares during the IPO and in the open market.

The loan is payable in annual installments over 30 years at an interest rate equal to the Prime rate as published in the The Wall Street Journal .

The unallocated ESOP shares are pledged as collateral on the loan.

The Company accounts for its ESOP in accordance with FASB ASC 718-40, " Compensation – Stock Compensation" .

Under this guidance, unreleased shares are deducted from shareholders’ equity as unearned ESOP shares in the accompanying Consolidated Balance Sheets.

The Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they are committed to be released.

To the extent that the fair value of the Company’s ESOP shares differs from the cost of such shares, the difference is credited or debited to equity.

Dividends on unallocated shares are used to pay the ESOP debt.

The following table presents the amount of compensation expense associated with the ESOP and the amount of the loan payments made by the ESOP, including the portions related to principal and interest, for the periods indicated:

Year Ended December 31,

2023 2022 2021

(In thousands)

Compensation expense $ 7,129 $ 9,923 $ 9,408

Annual loan payment:

Interest 9,374 4,724 4,826

Principal 2,914 3,147 3,045

Total loan payment $ 12,288 $ 7,871 $ 7,871

The number of shares committed to be released per year is estimated to be 495,339 through 2049 and 392,141 in the year 2050.

The following table presents share information held by the ESOP:

As of December 31,

(Dollars in thousands)

Allocated shares 1,541,971 1,046,850

Shares committed to be released 103,230 104,464

Unallocated shares (suspense shares) 13,270,932 13,769,628

Total shares 14,916,133 14,920,942

Fair value of unallocated shares $ 188,447 $ 237,526

Share-Based Compensation Plan

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However, the 2021 Plan permits the grant of additional awards of restricted stock or RSUs above the aforementioned limit, provided that, for each additional share of restricted stock or RSU awarded in excess of such limit, the pool of shares available to be issued upon the exercise of stock options will be reduced by three shares.

Pursuant to the terms of the 2021 Plan, each of the Company’s non-employee directors were automatically granted awards of restricted stock on November 30, 2021.

Pursuant to the terms of the 2021 Plan, each of the Company’s non-employee directors were automatically granted awards of restricted

stock on November 30, 2021.

Such restricted stock awards vest pro-rata on an annual basis over a five-year period.

The maximum term for stock options is ten years .

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.

In May 2023, the Company granted a total of 47,820 shares of restricted stock to the Company’s non-employee directors which vest after approximately one year from the date of grant.

In May 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.

In March 2023, the Company granted to all of the Company’s executive officers and certain other employees a total of 318,577 RSUs, which vest pro-rata on an annual basis over a period of three years from the date of the grant, and a total of 108,984 PSUs for which vesting is contingent upon the Compensation and Human Capital Management Committee of the Board of Director’s certification, after the conclusion of a three-year period from the date of the grant, that the Company has attained a threshold level of certain performance criteria over such period.

In March 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 from the date of the grant, and a total of 533,676 PSUs for which vesting is contingent upon the Compensation and Human Capital Management Committee of the Board of Director’s certification, after the conclusion of a three-year period from the date of the grant, that the Company has attained a threshold level of certain performance criteria over such period.

As of December 31, 2023 and 2022, there were 4,872,494 shares and 5,302,256 shares that remained available for issuance as restricted stock or RSU awards (including those that may be issued as performance shares and PSUs), respectively, and 18,675,815 shares that remained available for issuance upon the exercise of stock options at both dates.

As of both December 31, 2023 and 2022, no stock options had been awarded under the 2021 Plan.

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Non-vested restricted stock at end of year 420,400 $ 19.15 525,460 $ 20.08

During the year ended December 31, 2021, 683,056 RSA shares were granted which had a total grant date fair value of $ 13.7 million.

During the year ended December 31, 2023, 152,880 RSA awards vested.

Such awards had a grant date fair value of $ 3.0 million.

During the year ended December 31, 2022, 136,609 RSA awards had vested.

Such awards had a grant date fair value of $ 2.7 million.

The following table summarizes the Company’s restricted stock unit activity for the periods indicated:

3 unchanged sentences

Granted 318,577 15.63 978,364 21.08

Vested (1) ( 302,908 ) 21.08 — —

Forfeited ( 35,993 ) 15.73 ( 6,039 ) 21.08

Non-vested restricted stock at end of year 952,001 $ 19.46 972,325 $ 21.08

(1) Includes 95,808 shares withheld upon settlement for employee taxes.

During the year ended December 31, 2023, 302,908 RSU awards vested.

Such awards had a grant date fair value of $ 6.4 million.

As of December 31, 2022, no RSU awards had vested.

During the year ended year ended December 31, 2021, no RSU awards were granted.

The following table summarizes the Company’s performance stock unit activity for the periods indicated:

3 unchanged sentences

Granted 108,984 10.16 533,676 21.12

Forfeited ( 9,626 ) 10.16 — —

Non-vested restricted stock at end of year 633,034 $ 19.40 533,676 $ 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.

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, 2023, no PSU awards had vested.

As of December 31, 2022, no PSU awards had vested.

During the year ended year ended December 31, 2021, no PSU awards were granted.

