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Item 7. Management’s Discussion and Analysis

2025-02-28 compared with 2024-02-28 · 120 added, 118 removed, 817 unchanged (23% of the section changed)

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All material intercompany balances and transactions have been eliminated in consolidation.

When necessary, certain amounts in prior year financial statements have been reclassified to conform to the current year’s presentation.

Certain amounts in prior year financial statements have been reclassified to conform to the current year’s presentation, including the following:

• the Company reclassified its portfolio of loans secured by owner-occupied commercial real estate to the commercial and industrial loan category to more appropriately reflect the variation in the management and underlying risk profile of such loans compared with investor-owned commercial real estate loans;

• the Company combined the presentation of “Software maintenance” and “Subscriptions” costs into “Software and subscriptions” costs within Non-interest expense within the Consolidated Statements of Income.

Previously, “Subscriptions” costs were included within “Other noninterest expenses”.

The following should be read in conjunction with the Consolidated Financial Statements and related notes.

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Any potential acquisition opportunities are evaluated for the potential to provide a satisfactory financial return as well as other criteria (ease of integration, synergies, geographical location).

On December 9, 2024, the Company announced the signing of a definitive merger agreement with Enterprise Bancorp, Inc.

(“Enterprise”), which is currently expected to close in the second half of 2025.

The closing of the Enterprise acquisition is subject to certain conditions including approval of the transaction by Enterprise shareholders, receipt of required regulatory approvals, and other customary conditions.

Net income for the year ended December 31, 2024 was $192.1 million, or $4.52 on a diluted earnings per share basis, as compared to $239.5 million, or $5.42, on a diluted earnings per share basis for the year ended December 31, 2023, representing decreases of 19.8% and 16.6%, respectively.

Full year 2023 operating net income was also $239.5 million, or $5.42, on a diluted earnings per share basis, as no adjustments were recognized, while full year 2022 operating results reflect pre-tax merger and acquisition-related costs of $7.1 million associated with the fourth quarter 2021 acquisition of Meridian Bancorp, Inc.

("Meridian") and its subsidiary, East Boston Savings Bank.

Excluding these merger and acquisition-related costs, operating net income was $268.9 million, or $5.80 on a diluted per share basis for the year ended December 31, 2022, representing decreases of 10.9% and 6.6%, respectively.

Financial results for 2024 also reflected pre-tax merger-related costs of $1.9 million associated with the Company’s pending acquisition of Enterprise.

Excluding these merger-related costs and the related tax effects, full year 2024 operating net income was $193.4 million, or $4.55, on a diluted earnings per share basis.

No such adjustments were included in the Company’s full year 2023 results.

See “Non-GAAP Measures” below for a reconciliation of non-GAAP measures.

Full year 2024 results reflected the following key drivers:

• Net interest margin increased by 8 basis points as compared to the full year 2022;

• Disciplined loan growth;

• Stable asset quality;

• Net interest margin compression of 26 basis points as compared to the full year 2023;

• Loan growth of 1.6%;

• Deposit growth of 3.0%;

• Provision for credit loss primarily impacted by loss exposure in the commercial portfolios;

• Strong fee income;

• Prudent expense management;

54% efficiency ratio for the year;

• Strong tangible book value growth of 7.3%;

• Robust capital levels;

Company active under two authorized stock buyback programs, repurchasing 2.9 million shares for $189 million during the year.

with wealth assets under administration surpassing the $7.0 billion mark;

• Focused expense management;

• Strong capital levels, with tangible book value growth of $2.83 for the year.

Interest-Earning Assets

The results depicted in the following table reflect the trend of the Company’s interest-earning assets over the past five years and reflect a longer term overall strategy that typically emphasizes loan growth commensurate with overall economic growth.

Compared to the prior year, the composition of interest-earnings assets at December 31, 2023 primarily reflects growth in the residential real estate loan portfolio, decreased securities balances reflecting paydowns, calls and maturities, and also reduced cash balances commensurate with deposit balance reductions.

Compared to the prior year, the composition of interest-earning assets at December 31, 2024 primarily reflects growth in the residential real estate and commercial loan portfolios, as well as decreased securities balances reflecting paydowns, calls and maturities.

The following table summarizes the Company’s average interest-earning assets for each year presented:

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The Company’s overall sources of funding reflect strong business and retail deposit growth with a management emphasis on core deposit growth to fund loans.

Total borrowings increased by $1.1 billion at December 31, 2023 as compared to December 31, 2022, primarily in response to deposit balance reductions and to fund the Company's stock buyback activity.

In conjunction with deposit growth, total borrowings decreased by $517.0 million at December 31, 2024 as compared to December 31, 2023, driven by a reduction in Federal Home Loan Bank borrowings, along with the full redemption of $50.0 million in subordinated debentures during the first quarter of 2024.

For further details surrounding the Company’s liquidity risks and related strategy, see “Risk Management – Liquidity Risk” section below within Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations within this Report.

The following chart shows the sources of funding for the trailing five years:

The Company's ratio of core deposits to total deposits decreased during 2023, primarily attributable to core deposit outflows in conjunction with existing deposit balances shifting into higher cost time deposits.

The following chart shows the period end balances of the Company’s funding sources for each of the trailing five years:

The Company’s ratio of core deposits to total deposits decreased during 2023 and 2024, primarily attributable to the broader industry demand shift from core deposits to higher yielding time deposits.

The following chart shows the percentage of core deposits to total deposits for the trailing five years:

(1) The percentage of core deposits to total deposits presented above is inclusive of reciprocal money market deposits collected through the Company’s participation in the IntraFi Network.

The following table shows the net interest margin and cost of deposits trends for the trailing five year period:

The following table shows the net interest margin and cost of deposits trends for the trailing five year period, reflecting the 2024 impact from overall increases in deposit rates and the correlating direct impact on net interest margin:

Noninterest Income

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Cash dividends declared by the Company increased from an aggregate of $2.20 per share in 2023 to $2.28 per share in 2024, representing an increase of 3.6%.

