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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-26 · 400 added, 443 removed, 985 unchanged (46% of the section changed)

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We are a bank holding company, and our principal subsidiary, Eastern Bank, is a Massachusetts-chartered bank that has served the banking needs of our customers since 1818.

Our business philosophy is to operate as a diversified financial services enterprise providing banking and other financial services primarily to retail, commercial and small business customers.

Our business philosophy is to operate as a diversified financial services enterprise providing a broad array of banking and other financial services primarily to retail, commercial and small business customers.

We had total assets of $25.6 billion and $21.1 billion at December 31, 2024 and 2023, respectively.

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

Our banking business consists of a full range of banking, lending (commercial, residential and consumer), savings and small business offerings, including our wealth management and trust operations that we conduct through our Eastern Wealth Management division.

We are subject to comprehensive regulation and examination by the Massachusetts Commissioner of Banks, the New Hampshire Banking Department, the FDIC, the Federal Reserve Board and the Consumer Financial Protection Bureau.

Our business consists of a full range of banking, lending (commercial, residential and consumer), savings and small business offerings, including our wealth management and trust operations that we conduct through our Cambridge Trust Wealth Management division.

Previously, our wealth management and trust operations were conducted through Eastern Wealth Management.

Following our merger with Cambridge Bancorp, described further below, the wealth management divisions of both banks now operate under the “Cambridge Trust Wealth Management, a division of Eastern Bank,” brand name.

On July 12, 2024, we completed our previously announced merger with Cambridge and Cambridge Trust.

In accordance with the terms of the definitive merger agreement, through which we agreed to acquire Cambridge through a merger with the Company as the surviving entity, each share of Cambridge common stock was exchanged for 4.956 shares of our common stock.

The transaction qualified as a tax-free reorganization for federal income tax purposes and provided Cambridge shareholders with a tax-free exchange of their shares of Cambridge common stock in exchange for our common stock as the consideration they received in the merger.

We issued 38.9 million shares of our common stock in the exchange which resulted in a transaction value of approximately $580.6 million based upon the closing price of our common stock on July 12, 2024 of $14.87 per share.

Cambridge, a Massachusetts corporation, was a federally registered bank holding company headquartered in Cambridge, Massachusetts.

Cambridge Trust, a Massachusetts-chartered trust company formed in 1890, was a wholly-owned subsidiary of Cambridge that operated through a network of 18 full-service banking offices in eastern Massachusetts and New Hampshire with $5.3 billion in total assets and $3.9 billion in deposits as of July 12, 2024.

Cambridge’s core services also included wealth management.

Through its wealth management group, which had offices in Massachusetts and New Hampshire, it offered comprehensive investment management, as well as trust administration, estate settlement, and financial planning services.

Cambridge had assets under management and administration of approximately $5.0 billion as of July 12, 2024.

Cambridge Trust’s wholly owned subsidiary, Cambridge Trust Company of New Hampshire Inc.

(“CTCNH”), offered trust services pursuant to New Hampshire law and was regulated by the New Hampshire Banking Department.

CTCNH is now a subsidiary of Eastern Bank.

In recent years, we managed our business under two business segments:

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On October 31, 2023, we sold substantially all of the assets and transferred certain liabilities of our insurance agency business.

In the third quarter, following management’s decision to sell our insurance agency business, we reclassified the related assets and liabilities to assets and liabilities of discontinued operations, respectively, on our Consolidated Balance Sheets.

In the third quarter of 2023, following management’s decision to sell our insurance agency business, we reclassified the related assets and liabilities to assets and liabilities of discontinued operations, respectively, on our Consolidated Balance Sheets.

Accordingly, the results of discontinued operations were reclassified to “net income from discontinued operations” on our Consolidated Statements of Income.

For additional discussion of discontinued operations, refer to Note 23, “Discontinued Operations” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

The following discussion excludes the results of discontinued operations, unless otherwise indicated.

Net loss from continuing operations for the year ended December 31, 2023, computed in accordance with GAAP, was $62.7 million, as compared to net income from continuing operations of $186.5 million for the year ended December 31, 2022.

The net loss from continuing operations and resulting decline from net income during the year ended December 31, 2022 was primarily due to the sale of available for sale securities at a loss in connection with our balance sheet repositioning completed in March 2023.

Refer to the later sections titled “Outlook and Trends” and “Liquidity, Capital Resources, Contractual Obligations, Commitments and Contingencies” within this Item 7 for additional discussion.

Net loss from continuing operations for the year ended December 31, 2023 and net income from continuing operations for the year ended December 31, 2022 included items that our management considers non-core, which management excludes for purposes of assessing our operating net income, a non-GAAP financial measure.

The following discussion excludes amounts reported as discontinued operations.

Net income from continuing operations for the year ended December 31, 2024, computed in accordance with GAAP, was $119.6 million, as compared to a net loss from continuing operations of $62.7 million for the year ended December 31, 2023.

The net loss from continuing operations for the year ended December 31, 2023 and subsequent increase to net income during the year ended December 31, 2024 was primarily due to the sale of available for sale securities at a loss in connection with our balance sheet repositioning completed in March 2023.

Partially offsetting the increase to net income for the year ended December 31, 2024 were one-time expenses associated with our merger with Cambridge including the allowance for loan losses associated with non-purchased credit deteriorated (“PCD”) loans, which was recorded subsequent to the completion of the

merger and is hereafter referred to as the “non-PCD loan day-2” provision for the allowance for loan losses, and merger and acquisition expenses recorded.

Net income from continuing operations for the year ended December 31, 2024 and net loss from continuing operations for the year ended December 31, 2023 included items that our management considers non-core, which management excludes for purposes of assessing our operating net income, a non-GAAP financial measure.

Operating net income for the year ended December 31, 2024 was $192.6 million compared to $163.2 million for the year ended December 31, 2023.

This decrease was primarily due to increased noninterest expense on an operating basis and decreased net interest income for the year ended December 31, 2023 compared to year ended December 31, 2022.

This increase was primarily due to increased net interest income and noninterest income on an operating basis for the year ended December 31, 2024 compared to year ended December 31, 2023 partially offset by an increase in noninterest expense on an operating basis over the same period.

See “Non-GAAP Financial Measures” and “Results of Operations” below for a reconciliation of operating net income to net income on a GAAP basis and further discussion of noninterest income and noninterest expense.

The following chart shows our basic earnings per share from continuing operations on a GAAP and operating (non-GAAP) basis over the past four years (refer to the “Non-GAAP Financial Measures” section below for a reconciliation of GAAP earnings to operating earnings):

Earnings per share from continuing operations, on a GAAP basis, decreased from $1.13 for the year ended December 31, 2022 to a loss per share from continuing operations of $0.39 for the year ended December 31, 2023.

The decrease in earnings per share from continuing operations to a loss per share from continuing operations was due to a decrease in net income from continuing operations for the year ended December 31, 2022 to a net loss from continuing operations for the year ended December 31, 2023 as a result of a loss on sale of AFS securities in March 2023, which was part of our balance sheet repositioning, as described above.

Operating earnings per share decreased from $1.21 for the year ended December 31, 2022 to $1.01 for the year ended December 31, 2023, a 16.7% decrease.

The decrease was primarily due to an increase in noninterest expense and a decrease in net interest income.

Earnings (loss) per share from continuing operations, on a GAAP basis, increased from $(0.39) for the year ended December 31, 2023 to $0.66 for the year ended December 31, 2024.

The loss per share from continuing operations for the year ended December 31, 2023 was a result of a loss on sale of AFS securities in March 2023, which was part of our balance sheet repositioning, as described above.

Operating earnings per share increased from $1.01 for the year ended December 31, 2023 to $1.06 for the year ended December 31, 2024, a 5.8% increase.

The increase was primarily due to an increase net interest income and noninterest income on an operating basis which were partially offset by an increase in noninterest expense on an operating basis.

Refer to the “Results of Operations” section below for additional discussion of the changes in net interest income, noninterest income and noninterest expense.

The following chart shows our efficiency ratio on a GAAP and operating (non-GAAP) basis over the past five years (refer to the “Non-GAAP Financial Measures” section below for additional information on the determination of each measure):

Both the GAAP efficiency ratio and non-GAAP operating efficiency ratio for the year ended December 31, 2023 increased compared to the year ended December 31, 2022.

The increase in the GAAP efficiency ratio was primarily due to our balance sheet repositioning which included a sale of AFS securities at a loss and which was completed in March 2023 as described above.

The increase in the non-GAAP operating efficiency ratio was primarily due to an increase in noninterest expense and decrease in net interest income.

Both the GAAP efficiency ratio and non-GAAP operating efficiency ratio decreased during the year ended December 31, 2024 compared to the year ended December 31, 2023.

The decrease in the GAAP efficiency ratio is primarily due to lower security losses during the year ended December 31, 2024 compared to year ended December 31, 2023.

The decrease in the non-GAAP operating efficiency ratio was primarily due to increased net interest income and increased noninterest income on an operating basis which increased at a greater rate than noninterest expenses on an operating basis.

Refer to the “Results of Operations” section below for additional discussion of the changes in net interest income, noninterest income and noninterest expense.

Outlook and Trends

Proposed Acquisition

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

Under the Merger Agreement, each share of Cambridge common stock will be exchanged for 4.956 shares of our common stock.

The transaction is intended to qualify as a tax-free reorganization for federal income tax purposes and will provide Cambridge shareholders with a tax-free exchange of their shares of Cambridge common stock in exchange for our common stock as the consideration they will receive in the merger.

We anticipate issuing approximately 39.4 million shares of our common stock in the merger.

Based upon the closing price of our common stock on September 18, 2023 of $13.41 per share, the transaction is valued at approximately $528.1 million.

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

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

Cambridge, a Massachusetts corporation, is a federally registered bank holding company headquartered in Cambridge, Massachusetts.

Cambridge Trust, a Massachusetts-chartered trust company formed in 1890, is a wholly-owned subsidiary of Cambridge that operates through a network of 22 full-service banking offices in eastern Massachusetts and New Hampshire with $5.4 billion in total assets and $4.3 billion in deposits as of December 31, 2023.

Cambridge’s core services also include wealth management.

Through its wealth management group, which has offices in Massachusetts and New Hampshire, it offers

comprehensive investment management, as well as trust administration, estate settlement, and financial planning services.

Cambridge had assets under management and administration of approximately $4.6 billion as of December 31, 2023.

During the year ended December 31, 2023, we incurred and recorded merger and acquisition costs related to our proposed acquisition of Cambridge of $5.5 million.

The following table presents Cambridge-related merger and acquisition costs by financial statement line item on the Consolidated Statements of Income for the year ended December 31, 2023:

For the Year Ended December 31, 2023

(In thousands)

Salaries and employee benefits $ 5

Office occupancy and equipment 2

Data processing 1,357

Professional services 4,080

Total $ 5,495

Interest Rates

Beginning in March 2022, the Federal Open Market Committee (“FOMC”) voted to increase the federal funds rate multiple times from a range of 0.00% to 0.25% to a range of 5.25% to 5.50% on July 26, 2023, when the FOMC stated that it will continue to assess additional information and its implications for monetary policy.

At its most recent meeting on January 31, 2024, the FOMC decided to maintain the target range for the federal funds rate at the range set following its July 26, 2023 meeting.

The FOMC indicated, in consideration of adjustments to the target range for the federal funds rate, it will carefully assess incoming data, the evolving outlook, and the balance of risk.

Further, it indicated that it does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward its long-term target of 2%.

At its meeting on September 18, 2024, the FOMC decided to lower the target range for the federal funds rate by 50 basis points from the range set at its July 26, 2023 meeting to a range of 4.75% to 5.00%.

At its meeting on November 7, 2024, the FOMC then decided to lower the target range for the federal funds rate by 25 basis points to a range of 4.50% to 4.75%.

At its most recent meeting on January 29, 2025, the FOMC decided to maintain the target range for the federal funds rate at the range established following its November 7, 2024 meeting and indicated, in considering the extent and timing of additional adjustments to the target range for the federal funds rate, it will carefully assess incoming data, the evolving outlook, and the balance of risks.

The FOMC further indicated it is strongly committed to supporting maximum employment and reducing the annual inflation rate to its 2 percent objective.

Inevitably, not all of our interest rate-sensitive assets and liabilities will re-price simultaneously and in equal volume in response to changes in the federal funds rate, and therefore the potential for interest rate exposure exists.

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We attempt to manage interest rate risk by identifying, quantifying, and, where appropriate, hedging our exposure.

Approximately 33% of the outstanding principal balance of our loans as of December 31, 2023 was indexed to a market rate that is expected to reprice along with the federal funds rate.

Approximately 31% of the outstanding principal balance of our loans, gross of outstanding interest rate swaps as described further below, as of December 31, 2024 was indexed to a market rate that is expected to reprice with similar magnitude and direction as the federal

A portion of these loans have been hedged using interest rate swaps to convert the floating rate interest receipts to a fixed rate.

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Refer to the section titled “Management of Market Risk” within this Item 7 for additional discussion including the estimated change to our net interest income under interest rate risk measurement methodologies that use a variety of hypothetical scenarios assuming immediate and parallel changes in interest rates that may not reflect the manner in which actual yields and costs respond to changes in market interest rates.

Increases in the federal funds rate, which began in March 2022, and greater industry-wide competition for deposits have had a significant impact on our cost of interest-bearing liabilities and funding betas.

See note (1) to the following table for a description of our deposit beta.

Beginning in the third quarter of 2022 and to assist in meeting our loan-growth needs, we placed additional reliance on wholesale funding in the form of borrowings and then, in the fourth quarter of 2022, we started to purchase brokered certificates of deposit.

These funding sources generally have a higher cost than deposits originating within the markets we serve and are not our preferred sources of funding.

During the first quarter of 2023, we completed a balance sheet repositioning by selling a portion of our AFS securities portfolio for total proceeds of $1.9 billion.

The proceeds from the sale of such securities have been used to increase cash levels and reduce wholesale funds and, in turn, reduce the impact of our increasing of rates paid on deposits on our funding betas.

In addition, in October 2023, we completed the sale of our insurance agency business, which included the sale of substantially all of the assets and transfer of certain liabilities of Eastern Insurance Group, for net cash proceeds at closing of $498.1 million.

The proceeds from the sale were used to reduce our short-term FHLB borrowings.

For additional discussion of the sale, refer to Note 23, “Discontinued Operations” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

The following chart depicts our funding betas and cost of interest bearing liabilities for the previous twelve months as of December 31, 2023:

(1) Cycle beta calculated as the change in monthly average total interest-bearing liabilities cost in each respective month from the beginning of the cycle, defined as February 2022, divided by the respective change in the average monthly upper bound of the Federal Funds target range during the same period.

(2) The total cost of interest bearing liabilities is charted on the left-hand y-axis and cycle beta data is charted on the right-hand y-axis.

The above chart demonstrates a flattening of our liabilities costs immediately following the sale of AFS securities in March 2023 as the cash generated from the sale was used to reduce wholesale funding.

Bank Closures and Related FDIC Matters

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).