The following table shows share-based compensation expense under the 2021 Plan and the related tax benefit for the periods indicated:

For the Years Ended December 31,

2023 2022 2021

(In millions)

Share-based compensation expense $ 16.5 $ 10.5 $ 0.2

Related tax benefit (1) 4.7 3.0 0.1

(1) Estimated based upon the Company’s statutory rate for the respective period.

As of December 31, 2023 and 2022, there was $ 26.8 million and $ 34.6 million, respectively, of total unrecognized compensation expense related to unvested restricted stock awards, restricted stock units and performance stock units granted and issued under the 2021 Plan, as applicable.

As of December 31, 2023, this cost is expected to be recognized over a weighted average remaining period of approximately 2.2 years.

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The Company has been named a defendant in various legal proceedings arising in the normal course of business.

Set out below are descriptions of significant legal matters involving the Company and its subsidiaries.

In the opinion of management, and taking into account the advice of legal counsel, the ultimate resolution of these proceedings will not have a material effect on the Company’s Consolidated Financial Statements.

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 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.

However, in response to the COVID-19 pandemic, the Federal Reserve temporarily eliminated reserve requirements and therefore there was no minimum reserve requirement as of December 31, 2022 and 2021.

In the opinion of management, based on the advice of legal counsel, the ultimate resolution of these proceedings will not have a material effect on the Company’s Consolidated Financial Statements.

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 Company, based on the FDIC’s November 2023 final rule regarding a special assessment, determined that the total pre-tax amount of the Bank’s special assessment will be approximately $ 10.8 million, although the timing, amount and allocation of that special assessment remain subject to any actions by the FDIC, as described above, to cease collection early, extend the collection period, and impose a final shortfall special assessment.

In accordance with ASC 450, Contingencies , the Company recognized the special assessment estimate of $ 10.8 million in full upon finalization of the rule in the fourth quarter of 2023.

Derivative Financial Instruments

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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.

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.

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.

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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.

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.

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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.

Such interest rate swaps include those which effectively convert the floating rate one-month 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.

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:

The following tables reflect the Company’s derivative positions for interest rate swaps which qualify as cash flow hedges for accounting purposes as of the dates indicated:

As of December 31, 2023

Weighted Average Rate

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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 .

As of December 31, 2022

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.

The Company expects approximately $ 38.5 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, 2023.

The reclassification is due to anticipated net payments on the swaps based upon the forward curve as of December 31, 2023.

Due to the phase-out, and eventual discontinuation, of the LIBOR, central clearinghouses have begun to transition to alternative rates for valuation purposes.

As of October 16, 2020, the Company changed its valuation methodology to reflect changes made by the Chicago Mercantile Exchange (“CME”), through which the Company clears derivative financial instruments that are eligible for clearing.

The changes from the CME changed the discounting methodology and interest calculation of cash margin from Overnight Index Swap to SOFR for U.S.

dollar cleared interest rate swaps.

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.

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Unrealized gains on terminated hedges included in AOCI — December 31 $ — $ 46 $ 10,239

The balance of terminated cash flow hedges in AOCI will be amortized into earnings through January 2023.

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

47 unchanged sentences

Total $ 20,456 $ 23,861 $ 63,075 $ 81,422

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:

3 unchanged sentences

Derivatives designated as hedges:

Gain in OCI on derivatives $ ( 69,010 ) $ — $ 46,871

Gain reclassified from OCI into interest income (effective portion)

$ 9,580 $ 31,234 $ 27,131

Loss in OCI on derivatives $ ( 24,855 ) $ ( 69,010 ) $ —

(Loss) gain reclassified from OCI into interest income (effective portion) $ ( 48,795 ) $ 9,580 $ 31,234

Gain recognized in income on derivatives (ineffective portion and amount excluded from effectiveness test)

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Customer-related positions:

Gain (loss) recognized in interest rate swap income $ 4,324 $ 4,962 $ ( 3,812 )

Gain (loss) recognized in interest rate swap income for risk participation agreements 213 243 ( 384 )

(Loss) gain recognized in interest rate swap income $ ( 274 ) $ 4,324 $ 4,962

Gain recognized in interest rate swap income for risk participation agreements 97 213 243

Gain (loss) recognized in other income for foreign currency exchange contracts:

1 unchanged sentence

Foreign currency loan ( 96 ) ( 4 ) ( 27 )

Total gain (loss) for derivatives not designated as hedges $ 4,511 $ 5,179 $ ( 4,081 )

Total (loss) gain for derivatives not designated as hedges $ ( 178 ) $ 4,511 $ 5,179

The Company has agreements with its customer-related interest rate swap derivative counterparties that contain a provision whereby if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.

The Company also has agreements with certain of its customer-related interest rate swap derivative correspondent-bank counterparties that contain a provision whereby if the Company fails to maintain its status as a well-capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

The Company’s exposure related to its customer-related interest rate swap derivative consists of exposure on cleared derivative transactions and exposure on non-cleared derivative transactions.

The Company’s exposure related to its customer-related interest rate swap derivatives consists of exposure on cleared derivative transactions and exposure on non-cleared derivative transactions.

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, 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, 2023, 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.

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.

In addition, at December 31, 2023 and 2022, the Company had posted initial-margin collateral in the form of U.S.