During the first quarter of 2023, the Company repurchased 1.6 million shares of its common stock for $120.0 million at an average price of $74.18, marking the full completion of its stock repurchase program announced in October 2022.

Additionally, in consideration of the Company's strong capital position, the Company announced another stock repurchase plan in October 2023 which authorized repurchases by the Company of up to $100 million in common stock.

Under this new plan, the Company repurchased an additional 1.3 million shares of common stock for $69.0 million at an average price per share of $53.73 during the fourth quarter of 2023.

During the first quarter of 2024, the Company repurchased 532,266 shares of its common stock for $31.0 million at an average price per share of $58.22, marking the completion of a $100 million buyback program announced in October 2023.

Non-GAAP Measures

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These non-GAAP measures should not be viewed as a substitute for financial results determined in accordance with GAAP.

An item which management deems to be noncore and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular period.

An item which management deems to be noncore and excludes when computing these non-GAAP measures can be of

substantial importance to the Company’s results for any particular period.

The Company’s non-GAAP performance measures are not necessarily comparable to similarly named non-GAAP performance measures which may be presented by other companies.

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(Dollars in thousands)

Net interest income $ 606,521 $ 613,249 $ 401,559 $ 367,728 $ 393,135 (a)

Net interest income (GAAP) $ 561,729 $ 606,521 $ 613,249 $ 401,559 $ 367,728 (a)

Noninterest income (GAAP) $ 128,014 $ 124,609 $ 114,667 $ 105,850 $ 111,440 (b)

Gain on sale of loans — — — — 951

Noninterest income on an operating basis (non-GAAP) $ 124,609 $ 114,667 $ 105,850 $ 111,440 $ 114,343 (c)

Noninterest expense (GAAP) $ 392,746 $ 373,662 $ 332,529 $ 273,832 $ 284,321 (d)

Noninterest expense (GAAP) $ 406,366 $ 392,746 $ 373,662 $ 332,529 $ 273,832 (c)

Loss on termination of derivatives — — — — 684

Merger and acquisition expenses 1,902 — 7,100 40,840 —

Noninterest expense on an operating basis (non-GAAP) $ 392,746 $ 366,562 $ 291,689 $ 273,148 $ 257,888 (e)

Noninterest expense on an operating basis (Non-GAAP) $ 404,464 $ 392,746 $ 366,562 $ 291,689 $ 273,148 (d)

Total revenue (GAAP) $ 689,743 $ 731,130 $ 727,916 $ 507,409 $ 479,168 (a+b)

Total operating revenue (non-GAAP) $ 731,130 $ 727,916 $ 507,409 $ 479,168 $ 507,478 (a+c)

Noninterest income as a % of total revenue (GAAP) (calculated by dividing total noninterest income by total revenue) 18.56 % 17.04 % 15.75 % 20.86 % 23.26 % (b/(a+b))

Noninterest income as a % of total revenue on an operating basis (Non-GAAP) (calculated by dividing total noninterest income on an operating basis by total revenue) 17.04 % 15.75 % 20.86 % 23.26 % 22.53 % (c/(a+c))

Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue) 53.72 % 51.33 % 65.53 % 57.15 % 55.92 % (d/(a+b))

Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue) 53.72 % 50.36 % 57.49 % 57.00 % 50.82 % (e/(a+c))

Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue) 58.92 % 53.72 % 51.33 % 65.53 % 57.15 % (c/(a+b))

Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue) 58.64 % 53.72 % 50.36 % 57.49 % 57.00 % (d/(a+b))

The following table summarizes the calculation of the Company’s tangible common equity ratio and tangible book value per share for the periods indicated:

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government agency securities, agency mortgage-backed securities, agency collateralized mortgage obligations, and small business administration pooled securities.

Also included in the Company's security portfolio are trading and equity securities related to certain employee benefit programs.

Also included in the Company’s securities portfolio are trading and equity securities related to certain employee benefit programs.

The majority of these securities are investment grade debt obligations with average lives of five years or less.

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Interest and principal payments generated from securities provide a source of liquidity to fund loans and meet short-term cash needs.

Total securities decreased by $198.4 million, or 6.3%, at December 31, 2023 as compared to December 31, 2022, primarily reflecting the impact of paydowns, calls, and maturities, partially offset by unrealized gains of $42.0 million related to the available for sale portfolio.

Total securities decreased by $219.5 million, or 7.5%, at December 31, 2024 as compared to December 31, 2023, as new purchases of $130.4 million and $22.6 million in unrealized gains related to the available for sale portfolio were offset by calls, paydowns, and maturities.

The ratio of securities to total assets decreased to 14.0% at December 31, 2024 as compared to 15.1% at December 31, 2023.

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State, county, and municipal securities — 3.0 % — — 3.0 %

Single issuer trust preferred securities issued by banks — — — 3.7 % 3.7 %

Pooled trust preferred securities issued by banks and insurers — — — 5.1 % 5.1 %

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Securities held to maturity:

government agency securities:

0.5 % — — — 0.5 %

treasury securities — 1.3 % 1.5 % — 1.3 %

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Agency collateralized mortgage obligations — 2.5 % 1.1 % 1.6 % 1.7 %

Single issuer trust preferred securities issued by banks — 8.3 % — — 8.3 %

Small business administration pooled securities — — 2.5 % 4.1 % 4.0 %

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The Company incurred no material losses related to mortgage repurchases during the years ended December 31, 2024, 2023, and 2022.

The Company experienced a lower volume of residential real estate loan sales for the years ended December 31, 2023 and 2022, as compared to 2021, driven primarily by reduced customer demand in the rising interest rate environment.