We estimate, based on the FDIC’s November 2023 final rule, 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 remains 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 , we recognized the special assessment in full upon issuance of the final rule in the fourth quarter of 2023.

In February 2024, we received notification from the FDIC that the estimated loss attributable to the protection of uninsured depositors at SVB and Signature Bank is $20.4 billion, an increase of approximately $4.1 billion from the estimate of $16.3 billion described in the final rule.

The FDIC plans to provide institutions subject to the special assessment an updated estimate of each institution’s quarterly and total special assessment expense with its first quarter 2024 special assessment invoice, to be released in June 2024.

Non-GAAP Financial Measures

We present certain non-GAAP financial measures, which management uses to evaluate our performance, and which exclude the effects of certain transactions, non-cash items and GAAP adjustments that we believe are unrelated to our core business and are therefore not necessarily indicative of our current performance or financial position.

Management believes excluding these items facilitates greater visibility for investors into our core businesses as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding GAAP financial measures.

Except as otherwise indicated, the information presented within this section excludes discontinued operations.

Refer to Note 23, “Discontinued Operations” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

Management believes excluding these items facilitates greater visibility for investors into our core business as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding GAAP financial measures.

Except as otherwise indicated, the information presented for the years ended December 31, 2023, 2022, 2021, and 2020 within this section excludes discontinued operations.

Refer to Note 23, “Discontinued Operations” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K for further discussion regarding discontinued operations.

There are items in our financial statements that impact our results but which we believe are unrelated to our core business.

Accordingly, we present operating net income, noninterest income on an operating basis, noninterest expense on an operating basis, total operating revenue, operating earnings per share, operating net income to average tangible shareholders’ equity, tangible book value per share, and the operating efficiency ratio, each of which excludes the impact of such items because we believe such exclusion can provide greater visibility into our core business and underlying trends.

Such items that we do not consider to be core to our business include (i) income and expenses from investments held in rabbi trusts, (ii) gains and losses on sales of securities available for sale, net, (iii) gains and losses on the sale of other assets, (iv) rabbi trust employee benefits, (v) impairment charges on tax credit investments and associated tax credit benefits, (vi) expenses indirectly associated with our IPO, (vii) other real estate owned (“OREO”) gains, (viii) merger and acquisition expenses, (ix) the stock donation to the Eastern Bank Foundation (the “Foundation”) in connection with our mutual-to-stock conversion and IPO, (x) settlement of putative consumer class action litigation matters related to overdraft and non-sufficient fund fees, and associated settlement expenses, and (xi) the non-cash pension settlement charge recognized related to our Defined Benefit Plan.

We also present tangible shareholders’ equity, tangible assets, the ratio of tangible shareholders’ equity to tangible assets, average tangible shareholders’ equity, the ratios of net income and operating net income to average tangible shareholders’ equity and tangible book value per share, each of which excludes the impact of goodwill and other intangible assets, as we believe these financial measures provide investors with the ability to further assess our performance, identify trends in our core business and provide a comparison of our capital adequacy to other companies.

Accordingly, we present operating net income, noninterest income on an operating basis, noninterest expense on an operating basis, total operating revenue, operating earnings per share, tangible net income to average tangible shareholders’ equity, tangible operating net income to average tangible shareholders’ equity, tangible book value per share, and the operating efficiency ratio, each of which excludes the impact of such items because we believe such exclusion can provide greater visibility into our core business and underlying trends.

Such items that we do not consider to be core to our business include (i) income and expenses from investments held in rabbi trusts, (ii) gains and losses on sales of securities available for sale, net, (iii) gains and losses on the sale of other equity investments, (iv) gains and losses on the sale of other assets, (v) rabbi trust employee benefits expense, (vi) impairment charges on tax credit investments and associated tax credit benefits, (vii) expenses indirectly associated with our IPO, (viii) other real estate owned (“OREO”) gains, (ix) merger and acquisition expenses, including the “day-2” provision for allowance for loan losses for non-PCD acquired loans, (x) the stock donation to the Eastern Bank Foundation (the “Foundation”) in connection with our mutual-to-stock conversion and IPO, (xi) settlement of putative consumer class action litigation matters related to overdraft and non-sufficient fund fees, and associated settlement expenses, (xii) the non-cash pension settlement charge recognized related to our Defined Benefit Plan, and (xiii) certain discrete tax items.

We also present tangible shareholders’ equity, tangible assets, the ratio of tangible shareholders’ equity to tangible assets, average tangible shareholders’ equity, the ratios of tangible net income (loss) from continuing operations and tangible operating net income to average tangible shareholders’ equity and tangible book value per share, each of which excludes the impact of goodwill and other intangible assets, as we believe these financial measures provide investors with the ability to further assess our performance, identify trends in our core business and provide a comparison of our capital adequacy to other companies.

We have included the tangible ratios because management believes that investors may find it useful to have access to the same analytical tools used by management to assess performance and identify trends.

Our non-GAAP financial measures should not be considered as an alternative or substitute to GAAP net income from continuing operations, or as an indication of our cash flows from operating activities, a measure of our liquidity or an indication of funds available for our cash needs.

In the third quarter of 2024, we changed our return on average tangible shareholders’ equity and operating return on average tangible shareholders’ equity computations to utilize tangible net income (loss) from continuing operations and tangible operating net income, respectively, in the numerators of the computations.

Tangible net income (loss) from continuing operations excludes the amortization of intangible assets and the related tax effect and tangible operating net income excludes, in addition to the adjustments to derive operating net income, the amortization of intangible assets and related tax effect.

In addition, in the third quarter of 2024, we changed the computation of our operating efficiency ratio to exclude, in addition to the adjustments made to operating net income, the amortization of intangible assets.

Management believes the changes to such ratios result in a more meaningful measure of our financial performance and such measures are used by management when analyzing corporate performance.

Our non-GAAP financial measures should not be considered as an alternative or substitute to GAAP net income (loss), or as an indication of our cash flows from operating activities, a measure of our liquidity or an indication of funds available for our cash needs.

An item which we consider to be non-core and exclude when computing these non-GAAP financial measures can be of substantial importance to our results for any particular period.

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(Dollars in thousands, except per share data)

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

Net income (loss) from continuing operations (GAAP) $ 119,561 $ (62,689) $ 186,511

Non-GAAP adjustments:

Provision for non-PCD acquired loans 40,899 — —

Noninterest income components:

(Income) losses from investments held in rabbi trusts (9,675) (9,305) 10,762

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

Losses on sales of securities available for sale, net 16,798 333,170 3,157

Gain on sale of other equity investment (9,291) — —

Losses (gains) on sales of other assets 2,620 3 (1,365)

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Rabbi trust employee benefit expense (income) 4,241 3,742 (5,161)

Impairment reversal on tax credit investments — — (170)

Gain on sale of other real estate owned — — (87)

Merger and acquisition expenses (1) 36,664 5,495 —

Settlement and expenses for putative consumer class action matters — — 3,325

Defined Benefit Plan settlement loss (2) — — 12,045

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Diluted 182,181,073 162,403,097 165,648,571

(Loss) earnings per share from continuing operations, basic $ (0.39) $ 1.13 $ 0.85

(Loss) earnings per share from continuing operations, diluted $ (0.39) $ 1.13 $ 0.85

Earnings (loss) per share from continuing operations, basic $ 0.66 $ (0.39) $ 1.13

Earnings (loss) per share from continuing operations, diluted $ 0.66 $ (0.39) $ 1.13

Operating earnings per share, basic (non-GAAP) $ 1.06 $ 1.01 $ 1.21

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(1) Comprised of merger and acquisition expenses incurred related to our acquisitions of Cambridge and Century Bancorp, Inc.

Merger and acquisition expenses previously reported for the years ended December 31, 2022 and 2021 related to acquisitions by Eastern Insurance Group were excluded from the above table as they were reclassified to discontinued operations.

Merger and acquisition expenses previously reported for the year ended December 31, 2022 related to acquisitions by Eastern Insurance Group were excluded from the above table as they were reclassified to discontinued operations.

Refer to Note 23, “Discontinued Operations” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K for additional discussion.

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(3) The net tax benefit amount for the year ended December 31, 2023 primarily resulted from the sale of securities classified as available for sale in the first quarter of 2023 and a $23.7 million tax benefit resulting from the transfer of certain securities from Market Street Securities Corp., a wholly owned subsidiary which was liquidated during the first quarter of 2023, to Eastern Bank.

The net tax benefit amount for the years ended December 31, 2022 and 2021 reflects the impact of the reversal of a $12.0 million valuation allowance associated with the stock donation to the Eastern Bank Foundation in the amounts of $0.7 million and $11.3 million, respectively.

The reversal of the valuation allowance in each period was considered appropriate based upon our determination of the realizability of such deductions for tax purposes at that time.

The following table summarizes the impact of non-core items with respect to our total (loss) revenue, noninterest (loss) income, noninterest expense and the efficiency ratio, which reconciles to the most directly comparable respective GAAP financial measure, for the periods indicated:

The following table summarizes the impact of non-core items with respect to our total revenue, noninterest income (loss), noninterest expense and the efficiency ratio, which reconciles to the most directly comparable respective GAAP financial measure, for the periods indicated:

For the Year Ended December 31,

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Fully-taxable equivalent net interest income (non-GAAP) 626,217 567,590 580,790 435,920 406,723

Noninterest (loss) income (GAAP) (237,753) 76,750 97,437 83,679 91,476

Noninterest income (loss) (GAAP) 123,917 (237,753) 76,750 97,437 83,679

Income (losses) from investments held in rabbi trusts 9,675 9,305 (10,762) 10,217 10,337

(Losses) gains on sales of securities available for sale, net (16,798) (333,170) (3,157) 1,166 288

Gain on sale of other equity investment 9,291 — — — —

(Losses) gains on sales of other assets (2,620) (3) 1,365 26 (136)

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Rabbi trust employee benefit expense (income) 4,241 3,742 (5,161) 5,515 4,789

Impairment (reversal) charge on tax credit investments — — (170) 10,779 —

(Reversal of) impairment charge on tax credit investments — — — (170) 10,779

Indirect IPO costs (2) — — — — 1,199

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Noninterest expense on an operating basis (non-GAAP) 467,463 409,365 381,765 316,916 322,043

Total (loss) revenue (GAAP) $ 312,656 $ 644,804 $ 527,264 $ 484,930 $ 502,740

Amortization of intangible assets 14,569 1,804 1,198 219 596

Noninterest expense for calculation of operating efficiency ratio (non-GAAP) $ 452,894 $ 407,561 $ 380,567 $ 316,697 $ 321,447

Total revenue from continuing operations (GAAP) $ 731,514 $ 312,656 $ 644,804 $ 527,264 $ 484,930

Total operating revenue (non-GAAP) $ 750,586 $ 653,705 $ 670,094 $ 521,948 $ 479,913

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(1) Interest income on tax-exempt loans and investment securities has been adjusted to an FTE basis using a marginal tax rate of 21.8% for the year ended December 31, 2024, 21.8% for the year ended December 31, 2023, 21.6% for the year ended December 31, 2022, 21.0% for the year ended December 31, 2021, and 21.8% for the year ended December 31, 2020.

(2) Reflects costs associated with the IPO that are indirectly related to the IPO and were not recorded as a reduction of capital

(2) Reflects costs associated with the IPO that were indirectly related to the IPO and were not recorded as a reduction of capital.

(3) Comprised of merger and acquisition expenses incurred related to our acquisition of Cambridge and Century.

Merger and acquisition expenses previously reported for the years ended December 31, 2022, 2021, and 2020 related to acquisitions by Eastern Insurance Group were excluded from the above table as they were reclassified to discontinued operations.

Refer to Note 23, “Discontinued Operations” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

Refer to Note 23, “Discontinued

Operations” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

The following table summarizes the calculation of our tangible shareholders’ equity, tangible assets, the ratio of tangible shareholders’ equity to tangible assets, and tangible book value per share, which reconciles to the most directly comparable respective GAAP measure, as of the dates indicated:

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(1) Includes goodwill and other intangible assets which were associated with our insurance agency business for the years ended December 31, 2022, 2021, and 2020.

The following table summarizes the calculation of our average tangible shareholders’ equity and ratio of net income from continuing operations and operating net income to average tangible shareholders’ equity (“operating return on average tangible shareholders’ equity”), which reconciles to the most directly comparable GAAP measure, for the periods indicated:

The following table summarizes the calculation of our average tangible shareholders’ equity and ratio of net income (loss) from continuing operations and operating net income to average tangible shareholders’ equity (“operating return

on average tangible shareholders’ equity”), which reconciles to the most directly comparable GAAP measure, for the periods indicated:

As of December 31,

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(Dollars in thousands)

Net (loss) income from continuing operations (GAAP) $ (62,689) $ 186,511 $ 145,531 $ 8,861 $ 124,736

Net income (loss) from continuing operations (GAAP) $ 119,561 $ (62,689) $ 186,511 $ 145,531 $ 8,861

Amortization of intangible assets 14,569 1,804 1,198 219 596

Tax effect of amortization of intangible assets (3) 4,036 509 337 62 168

Tangible net (loss) income from continuing operations (non-GAAP) $ 130,094 $ (61,394) $ 187,372 $ 145,688 $ 9,289

Operating net income (non-GAAP) (1) $ 192,596 $ 163,186 $ 199,902 $ 157,140 $ 88,276

Amortization of intangible assets 14,569 1,804 1,198 219 596

Tax effect of amortization of intangible assets (3) 4,036 509 337 62 168

Tangible operating net income (non-GAAP) $ 203,129 $ 164,481 $ 200,763 $ 157,297 $ 88,704

Average tangible shareholders’ equity:

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Average tangible shareholders’ equity (non-GAAP) $ 2,477,374 $ 1,927,024 $ 2,175,880 $ 3,010,129 $ 1,663,450

Return on average total shareholders’ equity (GAAP) (2.44) % 6.59 % 4.25 % 0.43 % 8.08 %

Return on average tangible shareholders’ equity (non-GAAP) (3.25) % 8.57 % 4.83 % 0.53 % 10.72 %

Return (loss) on average total shareholders’ equity (GAAP) 3.66 % (2.44) % 6.59 % 4.25 % 0.43 %

Return (loss) on average tangible shareholders’ equity (non-GAAP) 5.25 % (3.19) % 8.61 % 4.84 % 0.56 %

Operating return on average tangible shareholders’ equity (non-GAAP) 8.20 % 8.54 % 9.23 % 5.23 % 5.33 %

(1) Refer to the table above within this “Non-GAAP Financial Measures” section for a reconciliation of operating net income to net income.

(2) Includes goodwill and other intangible assets included in assets of discontinued operations within the Company’s Consolidated Balance Sheets.

(2) Includes goodwill and other intangible assets included in assets of discontinued operations within the Company’s Consolidated Balance Sheets for the years ended December 31, 2023, 2022, 2021, and 2020.

(3) The tax effect of amortization of intangible assets was calculated using our combined statutory tax rate of 27.7% for the year ended December 31, 2024, 28.2% for the year ended December 31, 2023 , and 28.1% for the years ended December 31, 2022 , 2021, and 2020.