Treasury notes amounting to $ 85.9 million and $ 84.1 million, respectively, to CME for these derivatives.

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.

Treasury notes were considered restricted assets and were included in available for sale securities within the Company’s Consolidated Balance Sheets.

At December 31, 2023, there were $ 1.9 million of customer-related interest rate swap derivatives with credit-risk contingent features in a net liability position.

At December 31, 2022 there were no customer-related interest rate swap derivatives with credit-risk contingent features in a net liability position.

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, 2023 and 2022, the Company had posted collateral in the form of cash amounting to $ 3.0 million and $ 1.0 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.

If the Company had breached any of these provisions at December 31, 2023 or 2022, 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.

6 unchanged sentences

As of December 31, 2023 and December 31, 2022, the Company had an outstanding notional balance of residential mortgage loan origination commitments of $ 10.5 million and $ 8.3 million, respectively, and forward sale commitments of $ 9.2 million and $ 10.0 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.

During the years ended December 31, 2023, 2022 and 2021, the Company recorded net gains/(losses) related to the change in fair value of commitments to originate and sell mortgage loans of less than $ 0.1 million, $( 0.2 ) million and $( 0.7 ) million, respectively.

The aggregate fair value of the Company’s mortgage banking derivative asset and liability as of December 31, 2023 was $ 0.1 million and less than $ 0.1 million, respectively.

The aggregate fair value of the Company’s mortgage banking derivative asset and liability as of December 31, 2022 was less than $ 0.1 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.

25 unchanged sentences

Foreign currency exchange contracts – matched customer book 760 — 760 — — 760

Foreign currency exchange contracts – foreign currency loan 2 — 2 — — 2

$ 20,456 $ — $ 20,456 $ 4,871 $ ( 8,500 ) $ 7,085

17 unchanged sentences

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:

6 unchanged sentences

The Company uses fair value measurements to record adjustments to certain assets and liabilities and to determine fair value disclosures.

The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Fair value is best determined based upon quoted market prices.

18 unchanged sentences

Treasury securities, U.S.

Agency bonds (including SBA pooled securities), U.S.

Agency bonds, U.S.

government-sponsored residential and commercial mortgage-backed securities, state and municipal bonds, and other debt securities.

3 unchanged sentences

The fair value of U.S.

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.

Agency bonds 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.

5 unchanged sentences

Therefore, these securities were categorized as Level 2 given the use of observable inputs.

The fair value of other debt securities were estimated using a valuation matrix with inputs including observable bond interest rate tables, recent transactions, and yield relationships.

The fair value of other debt securities, which were held at December 31, 2022 and had matured as of December 31, 2023, were estimated using a valuation matrix with inputs including observable bond interest rate tables, recent transactions, and yield relationships.

Therefore, these securities were categorized as Level 2 given the use of observable inputs.

Fair value was based on the value of one unit without regard to any premium or discount that may result from concentrations of ownership of a financial instrument, possible tax ramifications, or estimated transaction costs.

The estimated fair value of the Company’s securities available for sale, by type, is disclosed in Note 4, “Securities.”

Loans Held for Sale

Fair value of loans held for sale, whose carrying amounts approximate fair value, was estimated using the anticipated market price based upon pricing indications provided by investor banks.

The fair value of loans held for sale, whose carrying amounts approximate fair value, was estimated using the anticipated market price based upon pricing indications provided by investor banks.

These assets were classified as Level 2 given the use of observable inputs.

1 unchanged sentence

For commercial, commercial real estate, residential real estate, automobile, and consumer home equity loans, fair value was estimated by discounting contractual cash flows adjusted for prepayment estimates using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

The fair value of PPP loans, which are fully guaranteed by the SBA, approximates the carrying amount.

Loans are classified as Level 3 since the valuation methodology utilizes significant unobservable inputs.

17 unchanged sentences

These assets were classified as Level 2 given the use of observable inputs.

The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings and interest checking accounts, and money market accounts, was equal to their carrying amount.

The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings, interest checking accounts, and money market accounts, was equal to their carrying amount.

The fair value of time deposits was based on the discounted value of contractual cash flows using current market interest rates.

42 unchanged sentences

State and municipal bonds and obligations 191,344 — 191,344 —

Other debt securities 1,285 — 1,285 —

Rabbi trust investments 87,435 81,278 6,157 —

6 unchanged sentences

Matched customer book 760 — 760 —

Foreign currency loan 2 — 2 —

Mortgage derivatives 69 — 69 —

23 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 —

6 unchanged sentences

Interest rate swap contracts

Cash flow hedges - interest rate positions $ 2,417 $ — $ 2,417 $ —

Customer-related positions 78,577 — 78,577 —

6 unchanged sentences

There were no transfers to or from Level 1, 2 and 3 during the years ended December 31, 2023 and 2022.

The Company held no assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of December 31, 2022 or December 31, 2021.

The Company held no assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of December 31, 2023 nor December 31, 2022.

Fair Value of Assets and Liabilities Measured on a Nonrecurring Basis

16 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

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.

1 unchanged sentence

The range of these possible adjustments may vary.

