What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-02 compared with 2025-02-27 · 658 added, 603 removed, 2568 unchanged (33% of the section changed)

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

(the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income (loss), changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 2025 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 2, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

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

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

We tested management’s quantitative model including, among other procedures, evaluating the model validation procedures performed over conceptual soundness of model methodology, tested management’s quantitative model including an evaluation of the model validation procedures performed over conceptual soundness of model methodology, assessed model governance policies and procedures, and assessed the conceptual soundness of the Company’s qualitative factor framework utilized in determining the overall allowance for loan losses.

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

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To test the allowance on loans individually assessed for impairment among other procedures, on a sample basis we assessed credit risk-rating assignments, evaluated the fair value of collateral, and involved EY specialists to evaluate assumptions and fair value of certain collateral.

Fair Value of Acquired Loans and Core Deposit Intangible Recognized as Part of the Cambridge Bancorp, Inc.

Description of the Matter As described in Note 3 to the consolidated financial statements, the Company acquired Cambridge Bancorp, Inc.

(Cambridge) on July 12, 2024.

The transaction has been accounted for as a business combination and accordingly, the assets acquired and liabilities assumed from Cambridge were recorded at fair value as of the merger date.

The fair value of loans acquired from Cambridge was approximately $3.65 billion as of July 12, 2024.

Fair Value of Acquired Loans and Core Deposit Intangible Recognized as Part of the HarborOne Merger

Description of the Matter As described in Note 3 to the consolidated financial statements, the Company acquired HarborOne on November 1, 2025.

The transaction has been accounted for as a business combination and accordingly, the assets acquired and liabilities assumed from HarborOne were recorded at fair value as of the merger date.

The fair value of loans acquired from HarborOne was approximately $4.49 billion as of November 1, 2025.

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

Additionally, the Company recognized a core deposit intangible asset of approximately $115 million as of July 12, 2024.

Additionally, the Company recognized a core deposit intangible asset of approximately $82.8 million as of November 1, 2025.

The fair value of the core deposit intangible asset was determined based on projected cash flows, discounted at a rate commensurate with market participants.

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Boston, Massachusetts

February 27, 2025

March 2, 2026

EASTERN BANKSHARES, INC.

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Borrowed funds:

Escrow deposits of borrowers 27,721 21,978

Interest rate swap collateral funds 15,321 48,590

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Net interest income after provision for allowance for loan losses 802,385 540,217 530,357

Noninterest income (loss):

Trust and investment advisory fees 46,126 24,264 23,593

Noninterest (loss) income:

Investment advisory fees 69,921 46,126 24,264

Service charges on deposit accounts 35,035 32,004 28,631

Debit card processing fees 14,177 13,469 12,644

Card income 18,260 16,612 15,777

Interest rate swap income 3,755 2,819 1,536

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

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

(Losses) gains on sales of mortgage loans held for sale, net ( 920 ) ( 507 ) 248

Income from investments held in rabbi trusts 9,963 9,675 9,305

Mortgage banking income (loss) 2,877 ( 887 ) ( 269 )

Losses on sales of securities available for sale, net ( 269,638 ) ( 16,798 ) ( 333,170 )

Other 36,834 21,457 17,783

Total noninterest income (loss) 123,917 ( 237,753 ) 76,750

Miscellaneous income and fees 23,038 27,695 16,176

Other non-operating income (loss) 853 6,671 ( 3 )

Total noninterest (loss) income ( 105,936 ) 123,917 ( 237,753 )

Noninterest expense:

Salaries and employee benefits 336,040 287,626 253,032

Office occupancy and equipment 46,515 35,992 37,445

Data processing 75,383 55,308 52,938

Occupancy and equipment 45,553 41,932 35,990

Technology and data processing 78,619 70,464 53,951

Professional services 14,641 12,753 13,305

Marketing 7,824 7,592 9,294

Marketing expenses 9,626 7,754 7,592

FDIC insurance 14,642 13,866 21,874

Amortization of other intangible assets 14,569 1,804 1,198

Other 27,793 25,610 32,622

Amortization of intangible assets 34,179 14,569 1,804

Other operating expenses 24,486 22,740 25,559

Non-operating expenses 39,157 36,664 5,495

Total noninterest expense 596,943 508,368 418,602

Income (loss) from continuing operations before income tax expense 155,766 ( 125,998 ) 238,230

Income (loss) before income tax expense (benefit) 99,506 155,766 ( 125,998 )