Financial Position

The information presented within this section excludes discontinued operations, which was applicable for the period ended December 31, 2022.

Refer to Note 23, “Discontinued Operations” within the Notes to the Consolidated Financial

Statements included in Part II, Item 8 in this Annual Report on Form 10-K for further discussion regarding the sale of our insurance agency business and discontinued operations.

Summary of Financial Position

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Federal Home Loan Bank stock 5,865 5,904 (39) (0.7) %

Goodwill and other intangible assets 566,205 568,009 (1,804) (0.3) %

Goodwill and other intangibles, net 1,050,158 566,205 483,953 85.5 %

Deposits 21,291,619 17,596,217 3,695,402 21.0 %

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Cash and cash equivalents

Total cash and cash equivalents increased by $523.6 million, or 308.9%, to $693.1 million at December 31, 2023 from $169.5 million at December 31, 2022.

This increase was primarily due to proceeds from sales of AFS securities of $1.9 billion during the first quarter of 2023, proceeds from maturities and principal paydowns of AFS and HTM securities of $451.3 million and proceeds from the sale of commercial and industrial loans during the third and fourth quarters of 2023 of $211.4 million.

Partially offsetting this increase was a decrease in deposits of $1.4 billion and an increase in gross loans of $397.9 million for the year ended December 31, 2023.

Total cash and cash equivalents increased by $313.8 million, or 45.3%, to $1.0 billion at December 31, 2024 from $693.1 million at December 31, 2023.

This increase was primarily due to proceeds from the sale of AFS securities of $1.1 billion and proceeds from maturities and principal paydowns of AFS and HTM securities of $0.4 billion.

Partially offsetting these increases were net repayments of FHLB advances of $739.9 million, which includes repayment of advances assumed in connection with our merger with Cambridge, a net decrease in deposits, excluding deposits acquired from Cambridge, of $178.3 million, and a net increase in gross loans, excluding loans acquired from Cambridge, of $171.0 million during the year ended December 31, 2024.

For further discussion of the change in securities, loans, and deposits, refer to the later “Securities,” “Loans,” and “Deposits” sections in this Item 7.

For further information regarding our merger with Cambridge, refer to Note 3, “Mergers and Acquisitions” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

Our current investment policy authorizes us to invest in various types of investment securities and liquid assets, including U.S.

Treasury obligations, securities of government-sponsored enterprises, mortgage-backed securities, collateralized mortgage obligations, corporate notes, asset-backed securities and municipal securities.

The Risk Management Committee of our Board of Directors is responsible for approving and overseeing our investment policy, which it reviews at least annually.

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government securities:

government securities consist of U.S.

government securities consists of U.S.

Agency bonds and U.S.

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State and municipal bonds and obligations 183,301 191,344

Other debt securities — 1,285

Total available for sale securities, at fair value 4,021,598 4,407,521

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Our securities portfolio has decreased $0.4 billion, or 8.5%, to $4.4 billion at December 31, 2024 from $4.9 billion at December 31, 2023.

This decrease was primarily due to the completion of a balance sheet repositioning in March 2023 through the sale of AFS securities for total proceeds of $1.9 billion.

Refer to the sections titled “Outlook and Trends” and “Liquidity, Capital Resources, Contractual Obligations, Commitments and Contingencies” within this Item 2 for additional discussion of such sales.

This decrease was primarily due to sales of AFS securities of $1.1 billion and maturities and principal paydowns of AFS and HTM securities of $0.4 billion.

Included in this activity are principal paydowns and proceeds from the sale of securities acquired in connection with our merger with Cambridge of $883.0 million, representing all of the securities acquired at fair value.

All acquired securities paid down or were sold immediately following the completion of the merger.

No gain or loss was recognized upon the sale as the securities were marked to fair value in connection with our purchase accounting based upon quoted sale prices.

Partially offsetting these items were purchases of AFS securities of $199.5 million.

We did not have trading investments at December 31, 2024 and 2023.

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State and municipal bonds and obligations 1.33 2.41 3.34 4.09 3.66

Other debt securities 0.84 — — — 0.84

Total available for sale securities 1.33 % 1.76 % 1.62 % 1.73 % 1.72 %

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Total 1.33 % 1.81 % 1.75 % 1.79 % 1.79 %

(1) Investment security weighted-average yields were calculated on a level-yield basis by weighting the tax equivalent yield for each security type by the book value of each maturity.

(1) Investment security weighted-average yields were calculated on a level-yield basis by weighting the tax equivalent yield for each security type by the book value of each maturity category.

The yield on tax-exempt obligations of states and political subdivisions has been adjusted to a fully-taxable equivalent (“FTE”) basis by adjusting tax-exempt income upward by an amount equivalent to the prevailing federal income taxes that would have been paid if the income had been fully taxable.

The following table shows the composition of our loan portfolio, by category, as of the dates indicated:

As of December 31,

2023 2022 Change ($) Change (%)

The following table shows the composition of our loan portfolio, by category, as of the dates indicated, and the balance of loans, by category, that were acquired in connection with our merger with Cambridge as of the merger date of July 12, 2024:

As of December 31, Cambridge Acquired Loan Balances Organic Change

2024 2023 Change ($) Amount ($) Percentage (%)

(Dollars in thousands)

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Total gross loans $ 18,079,084 $ 13,973,428 $ 4,105,656 $ 3,934,675 $ 170,981 1.2 %

(1) Amounts presented exclude unamortized premiums, unearned discounts and deferred fees and costs.

We consider our loan portfolio to be relatively diversified by borrower and industry.

Our loans increased $4.1 billion, or 29.4%, to $18.1 billion at December 31, 2024 from $14.0 billion at December 31, 2023.

The increase as of December 31, 2023 was primarily due to increases in our commercial real estate and residential real estate portfolios, partially offset by a decrease in our commercial and industrial portfolio, as further noted below:

• Our commercial real estate portfolio increased by $302.0 million from December 31, 2022 to December 31, 2023 which was primarily attributable to an increase of $329.1 million in commercial real estate investment loan balances.

Such loans represent loans secured by commercial real estate that are non-owner-occupied.

The increase in such loan balances was primarily due to management’s active focus on originating loans collateralized by industrial/warehouse and multi-family property types, which are included in the commercial real estate investment loan category, due to management’s belief that the credit performance of such loans has a stable outlook.

The increase in commercial real estate investment loan balances was partially offset by a decrease in commercial real estate owner-occupied loans of $24.3 million which was due to net paydowns of such loans during the year ended December 31, 2023 and charge-offs taken in the fourth quarter of 2023 on several loans.

Refer to the later “Allowance for Credit Losses” section in this Item 7 for additional discussion of charge-offs on commercial real estate loans.

• Our residential real estate portfolio increased by $104.6 million during the year ended December 31, 2023.

The increase in residential real estate loan balances was primarily due to fewer sales of originated loans resulting in more loans being held for investment, and purchases of loans which totaled $32.0 million during the year ended December 31, 2023.

• Our commercial and industrial portfolio decreased by $116.9 million from December 31, 2022 to December 31, 2023 which was primarily due to sales of commercial and industrial loans from our Shared National Credit Program portfolio of $214.2 million during the year ended December 31, 2023.

This overall decrease was partially offset by new loan originations within the commercial and industrial portfolio which were primarily funded with the proceeds from the sales of loans.

The increase as of December 31, 2024 was primarily due to loans acquired in connection with our merger with Cambridge.

Refer to Note 3, “Mergers and Acquisitions” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K for additional discussion.

Excluding the addition of acquired loans, our gross loans increased $171.0 million, or 1.2%, which was primarily attributable to increased balances of business banking and consumer home equity loans.

• Excluding Cambridge-acquired loans, our business banking portfolio increased by $242.0 million, or 22.3%, from December 31, 2023 to December 31, 2024 which was primarily due to transfers from our commercial and industrial and commercial real estate portfolios.

These transfers contributed to an overall decrease in the total balance of our commercial and industrial and commercial real estate portfolios and were partially offset by originations in those portfolios.

In the normal course of business, loans are transferred from our commercial and industrial and commercial real estate portfolios to our business banking portfolio once the loan balances reach a certain dollar threshold.

• Excluding Cambridge-acquired loans, our consumer home equity portfolio increased by $89.4 million, or 7.4%, from December 31, 2023 to December 31, 2024 which was primarily due to additional draws by borrowers on home equity lines of credit.

We believe that our commercial loan portfolio composition is relatively diversified in terms of industry sectors, property types and various lending specialties.

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Real estate 342,537 10.5 %

Accommodation 295,799 9.8 %

Professional, scientific, and technical services 326,486 10.0 %

Wholesale trade 279,947 8.6 %

Accommodation 266,386 8.2 %

Finance and insurance 174,313 5.3 %

Admin support 169,153 5.2 %

Transportation 162,326 5.4 %

Healthcare 164,557 5.0 %

Arts & entertainment 136,004 4.5 %

Finance and insurance 111,361 3.7 %

Transportation 150,465 4.6 %

Utilities 146,716 4.5 %

Other industries 551,276 16.9 %

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Office 606,562 8.6 %

Affordable housing 394,153 7.2 %

Mixed use - multi-family 443,060 6.3 %

Affordable housing 408,555 5.8 %

School 336,645 4.8 %

Mixed use - office 335,288 4.8 %

Self storage 233,443 4.3 %

Mixed use - retail 282,389 4.0 %

Hotel/motel/hospitality 259,178 3.7 %

Other property types 899,036 12.8 %

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(Dollars in thousands)

Multi-family $ 165,048 42.9 %

Affordable housing $ 284,753 57.9 %

Retail 17,099 4.4 %

Self storage 14,943 3.9 %

Medical office 14,915 3.9 %

Multi-family 81,056 16.5 %

For sale housing 44,160 9.0 %

Mixed use - multi-family 21,123 4.3 %

Self storage 18,829 3.8 %

Industrial/warehouse 14,748 3.0 %

Service station 7,132 1.9 %

For sale housing 4,806 1.2 %

Retail 12,667 2.6 %

School 3,602 0.7 %

Other property types 10,711 2.2 %

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Special mention, substandard and doubtful loans totaled 4.9% and 4.1% of total commercial loans outstanding at December 31, 2024 and 2023, respectively.

This increase was driven by several risk rating downgrades of loans in the commercial and industrial and commercial real estate portfolios.

This increase was driven by several risk rating downgrades of loans in the commercial real estate and commercial and industrial portfolios.

Our philosophy toward managing our loan portfolios is predicated upon careful monitoring, which stresses early detection and response to delinquent and default situations.

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(2) Insufficient data available to report.

The delinquency rate of our total loan portfolio decreased to 0.41% at December 31, 2023 from 0.50% at December 31, 2022.

The delinquency rate of our total loan portfolio increased to 0.62% at December 31, 2024 from 0.41% at December 31, 2023.

The following table provides details regarding our delinquency rates as of the dates indicated:

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We attempt to work-out alternative payment schedules with the borrowers in order to avoid foreclosure actions.

As noted within Note 2, “Summary of Significant Accounting Policies” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K, we adopted ASU 2022-02 on January 1, 2023 which eliminated TDR accounting.

Prior to the adoption of this standard, we reviewed each loan that was modified to identify whether a TDR had occurred.

TDRs involved situations in which, for economic or legal reasons related to the borrower’s financial difficulties, we granted a concession to the borrower that we would not otherwise have considered.

Subsequent to our adoption of this standard, we apply 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.

ASU 2022-02 requires disclosure of loan modifications to borrowers experiencing financial difficulty.

The aggregate amortized cost balance as of December 31, 2023 of loans modified during the year ended December 31, 2023, determined in accordance with ASU 2022-02, which were determined to be modifications to borrowers experiencing financial difficulty was $19.4 million.

As of December 31, 2023, there were no loans that had been modified to borrowers experiencing financial difficulty during the year ended December 31, 2023 and which had subsequently defaulted during the period.

Under previous accounting guidance, in cases where a borrower experienced financial difficulties and we made certain concessionary modifications to contractual terms, the loan was classified as a TDR.

Loans modified during the year ended December 31, 2022 which were determined to be TDRs, determined in accordance with previous accounting guidance in effect through December 31, 2022, totaled $12.6 million.

As of December 31, 2022, there was one loan which totaled approximately $1.0 million that had been modified during the preceding 12 months, which was party to a TDR and which subsequently defaulted during the year ended December 31, 2022.

The aggregate amortized cost balance as of December 31, 2024 of loans modified during the year ended December 31, 2024 which were determined to be modifications to borrowers experiencing financial difficulty was $30.7 million.

Included in such modifications were four commercial real estate loans collateralized by properties in our office risk segment.

The aggregate amortized cost balance as of December 31, 2023 of loans modified during the year ended December 31, 2023 which were determined to be modifications to borrowers experiencing financial difficulty was $19.4 million.

As of December 31, 2024, there were three loans with an aggregate balance of $0.5 million that had been modified to borrowers experiencing financial difficulty during the during the twelve-month period then ended which had subsequently defaulted during the year ended December 31, 2024.

As of December 31, 2023, there were no loans that had been modified to borrowers experiencing financial difficulty during the twelve-month period then ended which had subsequently defaulted during the year ended December 31, 2023.

Our policy is that any restructured 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 we consider its return to accrual status.

restructured loan is on accrual status prior to being modified, we review it to determine if the modified loan should remain on accrual status.

Purchased credit deteriorated (“PCD”) loans are loans that we acquired that have shown evidence of deterioration of credit quality since origination and, therefore, it was deemed unlikely that all contractually required payments would be collected upon the acquisition date.

We consider factors such as payment history, collateral values and accrual status when determining whether there was evidence of deterioration at the acquisition date.

As of December 31, 2023 and December 31, 2022, the carrying amount of PCD loans was $49.1 million and $56.6 million, respectively.

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

We consider factors such as payment history, collateral values and accrual status when determining whether there was evidence of deterioration at the merger date.

As of December 31, 2024 and December 31, 2023,

the carrying amount of PCD loans was $331.4 million and $49.1 million, respectively.

The increase in PCD loans was due to our acquisition of PCD loans in the third quarter of 2024 in connection with our merger with Cambridge which was completed on July 12, 2024 and which added $356.1 million in PCD loans on a gross amortized cost basis.

Potential Problem Loans.

In the normal course of business, we become aware of possible credit problems in which borrowers exhibit potential for the inability to comply with the contractual terms of their loans, but which currently do not yet meet the criteria for classification as NPLs.

In the normal course of business, we become aware of possible credit problems in which borrowers exhibit the potential to be unable to comply in the future with the contractual terms of their loans, but which currently do not yet meet the criteria for classification as NPLs.

These loans are neither delinquent nor on non-accrual status.

Our potential problem loans, or loans with potential weaknesses that were not included in the non-accrual loans or in the loans 90 or more days past due categories, increased by $186.7 million, or 99.8%, to $373.7 million at December 31, 2023 from $187.0 million at December 31, 2022.

These loans as a percentage of total loans increased to 2.7% at December 31, 2023 from 1.4% at December 31, 2022.