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

24 unchanged sentences

(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

4 unchanged sentences

Escrow deposits of borrowers 22,314 22,314 — 22,314 —

Interest rate swap collateral funds 14,430 14,430 — 14,430 —

This summary excludes certain financial assets and liabilities for which the carrying value approximates fair value.

13 unchanged sentences

The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

The information presented within this Note excludes discontinued operations.

Refer to Note 23, “Discontinued Operations” for further discussion regarding discontinued operations.

Performance obligations

1 unchanged sentence

Unsatisfied performance obligations at the report date are not material to the Company’s Consolidated Financial Statements.

A portion of the Company's noninterest income is derived from contracts with customers within the scope of ASC 606.

A portion of the Company's noninterest (loss)/income is derived from contracts with customers within the scope of ASC 606.

The Company has disaggregated such revenues by type of service, as presented in the table below.

3 unchanged sentences

(In thousands)

Insurance commissions $ 99,232 $ 94,704 $ 94,495

Service charges on deposit accounts $ 28,631 $ 30,392 $ 24,271

4 unchanged sentences

Total noninterest (loss) income out-of-scope of ASC 606 ( 314,619 ) ( 549 ) 28,014

Total noninterest income $ 176,161 $ 193,155 $ 178,373

Total noninterest (loss) income $ ( 237,753 ) $ 76,750 $ 97,437

Additional information related to each of the revenue streams is further noted below.

Insurance Commissions

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 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.

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

13 unchanged sentences

Cash management fees are recognized as revenue in the month that the services are provided.

Cash management fees earned but not yet received amounted to $ 2.1 million and $ 1.8 million as of December 31, 2022 and 2021 respectively, and were included in other assets.

Cash management fees earned but not yet received amounted to $ 1.6 million and $ 2.1 million as of December 31, 2023 and 2022 respectively, and were included in other assets on the Consolidated Balance Sheets.

Trust and Investment Advisory Fees

10 unchanged sentences

Debit card processing fees are recognized as card transactions are settled within each network.

Debit card processing fees earned but not yet received amounted to $ 0.3 million as of both December 31, 2022 and 2021 and were included in other assets.

Debit card processing fees earned but not yet received amounted to $ 0.4 million and 0.3 million as of December 31, 2023 and 2022, respectively, and were included in other assets on the Consolidated Balance Sheets.

Other Noninterest Income

The Company earns various types of other noninterest income that have been aggregated into one general revenue stream in the table noted above.

Noninterest income includes, but is not limited to, the following types of revenue with customers:

Noninterest income in-scope of ASC 606 includes, but is not limited to, the following types of revenue with customers:

safe deposit rent, ATM surcharge fees and customer checkbook fees.

1 unchanged sentence

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 benefit (expense) allocated to each component of other comprehensive (loss) income:

For the Year Ended December 31, 2023

Amount Tax Benefit (Expense) After Tax

Amount Tax (Expense) Benefit After Tax

(In thousands)

6 unchanged sentences

( 24,855 ) 8,165 ( 16,690 )

net cash flow hedge gains reclassified into interest income (1)

net cash flow hedge losses reclassified into interest income (1)

( 48,795 ) 13,517 ( 35,278 )

2 unchanged sentences

Change in actuarial net loss 19,742 ( 5,547 ) 14,195

BEP and Defined Benefit Plan amendments - accelerated vesting ( 1,351 ) 381 ( 970 )

amortization of actuarial net loss ( 9,563 ) 2,693 ( 6,870 )

Defined Benefit Plan settlement loss ( 12,045 ) 3,386 ( 8,659 )

BEP and Defined Benefit Plan curtailment gain

15,908 ( 4,490 ) 11,418

net accretion of prior service credit 11,560 ( 3,222 ) 8,338

Net change in other comprehensive income for defined benefit pension plans 486 ( 147 ) 339

Total other comprehensive loss $ ( 1,119,774 ) $ 253,278 $ ( 866,496 )

Total other comprehensive income $ 404,700 $ ( 89,860 ) $ 314,840

For the Year Ended December 31, 2022

1 unchanged sentence

(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 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)

4 unchanged sentences

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

2 unchanged sentences

For the Year Ended December 31, 2021

Amount Tax (Expense)

Benefit After Tax

Amount Tax Benefit (Expense) After Tax

(Dollars in thousands)

Unrealized gains on securities available for sale:

Unrealized losses 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 — — —

46,871 ( 13,175 ) 33,696

net cash flow hedge gains reclassified into interest income (1)

4 unchanged sentences

amortization of actuarial net loss ( 13,400 ) 3,767 ( 9,633 )

Plan amendment - prior service credit 133,439 ( 37,510 ) 95,929

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 income $ 133,862 $ ( 35,781 ) $ 98,081

(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 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.

Total other comprehensive loss $ ( 143,913 ) $ 32,983 $ ( 110,930 )

(1) Includes amortization of less than $ 0.1 million, $ 7.3 million, and $ 22.5 million for the years ended December 31, 2023, 2022, and 2021, respectively, of realized but unrecognized gains, net of tax, from the termination of interest rate swaps.

The total original gain of $ 41.2 million, net of tax, became fully accreted into income during the year ended December 31, 2023.

The balance of this gain had amortized to less than $ 0.1 million, and $ 7.4 million, net of tax, at December 31, 2022 and December 31, 2021, respectively.