Income tax expense (benefit) 11,287 36,205 ( 63,309 )

Net income (loss) from continuing operations $ 88,219 $ 119,561 $ ( 62,689 )

Net income from discontinued operations — 294,866 13,248

Income from discontinued operations, net of taxes — — 294,866

Net income $ 88,219 $ 119,561 $ 232,177

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EASTERN BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Year Ended December 31,

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Net income $ 88,219 $ 119,561 $ 232,177

Other comprehensive income (loss), net of tax:

Other comprehensive income, net of tax:

Net change in fair value of securities available for sale 324,514 368 295,913

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8,972 18,554 339

Total other comprehensive income (loss) 24,023 314,840 ( 866,496 )

Total comprehensive income (loss) $ 143,584 $ 547,017 $ ( 666,737 )

Total other comprehensive income 356,966 24,023 314,840

Total comprehensive income $ 445,185 $ 143,584 $ 547,017

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

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Comprehensive

Income (Loss) Unallocated Common Stock Held by ESOP Total

Loss Unallocated Common Stock Held by ESOP Total

(In thousands, except share data)

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— — — ( 67,020 ) — — ( 67,020 )

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

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

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

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

207,100 4 ( 1,400 ) — — ( 1,396 )

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

Net income — — — 232,177 — — 232,177

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

Other comprehensive income, net of tax — — — — 314,840 — 314,840

ESOP shares committed to be released — — 2,188 — — 4,941 7,129

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

Cumulative effect accounting adjustment (3)

— — — 822 — — 822

Dividends to common shareholders (2)

— — — ( 82,812 ) — — ( 82,812 )

Repurchased common stock ( 1,744,824 ) ( 17 ) ( 27,666 ) — — — ( 27,683 )

Issuance of restricted stock awards 56,352 1 ( 1 ) — — — —

Restricted stock awards cancelled (4)

( 18,513 ) ( 3 ) ( 235 ) — — — ( 238 )

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

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ESOP shares committed to be released — — 2,443 — — 4,913 7,356

Merger consideration:

Common stock issued for acquisition 38,769,562 388 576,116 — — — 576,504

Stock issuance costs — — ( 941 ) — — — ( 941 )

Cambridge Bancorp (“Cambridge”) restricted share awards converted to restricted share awards of the Company (5)

118,693 1 1,052 — — — 1,053

Pre-merger service credit for restricted share units (6)

— — 3,030 — — — 3,030

Balance at December 31, 2024 213,909,472 2,141 2,237,494 2,084,503 ( 584,329 ) ( 127,842 ) 3,611,967

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Share-based compensation — — 16,906 — — — 16,906

Stock options exercised 400,279 4 5,109 — — — 5,113

Stock issuance costs — — ( 122 ) — — — ( 122 )

Net income — — — 88,219 — — 88,219

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Common stock issued for acquisition 26,936,260 269 471,923 — — — 472,192

Stock issuance costs — — ( 941 ) — — — ( 941 )

Cambridge Bancorp restricted share awards converted to restricted share awards of the Company upon merger close (6)

118,693 1 1,052 — — — 1,053

Pre-merger service credit for restricted share units (7)

— — 3,030 — — — 3,030

HarborOne Bancorp, Inc.

(“HarborOne”) stock options converted to stock options of the Company — — 3,273 — — — 3,273

Balance at December 31, 2025 235,646,558 $ 2,356 $ 2,621,029 $ 2,067,327 $ ( 227,363 ) $ ( 122,796 ) $ 4,340,553

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(2) The Company declared cumulative cash dividends of $ 0.51 , $ 0.45 , and $ 0.41 per share of common stock during the years ended December 31, 2025, 2024, and 2023, respectively.

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

Refer to Note 5, “Loans and Allowance for Credit Losses” for additional discussion.

(3) Represents shares issued, net of employee tax withheld, upon the vesting of restricted stock units.

Refer to Note 17, “Share-Based Compensation” for additional discussion.

(5) Includes 15,487 restricted stock award shares cancelled upon vesting for employee payroll tax withholding and 3,026 restricted stock award shares cancelled upon forfeiture.

Shares withheld relate to awards issued by Cambridge Bancorp to its employees which were converted to awards of the Company upon completion of the Company' merger with Cambridge Bancorp effective July 12, 2024 ( “ the merger ” ).