The increase in potential problem loans from December 31, 2022 to December 31, 2023 was primarily due to the downgrade of certain commercial and industrial and commercial real estate loans during the year ended December 31, 2023, including certain commercial real estate loans collateralized by properties in the office risk segment.

Our potential problem loans, or loans with potential weaknesses that were not included in the non-accrual loans or in the loans 90 or more past due categories, increased by $38.3 million, or 10.2%, to $412.0 million at December 31, 2024 from $373.7 million at December 31, 2023.

These loans as a percentage of total loans decreased to 2.3% at December 31, 2024 from 2.7% at December 31, 2023.

The increase in potential problem loans from December 31, 2023 to December 31, 2024 was primarily due to the downgrade of certain commercial real estate and commercial and industrial loans during the year ended December 31, 2024, including certain commercial real estate loans collateralized by properties in the office risk segment, and the addition of certain loans acquired in connection with our merger with Cambridge.

Refer to the below “Commercial Real Estate Office Exposure” section of this Item 7 for additional information.

Commercial Real Estate Office Exposure.

Our total office-related commercial real estate (“CRE”) loans (which is comprised of loans within our commercial real estate and construction portfolios that are secured by office space, medical office space, and mixed-use properties where rental income is primarily from office space) totaled $818.9 million and $819.3 million as of December 31, 2023 and 2022, respectively.

Our total office-related commercial real estate (“CRE”) loans (which is comprised of loans within our commercial real estate and construction portfolios that are secured by office space, medical office space, and mixed-use properties where rental income is primarily from office space) totaled $1.0 billion and $0.8 billion as of December 31, 2024 and 2023, respectively.

Included in this total as of December 31, 2024 were loans with a balance of $288.1 million which were acquired during year ended December 31, 2024 in connection with our merger with Cambridge.

As of December 31, 2024, our office-related CRE loans are primarily concentrated in Massachusetts, where approximately 92.1% of the total recorded investment balance of office-related CRE loans are located, and approximately 20.4% of the total recorded investment balance of office-related CRE loans are located in the City of Boston.

Given prevailing market conditions such as rising interest rates, reduced occupancy as a result of the increase in hybrid work arrangements post-COVID, and lower commercial real estate valuations, we are carefully monitoring these loans for signs of deterioration in credit quality.

Given prevailing market conditions such as reduced occupancy as a result of the increase in hybrid and fully remote work arrangements post-COVID and lower commercial real estate valuations, we are carefully monitoring these loans for signs of deterioration in credit quality.

Such monitoring includes incremental risk management strategies undertaken by management including monthly internal CRE office exposure portfolio reporting, more frequent portfolio reviews, ongoing monitoring of market conditions, and additional portfolio analysis such as maturity risk analysis and rent rollover risk analysis.

As of December 31, 2023, two of our office-related CRE loans, which had a total recorded investment balance of $14.0 million, were on non-accrual status and had transitioned to non-accrual status during the third and fourth quarters of 2023.

As of December 31, 2022, none of these loans were on non-accrual status.

As of December 31, 2024, twelve of our office-related CRE loans, which had a total recorded investment balance of $87.0 million, were on non-accrual status.

As of December 31, 2023, two of our office-related CRE loans were on non-accrual status and had a total recorded investment balance of $14.0 million.

The following table sets forth the unpaid principal balance of office-related CRE loans by loan segment and credit quality indicator as of the dates indicated:

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The allowance for loan losses is allocated to loan categories using both a formula-based approach and an analysis of certain individual loans for impairment.

We use a methodology to systematically estimate the amount of expected credit loss

in the loan portfolio.

Under our current methodology, the allowance for loan losses contains reserves related to loans for which the related allowance for loan losses is determined on individual loan basis and on a collective basis, and other qualitative components.

We use a methodology to systematically estimate the amount of expected credit loss in the loan portfolio.

Under our current methodology, the allowance for loan losses contains reserves related to loans for which

the related allowance for loan losses is determined on an individual loan basis and on a collective basis, and other qualitative components.

The allowance for loan losses increased by $80.0 million, or 53.7%, to $229.0 million, or 1.29% of total loans, at December 31, 2024 from $149.0 million, or 1.07% of total loans at December 31, 2023.

The increase in the allowance for loan losses was primarily due to our merger with Cambridge, which was completed on July 12, 2024.

In connection with the merger, we recorded an allowance for acquired PCD loans of $55.8 million, as a gross-up of the corresponding loan balance, and an allowance for acquired non-PCD loans of $40.9 million, recognized through the provision for allowance for loan losses immediately following the completion of the merger.

Excluding these amounts, the allowance for loan losses decreased by $16.7 million from December 31, 2023 to December 31, 2024.

For further discussion of the change in the allowance for loan losses and the provision for allowance for loans losses, refer to Note 5, “Loans and Allowance for Credit Losses” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

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

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

The allowance for loan losses increased by $6.8 million, or 4.8%, to $149.0 million, or 1.07% of total loans, at December 31, 2023 from $142.2 million, or 1.05% of total loans at December 31, 2022.

The increase in the allowance for loan losses was primarily the result of additional reserves required due to increased loan balances, an increase in reserve rates for commercial real estate loans collateralized by properties in the office and retail risk segments, and increased specific reserve balances, particularly as they relate to several commercial real estate loans collateralized by properties in the office and retail risk segments which transitioned to non-accrual status during the year ended December 31, 2023.

Partially offsetting these increases in the allowance for loan losses, were partial charge-offs taken in the fourth quarter related to the previously discussed commercial real estate loans for which specific reserves had been previously established.

Also partially offsetting the increase in the allowance for loan losses was our adoption of ASU 2022-02, as previously described above, which resulted in a change in reserving method for loans previously classified as TDRs.

Upon adoption of ASU 2022-02, TDR loans for which the allowance for loan losses was determined by a discounted cash flow analysis transitioned to their respective pools of loans sharing similar risk characteristics and for which the allowance for loan losses is determined on a collective basis.

As a result, the allowance for loan losses for such loans was reduced by $1.1 million.

For additional discussion of our allowance for credit losses measurement methodology, see Note 2, “Summary of Significant Accounting Policies” and Note 4, “Loans and Allowance for Loan Losses” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

For additional discussion of the change in allowance for loan losses, refer to the later “ Provision for Loan Losses ,” included in the “Results of Operations” section within this Item 7.

Our reserve for unfunded lending commitments decreased by $1.0 million, or 7%, to $13.1 million at December 31, 2024 from $14.1 million at December 31, 2023.

The decrease was primarily due to lower reserve rates and unfunded balances within the commercial construction portfolio, which were attributable to an improved economic forecast and draws by borrowers which served to reduce unfunded balances.

The decrease in our reserve for unfunded lending commitments contributed to a decrease in our other non-interest expense during the year ended December 31, 2024.

The following table summarizes credit ratios for the periods presented:

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(1) Average loan balances exclude loans held for sale.

Non-accrual loans increased $14.0 million, or 36%, to $52.6 million at December 31, 2023 from $38.6 million at December 31, 2022, primarily due to an increase in commercial real estate non-accrual loans of $30.1 million partially offset by a decrease in commercial and industrial non-accrual loans of $13.5 million.

Non-accrual commercial real estate loans increased due to three loans, which are collateralized by properties in the office risk segment, transitioning to non-accrual status during the third and fourth quarters of 2023.

No commercial real estate loans were delinquent as of December 31, 2023.

Non-accrual commercial and industrial loans decreased primarily due to payoffs and curing of delinquency of such loans, which included the payoff during the year ended December 31, 2023 of one commercial and industrial loan which was on non-accrual and had a balance of $8.5 million as of December 31, 2022.

(2) Amounts presented include unearned discounts and deferred fees, net

Non-accrual loans increased $83.3 million, or 158%, to $135.8 million at December 31, 2024 from $52.6 million at December 31, 2023, primarily due to loans acquired from Cambridge and which were already on non-accrual or were transferred to non-accrual following the completion of the merger.

As of December 31, 2024, the amount of loans on non-accrual which were acquired from Cambridge was $59.3 million.

For additional information regarding the credit quality of our loans, see Note 5, “Loans and Allowance for Credit Losses” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

The following tables sets forth the allocation of the allowance for loan losses by loan categories listed in loan portfolio composition and the related loan balances as a percentage of total loans as of the dates indicated:

The following tables set forth the allocation of the allowance for loan losses by loan categories listed in loan portfolio composition and the related loan balances as a percentage of total loans as of the dates indicated:

Summary of Allocation of Allowance for Loan Losses

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Possible sources of repayment include the potential for future cash flows, liquidation of the collateral and the strength of co-makers or guarantors.

When available information confirms that specific loans or portions thereof are uncollectible, these amounts are promptly

charged-off against the allowance for loan losses and any recoveries of such previously charged-off amounts are credited to the allowance for loan losses.

When available information confirms that specific loans or portions thereof are uncollectible, these amounts are promptly charged-off against the allowance for loan losses and any recoveries of such previously charged-off amounts are credited to the allowance for loan losses.

Regardless of whether a loan is unsecured or collateralized, we charge off the amount of any confirmed loan loss in the period when the loans, or portions of loans, are deemed uncollectible.

For troubled, collateral-dependent loans, loss confirming events may include an appraisal or other valuation that reflects a shortfall between the value of the collateral and the carrying value of the loan or receivable, or a deficiency balance following the sale of the collateral.

For troubled, collateral-dependent loans, loss

confirming events may include an appraisal or other valuation that reflects a shortfall between the value of the collateral and the carrying value of the loan or receivable, or a deficiency balance following the sale of the collateral.

For additional information regarding our allowance for loan losses, see Note 5, “Loans and Allowance for Credit Losses” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

Separately, during the year ended December 31, 2023, we increased by $0.9 million our reserve on unfunded lending commitments, which was primarily due to an increase in the total exposure on unfunded lending commitments.

This increase contributed to an increase in our non-interest expense during the year ended December 31, 2023.

Federal Home Loan Bank stock

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We purchase and/or are subject to redemption of FHLBB stock proportional to the volume of funding received and view the holdings as a necessary long-term investment for the purpose of balance sheet liquidity and not for investment return.

We held an investment in the FHLBB of $5.9 million and $41.4 million at December 31, 2023 and 2022, respectively.

We held an investment in the FHLBB of $5.9 million at both December 31, 2024 and 2023.

The amount of stock we are required to purchase is in proportional to our FHLB borrowings and level of total assets.

Accordingly, the decrease in the FHLB stock is due to decreased borrowings.

Goodwill and core deposit intangible asset

The balance of our goodwill and core deposit intangible asset was $566.2 million and $568.0 million at December 31, 2023 and 2022, respectively, which excludes goodwill and other intangible assets included in discontinued operations as of December 31, 2022.

We did not record any impairment to our goodwill or core deposit intangible asset during the years ended December 31, 2023 and 2022.

Goodwill and other intangible assets

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

As of December 31,

(In thousands)

Balances not subject to amortization

Goodwill $ 914,957 $ 557,635

Balances subject to amortization

Core deposit intangibles 111,296 8,570

Customer list intangible 22,841 —

Trade name intangible 1,064 —

Total balances subject to amortization 135,201 8,570

Total goodwill and other intangible assets $ 1,050,158 $ 566,205

The balance of our goodwill and other intangible assets was $1.1 billion and $0.6 billion at December 31, 2024 and 2023, respectively.

The increase in goodwill and other intangible assets at December 31, 2024 from December 31, 2023 was due to our merger with Cambridge during the third quarter of 2024.

Refer to Note 3, “Mergers and Acquisitions” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K for additional discussion.

We did not record any impairment to our goodwill or other intangible assets during the years ended December 31, 2024 and 2023.

For discussion of the impairment testing performed, refer to Note 8, “Goodwill and Core Deposit Intangible Asset” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

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Historically, we have been able to compete effectively for deposits in our primary market areas.

The distribution and market share of deposits by type of deposit and by type of depositor are important considerations in our assessment of the stability of our funding sources and our access to additional funds.

The distribution and market share of deposits by type of deposit and type of depositor are important considerations in our assessment of the stability of our funding sources and our access to additional funds.

Furthermore, we shift the mix and maturity of the deposits depending on economic conditions and loan and investment policies in an attempt, within set policies, to minimize cost and maximize net interest margin.

The following table presents our deposits as of the dates presented:

The following table presents our deposits as of the dates indicated, and the balance of deposits, by category, that were acquired in connection with our merger with Cambridge as of the merger date of July 12, 2024:

Components of Deposits

As of December 31, Change Change

2023 2022 Amount ($) Amount (%)

As of December 31, Cambridge Acquired Deposit Balances Organic Change

2024 2023 Change Amount ($) Percentage (%)

(Dollars in thousands)

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Money market investments 5,736,362 4,664,475 1,071,887 854,614 217,273 4.7 %

Certificates of deposit (1) 2,709,037 1,624,382 1,084,655 66.8 %

Certificate of deposits 3,336,323 2,709,037 627,286 418,771 208,515 7.7 %

Total deposits $ 21,291,619 $ 17,596,217 $ 3,695,402 $ 3,873,717 $ (178,315) (1.0) %

(1) Brokered certificates of deposit are included in certificates of deposit and amounted to $50.0 million and $928.6 million at December 31, 2023 and 2022, respectively.

Deposits decreased by $1.4 billion, or 7.3%, to $17.6 billion at December 31, 2023 from $19.0 billion at December 31, 2022.

This decrease was primarily the result of an overall decline in deposits due to concerns around the banking industry as a whole in early 2023, as discussed in the earlier “Outlook and Trends” section in this Item 7, as well as industry-wide competition for deposits and a decrease in brokered certificates of deposit of $878.6 million.

Brokered certificates of deposit decreased as such accounts matured and were not renewed in full as we emphasized other means for increasing our overall liquidity as of December 31, 2023.

The decrease in brokered certificates of deposit was more than offset by a shift in deposit mix of certain core deposits from demand and interest checking deposits, which decreased by $1.1 billion and $0.8 billion, respectively, to certificates of deposit resulting in a net increase in certificates of deposit.

This shift in deposit mix during the year ended December 31, 2023 was due primarily to increases in rates paid on certificates of deposit, which attracted depositors to such products.

Deposits increased by $3.7 billion, or 21.0%, to $21.3 billion at December 31, 2024 from $17.6 billion at December 31, 2023.

This increase was primarily due to the addition of deposits acquired in connection with our merger with Cambridge, which was completed on July 12, 2024.

Excluding the acquired deposit balances, deposits decreased $178.3 million, or 1.0%, at December 31, 2024 from December 31, 2023.

This decrease was primarily driven by a decrease in the balances of omnibus deposit accounts which decreased $285.3 million from December 31, 2023 to December 31, 2024 and which contributed to the decrease in interest checking deposits, excluding the impact of our merger with Cambridge.

Further, the remaining changes, which taken together comprise an overall increase, reflect organic deposit growth and a continued shift in deposit mix from non-interest-bearing/low-yielding deposit accounts to interest-bearing/higher-yielding deposit account types during the year ended December 31, 2024.

The shift in deposit mix was due primarily to increases in rates paid on money market investment deposits and certificates of deposit, which attracted depositors to such products.