The following table illustrates the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax:

7 unchanged sentences

January 1, 2021 $ 45,672 $ 29,815 $ ( 21,253 ) $ 54,234

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

Net current-period other comprehensive income 23,874 14,191 60,016 98,081

Ending balance:

December 31, 2020 $ 45,672 $ 29,815 $ ( 21,253 ) $ 54,234

Other comprehensive (loss) income before reclassifications ( 103,349 ) — 14,629 ( 88,720 )

8 unchanged sentences

December 31, 2022 $ ( 880,156 ) $ ( 50,159 ) $ 7,123 $ ( 923,192 )

Other comprehensive income (loss) before reclassifications 37,373 ( 16,690 ) 13,225 33,908

Amounts reclassified from accumulated other comprehensive (loss) income ( 258,540 ) ( 35,278 ) 12,886 ( 280,932 )

Net current-period other comprehensive income 295,913 18,588 339 314,840

Ending balance:

December 31, 2023 $ ( 584,243 ) $ ( 31,571 ) $ 7,462 $ ( 608,352 )

The following table illustrates the significant amounts reclassified out of each component of accumulated other comprehensive (loss)/income, net of tax:

4 unchanged sentences

( 333,170 ) ( 3,157 ) 1,166 Total before tax

873 ( 257 ) ( 64 ) Tax benefit or (expense)

74,630 873 ( 257 ) Tax benefit (expense)

$ ( 258,540 ) $ ( 2,284 ) $ 909 Net of tax

Unrealized gains on cash flow hedges $ 9,580 $ 31,234 $ 27,131 Interest income

Unrealized (losses) gains on cash flow hedges $ ( 48,795 ) $ 9,580 $ 31,234 Interest income

( 48,795 ) 9,580 31,234 Total before tax

( 2,693 ) ( 8,780 ) ( 7,626 ) Tax expense

13,517 ( 2,693 ) ( 8,780 ) Tax benefit (expense)

$ ( 35,278 ) $ 6,887 $ 22,454 Net of tax

Amortization of defined benefit pension items $ ( 23,077 ) $ ( 13,400 ) $ ( 10,787 ) Net periodic pension cost - see Note 17

Accretion (amortization) of defined benefit pension items $ ( 9,563 ) $ ( 23,077 ) $ ( 13,400 ) Net periodic pension cost - see Note 15

BEP and Defined Benefit Plan curtailment gain 15,908 — — Net income from discontinued operations

Accretion of prior service credit 11,560 11,882 11,796 Net periodic pension cost - see Note 15

17,905 ( 11,195 ) ( 1,604 ) Total before tax

3,147 451 2,490 Tax benefit

( 5,019 ) 3,147 451 Tax (expense) benefit

$ 12,886 $ ( 8,048 ) $ ( 1,153 ) Net of tax

Total reclassifications for the period $ ( 280,932 ) $ ( 3,445 ) $ 22,210

Segment Reporting

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 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.

Revenue from the insurance agency business consists primarily of commissions on sales of insurance products and services.

Results of operations and selected financial information by segment and reconciliation to the Consolidated Financial Statements as of and for the years ended December 31, 2022, 2021, and 2020 were as follows:

As of and for the Year Ended December 31, 2022

Business Insurance

Business Other /

Eliminations Total

Discontinued Operations

On September 19, 2023, the Company announced that it had entered into an asset purchase agreement (“the agreement”) with Arthur J.

Gallagher & Co.

(“Gallagher”) to sell substantially all of the assets of its insurance agency business for a gross purchase price of $ 515.0 million.

The agreement also provided for the assumption of certain liabilities of the insurance agency business by Gallagher.

Management made the decision to sell certain assets of its insurance agency business to recognize the valuation premium of the business, while allowing the Company to focus on growth and strategic initiatives of its core banking business.

In September 2023, following the approval of the sale by the Company’s board of directors, the Company reclassified substantially all of the assets and certain liabilities of its insurance agency business as held for sale in connection with a planned disposition of the business.

A business is classified as held for sale when management, having the authority to approve the action, commits to a plan to sell the business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current fair value, and certain other criteria are met.

In accordance with ASC 205, Presentation of Financial Statements , the Company classifies operations as discontinued when they meet all the criteria to be classified as held for sale and when the sale represents a strategic shift that will have a major impact on the Company’s financial condition and results of operations.

Accordingly, the Consolidated Balance Sheets, Consolidated Statements of Income, and Consolidated Statements of Cash flows present discontinued operations for the current period and were adjusted on a retrospective basis for prior periods.

On October 31, 2023, the Company completed the sale of its insurance agency business for net cash consideration at closing of $ 498.1 million, subject to customary post-closing working capital adjustments.

The net cash proceeds at closing included the gross purchase price pursuant to the agreement of $ 515.0 million and an estimated working capital adjustment of $ 4.2 million, which were reduced by transaction expenses of $ 17.0 million and the settlement of certain obligations of the Company primarily related to employee post-retirement liabilities that originated prior to closing of $ 4.1 million.

In addition, the Company transferred $ 7.4 million in fiduciary cash to Gallagher upon closing which is included in the determination of the gain on sale as of December 31, 2023 but was not included in the amount of net cash consideration of $ 498.1 million.