The Company experienced a lower volume of residential real estate loan sales for the years ended December 31, 2024 and 2023, as compared to 2022, driven primarily by reduced customer demand in the higher interest rate environment.

The following table shows the total residential loans that were closed and whether the amounts were held in the portfolio or sold (or held for sale) in the secondary market for the periods indicated:

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Total closed loans $ 462,040 $ 592,656 $ 773,695

Additionally, during the years ended December 31, 2023 and 2022, a larger portion of new residential real estate closings were retained in the portfolio rather than sold into the secondary market as compared to prior year periods driven mainly by the current interest-rate environment.

During 2024, a larger portion of new originations were sold in the secondary market versus retained in the Company’s portfolio as compared to the same prior year periods, reflecting the Company’s strategy to shift its residential production to the saleable market.

When a loan is sold, the Company may decide to also sell the servicing of sold loans for a servicing release premium, simultaneously with the sale of the loan, or the Company may opt to sell the loan and retain the servicing.

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Loan Portfolio The Company’s loan portfolio at December 31, 2024 increased by $230.3 million, or 1.6%, when compared to December 31, 2023.

Loan growth was driven primarily by strong consumer real estate activity in 2023, with the majority of residential real estate originations retained on the balance sheet, leading to an increase of $389.2 million, or 19.1%, within the residential portfolio.

Total commercial loans decreased by $45.8 million, or 0.4% compared to December 31, 2022, reflecting disciplined origination activity and decreased line utilizations as compared to prior year.

Total commercial loans increased by $145.2 million, or 1.4%, fueled primarily by the commercial and industrial portfolio, which increased by $121.8 million, or 4.2%, along with steady growth in the small business portfolio, which increased by $29.8 million, or 11.8%, during the period, while the combined commercial real estate and construction portfolios remained relatively flat.

The total consumer portfolio increased $85.1 million, or 2.4%, reflecting solid growth in both the home equity and residential real estate portfolios, which increased by $42.5 million, or 3.9%, and $35.8 million, or 1.5%, respectively.

The following table sets forth information concerning the composition of the Bank’s loan portfolio by loan type at the dates indicated:

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Nonperforming assets as a percent of total assets 0.52 % 0.28 %

(1) Nonaccrual balances at December 31, 2022 included $11.5 million of nonaccruing TDRs.

The following table summarizes the changes in nonperforming assets for the periods indicated:

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Loans transferred to other real estate owned/other assets — (110)

Loans restored to accrual status (4,994) (7,652)

Loans restored to performing status (12,576) (4,994)

New to other real estate owned — 110

Sale of other real estate owned (110) —

Nonperforming assets ending balance $ 101,529 $ 54,493

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The allowance is increased by providing for credit losses through a charge to expense and by credits for recoveries of loans previously charged-off and is reduced by loans being charged-off.

In accordance with the CECL methodology, the Company estimates credit losses for financial assets on a collective basis for loans sharing similar risk characteristics 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.

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

Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period of one year, beyond which is a reversion to the Company's historical long-run average for a period of six months.

The Company's qualitative assessment is structured based upon nine environmental factors impacting the expected risk of loss within the loan portfolio, with an additional factor designed to capture model imprecision.

In accordance with its Allowance for Credit Losses Program, the Company uses the Current Expected Credit Losses (or “CECL”) model methodology to estimate credit losses for financial assets on a collective basis for loans sharing similar risk characteristics 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.

The model estimates expected credit losses using loan level data over the contractual life of the exposure, which is adjusted for estimated prepayments.

Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period of one year, beyond which is a reversion to the Company’s historical long-run average over a period of six months.

The Company’s qualitative assessment is structured based upon nine qualitative risk factors impacting the expected risk of loss within the loan portfolio, with an additional factor

designed to capture model imprecision.

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

For the loans that will be individually assessed, the Company uses either a discounted cash flow (“DCF”) approach

or a fair value of collateral approach.

For the loans that will be individually assessed, the Company uses either a discounted cash flow approach or a fair value of collateral approach.

The latter approach is used for loans deemed to be collateral dependent or when foreclosure is probable.

Management’s allowance for credit loss estimate incorporates an economic forecast over a reasonable and supportable period of 12 months.

As of December 31, 2023, the forecast selected by management assumes that the Federal Reserve will begin easing rates gradually in mid-2024, inflation will return to 2% target by the end of 2024, job growth will slow in 2024 with unemployment peaking at 4.1%, home prices will decline slightly in 2024, and that prices for office real estate will generally decrease as uncertainty over occupancy and operating cash flows persists.

Additionally, the allowance for credit losses is qualitatively adjusted on a quarterly basis in order to ensure coverage for relationships that are deemed to be more at risk within certain industries, specific collateral types, or other specific characteristics that may be highly impacted by the current economic environment.

As of December 31, 2024, the forecast selected by management assumes that the Federal Reserve will make two 25 basis point cuts to the policy rate in 2025 and gradually reduce rates to a neutral level of 3% by late 2026, that progress toward inflation normalization will be slowed as a result of expected fiscal, tariff and immigration policies implemented by the new U.S.

presidential administration, and that the 10-year treasury yield will remain elevated near 4% through 2025 and will only gradually decline by the end of the decade.

Additionally, the allowance for credit losses is qualitatively adjusted on a quarterly basis in order to ensure coverage for relatio nships that are deemed to be more at risk within certain industries, specific collateral types, or other specific characteristics that may be highly impacted by the current economic environment.

The following table summarizes the ratio of net charge-offs to average loans outstanding within each major loan category for the periods presented:

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(Dollars in thousands)

December 31, 2023

Year Ended December 31, 2024

Commercial and industrial $ 5,804 $ 2,980,286 0.19 %

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Total $ 8,488 $ 14,362,280 0.06 %

December 31, 2022

Year Ended December 31, 2023

Commercial and industrial $ 23,419 $ 3,026,327 0.77 %

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Total $ 33,447 $ 14,084,113 0.24 %

December 31, 2021

Year Ended December 31, 2022

Commercial and industrial $ (49) $ 2,886,383 — %

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To determine if a loan should be charged-off, all possible sources of repayment are analyzed.