The Bank’s estimate of total uninsured deposits was $9.0 billion and $8.0 billion at December 31, 2024 and 2023, respectively.

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

Our total borrowings decreased by $692.6 million to $48.2 million at December 31, 2023 compared to $740.8 million at December 31, 2022.

The decrease was primarily due to a decrease in FHLB advances, which were paid down primarily with the proceeds from the sale of substantially all of the assets and liabilities of our insurance agency business.

The following table sets forth information concerning balances on our borrowings as of the dates indicated:

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As of December 31, Change

2023 2022 Amount ($)

2024 2023 Amount ($) Percentage (%)

(In thousands)

Federal Home Loan Bank short-term advances $ 95 $ 691,297 $ (691,202)

Escrow deposits of borrowers $ 27,721 $ 21,978 $ 5,743 26.1 %

Interest rate swap collateral funds 48,590 8,500 40,090 471.6 %

Federal Home Loan Bank long-term advances 17,643 12,787 4,856

Federal Home Loan Bank advances 17,589 17,738 (149) (0.8) %

Total $ 93,900 $ 48,216 $ 45,684 94.7 %

Our total borrowings increased by $45.7 million to $93.9 million at December 31, 2024 compared to $48.2 million at December 31, 2023.

The increase was primarily due to increased balances of interest rate swap collateral funds.

Refer to the later “Liquidity, Capital Resources, Contractual Obligations, Commitments and Contingencies” section in this Item 7 for additional discussion of our liquidity position.

Results of Operations

The information presented within this section excludes discontinued operations.

The information presented within this section excludes discontinued operations with regard to the year ended December 31, 2023.

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Provision for allowance for loan losses 67,380 20,052 47,328 236.0 %

Noninterest (loss) income (237,753) 76,750 (314,503) (409.8) %

Noninterest income (loss) 123,917 (237,753) 361,670 (152.1) %

Noninterest expense 508,368 418,602 89,766 21.4 %

Income tax (benefit) expense (63,309) 51,719 (115,028) (222.4) %

Net (loss) income from continuing operations $ (62,689) $ 186,511 $ (249,200) (133.6) %

Income tax expense (benefit) 36,205 (63,309) 99,514 (157.2) %

Net income (loss) $ 119,561 $ (62,689) $ 182,250 (290.7) %

Comparison of the Years Ended December 31, 2024 and 2023

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Interest and dividend income increased by $150.3 million, or 18.9%, to $946.8 million during the year ended December 31, 2024 from $796.5 million during the year ended December 31, 2023.

The increase was primarily a result of an increase in the yield on average interest-earning assets which increased by 105 basis points compared with the year ended December 31, 2022.

Partially offsetting the impact of increased yields was a decrease in the average balance of our interest-earning assets which decreased by $0.8 billion, or 3.8%, to $20.8 billion during the year ended December 31, 2023 compared to $21.6 billion during the year ended December 31, 2022, which was attributable to a decrease in the average balance of securities.

The increase was due to an increase in the average balance of our loan portfolio and our yields and was partially offset by a decrease in interest income on securities and other short-term investments.

• Interest income on loans increased $155.9 million, or 23.9%, to $808.0 million during the year ended December 31, 2024 from $652.1 million during the year ended December 31, 2023.

The increase in interest income on our loans was due to an increase in our yields and an increase in the average balance.

The overall yield on our loans increased 95 basis points during the year ended December 31, 2023 in comparison to the year ended December 31, 2022.

The increase in yield was primarily due to increases in market rates of interest which resulted in increased yields on variable rate loans which repriced and new loans originated at higher rates of interest.

The average balance of our loans increased $1.3 billion, or 10.3%, to $13.8 billion during the year ended December 31, 2023 from $12.5 billion during the year ended December 31, 2022.

For further discussion of the change in the balance of loans, refer to the earlier “Loans” discussion within the “Financial Position” within this Item 7.

• Interest income on securities and other short-term investments increased $15.2 million, or 11.8%, to $144.4 million during the year ended December 31, 2023 from $129.1 million during the year ended December 31, 2022.

The increase in interest income on our securities and other short-term investments was due to an increase in our

yield on such investments.

The yield on our securities and short-term investments increased 65 basis points during the year ended December 31, 2023 in comparison to the year ended December 31, 2022, primarily due to an increase in the yield on our cash held at the Federal Reserve Bank of Boston (“FRBB”) from an average of 1.76% during the year ended December 31, 2022 to an average of 5.10% during the year ended December 31, 2023.

In addition, our average cash balance at the FRBB increased by $299.7 million, or 73.4%, to $707.7 million during the year ended December 31, 2023 from $408.0 million during the year ended December 31, 2022 which compounded the effect on our interest income of the increase in rates paid by the FRBB.

The increase in the average balance of cash held at the FRBB was primarily due to the deposit of proceeds from the sale of AFS securities (discussed earlier) in March 2023.

Partially offsetting this increase was a decrease in our overall average securities balance, which decreased $2.1 billion, or 23.3%, to $7.0 billion for the year ended December 31, 2023 from $9.1 billion for the year ended December 31, 2022 primarily due to the sales of AFS securities in March 2023.

For additional discussion of the sales, refer to the section titled “Liquidity, Capital Resources, Contractual Obligations, Commitments and Contingencies” within this Item 7.

The increase in interest income on our loans was due to an increase in the average balance of our loans and an increase in the yield on our loans.

The average balance of our loans increased $2.0 billion, or 14.3%, to $15.8 billion during the year ended December 31, 2024 from $13.8 billion during the year ended December 31, 2023, which was primarily due to loans acquired in connection with our merger with Cambridge of $3.7 billion.

The increase in yield, which increased 39 basis points to 5.22% during the year ended December 31, 2024, from 4.83% during the year ended December 31, 2023, was primarily due to accretion of the discount on loans acquired in our merger with Cambridge, increases in market rates of interest which resulted in increased yields on variable rate loans which repriced, and new loans originated at higher rates of interest.

• Interest income on securities and other short-term investments decreased by $5.6 million, or 3.9%, to $138.7 million during the year ended December 31, 2024 from $144.4 million during the year ended December 31, 2023.

The decrease was primarily driven by a decrease in the average balance of our securities and other short-term investments, which decreased $0.8 billion, or 11.2%, to $6.2 billion for the year ended December 31, 2024 from $7.0 billion for the year ended December 31, 2023.

The decrease in the average balance was primarily due to our sales of AFS securities during the year ended December 31, 2024, as well as maturities and principal paydowns on AFS and HTM securities.

Partially offsetting the decrease in the average balance of our securities and other short-term investments, and contributing to the overall increase in interest income during the year ended December 31, 2024, was an increase in our yield on our securities and other short-term investments which increased 16 basis points during the year ended December 31, 2024 in comparison to the year ended December 31, 2023 primarily due to an increase in the rate paid on our cash held at the Federal Reserve Bank of Boston from an average of 5.10% during the year ended December 31, 2023 to an average of 5.21% during the year ended December 31, 2024.

Interest Expense

Interest expense increased $93.1 million to $339.2 million during the year ended December 31, 2024 from $246.1 million during the year ended December 31, 2023.

The overall increase was attributable to increases in both deposit interest expense and borrowings interest expense.

• Interest expense on our interest-bearing deposits increased by $197.5 million to $226.1 million during the year ended December 31, 2023 from $28.6 million during the year ended December 31, 2022.

This increase was due to an increase in rates paid on deposits and an increase in the balance of average interest-bearing deposits.

Rates paid on interest-bearing deposits increased by 154 basis points to 1.77% during the year ended December 31, 2023 from 0.23% during the year ended December 31, 2022.

This was primarily due to our increasing overall deposit rates paid in response to an increase in market rates of interest and heightened industry-wide competition for deposits and an increase in brokered certificates of deposit which generally bear a higher rate of interest compared to other interest-bearing deposits.

Average interest-bearing deposits increased $0.4 billion, or 3.1%, to $12.8 billion for the year ended December 31, 2023 from $12.4 billion for the year ended December 31, 2022 as a result of our increasing of rates paid on such deposits as well as purchases of brokered certificates of deposit.

During the years ended December 31, 2023 and 2022 our average balance of purchased brokered certificates of deposit amounted to $575.6 million and $26.3 million, respectively.

• Interest expense related to our borrowings increased by $11.5 million to $20.0 million during the year ended December 31, 2023 from $8.5 million during the year ended December 31, 2022.

The increase in borrowings interest expense during the year ended December 31, 2023 compared to the year ended December 31, 2022 is attributable to an increase in our utilization of our FHLB borrowing capacity and an increase in rates paid on such borrowings.

We increased utilization of our FHLB borrowing capacity in order to support ongoing operations.

The overall increase was attributable to an increase in deposit interest expense partially offset by a decrease in borrowings interest expense.

During the year ended December 31, 2024, interest expense on our interest-bearing deposits increased by $111.3 million to $337.4 million from $226.1 million during the year ended December 31, 2023.

This increase was due to an increase in the average balance of interest-bearing deposits.

During the year ended December 31, 2024, average interest-bearing deposits increased $1.3 billion, or 9.8%, to $14.1 billion, from $12.8 billion during the year ended December 31, 2023 primarily as a result of our merger with Cambridge which added approximately $2.9 billion in interest-bearing deposits.

Also contributing to the increase was an increase in rates paid on deposits.

Rates paid on deposits increased by 63 basis points to 2.40% during the year ended December 31, 2024 from 1.77% during the year ended December 31, 2023.

This was primarily due to our increasing overall deposit rates paid in response to an increase in market rates of interest and heightened industry-wide competition for deposits, as well as a shift in deposit mix from lower interest-bearing account types to higher interest-bearing account types.

Interest expense related to our borrowings decreased by $18.2 million to $1.8 million during the year ended December 31, 2024 from $20.0 million during the year ended December 31, 2023.

The decrease in borrowings interest expense during the year ended December 31, 2024 compared to the year ended December 31, 2023 was due to a decrease in our utilization of our FHLB borrowing capacity.

Our utilization of FHLBB borrowings was greater during the year ended December 31, 2023 compared to the year ended December 31, 2024 as we had bolstered our on-balance sheet liquidity in response to the bank failures in the first quarter of 2023.

During the fourth quarter of 2023, we paid down our FHLB advances primarily with the proceeds from the sale of our insurance agency business, which occurred in the fourth quarter of 2023.

Both of these factors resulted in a reduced average balance of borrowings during the year ended December 31, 2024 compared to the year ended December 31, 2023.

Net Interest Income

Net interest income decreased by $17.6 million, or 3.1%, to $550.4 million during the year ended December 31, 2023, from $568.1 million during the year ended December 31, 2022.

Net interest income decreased due to an increase in interest expense of $208.9 million, or 562.7%, to $246.1 million during the year ended December 31, 2023 from $37.1 million during the year ended December 31, 2022.

Also contributing to the decrease was a decrease in the balance of average net interest-earning assets of $824.4 million, or 3.8%, to $20.8 billion during the year ended December 31, 2023 from $21.6 billion during the year ended December 31, 2022 .

Partially offsetting this decrease was an increase in yields on interest-earning assets.

Net interest income increased by $57.2 million, or 10.4%, to $607.6 million during the year ended December 31, 2024, from $550.4 million during the year ended December 31, 2023.

Net interest income increased due to a increase in the balance of average total interest-earning assets of $1.2 billion, or 5.7%, to $22.0 billion during the year ended December 31, 2024 from $20.8 billion during the year ended December 31, 2023, as well as an increase in our net interest margin during the year ended December 31, 2024.

The following chart shows our net interest margin over the past five years:

Net interest margin is determined by dividing FTE net interest income by average-earning assets.

For purposes of the following discussion, income from tax-exempt loans and investment securities has been adjusted to an FTE basis, using a marginal tax rate of 21.8% for the year ended December 31, 2023, 21.6% for the year ended December 31, 2022 and 21.0% for the year ended December 31, 2021.

For purposes of the following discussion, income from tax-exempt loans and investment securities has been adjusted to an FTE basis, using a marginal tax rate of 21.8%, 21.8%, and 21.6% for the years ended December 31, 2024, 2023, and 2022, respectively.

Net interest margin increased 12 basis points basis points to 2.85% during the year ended December 31, 2024, from 2.73% during the year ended December 31, 2023.

The increase in net interest margin for the year ended December 31, 2023 from the year ended December 31, 2022 was primarily due to an increase in market rates of interest which resulted in an increase in our average yield on interest-earning assets that exceeded the increase in the average cost of interest-bearing liabilities.

Also contributing to the increase was a decline in average interest earning assets for the year ended December 31, 2023 compared to the year ended December 31, 2022, which was a driven by the completion of a balance sheet repositioning in March 2023 through the sale of AFS securities

The increase in net interest margin for the year ended December 31, 2024 from the year ended December 31, 2023 was primarily due to an increase in the average balance and yield on interest-earning assets which exceeded the increase in the cost of our interest-earning liabilities.

The following tables set forth average balance sheet items, average yields and costs, and certain other information for the periods indicated.

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Interest-earning assets:

Residential $ 2,538,588 $ 90,139 3.55 % $ 2,064,609 $ 63,803 3.09 % $ 1,510,703 $ 47,143 3.12 %

Commercial $ 11,087,978 $ 591,885 5.34 % $ 9,913,968 $ 491,427 4.96 % $ 9,147,540 $ 366,097 4.00 %

Residential 3,214,769 131,648 4.10 % 2,538,588 90,139 3.55 % 2,064,609 63,803 3.09 %

Consumer 1,509,516 101,552 6.73 % 1,381,745 86,167 6.24 % 1,327,417 56,965 4.29 %

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(5) Represents net income, including net income from discontinued operations, divided by average total assets.

Discontinued operations is applicable to the years ended December 31, 2023 and 2022.

(6) Represents net income, including net income from discontinued operations, divided by average equity.

Discontinued operations is applicable to the years ended December 31, 2023 and 2022..

(7) Includes noninterest expenses included in results of discontinued operations.

Discontinued operations is applicable to the years ended December 31, 2023 and 2022.

Refer to Note 23, “Discontinued Operations ” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

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Interest-earning assets:

Residential $ 10,365 $ 15,971 $ 26,336 $ (462) $ 17,122 $ 16,660

Commercial $ 39,550 $ 60,908 $ 100,458 $ 92,755 $ 32,575 $ 125,330

Residential 15,163 26,346 41,509 10,365 15,971 26,336

Consumer 7,078 8,307 15,385 26,783 2,419 29,202

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We recorded a provision for allowance for loan losses of $67.4 million for the year ended December 31, 2024, compared to a provision of $20.1 million for the year ended December 31, 2023.

Management determined a provision to be necessary primarily due to increased loan balances and higher reserve rates relative to an increase in non-performing commercial real estate loans, which were reserved for on a specific reserve basis.

The increase in our non-performing commercial real estate loans was primarily attributable to several commercial real estate loans, which are collateralized by properties in the investor office risk segment and retail risk segment, transitioning to non-accrual during the year ended December 31, 2023.