In connection with the sale, the Company recognized a gain on sale of $ 408.6 million, which is subject to certain post-closing

adjustments during the 120 day post-closing settlement period which ends on February 28, 2024.

In addition, the Company recognized indirect noninterest expenses associated with the sale of approximately $ 22.3 million.

The following is a summary of the assets and liabilities of the discontinued insurance agency business as of December 31, 2022:

December 31, 2022

(In thousands)

Net interest income $ 568,054 $ — $ — $ 568,054

Provision for allowance for loan losses 17,925 — — 17,925

Net interest income after provision for loan losses 550,129 — — 550,129

Noninterest income 78,002 98,814 ( 655 ) 176,161

Noninterest expense 390,880 83,208 ( 4,486 ) 469,602

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

Premises and equipment $ 163

Goodwill and intangibles, net 93,117

Deferred income taxes, net ( 315 )

Prepaid expenses 532

Other assets 34,722

Total assets $ 128,219

Other liabilities $ 34,930

Total liabilities $ 34,930

As of and for the Year Ended December 31, 2021

Business Insurance

Business Other /

Eliminations Total

Certain assets and liabilities previously reported as assets and liabilities of the insurance agency business will not be disposed of and will be transferred into the Bank upon dissolution of Eastern Insurance Group following the asset sale.

The following is a summary of such assets and liabilities as of December 31, 2022:

December 31, 2022

(In thousands)

Net interest income $ 429,827 $ — $ — $ 429,827

Release of allowance for loan losses ( 9,686 ) — — ( 9,686 )

Net interest income after provision for loan losses 439,513 — — 439,513

Noninterest income 96,376 97,168 ( 389 ) 193,155

Noninterest expense 365,410 82,780 ( 4,234 ) 443,956

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

Cash $ 66,507

Premises and equipment (1) 1,792

Bank-owned life insurance 2,066

Deferred income taxes 3,662

Other assets (2) 12,944

Total assets $ 86,971

Other liabilities (3) $ 14,013

Total liabilities $ 14,013

As of and for the Year Ended December 31, 2020

Business Insurance

Business Other /

Eliminations Total

(1) Includes buildings and related improvements.

(2) Primarily includes assets held in rabbi trusts and the ROU asset associated with one lease which will be assumed by the Bank upon dissolution of Eastern Insurance Group.

(3) Primarily includes employee post-retirement liabilities and the lease liability associated with one lease which will be assumed by the Bank upon dissolution of Eastern Insurance Group.

The following presents operating results of the discontinued insurance agency business for the periods indicated:

For the Years Ended December 31,

2023 2022 2021

(In thousands)

Net interest income $ 401,251 $ — $ — $ 401,251

Provision for allowance for loan losses 38,800 — — 38,800

Net interest income after provision for loan losses 362,451 — — 362,451

Noninterest income:

Insurance commissions $ 93,997 $ 99,887 $ 95,164

Other noninterest income 67 179 1,014

Total noninterest income 94,064 100,066 96,178

Noninterest expense:

Income before income tax expense 13,080 18,933 3,888 35,901

Salaries and employee benefits 76,109 65,089 68,292

Office occupancy and equipment 4,420 3,319 3,204

Data processing 3,577 4,335 4,424

Professional services 1,176 1,009 596

Marketing expenses 179 246 241

Amortization of intangible assets 2,002 2,666 2,293

Other 5,304 4,944 4,411

Total noninterest expense 92,767 81,608 83,461

Income from discontinued operations before income tax expense 1,297 18,458 12,717

Gain on sale of discontinued operations before income tax expense 408,629 — —

Total gain on discontinued operations before income tax expense 409,926 18,458 12,717

Income tax expense 115,060 5,210 3,583

Net income $ 5,210 $ 13,640 $ 3,888 $ 22,738

Total assets $ 15,831,175 $ 200,216 $ ( 67,201 ) $ 15,964,190

Total liabilities $ 12,547,838 $ 55,501 $ ( 67,201 ) $ 12,536,138

Income from discontinued operations, net of taxes (1) $ 294,866 $ 13,248 $ 9,134

(1) Represents net income from discontinued operations that is presented in the Consolidated Statements of Income.

Certain income and expense amounts were excluded from discontinued operations as they relate to assets and liabilities which were not assumed by Gallagher.

The following is a summary of such items and the corresponding income tax effect for the periods indicated:

Years Ended December 31,

2023 2022 2021

(In thousands)

Noninterest income:

Income (losses) from investments held in rabbi trusts $ 697 $ ( 1,305 ) $ 937

Other noninterest income (1) 60 54 52

Total noninterest income (loss) 757 ( 1,251 ) 989

Noninterest expense:

Salaries and employee benefits (2) 721 ( 1,292 ) 967

Office occupancy and equipment (3) 433 499 501

Other (4) 1,608 2,396 ( 2,151 )

Total noninterest expense 2,762 1,603 ( 683 )

(Loss) income before income tax expense ( 2,005 ) ( 2,854 ) 1,672

Income tax (benefit) expense ( 564 ) ( 802 ) 470

Net (loss) income ( 1,441 ) ( 2,052 ) 1,202

(1) Includes income on Company-owned life insurance policies which were not disposed of and will be transferred into the Bank upon dissolution of Eastern Insurance Group.