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

(6) The Company issued 118,693 restricted stock award shares with a fair value of $ 1.1 million as part of the purchase consideration for the merger.

(4) Represents restricted stock awards (“RSAs”) cancelled upon vesting for employee payroll tax withholding and upon forfeiture.

(5) The Company issued 118,693 restricted stock award shares with a fair value of $ 1.1 million as part of the purchase consideration for the merger with Cambridge.

Refer to Note 3, “Mergers and Acquisitions” for additional discussion.

(7) Represents credit for service for former employees of Cambridge Bancorp retained following the merger related to restricted share unit awards converted to Company restricted share units at the merger date of July 12, 2024.

(6) Represents credit for service for former employees of Cambridge retained following the merger related to restricted share unit awards converted to Company restricted share units at the merger date of July 12, 2024.

Refer to Note 3, “Mergers and Acquisitions” for additional discussion.

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(Accretion) amortization of deferred loan fees and premiums, net ( 48,374 ) ( 13,557 ) 6,445

Deferred income tax expense (benefit) 36,059 ( 18,267 ) 5,262

Amortization of investment security premiums and discounts 4,539 6,281 18,274

Deferred income tax (benefit) expense ( 13,550 ) 36,059 ( 18,267 )

(Accretion) amortization of investment security premiums and discounts, net ( 7,268 ) 4,539 6,281

Right-of-use asset amortization 16,584 11,277 11,348

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Increase in cash surrender value of bank-owned life insurance ( 5,642 ) ( 4,326 ) ( 3,912 )

Loss on life insurance benefits — — 663

Loss on sales of securities available for sale, net 269,638 16,798 333,170

Net loss (gain) on bank premises and equipment 2,871 — ( 1,412 )

Net loss on lease right-of-use assets 4,685 395 593

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

Loss on right-of-use assets, net of gains from modifications 3,592 4,685 395

Employee Stock Ownership Plan expense 8,390 7,356 7,129

Realized loss on sales of commercial loans (1)

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

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

Net gain on sale of other equity investments ( 1,584 ) ( 9,291 ) —

Other ( 253 ) 3,791 3,224

Loans held for sale:

Proceeds from the sales of loans held for sale 159,543 92,904 73,829

Loans originated for sale, net of repayments ( 141,306 ) ( 93,072 ) ( 48,807 )

Prepaid pension (benefit) expense ( 5,259 ) ( 10 ) 4,260

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Net cash provided by operating activities - continuing operations 432,420 283,836 385,441

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

Net cash used in operating activities - discontinued operations — — ( 123,749 )

Net cash provided by operating activities 432,420 283,836 261,692

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Proceeds from sale of other equity investment 1,944 9,958 —

Proceeds from life insurance policies — — 20,446

Net cash acquired in business combination 24,879 — —

Net increase in outstanding loans, excluding loan purchases and sales ( 209,088 ) ( 586,584 ) ( 926,255 )

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

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

Net increase in outstanding loans ( 802,374 ) ( 209,088 ) ( 429,268 )

Net cash (paid) acquired in business combination ( 1,412 ) 24,879 —

Purchased banking premises and equipment ( 19,434 ) ( 13,539 ) ( 8,140 )

Proceeds from sale of bank premises and equipment — 15,116 —

Net cash provided by (used in) investing activities - continuing operations 1,059,397 1,911,760 ( 1,063,255 )

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

Net cash provided by (used in) investing activities 1,059,397 2,400,265 ( 1,076,655 )

Proceeds from life insurance policies 1,634 — —

Net cash (used in) provided by investing activities - continuing operations ( 364,021 ) 1,059,397 1,911,760

Net cash provided by investing activities - discontinued operations — — 488,505

Net cash (used in) provided by investing activities ( 364,021 ) 1,059,397 2,400,265

Financing activities

Net decrease in demand, savings, interest checking, and money market investment deposit accounts ( 386,830 ) ( 2,462,797 ) ( 1,751,953 )

Net increase in time deposits 208,515 1,084,655 1,098,001

Net (decrease) increase in borrowed funds (2)

Net increase (decrease) in demand, savings, interest checking, and money market investment deposit accounts 10,353 ( 384,720 ) ( 2,463,133 )

Net (decrease) increase in time deposits ( 192,104 ) 208,515 1,084,655

Net decrease in borrowed funds (1)

( 369,344 ) ( 742,059 ) ( 692,276 )

Payments for repurchases of common stock ( 106,589 ) ( 27,683 ) —

Proceeds from the exercise of stock options 5,113 — —

Stock issuance costs ( 122 ) ( 941 ) —

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Net cash used in financing activities ( 758,410 ) ( 1,029,429 ) ( 2,138,386 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 313,804 523,571 ( 1,062,287 )

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 690,011 ) 313,804 523,571

Cash, cash equivalents, and restricted cash at beginning of period 1,006,880 693,076 169,505

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Interest paid on deposits and borrowings $ 333,260 $ 316,128 $ 231,765

Income taxes 18,786 65,921 41,751

Income taxes (refunded) paid ( 2,514 ) 18,786 65,921

Non-cash activities

Net increase in capital commitments relating to low income housing tax credit projects $ 8,963 $ 102,001 $ 55,233

Net increase (decrease) in operating lease right of use assets and operating lease liabilities relating to lease remeasurements 5,492 ( 3,881 ) ( 14,836 )

(1) Excludes the mark-to-market adjustment related to one commercial and industrial loan transferred to held for sale during the year ended December 31, 2023 which is included in the change in loans held for sale.

(2) Includes the repayment of FHLB advances assumed in connection with the Company’s merger with Cambridge Bancorp.

Capital commitments relating to low income housing tax credit projects $ 23,796 $ 8,963 $ 102,001

Net increase (decrease) in operating lease right of use assets and operating lease liabilities relating to lease remeasurements/modifications 2,362 5,492 ( 3,881 )

(1) Includes the repayment of FHLB advances assumed in connection with the Company’s mergers with HarborOne and Cambridge for the years ended December 31, 2025 and 2024, respectively.

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

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

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

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

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All intercompany accounts and transactions have been eliminated in consolidation.

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

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

• reclassification of escrow deposits of borrowers to savings accounts and the related interest expense from interest on borrowings to interest on deposits;

• combination of certain credit card income balances previously included in other noninterest income and debit card processing fees into a new financial statement line item titled “card income;”

• reclassification of certain mortgage banking income accounts previously included in “(losses) gains on mortgage loans held for sale, net” and in “other noninterest income” to a new financial statement line item titled “mortgage banking income (loss).”

• combination of certain non-operating income accounts previously included in other noninterest income into a new financial statement line item titled “other non-operating income;”

• combination of certain non-operating expense accounts previously included in other noninterest expense into a new financial statement line item titled “non-operating expenses;”

• reclassification of merger and acquisition expenses previously included in salaries and employee benefits, occupancy and equipment, technology and data processing, professional services, marketing, and other operating expenses into a new financial statement line item titled “non-operating expenses;” and

• reclassification of proceeds from sales of loans held for investment and loan purchases to “net increase in outstanding loans.”

Summary of Significant Accounting Policies

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

Debt securities that are bought and held principally for the purpose of resale in the near term are classified as trading securities

and recorded at fair value, with subsequent changes in fair value included in net income.

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

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

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

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

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

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

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

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

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

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

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

The Company measures expected credit losses on AFS securities on a collective basis by major security type.

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

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

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

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

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Allowance for Credit Losses - Held to Maturity Securities

The Company measures expected credit losses on HTM securities on a collective basis by major security type which, as of December 31, 2024, included government-sponsored residential and commercial mortgage-backed securities.

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

The Company measures expected credit losses on HTM securities on a collective basis by major security type which, as of December 31, 2025, included government-sponsored residential, commercial mortgage-backed securities, state and municipal bonds and obligations, and corporate debt bonds.

Government-sponsored residential and commercial mortgage-backed securities in the Company’s HTM portfolio are guaranteed by either the U.S.

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

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

State and municipal bonds and obligations and corporate debt bonds are evaluated periodically to determine if an allowance for credit losses is warranted;

however, such securities do not have a history of credit losses.

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

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Modifications of Loans to Borrowers Experiencing Financial Difficulty

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

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

The Company applies the loan refinancing and restructuring guidance codified in paragraphs 310-20-35-9 through 35-11 of the Accounting Standards Codification to determine whether a modification results in a new loan or a continuation of an existing loan.

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

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

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

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

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

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

Those commercial loans that were determined to be TDRs under previously effective accounting guidance, and which were determined to be collateral dependent, continue to be assessed for impairment on an individual basis.

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

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

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

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

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

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

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

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

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

Refer to Note 5, “Loans and Allowance for Credit Losses” for additional information regarding the Company’s measurement of the allowance for loan losses as of December 31, 2024 and 2023 and information regarding the Company’s TDR loans for the year ended December 31, 2022.

Purchased Credit-Deteriorated Loans

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

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

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

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

Expected losses or recoveries related to loans where modifications have been granted to borrowers experiencing financial difficulty have been included in the

Company’s determination of the allowance for loan losses.

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

Acquired Loans

The Company periodically acquires loans through purchases and business combinations.

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

An acquired loan that is not a PCD loan is evaluated to determine if it is a purchased seasoned loan (“PSL”).

All loans acquired in a business combination that are not PCD loans, are assessed to determine if they are PSL’s.

PCD loans and PSL’s are recorded at their purchase price plus the allowance for loan losses expected at the time of acquisition, or “gross up” of the amortized cost basis, if any.

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

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

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

Previous to the Company’s adoption of ASU 2025-08, described further below, a purchased loan that did not qualify as a PCD asset was accounted for similar to the Company’s method of accounting for originated assets, whereby an allowance for loan losses was recognized with a corresponding increase to the income statement provision for loan losses.

Allowance for Credit Losses

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

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

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

credit losses within the loan portfolio.

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

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

Refer to Note 5, “Loans and Allowance for Credit Losses” for additional information regarding the Company’s measurement of credit losses on loans receivable and off-balance sheet commitments to lend as of December 31, 2024 and 2023 and comparative loan modification information for which ASC 310, “Receivables” was applied (i.e., prior to the Company’s adoption of ASU 2022-02) for the year ended December 31, 2022.

Mortgage Banking Activities

Refer to Note 6, “Loans and Allowance for Credit Losses” for additional information regarding the Company’s measurement of credit losses on loans receivable and off-balance sheet commitments to lend.

Loans Held for Sale

Mortgage loans held for sale to the secondary market are carried at the lower of cost or estimated market value on an individual loan basis.

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Direct loan origination costs and fees are deferred upon origination and are recognized in the Consolidated Statements of Income on the date of sale.

Certain mortgage loans that are originated for sale are accounted for under the fair value option, which is elected at origination, whereby any changes in fair value relating to loans intended for sale are recorded in earnings and are offset by changes in fair value relating to interest rate lock commitments and forward sales commitments.

Gains and losses on residential loan sales are recorded in mortgage banking income.

Upfront costs and fees related to items for which the fair value option is elected are recognized in earnings as incurred and are not deferred.

Mortgage Servicing Rights

When mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with subsequent changes in fair value recorded in income through mortgage banking income.

Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income.

Under the fair value measurement method, the Company measures mortgage servicing rights (“MSRs”) at fair value at each reporting date and reports changes in fair value of servicing assets in earnings in the period in which the changes occur and are included with changes in mortgage servicing rights fair value on the Consolidated Statements of Income.

values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayments speeds and default rates and losses.

Servicing fee income, which is reported on the Consolidated Statements of Income within mortgage banking income, is recorded for fees earned for servicing loans.

The fees are based on a contractual percentage of outstanding principal;

or a fixed amount per loan and are recorded as income when earned.

Late fees and ancillary fees related to loan servicing are not material.

Other Real Estate Owned

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

equipment auction or liquidation values, income capitalization, or a combination of income capitalization and comparable sales.

The Company relies primarily on third-party valuation information from certified appraisers and values are generally based upon recent appraisals of the underlying collateral, brokers’ opinions based upon recent sales of comparable properties, estimated equipment auction or liquidation values, income capitalization, or a combination of income capitalization and comparable sales.

As of December 31, 2025 and 2024, the Company held no OREO.

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The Company evaluates goodwill for impairment at least annually, as of November 30, or more often if warranted, using a quantitative impairment approach.

Previously, the Company’s annual evaluation of its goodwill for impairment was performed on September 30 of each year.

Refer to Note 8, “Goodwill and Other Intangible Assets” for additional discussion of the change in impairment assessment date.

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

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

Contribution credits equal to a percentage of

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

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

For employees hired prior to November 1, 2020, annual contribution credits generally increase as the participant remains employed with the Company.

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Effective December 31, 2020, the Company closed the ODRCP to new participants and froze benefit accruals for active participants.

In connection with the Company’s merger with Cambridge, the Company acquired Cambridge’s post-retirement health care plan.

Benefits for the postretirement health care plan are based on years of service.

Expenses for the postretirement health care plan are recognized over the employee's service life utilizing the projected unit credit actuarial cost method.

Effective November 7, 2019, the postretirement health care plan was frozen for employees hired after that date.

The frozen health care plan is not accruing and is only in payout status.

Defined Benefit Plan assets are invested in various investment funds and held at fair value which generally represents observable market prices.

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

The overfunded or underfunded status of the plans is recorded as an asset or liability on the Consolidated Balance Sheets, with changes in that status recognized through other comprehensive income, net of related taxes.

The overfunded or underfunded status of the plans is recorded as an asset or liability on the Consolidated Balance Sheets, with changes in that

status recognized through other comprehensive income, net of related taxes.

Funded status represents the difference between the projected benefit obligation of the plan and the market value of the plan’s assets.

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The Company has an employee tax deferred incentive plan (“401(k) plan”) under which the Company makes voluntary contributions within certain limitations.

All employees who meet specified age and length of service requirements are

eligible to participate in the 401(k) plan.

All employees who meet specified age and length of service requirements are eligible to participate in the 401(k) plan.

The amount contributed by the Company is included in salaries and employee benefits expense.

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VIEs are entities that possess any of the following characteristics:

1) the total equity investment at risk is insufficient to permit the legal entity to finance its activities without additional subordinated financial support from other parties;

1) the total equity investment at risk is insufficient to permit the legal entity to finance its activities without additional subordinated financial support from other

2) as a group, the holders of the equity investment at risk lack any of the characteristics of a controlling financial interest;

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

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

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

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

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

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The Company accounts for its investments in qualified affordable housing projects using the proportional amortization method and amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits allocated to the Company.

The amortization of the excess of the carrying amount of the investment over its estimated residual value is included as a component of income tax expense.

The amortization of the excess of the carrying amount of the investment over its estimated residual

value is included as a component of income tax expense.

At investment inception, the Company records a liability for the committed amount of the investment;

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ASC 820 also establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements), and the lowest priority to unobservable inputs (Level 3 measurements).

The hierarchy gives the highest

priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements), and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are described below:

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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.

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:

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

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.

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

In April 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810):

Determining the Accounting Acquirer of a Variable Interest Entity .

The amendments in this update are intended to improve the requirements for identifying the accounting acquirer in Topic 805, Business Combinations.

The amendments in this update differ from current generally accepted accounting principles because, for certain transactions, they replace the requirement that the primary beneficiary always is the acquirer with an assessment that requires an entity to consider the factors to determine which entity is the accounting acquirer.

The amendments in this update enhance the comparability of financial statements across entities engaging in acquisition transactions effected primarily by exchanging equity interests when the legal acquiree meets the definition of a business.

Specifically, under the amendments, acquisition transactions in which the legal acquiree is a variable interest entity will, in more instances, result in the same accounting outcomes as economically similar transactions in which the legal acquiree is a voting interest entity.

The amendments in this update do not change the accounting for a transaction determined to be a reverse acquisition or a transaction in which the legal acquirer is not a business and is determined to be the accounting acquiree.

For public business entities, the amendments in ASU 2025-03 are effective for annual periods beginning after December 15, 2026 and interim periods within those annual periods.

Adoption should be done on a prospective basis.

Early adoption is permitted as of the beginning of an interim or annual reporting period.

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

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements .

The amendments in this update help clarify and refine hedge accounting requirements, including clarifications to documentation and designation in regards to hedge relationships.

The update introduces improvements to hedge accounting to better align financial reporting with the economic results of an entity's risk management activities.

Early adoption is permitted.

For public business entites, the amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods.

The Company does not expect the adoption of this standard to have a material impact on its Consolidated Financial Statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements.

The amendments in this update clarify interim disclosure requirements and the applicability of Topic 270.

The amendments in this update result in a comprehensive list of interim disclosures that are required by GAAP.

In developing the list of disclosures required by other Topics, the Board focused on identifying the interim disclosures that are currently required under GAAP.

The objective of the amendments is to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements.

The amendments in this update also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.

The intent of the disclosure principle, which is modeled after a previous SEC disclosure requirement, is to help entities determine whether disclosures not specified in Topic 270 should be provided in interim reporting periods.

The amendments in this update also clarify the applicability of Topic 270, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP.

For public business entities, the amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.

Adoption can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements.

Early adoption is permitted.

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

Relevant standards that were adopted during the year ended December 31, 2025:

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

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