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

Possible sources of repayment include the potential for future cash flows, the value of the Bank’s collateral, and the strength of co-makers or guarantors, if applicable.

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

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For additional information regarding the Bank’s allowance for credit losses, see Note 1, “Summary of Significant Accounting Policies” and Note 3, “Loans, Allowance for Credit Losses and Credit Quality” within the Notes to the Consolidated Financial Statements included in Item 8 of this Report.

Federal Home Loan Bank Stock The Federal Home Loan Bank ("FHLB") is a cooperative that provides services to its member banking institutions.

Federal Home Loan Bank Stock The FHLB is a cooperative that provides services to its member banking institutions.

The primary reason for the FHLB of Boston membership is to gain access to a reliable source of wholesale funding as a tool to manage liquidity and interest rate risk.

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The Company views the holdings as a necessary long-term investment for the purpose of balance sheet liquidity and not for investment return.

The Company's investments in FHLB of Boston stock increased to $43.6 million at December 31, 2023 compared to $5.2 million at December 31, 2022, reflecting a net increase in FHLB borrowings of $1.1 billion during the year ended 2023.

Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets were $1.0 billion at both December 31, 2023 and December 31, 2022.

The Company’s investments in FHLB of Boston stock decreased to $31.6 million at December 31, 2024 compared to $43.6 million at December 31, 2023, reflecting reduced levels of outstanding FHLB borrowings, which decreased by $467.0 million, or 42.2%, from $1.1 billion at December 31, 2023 to $638.5 million at December 31, 2024, largely attributable to growth in deposit balances experienced during 2024.

Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets were $997.4 million and $1.0 billion at December 31, 2024 and December 31, 2023.

The Company typically performs its annual goodwill impairment testing during the third quarter of the year, unless certain indicators suggest earlier testing to be warranted, using a combined qualitative and quantitative approach.

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The Company’s annual impairment test was performed as of August 31, 2024 using a quantitative impairment test which leveraged a combination of income and market valuation approaches to determine the implied fair value of the reporting unit.

The income valuation approach utilized a discounted cash flow analysis, while the market approach utilized a guideline public company approach whereby market multiples were derived from market prices of stocks of public companies that are engaged in the same or similar lines of business.

The results of the annual assessment determined that the Company’s goodwill was not impaired, however the fair value of its reporting unit was in excess of its carrying value by less than 10%, indicating that goodwill may be at risk of impairment.

The income valuation approach utilized a discounted cash flow analysis, while the market approach utilized a combination of the guideline public company and comparative transactions approaches, whereby market multiples used to estimate fair values were derived from market stock prices of, and comparable transactions announced by public companies that are engaged in the same or similar lines of business.

The results of the annual assessment determined that the Company’s goodwill was not impaired and that the fair value of its reporting unit was in excess of its carrying value by greater than 10%.

Events or circumstances that could negatively impact the fair value of the Company’s reporting unit in the future include a sustained decrease in the Company’s stock price, continued decline in industry peer multiples, and further deterioration of the Company’s financial projections.

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The Company recorded tax exempt income from life insurance policies in the amounts of $8.1 million, $7.9 million, and $7.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The Company also recorded gains on life insurance benefits of $2.3 million, $1.3 million, and $258,000 for the years ended December 31, 2023, 2022 and 2021, respectively.

Deposits At December 31, 2023, total deposits were $14.9 billion, representing a decrease of $1.0 billion, or 6.4% compared to December 31, 2022, primarily reflective of industry wide dislocations occurring during the first quarter of 2023, coupled with an overall competitive rate environment and a redeployment of customer excess liquidity due to inflation and other factors.

The total cost of deposits was 0.96% for the year ended December 31, 2023, representing an increase from the prior year of 81 basis points, fueled primarily by the higher rate environment driven by the Federal Reserve's rate hikes over the latter half of 2022 and 2023.

The Company also recorded gains on life insurance benefits of $457,000, $2.3 million, and $1.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Deposits At December 31, 2024, total deposits were $15.3 billion, representing a $440.4 million, or 3.0% increase compared to $14.9 billion at December 31, 2023, reflecting continued consumer demand for higher cost time deposits, along with strong business and municipal deposit inflows.

The total cost of deposits was 1.63% for the year ended December 31, 2024, representing an increase of 67 basis points from the prior year, reflecting an overall higher rate environment in 2024 as compared to the prior year.

The Company’s deposits are comprised primarily of core deposits (demand, savings and money market), as well as time deposits.

The Company's ratio of core deposits, inclusive of reciprocal money market deposits, to total deposits represented 84.6% at December 31, 2023 compared to 91.8% at December 31, 2022, with the 2023 decrease driven primarily by core deposit outflows in conjunction with growth in higher yielding time deposits.

The Company’s ratio of core deposits, inclusive of reciprocal money market deposits, to total deposits represented 81.7% at December 31, 2024 compared to 84.6% at December 31, 2023, with the decrease driven primarily by core deposit outflows in conjunction with growth in time deposits.

In addition, the Company may also utilize brokered deposit sources, as needed, with balances of $61.2 million and $100.9 million outstanding at December 31, 2024 and December 31, 2023, respectively.

The Company's deposit accounts are insured to the maximum extent permitted by the Deposit Insurance Fund which is administered by the Federal Deposit Insurance Corporation ("FDIC").

The Company’s deposit accounts are insured to the maximum extent permitted by the Deposit Insurance Fund (“DIF”) which is administered by the Federal Deposit Insurance Corporation (“FDIC”).

The FDIC offers insurance coverage on deposits up to the federally insured limit of $250,000.