(2) Includes expenses, which were a net credit for the year ended December 31, 2022, associated with certain employee post-retirement benefit plan expenses.

(3) Includes depreciation expense associated with buildings and related improvements and ROU asset amortization related to one lease which were not disposed of and will be transferred into the Bank upon dissolution of Eastern Insurance Group.

(4) Includes intercompany expenses and other credits associated with the Defined Benefit Plan and the BEP.

Components of net periodic benefit cost associated with the Defined Benefit Plan and the BEP and included in other noninterest expense above were a net credit for the periods presented.

Continuing Involvement

Pursuant to a transition services agreement, the Company will perform certain transitional services to Gallagher for up to six months following the closing of the sale.

Such services include the provision of certain information technology support and human resources support.

The Company will be compensated for such services on a monthly basis and estimates the total compensation to be approximately $ 1.0 million over the six-month period plus reimbursement of any amounts paid by the Company in connection with its performance of the transitional services.

During the year ended December 31, 2023, upon reclassification of the above assets and liabilities to assets and liabilities of discontinued operations, the Company re-assessed the ROU assets of certain leases, which were assumed by Gallagher upon closing, and made the decision to abandon certain leases which were not assumed by Gallagher and for which Eastern Insurance Group is the lessee.

The amounts of ROU asset and lease liability of leases included in assets and liabilities of discontinued operations and which were either assumed by Gallagher or terminated by the Company were $ 8.7 million and $ 9.2 million, respectively, at December 31, 2022.

The Company retained one lease for which Eastern Insurance Group was lessee at the time of closing.

Following the sale, the lease was partially sublet to Gallagher and Eastern Insurance Group’s obligation will be transferred to the Bank upon dissolution of Eastern Insurance Group which is expected to occur in 2024.

As of December 31, 2023, the ROU asset and lease liability for such lease was $ 0.5 million and $ 0.3 million, respectively.

As of December 31, 2022, the ROU asset and lease liability for such lease was $ 1.9 million and $ 2.2 million, respectively.

During the year ended December 31, 2023, the Company remeasured the present value of the future lease payments related to each lease for which Eastern Insurance Group was the lessee which resulted in a net reduction of the lease liabilities and a corresponding net reduction of the lease ROU assets of $ 6.4 million.

The Company recorded an impairment charge of $ 2.0 million related to leases which were terminated early following the closing of the asset sale.

The impairment charge was included in net income from discontinued operations for the year ended December 31, 2023.

Revenue Recognition - Insurance Commissions

The Company acted as an agent in offering property, casualty, and life and health insurance to both commercial and consumer customers though Eastern Insurance Group.

The Company also earned additional commissions from the insurers based upon meeting certain criteria, such as premium levels, growth rates, new business volume and loss experience.

The Company recognized commission revenues when earned based upon the effective date of the policy or when services were rendered.

Certain revenues were deferred to reflect delivery of services over the contract period.

Upon the transfer of Eastern Insurance Group’s assets to Arthur J.

Gallagher & Co., which occurred on October 31, 2023, the Company ceased to offer insurance products and services and thus no longer receives insurance-related commissions and revenues.

The Company earned a fixed commission rate on the sales of these products and services.

Commissions were earned on the contract effective date and generally were based upon a percentage of premiums for insurance coverage.

Commission rates depended 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 were associated with the placement of an insurance contract.

The Company also earned profit-sharing revenues, also referred to as contingency revenue, from the insurers with whom the Company placed business.

These profit-sharing revenues were performance bonuses from the insurers based upon certain performance metrics such as floors on written premiums, loss rates, and growth rates.

These amounts were in excess of the commission revenues discussed above, and not all business placed with underwriting enterprises was eligible for contingent revenues.

Contingent revenues were variable and generally based upon the Company’s expectation of the ultimate profit-sharing revenue amounts to be earned and varied from period to period.

The Company’s contracts were generally calendar year contracts whereby revenues from underwriting enterprises were 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 made its best estimate of the amounts that had been earned using historical averages and other factors to project revenues.

The Company based its estimates each period on a contract-by-contract basis.

As estimates could have changed significantly from period to period, the Company did not recognize this revenue until it had concluded that, based upon all the facts and information available, it was probable that a significant revenue reversal would not occur in a future period.

Parent Company Financial Statements

24 unchanged sentences

Professional services 4,937 899 7,393

Charitable contributions — — 91,287

Other 3,706 3,070 222

1 unchanged sentence

Loss before income taxes and equity in undistributed income of subsidiaries ( 8,513 ) ( 3,954 ) ( 7,615 )

Income tax expense (benefit) 269 ( 11,344 ) ( 13,933 )

Income tax (benefit) expense ( 1,773 ) 269 ( 11,344 )

(Loss) income before equity in undistributed income of subsidiaries ( 6,740 ) ( 4,223 ) 3,729

9 unchanged sentences

Equity in undistributed income of subsidiaries ( 238,917 ) ( 203,982 ) ( 150,936 )

Issuance of common shares donated to the Eastern Bank Foundation — — 91,287

Share-based compensation 16,513 10,507 —

4 unchanged sentences

Cash flows provided by (used in) investing activities

Investment in Eastern Bank — — ( 882,096 )

Cash paid for acquisition, net of cash acquired — — ( 640,890 )

2 unchanged sentences

Net cash provided by (used in) investing activities 39,280 239,212 ( 500,890 )

Cash flows (used in) provided by financing activities

Proceeds from issuance of common shares — — 1,792,878

Purchase of shares by ESOP — — ( 149,407 )

Payments for deferred offering costs — — ( 28,552 )

Cash flows used in financing activities

Payment of subordinated debentures assumed in business combination (1)

2 unchanged sentences

Dividends declared and paid to common shareholders ( 66,671 ) ( 65,886 ) ( 51,564 )

Net cash (used in) provided by financing activities ( 267,504 ) ( 111,065 ) 1,614,919

Net (decrease) increase in cash and cash equivalents ( 8,230 ) ( 606,363 ) 736,304

Net cash used in financing activities ( 66,671 ) ( 267,504 ) ( 111,065 )

Net decrease in cash and cash equivalents ( 8,185 ) ( 8,230 ) ( 606,363 )

Cash and cash equivalents at beginning of year 126,441 134,671 741,034

2 unchanged sentences

Accordingly, Century recorded a payable to the Company in the amount of the escrow deposit and the Company recorded a receivable from Century in the same amount.

The payable was reclassified to other assets upon acquisition and is reflected as such balance in the summary of net assets acquired included in Note 3 to the Consolidated Financial Statements.

The payable was reclassified to other assets upon acquisition.

4 unchanged sentences

During the years ended December 31, 2023, 2022 and 2021, no such transactions involved amounts in excess of 5% of the Company’s total shareholders’ equity.

Quarterly Results of Operations (Unaudited)

In connection with the sale of the insurance agency business, the Company reclassified certain assets and liabilities and the related results of operations to discontinued operations in the third quarter of 2023.

Refer to Note 23, “Discontinued Operations” for further discussion regarding discontinued operations.

The following unaudited supplementary information summarizes the retrospective changes to the Consolidated Statements of Income as a result of the decision to sell the insurance agency business for the periods indicated:

First Quarter Second Quarter Third Quarter Fourth Quarter

2023 2022 2023 2022 2023 2022 2023 2022

(Dollars in thousands, except per share data)

Interest and dividend income $ 188,880 $ 131,485 $ 201,765 $ 140,871 $ 202,168 $ 157,827 $ 203,646 $ 174,998

Interest expense 50,571 3,361 60,177 3,114 64,963 5,648 70,339 25,004

Net interest income 138,309 128,124 141,588 137,757 137,205 152,179 133,307 149,994

Provision for (release of) allowance for loan losses 25 ( 485 ) 7,501 1,050 7,328 6,480 5,198 10,880

Net interest income after provision for loan losses 138,284 128,609 134,087 136,707 129,877 145,699 128,109 139,114

Noninterest (loss) income ( 309,853 ) 17,655 26,204 17,146 19,157 19,524 26,739 22,425

Noninterest expense 95,891 89,246 99,934 91,055 101,748 95,765 121,029 112,583

(Loss) income from continuing operations before income tax expense ( 267,460 ) 57,018 60,357 62,798 47,286 69,458 33,819 48,956

Income tax (benefit) expense ( 65,379 ) 12,064 15,938 14,967 ( 16,178 ) 16,650 2,310 8,038

Net (loss) income from continuing operations ( 202,081 ) 44,954 44,419 47,831 63,464 52,808 31,509 40,918

Net income (loss) from discontinued operations 7,985 6,562 4,238 3,341 ( 4,351 ) 1,969 286,994 1,376

Net (loss) income $ ( 194,096 ) $ 51,516 $ 48,657 $ 51,172 $ 59,113 $ 54,777 $ 318,503 $ 42,294

Basic (loss) earnings per share:

Continuing operations $ ( 1.25 ) $ 0.26 $ 0.27 $ 0.29 $ 0.39 $ 0.32 $ 0.19 $ 0.25

Discontinued operations 0.05 0.04 0.03 0.02 ( 0.03 ) 0.01 1.77 0.01

Basic (loss) earnings per share $ ( 1.20 ) $ 0.30 $ 0.30 $ 0.31 $ 0.36 $ 0.33 $ 1.96 $ 0.26

Diluted (loss) earnings per share:

Continuing operations $ ( 1.25 ) $ 0.26 $ 0.27 $ 0.29 $ 0.39 $ 0.32 $ 0.19 $ 0.25

Discontinued operations 0.05 0.04 0.03 0.02 ( 0.03 ) 0.01 1.76 0.01

Diluted (loss) earnings per share $ ( 1.20 ) $ 0.30 $ 0.30 $ 0.31 $ 0.36 $ 0.33 $ 1.95 $ 0.26

Average common shares outstanding:

Basic 161,991,373 169,857,950 162,232,236 166,533,920 162,370,469 163,718,962 162,571,066 162,032,522

Diluted 162,059,431 169,968,156 162,246,675 166,573,627 162,469,887 164,029,649 162,724,398 162,263,547

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