During the year ended December 31, 2024, we recorded a provision for allowance for loan losses of $40.9 million related to non-PCD loans acquired in connection with our merger with Cambridge which closed on July 12, 2024.

Excluding this amount, the provision for the year ended December 31, 2024 was $26.5 million.

Management determined a provision to be necessary for the year ended December 31, 2024 primarily due to $42.6 million in charge-offs of commercial real estate loans and due to an increase in specific reserves for commercial real estate loans collateralized by property in the office risk segment.

Included in charge-offs of commercial real estate loans during the year ended December 31, 2024 was $41.3 million of charge-offs on loans collateralized by property in the office risk segment which transitioned to non-accrual status during the year ended December 31, 2024 and had not been previously reserved for on a specific reserve basis, and $19.8 million of charge-offs on PCD loans acquired in the merger with Cambridge.

Management’s estimate of our allowance for loan losses as of December 31, 2024 and the provision for loan losses for the year ended December 31, 2024, was supported, in part, by Oxford Economics’ December 2024 Baseline forecast (“the forecast”) which was used to develop management’s estimate of the effect of expected future economic conditions on the allowance for loan losses.

The forecast assumed the U.S.

economy will continue slow at the start of 2024 following a decline in gross domestic product (“GDP”) in the fourth quarter of 2023, as growth in various metrics continues to slow but little to no contraction in the first quarter of 2024.

This forecast reflects the impact of positive consumer spending despite lower income growth.

Primary macroeconomic assumptions included in management’s evaluation of the adequacy of the allowance for loan losses included an unemployment rate that remained low and a decrease in GDP.

Further, the forecast assumed the FOMC will not begin to reduce the federal funds rate until late 2024 following an extended period of below-trend growth and further softening in the labor market conditions.

Although the core consumer price index declined in 2023 from the prior year, inflation is expected to remain slightly above the FOMC’s 2% target through 2024.

For discussion of our previous methodology for estimating the allowance for loan losses, refer to Note 4, “Loans and Allowance for Loan Losses” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

The forecast assumed U.S.

economic growth in 2025 will be consistent with 2024 as U.S.

gross domestic product (“GDP”) will grow by 2.6%.

This forecast reflects the impact of steady consumer spending but a slight increase in the unemployment rate.

Primary macroeconomic assumptions included in management’s evaluation of the adequacy of the allowance for loan losses included a rise in the unemployment rate and a slight decline in the growth rate of U.S.

Further, the forecast assumed that the FOMC will decrease federal funds rates several times in 2025.

Refer to the section titled “Outlook and Trends” within this Item 7 for additional discussion.

For additional discussion of our allowance for credit losses measurement methodology, see Note 5, “Loans and Allowance for Credit Losses” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

To illustrate the sensitivity of the modeled result to the impact of a hypothetical change in the economic forecast, management calculated the allowance for loan losses assuming the downside economic forecast scenario and, separately, the upside economic forecast scenario.

The downside scenario assumed the U.S.

economy will experience a decline in GDP in 2024 of 0.7%.

economy will experience a slight growth in GDP in 2025 of 0.1%.

Use of the downside scenario would have resulted in an incremental increase in the allowance for loan losses of approximately $16.9 million as of December 31, 2024.

The upside scenario assumed GDP growth of 2.5% in 2024 along with

sustained recovery.

The upside scenario assumed GDP growth of 3.3% in 2025 along with sustained recovery.

Use of the upside scenario would have resulted in an incremental decrease in the allowance for loan losses of approximately $6.3 million as of December 31, 2024.

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The following table sets forth information regarding noninterest income for the periods shown:

Noninterest (Loss) Income

Noninterest Income (Loss)

For the Year Ended December 31, Change

1 unchanged sentence

(Dollars in thousands)

Service charges on deposit accounts $ 28,631 $ 30,392 $ (1,761) (5.8) %

Trust and investment advisory fees $ 46,126 $ 24,264 $ 21,862 90.1 %

Service charges on deposit accounts 32,004 28,631 3,373 11.8 %

Debit card processing fees 14,177 13,469 708 5.3 %

Interest rate swap income 2,819 1,536 1,283 83.5 %

Income (losses) from investments held in rabbi trusts 9,305 (10,762) 20,067 (186.5) %

Income from investments held in rabbi trusts 9,675 9,305 370 4.0 %

Losses on sales of commercial and industrial loans — (2,738) 2,738 (100.0) %

(Losses) gains on sales of mortgage loans held for sale, net (507) 248 (755) (304.4) %

Losses on sales of mortgage loans held for sale, net (920) (507) (413) 81.5 %

Losses on sales of securities available for sale, net (16,798) (333,170) 316,372 (95.0) %

Other 36,834 21,457 15,377 71.7 %

Total noninterest (loss) income $ (237,753) $ 76,750 $ (314,503) (409.8) %

Noninterest income decreased $314.5 million, to a net loss of $237.8 million for the year ended December 31, 2023 from income of $76.8 million for the year ended December 31, 2022.

This decrease was primarily due to a $330.0 million increase in losses on sales of securities available for sale, a $4.5 million decrease in interest rate swap income, and losses on sales of commercial and industrial loans of $2.7 million.

These items were partially offset by an $20.1 million increase in income from investments held in rabbi trusts, and an $3.7 million increase in other noninterest income.

• Losses on sales of securities available for sale, net, increased by $330.0 million to $333.2 million for the year ended December 31, 2023 from $3.2 million for the year ended December 31, 2022 due to a balance sheet repositioning which was completed in March 2023 and included the sale of certain available for sale securities.

Refer to the section titled “Liquidity, Capital Resources, Contractual Obligations, Commitments and Contingencies” within this Item 7 for additional discussion of such sales.

• Interest rate swap income decreased primarily as a result of a less favorable mark-to-market adjustment during the year ended December 31, 2023 compared to the year ended December 31, 2022.

• We realized a loss on sale of commercial and industrial loans of $2.7 million during the year ended December 31, 2023.

Management made the decision to sell a portion of our commercial and industrial loans included in the SNC Program in order to fund new loan originations and to provide additional liquidity to support ongoing operations.

No commercial loans were sold during the year ended December 31, 2022.

For additional discussion, refer to Note 4, “Loans and Allowance for Credit Losses” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

• Income from investments held in rabbi trusts increased primarily as a result of a favorable mark-to-market adjustment on equity securities held in these accounts for the year ended December 31, 2023 resulting from an increase in the market value of equity securities held in the rabbi trusts as compared to an unfavorable mark-to-market adjustment for the year ended December 31, 2022.

• Other noninterest income increased primarily as a result of an increase in FHLB dividend income during the year ended December 31, 2023 compared to the year ended December 31, 2022, which was primarily due to an increase in the average balance of FHLB stock from $15.4 million during the year ended December 31, 2022 to $21.0 million during the year ended December 31, 2023, as well as the FHLB’s overall increases in dividends.

Also contributing to the increase in noninterest income was an increase in commercial loan fee income, net of deferrals, which increased to $2.0 million as a result of increased commercial loan origination volume during the year ended December 31, 2023 compared to the year ended December 31, 2022.

Total noninterest income (loss) $ 123,917 $ (237,753) $ 361,670 (152.1) %

Noninterest income increased $361.7 million, or 152.1%, to $123.9 million for the year ended December 31, 2024 from a net loss of $237.8 million for the year ended December 31, 2023.

This increase was primarily due to a $316.4 million decrease in losses on sales of securities available for sale, a $21.9 million increase in trust and investment advisory fees, a $15.4 million increase in other noninterest income, and a $3.4 million increase in service charges on deposit accounts.

• We recorded losses of $16.8 million and $333.2 million on sales of securities available for sale, net, for the years ended December 31, 2024 and 2023, respectively.

◦ In the second quarter of 2024, an early withdrawal of an omnibus deposit contract occurred which had a balance of $100.0 million at the time of the contract termination.

Management made the decision to sell certain available for sale securities following the early termination in order to recoup liquidity.

◦ In July 2024, following our merger with Cambridge, we sold all securities that we had acquired through the merger.

However, such securities had been adjusted to fair value in connection with our merger purchase accounting based upon the quoted sale price.

As such, no gain or loss was recognized from the sale of such securities.

◦ In the fourth quarter of 2024, management made the decision to sell lower yielding available for sale securities at a loss to offset a gain recognized upon sale of an other equity investment we sold in the fourth quarter of 2024.

◦ We recorded losses during the year ended December 31, 2023 as management made the decision to sell certain available for sale securities in connection with a balance sheet repositioning in March 2023.

• Trust and investment advisory fees increased due to an increase in our assets under management, which increased due to an increase in our wealth management and trust operations as a result of our merger with Cambridge through which we acquired $5.0 billion in assets held in a fiduciary, custodial or agency capacity for customers.

• Other noninterest income increased primarily as a result of a $9.3 million gain on sale of an other equity investment held by us, as described above.

Also contributing to the increase was $7.8 million of fee income received as a result of the early withdrawal of an omnibus deposit contract which had a balance of $100.0 million, as described above.

• Service charges on deposit accounts increased primarily as a result of increased corporate account analysis charges as a result of an increase in our account analysis service prices charged to customers during the year ended December 31, 2024.

Noninterest Expense

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Noninterest Expense

For the Year Ended December 31, Change

For the Year Ended December 31, Change in Merger & Acquisition Expenses, Net (1) Change Excluding Merger & Acquisition Expenses (1)

2024 2023 Amount %

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Marketing 7,824 7,592 232 3.1 % 70 162

Loan expenses 4,466 6,384 (1,918) (30.0) %

FDIC insurance 13,866 21,874 (8,008) (36.6) % — (8,008)

Amortization of core deposit intangible asset 1,804 1,198 606 50.6 %

Amortization of other intangible assets 14,569 1,804 12,765 707.6 % — 12,765

Other 27,793 25,610 2,183 8.5 % 5,002 (2,819)

Total noninterest expense $ 508,368 $ 418,602 $ 89,766 21.4 % $ 31,169 $ 58,597

(1) We recorded merger and acquisition expenses of $36.7 million and $5.5 million during the years ended December 31, 2024 and 2023, respectively, related to our merger with Cambridge.

These columns display the period-over-period change in merger and acquisition expenses by financial statement line item and the change in account balances excluding such amounts.

Noninterest expense increased by $89.8 million, or 21.4%, to $508.4 million during the year ended December 31, 2024 from $418.6 million during the year ended December 31, 2023.

The overall increase was primarily due to an $19.9 million increase in salaries and employee benefits and a $15.6 million increase in FDIC insurance expense.

Partially offsetting these increases were a $5.1 million decrease in other noninterest expenses and a $1.9 million decrease in loan expenses.

• Salaries and employee benefits increased primarily due to an $8.9 million increase in benefit expense related to our defined contribution supplemental executive retirement plan (“DC SERP”).

Participant benefits are adjusted based upon deemed investment performance.

Accordingly, such investments experienced an increase in value during the year ended December 31, 2023 resulting in a corresponding increase in the related benefit expense.

Also contributing to the increase was an increase of $6.8 million in salaries and wages expense, which was primarily due to costs of living salary and wage increases and the addition of new employees.

Also contributing to the increase in salaries and employee benefits was an increase in the legacy long-term cash-based incentive plan compensation expense as well as an increase in the restricted stock award expense.

Expense related to the long-term cash-based incentive plan increased to a net expense during the year ended December 31, 2023 compared to a net credit (reduction of expense) during the year ended December 31, 2022, resulting from an increase in certain metrics to which the awards are tied during the year ended December 31, 2023 in contrast with a decrease in such metrics during year ended December 31, 2022.

Restricted stock award expense increased $5.5 million due to incremental expense recognized in relation to restricted stock units and restricted stock awards granted in December 2022 and during the first and second quarters of 2023.

Partially offsetting these items was a decrease of $4.1 million in the pension service cost, which was primarily driven by a change in the mix of employees which reduced the present value of benefits based upon salary growth levels in comparison to the year ended December 31, 2022.

• FDIC insurance expenses increased $15.6 million primarily due to the FDIC’s special assessment which we accrued for in the fourth quarter of 2023 following the finalization of the rule.

Refer to the section titled “Outlook and Trends” within this Item 7 for additional discussion of the FDIC’s special assessment.

• Other noninterest expenses decreased primarily due to a $2.8 million decrease in post-retirement bank-owned life insurance expense which was primarily caused by an increase in the discount rate used to determine the liability related to our split-dollar life insurance policies.

This increase in the discount rate resulted in a decrease in the expense associated with such liabilities.

Also contributing to this decrease was a $1.6 million decrease in other pension expense.

This is primarily due to a greater return than expected on plan assets in our Defined Benefit Plan.

For further discussion on the Company’s Defined Benefit Plan refer to Note 15, “Employee Benefits” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

Also contributing to this decrease was a $1.1 million decrease in the provision for credit losses on off balance sheet exposures, which was primarily due to a reduction in reserve rates.

• Loan expenses decreased primarily due to a decrease in the volume of consumer home equity line of credit (“HELOC”) applications received during the year ended December 31, 2023 compared to during the year ended December 31, 2022.

We had marketed our HELOC products during the first three quarters of 2022, which led to

increased volume during that period.

We ceased our HELOC promotion in the fourth quarter of 2022 which led to a subsequent decline in the volume of HELOC applications received.

This increase was primarily due to an increase in merger and acquisition expenses of $31.2 million and the following items, which exclude merger and acquisition expenses:

a $34.6 million increase in salaries and employee benefits, a $16.5 million increase in data processing, a $12.8 million increase in amortization of intangible assets, and a $5.9 million increase in office occupancy and equipment.

These increases were partially offset by a $8.0 million decrease in FDIC insurance expenses.

• Merger and acquisition expenses increased as our merger with Cambridge was completed in the third quarter of 2024 around such time the majority of the related expenses were incurred.

• Salaries and employee benefits expenses increased primarily due to an increase in salaries and wages expense, an increase in share-based compensation, an increase in pension service cost.

◦ Salaries and wages expense, excluding merger and acquisition expenses, increased $20.5 million primarily due to an increase in the number of employees as a result of our merger with Cambridge as well as regular annual wage increases.

◦ Share-based compensation, excluding merger and acquisition expenses, increased due to an increase in the number of employees in the “2021 Equity Plan”, which was the result of our merger with Cambridge, as well as additional restricted stock awards granted to two new executives who were hired during the year ended December 31, 2024.

◦ Pension service cost primarily increased due to an increase in the number of employees enrolled in our Defined Benefit Plan during the year ended December 31, 2024.

Also contributing to the increase was an increase in the interest crediting rate on cash balance accounts in the plan during the year ended December 31, 2024.

• Data processing, excluding merger and acquisition expenses, increased primarily as a result of a increase in software expenses, which were primarily driven by an increase in cybersecurity software expenses.

The increase in these expenses was driven by efforts to improve our cybersecurity technology to better protect against cybersecurity threats.

• Amortization of intangible assets increased primarily due to an increase in intangible assets in connection with our merger with Cambridge, resulting in a corresponding increase in amortization expense.

• Office occupancy and equipment, excluding merger and acquisition expenses, increased primarily due to the addition of properties resulting from our merger with Cambridge.