The Company participates in the IntraFi Network, allowing it to provide easy access to multi-million dollar FDIC deposit insurance protection on certificate of deposit and money market investments for consumers, businesses and public entities.

This channel allows the Company to access a reciprocal deposit exchange that can be used to benefit customers seeking increased FDIC insurance protection, and amounted to $959.1 million and $653.6 million in deposits, at December 31, 2023 and December 31, 2022, respectively.

The Company participates in the IntraFi Network, allowing it to provide

easy access to multi-million dollar FDIC deposit insurance protection on certificate of deposit and money market investments for consumers, businesses and public entities.

This channel allows the Company to access a reciprocal deposit exchange that can be used to benefit customers seeking increased FDIC insurance protection, and amounted to $1.1 billion and $959.1 million in deposits, at December 31, 2024 and December 31, 2023, respectively.

The estimated balance of uninsured deposits at the Bank were $5.0 billion and $4.6 billion as of December 31, 2024 and December 31, 2023, respectively.

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

Borrowings increased by $1.1 billion, or 974.6%, at December 31, 2023, as compared to December 31, 2022, due primarily to deposit outflows experienced during 2023 as well as to fund stock buyback activity during the fourth quarter of 2023.

Borrowings were $701.4 million at December 31, 2024, representing a decrease of $517.0 million, compared to December 31, 2023.

The decrease was experienced primarily within Federal Home Loan Bank borrowings, which decreased $467.0 million in conjunction with deposit balance growth during 2024.

In addition, the Company fully redeemed its outstanding subordinated debentures with an aggregate principal amount of $50.0 million during the first quarter of 2024.

See Note 7, “Borrowings” within the Notes to Consolidated Financial Statements included in Item 8 of this Report for more information regarding borrowings.

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The liquidity position of the Company is continuously monitored by management and adjustments are made to appropriately balance sources and uses of funds, as needed.

In response to the banking industry turmoil experienced during the year, management took immediate actions during the first quarter by proactively borrowing under its existing FHLB capacity to increase on balance sheet liquidity, as well as pledging additional assets to increase overall off balance sheet liquidity.

For further details surrounding the Company’s liquidity risks and related strategy, see the “ Risk Management – Liquidity Risk” section below within Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations within this Report.

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The Investment Management Group generated gross fee revenues of $38.3 million, $34.6 million, and $32.8 million for the years ended December 31, 2024, 2023, and 2022, respectively.

assets under administration as of December 31, 2023 were $6.5 billion, including $622.9 million of investment solutions designed by Rockland Trust that are administered and executed through its agreement with LPL Financial ("LPL"), compared to $5.8 billion and $603.7 million, respectively, at December 31, 2022.

Total assets under administration as of December 31, 2024 were $7.0 billion, including $418.2 million of investment solutions designed by Rockland Trust that are administered and executed through its agreement with LPL Financial (“LPL”), compared to $6.5 billion and $383.0 million, respectively, at December 31, 2023.

The Company also has a subsidiary that is a registered investment advisor, Bright Rock Capital Management, LLC, which provides institutional quality investment management services to both institutional and high net worth clients.

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On a fully tax-equivalent basis, net interest income was $566.5 million for the year ended December 31, 2024, representing a 7.3% decrease from net interest income of $611.0 million for the year ended December 31, 2023.

The 2024 decrease in net interest income was attributable to rising deposit costs, resulting in a 26 basis point reduction in net margin to 3.28%, as compared to 3.54% for the prior year.

The following table presents the Company’s average balances, net interest income, interest rate spread, and net interest margin for the years ended December 31, 2024, 2023 and 2022.

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Provision For Credit Losses The provision for credit losses represents the charge to expense that is required to maintain an adequate level of allowance for credit losses.

The Company's provision for credit losses totaled $23.3 million, $6.5 million and $18.2 million for the years ended December 31, 2023, 2022, and 2021, respectively.

The provision for credit losses for the years ended December 31, 2023, 2022, and 2021, respectively has been driven primarily by idiosyncratic events within the commercial portfolios.

The Company recorded a provision for credit losses $36.3 million, $23.3 million and $6.5 million for the years ended December 31, 2024, 2023, and 2022, respectively, primarily attributable to idiosyncratic events within the commercial portfolios.

The Company’s allowance for credit losses, as a percentage of total loans, was 1.17%, 1.00% and 1.09% at December 31, 2024, 2023 and 2022, respectively.

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The primary reasons for significant variances in the noninterest income categories shown in the preceding table are noted below:

• Interchange and ATM fees increased year over year due primarily to higher debit card service charges driven by increased transaction volume.

• Investment management revenue increased due in part to growth in overall assets under administration, which increased from $5.8 billion at December 31, 2022 to $6.5 billion at December 31, 2023, reflecting healthy new asset inflows and increased market valuations, as well as due to higher retail and insurance commission income recognized during 2023.

• Mortgage banking income decreased in comparison to the prior year, primarily attributable to overall reduced saleable volumes as a result of the rising interest rate environment in 2023.

• Gain on life insurance benefits was higher in 2023 due to elevated proceeds on life insurance policies received in comparison to the prior year.

• The changes in loan level derivative income primarily reflect customer demand during the respective periods.

• Other noninterest income increased during the year, primarily due to increases in FHLB dividend income, unrealized gains on equity securities, outsized loan fees, and discounted purchases of Massachusetts historical tax credits, partially offset by decreases in gains on sales of fixed assets, equity capital gain distributions, and income from like-kind exchanges.

• Deposit account fees increased year-over-year due primarily to increased overdraft and cash management fees.

• Interchange and ATM fees increased year-over-year due to transaction volumes.

• Investment management and advisory income increased year-over-year, driven largely by higher levels of assets under administration, which increased by $497.4 million, or 7.6%, from $6.5 billion at December 31, 2023 to $7.0 billion at December 31, 2024.

This increase was partially offset by lower insurance commissions recognized in 2024 as compared to 2023.

• Mortgage banking income increased year-over-year, driven by a greater portion of new originations being sold in the secondary market versus being retained in the Company’s portfolio in 2024.

• Gain on life insurance benefits decreased year-over-year as the Company received lower levels of proceeds on life insurance policies.

• Loan level derivative decreased year-over-year, reflecting fluctuations in customer demand fueled by changes in the macroeconomic environment.

• Other noninterest income decreased year-over-year, driven primarily by a $1.9 million decrease in discounted purchases of Massachusetts historical tax credits, lower commercial loan fees, and reduced unrealized gains on equity securities.

These decreases were partially offset by increases in FHLB dividend income and equity capital gain distributions.

Noninterest Expense The following table sets forth information regarding noninterest expense for the periods shown:

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Data processing and facilities management 9,957 9,884 73 0.7 %

Software maintenance 13,115 10,961 2,154 19.7 %

Software and subscriptions 18,152 16,165 1,987 12.3 %

FDIC assessment 10,892 11,953 (1,061) (8.9) %

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Amortization of intangible assets 5,905 6,878 (973) (14.1) %

Merger & acquisitions — 7,100 (7,100) (100.0) %

Merger and acquisition expense 1,902 — 1,902 (100.0) %

Other noninterest expense 60,078 57,192 2,886 5.0 %

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The primary reasons for significant variances in the noninterest expense categories shown in the preceding tables are noted below:

• The increase in salaries and employee benefits in comparison to the prior year was primarily attributable to non-recurring CEO transition expenses incurred during the first quarter of 2023, as well as increases in general salaries, equity compensation, severance and medical plan insurance, partially offset by decreases in incentive programs and payroll taxes.

• Occupancy and equipment expense increased year-over-year, primarily driven by costs associated with the Company's leased real estate, including one-time lease exit costs associated with two leased locations related to the 2021 Meridian acquisition, as well as increased utilities costs, partially offset by reduced snow removal costs as compared to the prior year.

• Data processing and facilities management expenses increased primarily due to the timing of certain initiatives and general increases associated with higher transaction volumes.

• Software maintenance increased primarily due to the Company's continued investment in its technology infrastructure.

• FDIC assessment expense increased in comparison to the prior year due an increased assessment base as well as an estimated $1.1 million special assessment based on rules implemented by the FDIC to recover losses incurred by the Deposit Insurance Fund in 2023.

• Salaries and employee benefits increased year-over-year primarily attributable to increases in general salaries of $7.6 million, medical plan insurance of $2.0 million, payroll taxes of $1.9 million and incentive programs of approximately $860,000.

These increases were partially offset by the impact of outsized interest rate-driven valuation fluctuations on the Company’s split-dollar bank-owned life insurance policies, which resulted in a $1.0 million decrease in expense for 2024 as compared to 2023.

• Occupancy and equipment expense increased year-over-year, driven primarily by lease termination costs related to the exit of an inactive branch location associated with a previous acquisition, as well as increased cleaning costs and depreciation expense.

• Software and subscriptions increased primarily due to the Company’s continued investment in its technology infrastructure.

• FDIC assessment expense decreased in comparison to the prior year, primarily attributable to an estimated $1.1 million special assessment imposed by the FDIC and recognized by the Company in the fourth quarter of 2023 to recover losses incurred by the DIF during the year.

• Debit card expenses decreased year-over-year, driven primarily by a one-time credit of $1.1 million recognized during the third quarter of 2024, as well as reduced processing costs.

• Consulting expense decreased year-over-year due primarily to the timing of strategic initiatives.

• The Company incurred merger and acquisition costs related to the Meridian acquisition of $7.1 million during the first quarter of 2022, primarily related to lease terminations associated with exited branch locations, along with additional integration costs and professional fees.

• During the fourth quarter of 2024, the Company recognized $1.9 million of merger and acquisition expenses related to the pending merger with Enterprise.

No such costs were incurred during 2023.

• Other noninterest expenses increased year-over year due primarily to increased interest paid on cash collateral accounts, loan workout costs, sponsorships, and internet banking costs, partially offset by decreases in unrealized losses on equity securities, telecommunications costs, and mortgage operations expense.

• Other noninterest expenses increased year-over year, driven primarily by increases in internet banking expense of $1.1 million, telecommunications costs of $762,000, card issuance costs of $599,000, unrealized losses on equity securities of $543,000, examinations and audits of $323,000, along with other miscellaneous expenses.

These increases were partially offset by decreases in recruitment and legal costs.

Income Taxes The tax effect of all income and expense transactions is recognized by the Company 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 27.91 % 27.91 % 27.85 %

The Company’s effective tax rate for 2023 is lower as compared to the year ago period primarily due to lower pre-tax net income, as well as the impact of discrete items, such as provision to return adjustments, changes in uncertain tax positions, and excess benefits from equity compensation, which are subject to fluctuation year over year.

The effective tax rates reported in the table above are lower than the blended statutory tax rates due to the aforementioned discrete items as well as certain tax preference assets such as life insurance policies, tax exempt bonds, and federal tax credits.

Additionally, the Company invests in various low-income housing projects which are real estate limited partnerships that acquire, develop, own and operate low and moderate-income housing developments.

As a limited partner in these operating partnerships, the Company receives tax credits and tax deductions for losses incurred by the underlying properties.

The Company’s effective tax rate for 2024 is lower as compared to the year ago period primarily due to lower pre-tax income as well as increased tax benefits from low-income housing tax credits.

The effective tax rates in the table above are lower than the blended statutory tax rates due to the impact of discrete items, including tax benefits related to equity compensation and purchased state tax credits, as well as certain tax preference assets such as life insurance policies, tax exempt bonds, and federal tax credits.

The Company invests in various low income housing projects, which are real estate limited partnerships that acquire, develop, own and operate low and moderate-income housing developments.

As a limited partner in these operating partnerships, the Company will receive tax credits and tax deductions for losses incurred by the underlying properties.

The investments are accounted for using the proportional amortization method and will be amortized over various periods through 2043, which represents the period that the tax credits and other tax benefits will be utilized.

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Risk Management

The Board of Directors has approved an Enterprise Risk Management Policy to state the Company’s goals and objectives in identifying, measuring, and managing the risks associated with the Company’s current and near future anticipated size and complexity.

The Board of Directors has approved an Enterprise Risk Management Policy and Risk Appetite Statement to state the Company’s goals and objectives in identifying, measuring, and managing the risks associated with the Company’s current and near future anticipated size and complexity.

Management is responsible for comprehensive enterprise risk management, and continually strives to adopt and implement practices that strike an appropriate balance between risk and reward and permit the achievement of strategic goals in a controlled environment.

The Company has implemented the “three lines of defense” enterprise risk management model.

The Company has implemented the “three lines of defense” enterprise risk management framework.

The first line of defense are the executives in charge of business units, operational areas, and corporate functions who, sometimes assisted by management committees, teams, and working groups, own and manage risks.

The second line of defense monitors and provides risk management advice across all risk domains, and is comprised of the enterprise risk department, with oversight from the Chief Risk Officer.

The second line of defense monitors and provides risk management advice across all risk domains, and is comprised of the enterprise risk management department, with oversight from the Chief Risk Officer.

The third line of defense is independent assurance performed by the Chief Internal Auditor, who reports to the Audit Committee of the Company’s Board of Directors, and by the Company’s internal audit department.

The Board of Directors, with the assistance of its Risk Committee, oversees management’s enterprise risk management practices.

The Board, with the assistance of its Risk Committee, oversees management’s enterprise risk management practices.

As risks must be taken to create value, the Board of Directors has approved a Risk Appetite Statement that defines the acceptable residual risk tolerances for the Company and the nine major risk types identified as having the potential to create significant adverse impacts on the Company, such as financial losses, reputational damage, legal or regulatory actions, failure to achieve strategic objectives, diminished customer experience, and/or cultural erosion.

The nine major risk categories identified by the Company and addressed in the Risk Appetite Statement are strategic and emerging risk, culture risk, credit risk, liquidity risk, interest rate risk, operational risk, reputation risk, compliance risk, and technology risk, each of which is discussed below.

The nine major risk categories identified by the Company and addressed in the Risk Appetite Statement are strategic and emerging risk, culture risk, credit risk, liquidity risk, market and interest rate risk, operational risk, reputation risk, compliance risk, and technology and cyber risk, each of which is discussed below.

Strategic and Emerging Risk Strategic and emerging risk is the risk arising from adverse strategic or business decisions, misalignment of strategic direction with the Company’s mission and values, failure to execute strategies or tactics, or an inadequate adaptation or lack of responsiveness to industry and/or operating environment changes.

Management seeks to mitigate strategic risk through strategic planning, frequent executive review of strategic plan progress, monitoring of competitors and technology, assessment of new products, new branches, and new business initiatives, customer advocacy, and crisis management planning.

Culture Risk Culture risk is the risk arising from failed leadership and/or ineffective colleague engagement and workplace management that causes the Company to lose sight of core values and, through acts or omissions, damage the relationship-based culture that has been one of the foundations of the Company’s consistent success.

Management seeks to mitigate culture risk through effective employee relations, leadership that encourages continuous improvement, cultural development and reinforcement of core values, communication of clear ethical and behavioral standards, consistent enforcement of policies and programs, discipline of misbehavior, alignment of incentives and compensation, and by promoting diversity, equity, and inclusion.

Management seeks to mitigate strategic and emerging risk through strategic planning, frequent executive review of strategic plan progress, monitoring of competitors and technology, assessment of new products, new branches, and new business initiatives, customer advocacy, and crisis management planning.

Credit Risk Credit risk is the risk arising from the failure of a borrower or a counterparty to a contract to make payments as agreed and includes the risks arising from inadequate collateral and mismanagement of loan concentrations.

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The amount and type of assets that the Company has available to pledge affects the Company’s FHLB and Federal Reserve borrowing capacity.

For example, a prime one-to-four family residential loan may provide 75 cents of borrowing capacity for every $1.00 pledged, whereas a pledged commercial loan may increase borrowing capacity in a lower amount.

For example, a prime one-to-four family residential loan may provide 75 cents of borrowing capacity for every $1.00 pledged, whereas a pledged commercial loan may

increase borrowing capacity in a lower amount.

The Company’s lending decisions, therefore, can also affect its liquidity position.

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Unpledged securities — 564,676 — 1,187,882

Line of Credit — 85,000 — 85,000

Federal Funds Lines of Credit — 50,000 — 85,000

Junior subordinated debentures (3) 62,860 — 62,858 —

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$ 1,825,506 $ 6,242,483 $ 2,278,370 $ 5,928,807

(1) Assets with a carrying value of $3.9 billion and $2.7 billion at December 31, 2023 and 2022, respectively, were pledged to the Federal Home Loan Bank of Boston.

(2) Loans with a carrying value of $4.6 billion and $1.7 billion at December 31, 2023 and 2022, respectively, were pledged to the Federal Reserve Bank of Boston.

(1) Loans and securities with a carrying value of $3.8 billion and $3.9 billion at December 31, 2024 and 2023, respectively, were pledged to the Federal Home Loan Bank of Boston.

(2) Loans and securities with a carrying value of $4.9 billion and $4.6 billion at December 31, 2024 and 2023, respectively, were pledged to the Federal Reserve Bank of Boston.

(3) The additional borrowing capacity has not been assessed for these categories.

In addition to customary operational liquidity practices, the Board of Directors and management recognize the need to establish reasonable guidelines to manage a heightened liquidity risk environment.

In addition to customary operational liquidity practices, the Board and management recognize the need to establish reasonable guidelines to manage a heightened liquidity risk environment.

Catalysts for elevated liquidity risk can be Company-specific issues and/or systemic industry-wide events.

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In a period of perceived heightened liquidity risk, the Liquidity Contingency Plan provides for the establishment of a Liquidity Crisis Task Force to monitor the potential for a liquidity crisis and execute an appropriate response.

In response to the banking industry turmoil experienced in 2023, the Company operated under the parameters of its Liquidity Contingency Plan, which resulted in various immediate action items taken during the first quarter.

From a liquidity management perspective, the Company proactively borrowed under its existing FHLB capacity to increase current cash on hand, while also pledging additional assets to increase overall borrowing capacity.

On an ongoing basis, the Company continues to monitor both on and off balance sheet liquidity sources to understand vulnerabilities through the application of various stress testing scenarios and other analyses.

The Company continually monitors both on and off balance sheet liquidity sources to understand vulnerabilities and when adjustments to the balance between sources and uses of funds may be necessary.

Management regularly performs various liquidity stress testing scenarios and other analyses to assess potential liquidity outflows or funding concerns resulting from economic or industry disruptions, volatility in the financial markets, or unforeseen credit events.

The results of these scenarios are used to inform the Company’s Liquidity Contingency Plan and help provide the basis for its liquidity needs.

Market and Interest Rate Risk Market risk refers to the risk of potential losses arising from changes in interest rates and the value of investments due to market conditions or other external factors or events.

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Interest rate risk arises directly from the Company’s core banking activities.

In addition to directly affecting 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 securities and derivatives, and have other effects.

In addition to directly affecting 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 securities and derivatives, and have other effects.

Management strives to control interest rate risk within limits approved by the Board of Directors that reflect the Company’s tolerance for interest rate risk over short-term and long-term horizons.

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Non-maturity deposits, assumptions over customer behavior, shifts in deposits categories, and magnitude of impact to the cost of deposits all may differ from what is currently anticipated by the models or analyses.

Given the volatility associated with market rates, and the uncertainty surrounding future rate movements, management has been proactive in achieving a more neutral interest rate risk position as compared to the prior year.

In 2023, management continued to increase the duration of its assets by marginally increasing exposure to fixed rate loans while deposit attrition reduced the amount of rate sensitive cash on hand at the Federal Reserve Bank.

Given the volatility associated with market rates, and the uncertainty surrounding future rate movements, management has continued to maintain a more neutral interest rate risk position.

The Company runs several scenarios to quantify and effectively assist in managing interest rate risk, including instantaneous parallel shifts in market rates as well as gradual (12-24 months) shifts in market rates, and may also include other alternative scenarios as management deems necessary given the interest rate environment.

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+200 over 12 months 0.7% (0.3)%

+400 over 24 months n/a 1.4%

Alternative scenarios

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Accordingly, although the tables provide an indication of the Company’s interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates, and actual results may differ.

The most significant market factors affecting the Company’s net interest income during the twelve months ended December 31, 2023 were the shape of the U.S.

The most significant market factors affecting the Company’s net interest income during the year ended December 31, 2024 were the shape of the U.S.

Government securities and interest rate swap yield curve, the U.S.

prime interest rate, the secured overnight financing rate ("SOFR"), and other interest rates offered on long-term fixed rate loans.

prime interest rate, the Secured Overnight Financing Rate, and other interest rates offered on long-term fixed rate loans.

The Company manages the interest rate risk inherent in both its loan and borrowing portfolios by using interest rate swap agreements and interest rate caps and floors.

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Management performs periodic sensitivity and stress testing using available economic forecasts in order to evaluate the adequacy of the allowance for credit losses under varying scenarios.

Given the Company's benign loss history, the analyses

performed have not resulted in a material change to the quantitative allowance but has informed management's determination of qualitative adjustments and act as corroborating evidence as to the appropriateness of the allowance as a whole.

Given the Company’s benign loss history, the analyses performed have not resulted in a material change to the quantitative allowance but have informed management’s determination of qualitative adjustments and act as corroborating evidence as to the appropriateness of the allowance as a whole.

For additional discussion of the Company’s methodology of assessing the appropriateness of the allowance for credit losses, see Note 3, “Loans, Allowance for Credit Losses and Credit Quality” within the Notes to Consolidated Financial Statements included in Item 8 of this Report.

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All other securities are classified as securities available-for-sale and are carried at fair market value.

The fair values of securities is based on either quoted market price or third party pricing services.

The fair values of securities are based on either quoted market price or third-party pricing services.

In general, the third-party pricing services employ various methodologies, including but not limited to, broker quotes and proprietary models.

Management does not typically adjust the prices received from third-party pricing services.

Depending upon the type of security, management employs various techniques to analyze the pricing it receives from third-parties, such as reviewing model inputs, reviewing

comparable trades, analyzing changes in market yields and, in certain instances, reviewing the underlying collateral of the security.

Depending upon the type of security, management employs various techniques to analyze the pricing it receives from third-parties, such as reviewing model inputs, reviewing comparable trades, analyzing changes in market yields and, in certain instances, reviewing the underlying collateral of the security.

Management reviews changes in fair values from period to period and performs testing to ensure that the prices received from the third parties are consistent with their expectation of the market.

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The third-party service provider performs calibration and testing of the models by comparing anticipated inputs to actual results, on a quarterly basis.

Unrealized gains and losses on securities available-for-sale are reported, on an after-tax basis, as a separate component of stockholders’ equity in accumulated other comprehensive income.

Unrealized gains

and losses on securities available-for-sale are reported, on an after-tax basis, as a separate component of stockholders’ equity in accumulated other comprehensive income.

Recent Accounting Developments

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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