• FDIC insurance expenses decreased primarily due to the FDIC's special assessment for which the majority was accrued for in the fourth quarter of 2023.

In 2023, the FDIC 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.

We recognized the special assessment estimate of $10.8 million in full upon finalization of the rule in the fourth quarter of 2023.

In June 2024, we received the FDIC’s additional special assessment invoice, which included an incremental assessment amount of $1.9 million.

We recorded this amount during the second quarter of 2024.

We recognize the tax effect of all income and expense transactions in each year’s consolidated statements of income, regardless of the year in which the transactions are reported for income tax purposes.

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Blended statutory tax rate 27.7 % 28.2 %

Income tax expense decreased by $115.0 million to a benefit of $63.3 million in the year ended December 31, 2023 from a provision of $51.7 million in the year ended December 31, 2022.

The decrease in income tax expense, which resulted in a tax benefit for the year ended December 31, 2023, was primarily due to lower income before income tax expense, which was a net loss during the year ended December 31, 2023, as a consequence of losses realized on sales of available for sale securities in the first quarter of 2023.

Income tax expense increased by $99.5 million to expense of $36.2 million in the year ended December 31, 2024 from a benefit of $63.3 million in the year ended December 31, 2023.

The increase to net expense for the year ended December 31, 2024 was primarily due to pre-tax losses resulting from losses on sales available for sale securities in the first quarter of 2023.

Also contributing to the increase was a $7.4 million expense recorded in 2024 for the lost state tax benefit associated with the 2024 Massachusetts state tax net operating loss which cannot be carried over.

The state tax net operating losses were due to the tax losses incurred as a result of the liquidation of the securities acquired in connection with our merger with Cambridge.

During the first quarter of 2023, we 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.

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.

For additional information related to the Company’s income taxes see Note 13, “Income Taxes” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

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

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

Expected lifetime losses are estimated on a collective basis for loans sharing similar risk characteristics and are

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

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

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For further discussion of management’s economic forecast assumptions and our sensitivity analysis of the allowance for loan losses as of December 31, 2024, refer to the earlier “Provision for Loan Losses” discussion within the “Results of Operations” within this Item 7.

For additional information on our allowance for loan losses, refer to Note 4, “Loans

and Allowance for Credit Losses” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

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

Accordingly, the net assets of the companies acquired are recorded at their fair values at the date of acquisition.

Goodwill represents the excess of purchase price over the fair value of net assets acquired.

For additional information on our allowance for loan losses, refer to Note 5, “Loans and Allowance for Credit Losses” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

Acquisitions of businesses are accounted for using the acquisition method of accounting whereby goodwill represents the excess of purchase price over the fair value of net assets acquired.

We evaluate goodwill for impairment at least annually, which we performed as of September 30, 2024, using a quantitative impairment approach.

Following management’s decision to change its annual assessment date, we performed an assessment as of November 30, 2024, described further below.

For additional information regarding the change in annual assessment date, refer to Note 8, “Goodwill and Other Intangible Assets” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

An assessment is also 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.

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We performed our annual assessment of impairment for the banking business as of September 30, 2024.

The assessment included a comparison of the banking business’ book value to the implied fair value using a pricing multiple of our 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.

The assessment included a comparison of the banking reporting unit’s carrying value of equity to estimated fair value of equity using the market capitalization method of the market approach.

We evaluated conditions as of the assessment date and how a market participant would evaluate a control premium for the banking reporting unit.

The implied control premium was estimated using the discounted cash flow method of the income approach by evaluating the present value of market participant cost savings and synergies.

Based upon the assessment, we determined there was no impairment of our goodwill as of September 30, 2024.

Significant management judgment is necessary in the determination of the fair value of a reporting unit as the income approach (comparison of the business’ book value to its discounted cash flows) requires an estimation of future cash flows, considering after-tax results of operations, the extent and timing of credit losses, and appropriate discount and capital retention rates.

In addition, following management’s decision to change the date at which our annual impairment assessment is performed, we performed our annual assessment for the banking business as of November 30, 2024, our new annual assessment date.

The assessment included a comparison of the banking reporting unit’s carrying value of equity to estimated fair value of equity based on our market capitalization.

The assessment also considered the changes in market conditions from the September 30, 2024 assessment.

Based upon the assessment, it was determined there was no impairment of our goodwill as of November 30, 2024.

Refer to Note 8, “Goodwill and Other Intangible Assets” within the Notes to the Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K for additional discussion of the change in annual impairment assessment date.

Significant management judgment is necessary in the determination of the fair value of a reporting unit as the estimated fair value of equity and of the implied control premium requires estimation of future cash flows and the evaluation of the present value of market participant cost savings and synergies.

The determination of fair value is a highly subjective process, and actual future cash flows may differ from forecasted results.

Our discount rate was based upon the estimated cost of equity under the Capital Asset Pricing Model, which considers the risk-free interest rate, market risk premium, size premium, company specific premium and beta specific to a particular reporting unit.

For additional information on our goodwill and other intangibles, refer to Note 7, “Goodwill and Core Deposit Intangible Asset” within the Notes to the Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K.

For additional information on our goodwill and other intangibles, refer to Note 8, “Goodwill and Other Intangible Assets” within the Notes to the Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K.

Business Combinations .

As indicated above, acquisitions of businesses are accounted for using the acquisition method of accounting.

In accordance with applicable accounting guidance, we recognize assets acquired and liabilities assumed at their respective fair values as of the date of acquisition, with the related transaction costs expensed in the period incurred.

We use third party valuation specialists to assist in the determination of fair value of certain assets and liabilities at the merger date,

including loans, core deposit intangibles, customer list intangibles, trade name intangibles and time deposits.

While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed on the acquisition date, the estimates are inherently uncertain.

For further discussion of our methodology for estimating the fair value of acquired assets and assumed liabilities in connection with our merger with Cambridge, see Note 3, “Mergers and Acquisitions” within the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

The allowance for credit losses on PCD loans is recognized within business combination accounting.

The allowance for credit losses on non-PCD loans is recognized as a provision expense in the same period as the business combination.

For further discussion of our accounting policies for estimating credit losses on acquired loans, see Note 2, “Summary of Significant Accounting Policies” within the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

Income Taxes .

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We apply the individual annual yield curve rates instead of the assumed discount rate to determine the service cost and interest cost, which more specifically links the cash flows related to service cost and interest cost to bonds maturing in their year of payment.

For our Defined Benefit Plan and the Non-Qualified Benefit Equalization Plan, the interest rates used to convert annuities to the actuarial equivalent lump sum amounts were selected based on the applicable segment rates under Internal Revenue Code Section 417(e) for the plan year beginning on November 1, 2023.

The Society of Actuaries (“SOA”) most recently issued mortality improvement tables during the year ended December 31, 2021.

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Significant differences in actual experience or significant changes in assumptions may materially affect the pension obligations.

The effects of actual results differing from assumptions and the changing of assumptions are included in unamortized net actuarial gains and losses that are subject to amortization to pension expense over future periods.

The effects of actual results differing from assumptions and the changing of assumptions are included in

unamortized net actuarial gains and losses that are subject to amortization to pension expense over future periods.

The unamortized pre-tax actuarial loss on all of our pension plans was $34.1 million and $69.7 million at December 31, 2024 and December 31, 2023, respectively.

The year-over-year change was primarily due to an increase in plan assets and an increase in lump sum conversion rates, partially offset by a decrease in discount rate assumptions used for determining the benefit obligation.

The year-over-year change was primarily due to an increase in plan assets and an increase in discount rates, partially offset by a decrease in lump sum conversion rates assumptions used for determining the benefit obligation.

The overfunded status of all of our pension plans improved during the year ended December 31, 2024 to $110.9 million from $69.0 million primarily due to:

(i) actual pension plan investment returns less than expected of $33.7 million;

(ii) the favorable effect of an increase in lump sum conversion rates of $5.8 million;

and (iii) changes in other actuarial assumptions and demographic data updates;

partially offset by (iv) the unfavorable effect of a decrease in discount rates of $7.7 million.

(i) actual pension plan investment returns greater than expected of $12.7 million;

and (ii) the favorable effect of an increase in discount rates of $22.2 million;

partially offset by (iii) changes in other actuarial assumptions and demographic data updates;

and (iv) the unfavorable effect of a decrease in lump sum conversion rates of $0.3 million.

The following table illustrates the sensitivity to a change in certain assumptions for the pension plans, holding all other assumptions constant:

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Relevant standards that we adopted during the year ended December 31, 2024:

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

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”).

This update modifies how an acquiring entity measures contract assets and contract liabilities of an acquiree in a business combination in accordance with Topic 606.

The amendments in this update require the acquiring entity in a business combination to account for revenue contracts as if they had originated the contract and assess how the acquiree accounted for the contract under Topic 606.

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 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.

On January 1, 2023, we adopted this standard on a prospective basis.

The adoption of this standard did not have a material impact on our Consolidated Financial Statements.

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

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

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

This update supersedes the existing accounting guidance for TDRs in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under existing accounting guidance in ASC 310-20 to determine whether a modification made to a borrower results in a new loan or a continuation of an existing loan.

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

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

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, we 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.

Accordingly, we 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 our Consolidated Financial Statements.

Relevant standards that were recently issued but which we had 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):

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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 previously effective accounting standards, the proportional amortization method was 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.

We had previously made an accounting policy election to account for our investments in low-income-housing tax credit investments using the proportional amortization method.

This election was made upon our 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.

On January 1, 2024, we adopted this standard using the modified retrospective method.

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 .

We adopted this standard on January 1, 2024 and such adoption did not have a material impact on our 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 chief operating decision-maker (“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.

The adoption of this standard did not have a material impact on our Consolidated Financial Statements.

Relevant standards that were recently issued but which we had not yet adopted as of December 31, 2024:

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 us:

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):

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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.

We expect the adoption of this standard will not have a material impact on our 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 chief operating decision maker (“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.

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.

In other words, in addition to the measure that is most consistent with the measurement principles under generally accepted accounting principles (“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 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.

Early adoption is not permitted and the

amendments are required to be applied on a prospective basis.

We expect the adoption of this standard will not have a material impact on our Consolidated Financial Statements.

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

In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40).

The amendments in this update require disclosure, in the notes to the financial statements, of specified information about certain costs and expenses.

The amendments require that at each interim and annual reporting period an entity:

Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption.

A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(e).

Include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements.

Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

For public business entities, the amendments in ASU 2024-03 are effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027.

Early adoption is permitted.

The amendments in this update are to be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this update or (2) retrospectively to any or all prior periods presented in the financial statements.

Management of Market Risk

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Interest rate sensitivity is the most significant market risk to which we are exposed.

Interest rate risk is the sensitivity of the net present value of assets and liabilities and/or income to changes in interest rates.

Interest rate risk is the sensitivity of the net present value of assets and liabilities and income to changes in interest rates.

Changes in interest rates, as well as fluctuations in the level and duration of assets and liabilities, affect net interest income, our primary source of income.

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In addition to directly impacting net interest income, changes in the level of interest rates can also affect the amount of loans originated, the timing of cash flows on loans and securities, and the fair value of assets and liabilities, as well as other aspects of our business.

The primary goal of interest rate risk management is to attempt to control this risk within policy limits approved by the Risk Management Committee of our Board of Directors, and within the Risk Appetite Statement formally adopted by the Board of Directors and described further below.

These limits reflect our tolerance for interest rate risk over both short-term and long-term horizons, are designed to encompass market rate shocks that would take place with both gradual and immediate effect and encompass a range of scenarios from mild to extreme market shocks.

The primary goal of interest rate risk management is to attempt to control this risk within policy limits approved by the Risk Management Committee of our Board of Directors (“RMC”), and within the Risk Appetite Statement formally adopted by the Board of Directors and described further below.

These limits reflect our tolerance for interest rate risk over both short-term and long-term horizons, are designed to encompass market rate shocks that would take place with both gradual and immediate effect and cover a range of scenarios from mild to extreme market shocks.

More specifically, and as further described below, our policy limits govern:

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• Guidelines on accounting classification of securities including held for trading, available for sale and held to maturity.

Policy limits are tested quarterly, and the results are reported to the Asset and Liability Management Committee (“ALCO”) and to the Risk Management Committee of the Board of Directors (“RMC”).

RMC advises the Board of Directors with respect to the adequacy of capital allocated based on the level of risk as well as risk issues that could impact liquidity and/

or capital adequacy.

Policy limits are tested quarterly, and the results are reported to the Asset Liability Committee (“ALCO”), which is a subcommittee of management’s Enterprise Risk Management Committee (“ERMC”), and to RMC.

RMC advises the Board of Directors with respect to the adequacy of capital allocated based on the level of risk as well as risk issues that could impact liquidity and/or capital adequacy.

From time to time, we expect we will exceed policy limits, in which case we may seek corrective action after considering, among other things, market conditions, customer reaction, and the estimated impact on profitability.

A remediation plan will be presented to ALCO, Enterprise Risk Management Committee (“ERMC”) and RMC that carefully outlines the proposed corrective action.

A remediation plan will be presented to ALCO, ERMC and RMC that carefully outlines the proposed corrective action.

We attempt to manage interest rate risk by identifying, quantifying, and where appropriate, hedging our exposure to market risk.

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Our objective is to maintain stability in the growth of net interest income through the maintenance of an appropriate mix of interest-earning assets and interest-bearing liabilities and, when necessary and within limits that management determines to be prudent, through the use of off-balance sheet hedging instruments including, but not limited to, interest rate swaps, floors and caps.

Our asset-liability management strategy is devised and monitored by our ALCO, a subcommittee of the ERMC, in accordance with policies approved by the RMC.

ALCO operates under a charter developed and approved by the ERMC.

ALCO meets at least monthly, or more frequently as needed, to review, among other things, our sensitivity to interest rate changes, loan pricing and activity, investment activity and strategy, hedging strategies, deposit pricing and funding strategies with respect to overall balance sheet composition, as well as earnings simulations over multiple years.

ALCO may meet more frequently if there are changes in the economic environment, such as rapid increases or decreases in interest rates due to or as a result of exogenous or unknown factors so that ALCO can make any necessary strategic adjustments to ensure risk is well-managed.

Our asset-liability management strategy is devised and monitored by our ALCO in accordance with policies approved by RMC.

ALCO operates under a charter developed and approved by ERMC.

ALCO meets monthly, or more frequently as needed, to review, among other things, our sensitivity to interest rate changes, loan pricing and activity, investment activity and strategy, hedging strategies, deposit pricing and funding strategies with respect to overall balance sheet composition, as well as earnings simulations over multiple years.

ALCO’s membership is comprised of executive management of the Company, and representatives from various lines of business are in regular attendance, including representation from Enterprise Risk Management (“ERM”).

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In its oversight of our risk management framework, the Board of Directors has adopted a formal Risk Appetite Statement (“RAS”) which defines the aggregate level of risk and the types of risk the Company is willing to assume to achieve its corporate strategy and objectives.

The Board ensures that approved policy limits, as described further above, conform to stated risk appetite.

The Board monitors, on at least a quarterly basis, a set of key risk metrics, including those, but not limited to those, pertaining to market risk.

Monitoring these metrics ensures that management is operating within the Board’s stated risk appetite, can help to identify trends in risk profile or emerging risks over time, and where applicable, determine where adjustments may be required to business strategy or tactics.

The Board of Directors regularly assesses whether the approved policy limits, as described further above, conform to stated risk appetite.

The Board of Directors monitors, on at least a quarterly basis, a set of key risk metrics, including those, but not limited to those, pertaining to market risk.

Monitoring these metrics can help to identify trends in risk profile or emerging risks over time, and where applicable, determine where adjustments may be required to business strategy or tactics.

Within our risk management framework, the functional responsibilities of risk management are divided into a tiered model, involving three lines of defense:

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Comments on Recent Developments.

As noted in the earlier section titled “Outlook and Trends” and the later section titled “Liquidity, Capital Resources, Contractual Obligations, Commitments and Contingencies” in this Item 7, we completed a balance sheet repositioning during the first quarter of 2023 by selling a portion of our AFS investment securities portfolio for total proceeds of $1.9 billion.

Such securities were lower-yielding U.S.

Agency bonds and government-sponsored residential and commercial mortgage-backed securities which were purchased when interest rates were historically low.

In addition, as noted in the earlier section titled “Outlook and Trends” within this Item 2, we completed the sale of our insurance agency business in the fourth quarter of 2023 for net proceeds at closing of $498.1 million.

Prior to the sales of securities and of our insurance agency business, we placed greater reliance on wholesale funding, including brokered deposits, to meet our loan-growth needs.

Wholesale funding generally has a higher cost than deposits originating within the markets we serve and are not our preferred sources of funding.

Subsequent to such sales, a portion of the proceeds of which were used to reduce our wholesale funding balances, our reliance on such funding sources is lessened as we believe we have a stronger liquidity position.

As noted in the earlier section titled “Outlook and Trends” within this Item 7, beginning in March 2022, the Federal Open Market Committee (“FOMC”) voted to increase the federal funds rate multiple times from a range of 0.00% to 0.25% to a range of 5.25% to 5.50% on July 26, 2023, when the FOMC stated that it will continue to assess additional information and its implications for monetary policy.

During the past several years, the U.S.

economy has experienced both sharp increases and decreases in interest rates.

The FOMC next adjusted the federal funds rate on September 18, 2024, when the FOMC reduced the target range by 50 basis points to a range of 4.75% to 5.00% and again on November 7, 2024, when the FOMC reduced the target range further by 25 basis points to a range of 4.50% to 4.75%.

Our market risk management framework is designed for the potential for such rapid changes in interest rates, by establishing policy limits on such rapid shocks and periodically back-testing modeled to actual results.

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The impact of our interest rate derivatives designated as hedging instruments are included in the model results.

We then model NII for the same period under the assumption that market rates increase and decrease instantaneously by certain basis point increments, which vary by period depending upon market conditions, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.

We then model NII for the same period under the assumption that market rates increase and decrease instantaneously by certain basis point increments, which vary by period depending upon market conditions, with changes in interest rates representing immediate, permanent, and parallel shifts in the yield curve.

A basis point equals one-hundredth of one percent, and 100 basis points equals one percent.

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The tables provide an indication of our interest rate risk exposure at a particular point in time, and actual results may differ.

The tables below set forth, as of December 31, 2023 and 2022, the calculation of the estimated changes in our net interest income on an FTE basis that would result from the designated immediate changes in market interest rates:

The tables below set forth, as of December 31, 2024 and 2023, the modeled changes in our net interest income on an FTE basis that would result from the designated immediate changes in market interest rates:

Interest Rate Sensitivity

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Interest Rates

(basis points) (1) Net Interest

Income Year 1

Forecast Year 1

(basis points) (1) Year 1

Level Policy Limit

(Dollars in thousands)

400 (2.1) % (20) %

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100 (0.4) % (10) %

Flat 576,482 — % — %

(100) 0.2 % (10) %

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(basis points) (1)

Income Year 1

Forecast Year 1

Level Policy Limit

(Dollars in thousands)

400 (6.1) % (20) %

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100 (1.4) % (10) %

Flat 576,477 — % — %

(100) 1.0 % (10) %

(200) 1.3 % (12) %

(400) (0.4) % (20) %

(1) Assumes an immediate uniform change in interest rates at all maturities.

As of December 31, 2024, our model, as indicated above, shows a decline in our net interest income in rising rate scenarios.

In the rising rate scenarios, funding costs are modeled to rise faster than income on earning assets, due, in part, to the mix of funding which has shifted towards higher rate paying deposits.

In the rising rate scenarios, funding costs are modeled to rise faster than income on earning assets, due, in part, to the mix of funding which has shifted towards higher rate paying deposits, which are more sensitive to changes in interest rates.

As shown in the table above, the model generated similar results as of December 31, 2023.

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The rate scenarios that we model at each period end are dependent upon market conditions, which is why the rate scenarios that we model may differ from period-to-period.

As such, we did not previously model an instantaneous 400 basis point decrease in interest rates at December 31, 2022 given the lower level of interest rates compared to December 31, 2023.

Management may use investment strategy, loan and deposit pricing, non-core funding strategies, and interest rate derivative financial instruments, within internal policy guidelines, to manage interest rate risk as part of our asset/liability strategy.

Management may use techniques such as investment strategy, loan and deposit pricing, non-core funding strategies, and interest rate derivative financial instruments, within internal policy guidelines, to manage interest rate risk as part of our asset/liability strategy.

Hedging strategies such as, for example, receive-fixed and pay-fixed swaps, interest rate caps, floors, or collars, may be used to protect against benchmark interest rates either rising or falling.

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In 2022, management executed a total of $2.4 billion in notional value of receive-fixed interest rate swap agreements on floating-rate loans.

These swaps are designated as cash flow hedges and management believes these derivatives provide significant protection against falling interest rates.

These swaps are designated as cash flow hedges and management believes these derivatives provide significant protection against falling interest rates, as they have the effect of converting floating rate loan exposure to fixed rates.

These receive-fixed swaps constitute the entirety of our current hedge portfolio.

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Economic Value of Equity Analysis.

We also analyze the sensitivity of our financial condition in interest rates through our economic value of equity (“EVE”) model.

We also analyze the sensitivity of our financial condition to changes in interest rates through our EVE model.

This analysis calculates the difference between the present value of expected cash flows from assets and liabilities assuming various changes in current interest rates.

The impact of our interest rate derivatives designated as hedging instruments are included in the model results.

The tables below represent an analysis of our interest rate risk as measured by the estimated changes in our EVE, resulting from an instantaneous and sustained parallel shift in the yield curve (+100, +200, +400 basis points and -100, -200, and -400 basis points) at December 31, 2023 and (+200, +300, +400 basis points and -100, -200 basis points) at December 31, 2022.

The model requires that interest rates remain positive for all points along the yield curve for each rate scenario which may preclude the modeling of certain falling rate scenarios during periods of lower market interest rates.

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EVE Interest Rate Sensitivity (2)

Change in Interest

Rates (basis points) (1) Estimated EVE (2) As of December 31, 2023 EVE as a

Change in Interest Rates (basis points) (1) As of December 31, 2024 EVE as a

Percentage of

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Estimated Increase (Decrease) in EVE from Level

Amount Percent Policy Limit

(Dollars in thousands)

Percent Policy Limit

400 (10.8) % (30) % 22.34 %

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(400) 8.8 % (30) % 22.06 %

Change in Interest

Rate (basis points) (1) Estimated EVE (2) As of December 31, 2022 EVE as a

Change in Interest Rate (basis points) (1) As of December 31, 2023 EVE as a

Percentage of

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Estimated Increase (Decrease) in EVE from Level

Amount ($) Percent (%) Policy Limit

(Dollars in thousands)

400 $ 3,691,963 $ (691,696) (15.8) % (30) % 18.48 %

Percent (%) Policy Limit

400 (17.3) % (30) % 18.76 %

200 (9.9) % (20) % 19.37 %

100 (5.5) % N/A 19.73 %

Flat — — 20.22 %

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(200) 9.2 % (20) % 20.73 %

(400) 13.1 % (30) % 20.34 %

(1) Assumes an immediate uniform change in interest rates at all maturities.

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While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan and securities prepayments are greatly influenced by general interest rates, economic conditions, and competition.

Our most liquid assets are unencumbered cash and due from banks and securities classified as available for sale, which could be liquidated, subject to market conditions.

In the future, our liquidity

position will continue to be affected by the level of customer deposits and payments, as well as any acquisitions, dividends, and share repurchases in which we may engage.

Our most liquid assets are unencumbered cash and cash equivalents and securities classified as available for sale, which could be liquidated, subject to market conditions.

In the future,

our liquidity position will continue to be affected by the level of customer deposits and payments, loan originations and repayments, as well as any acquisitions, dividends, and share repurchases in which we may engage.

For the next twelve months, we believe that our existing resources, including our capacity to use brokered deposits and wholesale borrowings, will be sufficient to meet the liquidity and capital requirements of our operations.

We may elect to raise additional capital through the sale of additional equity or debt financing to fund business activities such as strategic acquisitions, share repurchases, or other purposes beyond the next twelve months.

At December 31, 2023, we had $693.1 million of cash and cash equivalents, an increase of $523.6 million from $169.5 million at December 31, 2022.

The increase in cash levels was due primarily to a decrease of $2.3 billion in AFS securities from $6.7 billion at December 31, 2022 to $4.4 billion at December 31, 2023.

In March 2023, we completed a balance sheet repositioning by selling lower yielding AFS securities.

The sale allowed us to redeploy the proceeds in the current higher interest rate environment through increased cash levels and loan fundings, and the reduction of wholesale borrowings.

The increased cash levels following our balance sheet repositioning provided strong balance sheet liquidity to support the needs of our depositors as part of our liquidity contingency planning during the uncertain environment created by the bank failures in the months of March and May 2023.

Advances from the FHLBB were also used to support ongoing operations and totaled $17.7 million and $704.1 million at December 31, 2023 and 2022, respectively.

Such advances were reduced at December 31, 2023 following the sale of our insurance agency business as the net proceeds from the sale at closing of $498.1 million were primarily used to paydown our FHLBB borrowings.

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

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

At both December 31, 2023 and 2022, we had no IntraFi Network one-way sell deposits.

As of both December 31, 2024 and 2023, we had no IntraFi Network one-way sell deposits.

At December 31, 2024 and December 31, 2023, we had repurchased $2.1 billion and $1.3 billion, respectively, of previously sold reciprocal deposits.

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We also have the ability to borrow from the Federal Reserve Bank of Boston.

At December 31, 2023, we had a $2.4 billion collateralized line of credit from the Federal Reserve Bank of Boston through the Bank Term Funding Program (“BTFP”).

The BTFP was created by the Federal Reserve in March 2023.

On January 24, 2024, the Federal Reserve Board announced the BTFP will cease making new loans as scheduled on March 11, 2024.

Following expiration of the BTFP, management expects to pledge the existing BTFP collateral to the Federal Reserve Discount Window.

At December 31, 2023, we had the ability to borrow up to $775.9 million from the Federal Reserve Bank of Boston Discount Window.

In addition, we were able to acquire brokered deposits at our discretion to raise additional funds.

At December 31, 2023, we had $50.0 million in brokered certificates of deposit.

At December 31, 2023, cash and cash equivalents were $693.1 million and secured borrowing capacity at the Federal Reserve Bank and Federal Home Loan Bank totaled $6.1 billion, providing total liquidity sources of $6.8 billion.

At December 31, 2024, we had the ability to borrow up to $2.8 billion from the Federal Reserve Bank of Boston Discount Window.

At December 31, 2024, cash and cash equivalents were $1.0 billion and secured borrowing capacity at the Federal Reserve Bank and Federal Home Loan Bank totaled $5.2 billion, providing total liquidity sources of $6.2 billion.

These liquidity sources provided 90% coverage of all customer uninsured and uncollateralized deposits, which totaled $6.9 billion, or 32% of total deposits, as of December 31, 2024.

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(1) The additional borrowing capacity has not been assessed for this category.

(2) As of December 31, 2023 and 2022, loans have been pledged to the FHLBB with a carrying value of $4.6 billion and $3.9 billion, respectively, to secure our total borrowing capacity.

(3) Securities with a carrying value of $2.4 billion at December 31, 2023 have been pledged to the Federal Reserve Bank of Boston under the Bank Term Funding Program, resulting in this additional unused borrowing capacity.

(4) Loans with a carrying value of $1.1 billion at both December 31, 2023 and 2022 and securities with a carrying value of $168.8 million at December 31, 2023 were pledged to the Discount Window, resulting in this additional borrowing capacity.

No securities were pledged to the Discount Window at December 31, 2022.

We believe that advanced preparation, early detection, and prompt responses can avoid, minimize, or shorten potential liquidity crises.

Our Board of Directors and our management’s Asset Liability Committee have put a liquidity contingency plan in place to establish methods for assessing and monitoring risk levels, as well as potential responses during unanticipated stress events.

(2) As of December 31, 2024 and 2023, loans with a carrying value of $2.3 billion and $4.6 billion, respectively, and securities with a carrying value of $1.0 billion at December 31, 2024 were pledged to the FHLBB resulting in this additional unused borrowing capacity.

No securities were pledged to the FHLBB as collateral as of December 31, 2023.

(3) Securities with a carrying value of $2.4 billion at December 31, 2023 were pledged to the Federal Reserve Bank of Boston under the Bank Term Funding Program, resulting in this additional unused borrowing capacity.

The Bank Term Funding Program ceased extending new loans March 11, 2024.

Accordingly, we had no additional capacity nor any securities pledged to the Federal Reserve Bank of Boston under the Bank Term Funding Program as of December 31, 2024.

(4) Loans with a carrying value of $3.1 billion and $1.1 billion at December 31, 2024 and 2023, respectively, and securities with a carrying value of $794.8 million and $168.8 million at December 31, 2024 and 2023, respectively, were pledged to the Discount Window, resulting in this additional borrowing capacity.

The increase in the amount of securities pledged to the Discount Window at December 31, 2024 from December 31, 2023 was due to additional securities pledged which were previously pledged as collateral to the Bank Term Funding Program.

We believe that advanced preparation, early detection, and prompt responses can avoid, minimize, or shorten potential liquidity constraints.

Our Board of Directors and management’s ALCO oversee the assessment and monitoring of risk levels, as well as potential responses during unanticipated stress events.

As part of our risk management framework, we perform periodic liquidity stress testing to assess our need for liquid assets as well as backup sources of liquidity.

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At December 31, 2024 and 2023, we exceeded all applicable regulatory capital requirements, and were considered “well capitalized” under regulatory guidelines.

For additional information regarding our regulatory capital requirements, refer to Note 14, “Minimum Regulatory Capital Requirements” within the Notes to the Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K.

For additional information regarding our regulatory capital requirements, refer to Note

14, “Minimum Regulatory Capital Requirements” within the Notes to the Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K.

Contractual Obligations, Commitments and Contingencies.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis