What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-28 compared with 2024-02-28 · 237 added, 236 removed, 2158 unchanged (18% of the section changed)

4 unchanged sentences

We have audited the accompanying consolidated balance sheets of Independent Bank Corp.

(the Company) as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023 and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders’ 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”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

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Critical Audit Matter

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for credit losses

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Further, we performed an independent search for the existence of new or contrary information relating to risks impacting the qualitative adjustments to validate that management’s considerations were appropriate.

Additionally, we evaluated whether the overall allowance, inclusive of qualitative adjustments, appropriately reflected losses expected in the loan portfolio by comparing to peer bank data.

Additionally, we evaluated whether the overall allowance, inclusive of qualitative adjustments, reasonably reflects losses expected in the loan portfolio by comparing to peer bank data.

For the allowance on individually evaluated loans, we assessed management’s use of either a discounted cash flow or fair value of collateral approach based on the nature of the loan.

1 unchanged sentence

Procedures performed included testing the completeness and accuracy of management’s population and testing the calculation of the allowance on individually evaluated loans.

Annual Goodwill Impairment Analysis

Description of the Matter As described in Note 1 and Note 5 to the consolidated financial statements, the Company’s goodwill balance totaled $985 million as of December 31, 2023.

The Company evaluates goodwill for impairment at least annually, or more often if warranted, using either a qualitative or quantitative impairment approach.

The quantitative impairment test compares the book value of equity to the fair value of the Company’s single reporting unit and if the book value exceeds the fair value, an impairment is charged to net income.

The Company’s annual analysis as of August 31, 2023 used a quantitative impairment approach which included a comparison of the reporting unit’s book value to the implied fair value using both a comparable analysis of relevant price multiples in recent market transactions and a discounted cash flow analysis.

As a result of the annual analysis, management determined that goodwill for the reporting unit was not impaired.

Auditing the Company's goodwill impairment analysis for the reporting unit was complex due to the estimation involved in determining the fair value.

In particular, the fair value was highly sensitive to certain key assumptions including projected financial information developed by management and the discount rate.

How we addressed the matter in our audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s goodwill impairment analysis process, which included, among others, controls over the appropriateness of the methodology, management’s evaluation and oversight of external specialists, and management’s identification and review of key assumptions utilized in the quantitative impairment test.

With the assistance of EY Specialists, we tested management’s quantitative impairment analysis including evaluating the impairment methodology and testing the key assumptions and the underlying data used by the Company in its analysis.

We compared the key assumptions used by management to recent financial performance, the company's peer group and economic trends.

We assessed the historical accuracy of management's estimates and performed sensitivity analyses for key assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions.

In addition, we tested management's reconciliation of the fair value of the reporting unit to the market capitalization of the Company.

/s/ Ernst & Young LLP

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62,860 62,858

Subordinated debentures (less unamortized debt issuance costs of $ 20 and $ 115 )

49,980 49,885

Subordinated debentures (less unamortized debt issuance costs of $ 20 )

Total borrowings 701,374 1,218,379

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Data processing & facilities management 9,957 9,884 9,320

Software maintenance 13,115 10,961 8,149

Software and subscriptions 18,152 16,165 13,655

FDIC assessment 10,892 11,953 6,951

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— — — — — ( 96,087 ) — ( 96,087 )

Common stock issued for acquisition 14,299,720 143 — — 1,298,415 — — 1,298,558

Proceeds from exercise of stock options, net of cash paid 4,744 — — — ( 57 ) — — ( 57 )

Stock based compensation — — — — 4,464 — — 4,464

1 unchanged sentence

Shares issued under direct stock purchase plan 29,409 — — — 2,359 — — 2,359

Shares repurchased under share repurchase program ( 1,786,965 ) ( 18 ) — — ( 139,928 ) — — ( 139,946 )

Deferred compensation and other retirement benefit obligations — — ( 81 ) 81 — — — —

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Net income — — — — — 239,502 — 239,502

Other comprehensive loss — — — — — — ( 165,267 ) ( 165,267 )

Other comprehensive income — — — — — — 48,257 48,257

Common dividend declared ($ 2.20 per share)

— — — — — ( 96,456 ) — ( 96,456 )

Proceeds from exercise of stock options, net of cash paid 3,238 — — — 81 — — 81

Stock based compensation — — — — 6,377 — — 6,377

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Balance December 31, 2024 42,500,611 $ 423 $ ( 3,383 ) $ 3,383 $ 1,909,980 $ 1,172,724 $ ( 90,007 ) $ 2,993,120

(1) Inclusive of $ 1.8 million impact of excise tax attributable to shares repurchased under the share repurchase program during the year ended December 31, 2023.

(1) Includes excise tax impact of $ 311,000 and $ 1.8 million for the years ended December 31, 2024 and 2023, respectively, related to shares repurchased under the Company’s share repurchase program.

The accompanying notes are an integral part of these consolidated financial statements.

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Provision for credit losses 36,250 23,250 6,500

Deferred income tax expense (benefit) 2,738 ( 1,254 ) 3,090

Deferred income tax (benefit) expense ( 10,600 ) 2,738 ( 1,254 )

Net (gain) loss on equity securities ( 423 ) ( 1,180 ) 3,061

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Purchases of securities held to maturity — — ( 804,105 )

Net (purchases) redemption of Federal Home Loan Bank stock ( 38,339 ) 6,189 25,027

Net redemption (purchases) of Federal Home Loan Bank stock 11,984 ( 38,339 ) 6,189

Investments in low-income housing projects ( 33,053 ) ( 31,073 ) ( 33,232 )

1 unchanged sentence

Proceeds from life insurance policies 1,929 5,531 3,160

Net (increase) decrease in loans ( 378,735 ) ( 335,448 ) 744,981

Net cash acquired in business combinations — — 787,301

Net increase in loans ( 236,519 ) ( 378,735 ) ( 335,448 )

Purchases of bank premises and equipment ( 20,435 ) ( 15,844 ) ( 22,072 )

1 unchanged sentence

Net cash used in investing activities ( 33,010 ) ( 211,650 ) ( 1,000,474 )

Cash flows (used in) provided by financing activities

Cash flows used in financing activities

Net increase (decrease) in time deposits 565,752 985,567 ( 334,381 )

Net (decrease) increase in other deposits ( 1,999,198 ) ( 702,628 ) 1,719,398

Net advances from (repayments of) short-term Federal Home Loan Bank borrowings 1,105,000 ( 25,000 ) —

Repayments of long-term Federal Home Loan Bank borrowings — — ( 586,088 )

Net decrease in other deposits ( 125,436 ) ( 1,999,198 ) ( 702,628 )

Net (repayments of) advances from Federal Home Loan Bank borrowings ( 467,000 ) 1,105,000 ( 25,000 )

Repayments of long-term debt, net of issuance costs — — ( 14,063 )

Repayments of subordinated debentures ( 50,000 ) — —

Net proceeds from exercise of stock options 80 80 —

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Common dividends paid ( 96,200 ) ( 98,006 ) ( 93,734 )

Net cash (used in) provided by financing activities ( 193,947 ) ( 1,308,477 ) 816,964

Net (decrease) increase in cash and cash equivalents ( 128,603 ) ( 1,887,751 ) 944,048

Net cash used in financing activities ( 201,351 ) ( 193,947 ) ( 1,308,477 )

Net decrease in cash and cash equivalents ( 4,440 ) ( 128,603 ) ( 1,887,751 )

Cash and cash equivalents at beginning of year 224,330 352,933 2,240,684

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Recognition of operating lease at commencement and/or extension $ 12,602 $ 7,916 $ 14,789

In conjunction with the Company's acquisitions, assets were acquired and liabilities were assumed as follows

Common stock issued for acquisition $ — $ — $ 1,298,558

Fair value of assets acquired, net of cash acquired $ — $ — $ 5,574,209

Fair value of liabilities assumed $ — $ — $ 5,062,952

The accompanying notes are an integral part of these consolidated financial statements.

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Reclassification

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 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.”

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

revenues and expenses during the reporting periods.

Actual results could vary from these estimates.

Material estimates that are particularly susceptible to significant changes in the near-term relate to the determination of the allowance for expected credit losses on loans held for investment, income taxes, valuation and allowance for expected credit losses on investment securities, and the valuation of goodwill and other intangible assets and their respective analyses of impairment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Concentrations of Credit Risk

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The Bank may choose to classify new residential real estate mortgage loans as held for sale based on intent, which is determined when loans are underwritten.

Residential real estate mortgage loans not designated as held for sale are retained based upon available liquidity, for interest rate risk management and other business purposes.

The Company has elected the fair value option to account for originated closed loans intended for sale.

Accordingly, 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.

Loans that are classified as held for sale at the time of origination are accounted for under the fair value option, 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 (sales proceeds minus carrying amount) 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.

Alternatively, any loans not originated for sale but subsequently transferred from held for investment to held for sale are valued at the lower of cost or fair value on an individual asset basis.

Prospectively, any cost amounts in excess of fair value would be recorded as a valuation allowance and recognized as a reduction of other non-interest income.

Loans Held for Investment

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Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and may include adjustments to term extensions, interest rates, other than insignificant payment delays and/or a combination thereof.

These actions are intended to minimize economic loss and avoid foreclosure or repossession of collateral.

If such efforts by the Bank

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

do not result in satisfactory performance, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated.

actions are intended to minimize economic loss and avoid foreclosure or repossession of collateral.

If such efforts by the Bank do not result in satisfactory performance, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated.

At any time prior to a sale of the property at foreclosure, the Bank may terminate foreclosure proceedings if the borrower is able to work out a satisfactory payment plan.

Any loans that are modified are reviewed by the Company to determine whether the modification is the direct result of a borrower experiencing financial difficulty, as the Company adopted the accounting and disclosure requirements for loan modifications made to borrowers experiencing financial difficulty and ceased to recognize troubled debt restructurings (“TDRs”) effective January 1, 2023.

Prior to this adoption, the Company would classify loans as TDRs in cases where a borrower was experiencing financial difficult and where the Company made certain concessionary modifications to contractual terms.

Prior to this adoption, the Company would classify loans as TDRs in cases where a borrower was experiencing financial difficulty and where the Company made certain concessionary modifications to contractual terms.

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 Bank, and other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral.

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• Concentrations of credit risk

• Model imprecision

• Other external factors

• Model imprecision

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

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Loan modifications made to borrowers experiencing financial difficulty are evaluated on a collective basis with loans sharing similar risk characteristics in accordance with the CECL methodology.

Under previously applicable accounting guidance, the Company determined the amount of allowance for credit losses on TDRs using a discounted cash flow analysis or a fair value of collateral approach if the loan was determined to be individually evaluated.

This change in methodology did not have a material impact on the Company's allowance for credit loss estimate.

Under previously applicable accounting guidance, the Company determined the amount of allowance for credit losses on TDRs using a discounted cash flow analysis or

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

a fair value of collateral approach if the loan was determined to be individually evaluated.

This change in methodology did not have a material impact on the Company’s allowance for credit loss estimate.

Accrued interest receivable amounts are excluded from balances of loans held at amortized cost and are included within other assets on the Consolidated Balance Sheets.

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Consistent with the Company’s policy for nonaccrual loans, accrued interest receivable is typically written off when loans reach 90 days past due and are placed on nonaccrual status.

Allowance for Credit Losses - Unfunded Lending Commitments

In the ordinary course of business, the Company enters into commitments to extend credit, commercial letters of credit, and standby letters of credit.

Such financial instruments are recorded in the financial statements when they become payable.

The credit risk associated with these commitments is evaluated in a manner similar to the allowance for credit losses.

The allowance for credit losses on these unfunded loan commitments provides for potential exposure inherent with the funding of unused portions on legal commitments that are not unconditionally cancellable by the Company.

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

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

1 unchanged sentence

Loans acquired through purchase or a business combination are recorded at their fair value at the acquisition date.

The Company performs an assessment of acquired loans to first determine if such loans have experienced a more than insignificant deterioration in credit quality since their origination and thus should be classified and accounted for as PCD loan.

For loans that have not experienced a more than insignificant deterioration in credit quality since origination, referred to as non-PCD loans, the Company records such loans at fair value, with any resulting discount or premium accreted or amortized into interest income over the remaining life of the loan using the interest method.

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At the acquisition date, an estimate of expected credit losses is made for groups of PCD loans with similar risk characteristics and individual PCD loans without similar risk characteristics, if applicable.

Subsequent to acquisition, the allowance for credit losses for both non-PCD and PCD loans are determined with the use of the Company’s allowance methodology under CECL, in the same manner as all other loans.

Subsequent to acquisition, the allowances for credit losses for both non-PCD and PCD loans are determined with the use of the Company’s allowance methodology under CECL, in the same manner as all other loans.

Transfers and Servicing of Financial Assets

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Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Loans held for sale are generally sold with servicing rights released, however if rights are retained, servicing assets are recognized as separate assets.

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If the Company later determines that all or a portion of the impairment no longer exists, a reduction of the allowance may be recorded as an increase to income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Servicing fee income is recorded for fees earned for servicing loans for investors.

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The Company continually reviews its investment to determine if impairment exists.

The Company reviews recent public filings, rating agency analysis and other factors when making its determination.

Bank Premises and Equipment

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Expected terms include lease option periods to the extent that the exercise of such options is reasonably assured, not to exceed fifteen years .

The Company leases office space, space for ATM and parking locations, and certain branch locations under noncancelable operating leases, several of which have renewal options to extend lease terms.

The Company leases office space, space for ATM and parking locations, and certain branch locations under noncancellable operating leases, several of which have renewal options to extend lease terms.

Upon commencement of a new lease, the Company will recognize a right of use (“ROU”) asset and corresponding lease liability.

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The Company has lease agreements with lease and non-lease components, which are generally accounted for separately.

For real estate leases, non-lease components and other non-components, such as common area maintenance charges, real estate taxes, and insurance, are not included in the measurement of the lease liability since they are generally able to be segregated.

For real estate leases and non-lease components, such as common area maintenance charges, real estate taxes, and insurance, are not included in the measurement of the lease liability since they are generally able to be segregated.

The Company has elected the short-term lease recognition exemption for all leases that qualify.

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Under direct financing lease arrangements, the leased asset value is de-recognized and offset with the recognition of a lease receivable that is evaluated for impairment in a manner similar to loans.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Goodwill and Other Intangible Assets

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If the carrying amount of the reporting unit exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other intangible assets subject to amortization consist of core deposit intangibles, customer lists, and non-compete agreements that are amortized over the estimated lives of the intangibles using a method that approximates the amount of economic benefits that are realized by the Company.

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Hedge accounting is discontinued prospectively when (1) a derivative is no longer highly effective in offsetting changes in the fair value or cash flow of a hedged item, (2) a derivative expires or is settled, (3) it is no longer likely that a forecasted transaction associated with the hedge will occur, or (4) it is determined that designation of a derivative as a hedge is no longer appropriate.

To the extent the Company enters into new or re-designates existing hedging relationships, it is the Company's policy to include the Overnight Index Swap Rate based on the Fed Funds Effective Rate and the Overnight Index Swap Rate based on the Secured Overnight Financing Rate in the spectrum of available benchmark interest rates for hedge accounting.

To the extent the Company enters into new or re-designates existing hedging relationships, it is the Company’s policy to include the Overnight Index Swap Rate based on the Fed Funds Effective Rate and the Overnight Index Swap Rate based on the Secured Overnight Financing Rate (“SOFR”) in the spectrum of available benchmark interest rates for hedge accounting.

For derivative instruments not designated as hedging instruments, such as loan level derivatives, foreign exchange contracts, risk participation agreements and mortgage derivatives, changes in fair value are recognized in other noninterest income during the period of change and are included in changes in other assets or other liabilities on the Company’s Consolidated Statement of Cash Flows.

Retirement Plans

The Company has various retirement plans in place for current and former employees, including postretirement benefit plans, supplemental executive retirement plans, frozen multiemployer pension plans, deferred compensation plans, as well as other benefits.

The Company has various retirement plans in place for current and former employees, including postretirement benefit plans, supplemental executive retirement plans, a frozen multiemployer pension plan, a frozen defined benefit pension plan, deferred compensation plans, as well as other benefits.

The postretirement benefit plans and the supplemental executive retirement plans are unfunded and therefore have no plan assets.

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The underfunded status of the plans is recorded as a liability on the balance sheet.

The multiemployer pension plans' assets are determined based on fair value, generally representing observable market prices.

The multiemployer pension plan’s assets are determined based on fair value, generally representing observable market prices.

The actuarial cost method used to compute the pension liabilities and related expense is the unit credit method.

The pension expense is equal to the plan contribution requirement of the Company for the plan year.

In conjunction with the acquisition of Blue Hills Bancorp, Inc., parent of Blue Hills Bank (collectively "BHB") the Company acquired BHB's defined benefit pension plan, which is administered by the Savings Banks Employees Retirement Association.

The Company accounts for the plan using an actuarial model that allocates pension costs over the service period of employees in the plan.

The Company accounts for the over-funded or under-funded status of the plan as an asset or liability on its consolidated balance sheets and recognizes changes in the funded status that are not reflected in net periodic pension cost as other comprehensive income or loss.

BHB amended its defined benefit pension plan in 2013 freezing the plan to new participants and subsequently amended the plan and froze it for all participants effective October 31, 2014.

The Company maintains two frozen single employer pension plans.

The Company accounts for these pension plans using an actuarial model that allocates pension costs over the service period of employees in the plan.

The Company accounts for the over-funded or under-funded status of the pension plans as an asset or liability on its consolidated balance sheets and recognizes changes in the funded status that are not reflected in net periodic pension cost as other comprehensive income or loss.

The Director Deferred Compensation Plan allows directors to invest their funds into a diversified investment portfolio and the 401(k) Restoration Plan allows employees to invest their funds in both Company stock and other investment alternatives offered by the Plan.

All funds under both of these plans are held in a rabbi trust.

The plans do not permit

The plans do not permit diversification after initial election and therefore elections made to defer into Company stock result in both the investment and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

diversification after initial election and therefore elections made to defer into Company stock result in both the investment and obligation recognized within Stockholders' Equity.

obligation recognized within Stockholders’ Equity.

Alternatively, investments not in Company stock are included in trading securities, with the correlating obligation classified as a liability.

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Basic earnings per share is calculated using the two-class method.

The two-class method is an earnings allocation formula under which earnings per share is calculated from common stock and participating securities according to dividends

The two-class method is an earnings allocation formula under which earnings per share is calculated from common stock and participating securities according to dividends declared and participation rights in undistributed earnings.

Under this method, all earnings, distributed and undistributed, are

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

declared and participation rights in undistributed earnings.

Under this method, all earnings, distributed and undistributed, are allocated to participating securities and common shares based on their respective rights to receive dividends.

allocated to participating securities and common shares based on their respective rights to receive dividends.

Unvested share-based payment awards that contain nonforfeitable rights to dividends are considered participating securities, not subject to performance based measures (i.e.

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Recent Accounting Standards

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 220-40 “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures” Update No.

Update No 2024-03 was issued in November 2024 and requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses for both interim and annual reporting periods.

This standard is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the impact of this standard and does not expect the adoption to have an impact on the Company’s financial statements.

FASB ASC Topic 740 “Income Taxes” Update No.

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This standard is effective for annual periods beginning after December 15, 2024 and requires prospective application with the option to apply retrospectively.

The adoption of this standard will not have an impact on the Company's financial statements.

The adoption of this standard is not expected to have an impact on the Company’s financial statements.

FASB ASC Topic 280 “Segment Reporting” Update No.

2023-07 was issued in November 2023 to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of profit or loss.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods with fiscal years beginning after December 15, 2024.

The Company adopted this standard, effective December 31, 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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net gains recognized during the period on equity securities sold during the period 877 197 —

Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date $ 983 $ ( 3,061 ) $ 362

Unrealized (losses) gains recognized during the reporting period on equity securities still held at the reporting date $ ( 454 ) $ 983 $ ( 3,061 )

Available for Sale Securities

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Held to maturity securities

government agency securities $ 29,521 $ 28,408 $ — $ — $ — $ — $ — $ — $ 29,521 $ 28,408

Treasury securities $ — $ — $ 99,798 $ 92,205 $ 993 $ 817 $ — $ — $ 100,791 $ 93,022

1 unchanged sentence

Agency collateralized mortgage obligations — — 61,215 57,331 16,776 14,963 344,836 285,390 422,827 357,684

Single issuer trust preferred securities issued by banks — — 1,500 1,373 — — — — 1,500 1,373

Small business administration pooled securities — — — — 6,555 6,043 116,313 108,690 122,868 114,733

2 unchanged sentences

Included in the table above is $ 24.7 million of callable securities at December 31, 2024.

The carrying value of securities pledged to secure public funds, trust deposits, and for other purposes, as required or permitted by law, was $ 1.7 billion and $ 959.8 million at December 31, 2023 and 2022, respectively.

The elevated balance at December 31, 2023 was primarily attributable to additional securities pledged during the year as part of the Company's strategy to bolster off-balance sheet liquidity.

The carrying value of securities pledged to secure public funds, trust deposits, and for other purposes, as required or permitted by law, was $ 2.1 billion and $ 1.7 billion at December 31, 2024 and 2023, respectively.

At December 31, 2024 and 2023, the Company had no investments in obligations of individual states, counties, or municipalities which exceeded 10% of stockholders’ equity.

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(1) Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $ 55.6 million, $ 60.2 million, and $ 50.8 million at December 31, 2024, 2023, and 2022, respectively.

The balance of allowance for credit losses of $ 142.2 million at December 31, 2023 decreased by $ 10.2 million, or 6.7 % from the prior year driven primarily by isolated charge-offs within the commercial portfolios, partially offset by general provisioning during the year.

The balance of allowance for credit losses of $ 170.0 million at December 31, 2024 increased by $ 27.8 million, or 19.5 % from the prior year driven primarily by specific reserve allocations on certain individually evaluated commercial loans.

For the purpose of estimating the allowance for credit losses, management segregated the loan portfolio into the portfolio segments detailed in the above tables.

4 unchanged sentences

• Commercial and Industrial :

Consists of revolving, non-revolving, and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment.

Consists of revolving, non-revolving, and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment, as well as loans to finance owner-occupied commercial properties.

Collateral generally consists of accounts receivable, inventory, plant and equipment, real estate, or other business assets.

1 unchanged sentence

• Commercial Real Estate :

Consists of mortgage loans to finance investment in real property such as multi-family residential, commercial/retail, office, industrial, hotels, educational and healthcare facilities, as well as other specific use properties and is inclusive of owner-occupied commercial properties.

Loans are typically written with amortizing payment structures.

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Under this structure, consumer loans less than 90 days past due are assigned a “pass” rating, while any consumer loans 90 days or more past due are assigned a “default” rating.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table details the amortized cost balances of the Company’s loan portfolios, presented by credit quality indicator and origination year as of the dates indicated below:

5 unchanged sentences

Special Mention 18,600 554 2,394 10,610 871 2,458 40,927 — 76,414

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Substandard 16,933 4,195 5,276 27,641 139 22 21,517 — 75,723

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Current-period gross write-offs $ — $ — $ — $ — $ — $ — $ 241 $ 139 $ 380

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other consumer (2)

4 unchanged sentences

Total $ 2,161,170 $ 1,964,758 $ 2,118,947 $ 1,876,818 $ 1,407,685 $ 3,210,444 $ 1,749,116 $ 19,440 $ 14,508,378

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total current-period gross write-offs $ 3,387 $ 39 $ 35 $ 54 $ — $ 19 $ 6,674 $ 139 $ 10,347

9 unchanged sentences

Total commercial and industrial $ 514,086 $ 431,302 $ 323,576 $ 219,765 $ 134,896 $ 545,623 $ 756,485 $ 90 $ 2,925,823

Current-period gross write-offs $ — $ 91 $ — $ — $ — $ 34 $ 23,439 $ — $ 23,564

Commercial real estate

5 unchanged sentences

Total commercial real estate $ 1,038,198 $ 988,550 $ 1,139,377 $ 1,148,980 $ 522,060 $ 1,778,388 $ 76,759 $ 3,359 $ 6,695,671

Current-period gross write-offs $ — $ 5,072 $ — $ — $ 2,783 $ — $ — $ — $ 7,855

Commercial construction

5 unchanged sentences

Total commercial construction $ 203,106 $ 407,498 $ 151,142 $ 44,953 $ 23,823 $ 1,561 $ 17,503 $ — $ 849,586

Current-period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

Small business

5 unchanged sentences

Total small business $ 51,264 $ 51,439 $ 39,525 $ 26,272 $ 12,944 $ 23,265 $ 47,247 $ — $ 251,956

Current-period gross write-offs $ — $ — $ 54 $ 40 $ — $ — $ 390 $ — $ 484

Residential real estate

2 unchanged sentences

Total residential real estate $ 505,517 $ 638,223 $ 405,386 $ 184,833 $ 89,327 $ 601,468 $ — $ — $ 2,424,754

Current-period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Pass $ 28,903 $ 38,401 $ 54,944 $ 49,803 $ 29,103 $ 121,286 $ 770,074 $ 4,583 $ 1,097,097

1 unchanged sentence

Total home equity $ 28,903 $ 38,401 $ 54,944 $ 49,803 $ 29,103 $ 121,349 $ 770,398 $ 4,725 $ 1,097,626

Current-period gross write-offs $ — $ — $ — $ — $ — $ — $ 47 $ — $ 47

Other consumer (2)

2 unchanged sentences

Total other consumer $ 639 $ 263 $ 1,178 $ 706 $ 257 $ 1,835 $ 27,776 $ — $ 32,654

Current-period gross write-offs $ 2,766 $ — $ — $ — $ — $ 49 $ 17 $ — $ 2,832

Total $ 2,341,713 $ 2,555,676 $ 2,115,128 $ 1,675,312 $ 812,410 $ 3,073,489 $ 1,696,168 $ 8,174 $ 14,278,070

Total current-period gross write-offs $ 2,766 $ 5,163 $ 54 $ 40 $ 2,783 $ 83 $ 23,893 $ — $ 34,782

(1) Loans origination dates in the tables above reflect the original date, or the date of a material modification of a previously originated loan, for both organic originations and acquired loans.

(2) Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances and the associated gross write-offs.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower.

25 unchanged sentences

The Company also may use discretion regarding other loans 90 days or more delinquent if the loan is well secured and/or in process of collection.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table shows information regarding nonaccrual loans at the dates indicated:

10 unchanged sentences

Total nonaccrual loans $ 82,660 $ 18,869 $ 101,529 $ 43,040 $ 11,343 $ 54,383

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

(1) Nonaccrual balances reported above without an allowance for credit losses are attributable to loans evaluated on an individual basis where it was determined that there was no risk of loss due to sufficient underlying collateral values.

It is the Company’s policy to reverse any accrued interest when a loan is put on nonaccrual status, and, as such, the Company did not record any interest income on nonaccrual loans for the years ended December 31, 2024, 2023, and 2022, except for instances where nonaccrual loans were paid off in excess of the recorded book balance.

Total accrued interest reversed against interest income amounted to $ 1.0 million, $ 1.4 million, and $ 180,000 for the years ended December 31, 2023, 2022, and 2021, respectively.

Total accrued interest reversed against interest income amounted to $ 676,000 , $ 1.0 million, and $ 1.4 million for the years ended December 31, 2024, 2023, and 2022, respectively.

The following table shows information regarding foreclosed residential real estate property at the dates indicated:

24 unchanged sentences

Total 761 $ 47,521 28 $ 2,201 37 $ 37,686 826 $ 87,408 $ 14,420,970 $ 14,508,378

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2023

19 unchanged sentences

(1) Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances.

(2) The amount of net deferred costs on originated loans included in the ending balance was $ 6.4 million at December 31, 2023, compared to net deferred fees of $ 5.0 million at December 31, 2022.

(2) The amount of net unamortized deferred fees/costs on originated loans included in the ending balance was $ 6.1 million and $ 6.4 million at December 31, 2024, and December 31, 2023, respectively.

Net unamortized discounts on acquired loans included in the ending balance was $ 8.1 million and $ 8.6 million at December 31, 2024 and 2023, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Loan Modifications

The following tables present the amortized cost basis as of December 31, 2023 of loans modified to borrowers experiencing financial difficulty during the twelve months then ended, disaggregated by class of financing receivable and type of modification granted :

The following tables present the period end amortized cost basis of loans modified to borrowers experiencing financial difficulty during the periods indicated, disaggregated by class of financing receivable, type of modification granted and the financial effect of the modifications:

Year Ended December 31, 2024

Term Extension

Amortized Cost Basis % of Total Class of Financing Receivable

Amortized Cost Basis % of Total Class of Financing Receivable Financial Effect

(Dollars in thousands)

Commercial and industrial $ 11,010 0.70 %

Commercial real estate 17,530 0.22 %

Small business 208 0.08 %

Term Extension

Commercial and industrial $ 12,983 0.43 % Added a weighted-average contractual term of 2.4 years to the life of the loans

Commercial real estate 26,749 0.40 % Added a weighted-average contractual term of 2 years to the life of the loans

Commercial construction 818 0.10 % Added a weighted-average contractual term of 6 months to the life of one loan

Residential real estate 764 0.03 % Added a weighted-average contractual term of 7.9 years to the life of the loans

Total $ 41,314

Combination - Interest Rate Reduction and Term Extension

Amortized Cost Basis % of Total Class of Financing Receivable

(Dollars in thousands)

Commercial and industrial $ 85 0.01 %

Small business $ 38 0.02 %

Interest Rate Reduction

Small business $ 36 0.01 % Reduced contractual rate on one loan from 11.00 % to 8.20 %

Home equity 63 0.01 % Reduced contractual rate on one loan from 7.99 % to 7.00 %

Other Than Insignificant Payment Delay

Commercial and industrial $ 11,604 0.38 % Modification was made with minimal financial effect

Commercial construction 10,672 1.4 % Modification was made with minimal financial effect

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total $ 22,276

Combination - Term Extension and Interest Rate Reduction

Commercial and industrial $ 168 0.01 % Added a weighted-average contractual term of 4.1 years to the life of the loans and reduced the weighted-average interest rate by 6.08 %

Small business 26 0.01 % Extended the contractual term on one loan by 2.5 years and reduced the interest rate from 10.25 % to 6.50 %

Residential real estate 397 0.02 % Extended the contractual term on one loan by 6.1 years and reduced the interest rate from 7.75 % to 6.30 %

Home equity 69 0.01 % Extended the contractual term on one loan by 8.1 years and reduced the interest rate from 10.00 % to 6.80 %

Combination - Term Extension and Other Than Insignificant Payment Delay

Amortized Cost Basis % of Total Class of Financing Receivable

(Dollars in thousands)

Commercial and industrial $ 1,865 0.12 %

Commercial real estate 6,505 0.08 %

Commercial real estate 25,929 0.38 % The financial effects of term extensions are included in term extension table above, while the payment delay modifications had minimal financial effect

Total $ 25,929

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Total Outstanding Modified $ 90,278

Year Ended December 31, 2023

Amortized Cost Basis % of Total Class of Financing Receivable Financial Effect

(Dollars in thousands)

Term Extension

Financial Effect

Commercial and industrial $ 11,010 0.38 % Added a weighted-average contractual term of 3 months to the life of the loans

1 unchanged sentence

Small business 208 0.08 % Added a weighted-average contractual term of 4.7 years to the life of the loans

Interest Rate Reduction

Financial Effect

Commercial and industrial Reduced contractual rate on one loan from 10.00 % to 7.00 %

Small business Reduced contractual rate on one loan from 10.00 % to 6.50 %

Total $ 28,748

Combination - Term Extension and Interest Rate Reduction

Commercial and industrial $ 85 — % Reduced the contractual interest rate on one loan from 10.00 % to 7.00 %;

the financial effect of term extensions is included in term extension table shown above

Small business $ 38 0.02 % Reduced the contractual interest rate on one loan from 10.00 % to 6.50 %;

the financial effect of term extensions is included in term extension table shown above

Combination - Term Extension and Other Than Insignificant Payment Delay

Commercial and industrial $ 8,370 0.29 % The financial effects of term extensions are included in term extension table above, while the payment delay modifications had minimal financial effect

Total $ 8,370

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total Outstanding Modified $ 37,241

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

The following table depicts the amortized cost and payment status of loans that have been modified in the last 12 months as of December 31, 2023:

The following tables depict the amortized cost and payment status of loans that were modified during the previous twelve months as of the periods indicated:

December 31, 2024

Payment Status (Amortized Cost Basis)

Current 30-89 Days Past Due 90+ Days Past Due Total

2 unchanged sentences

Commercial real estate 41,018 — 11,660 52,678

Commercial construction 11,490 — — 11,490

Small business 62 — — 62

Residential real estate 1,161 — — 1,161

Home equity 132 — — 132

Total $ 78,618 $ — $ 11,660 $ 90,278

(1) Current category is inclusive of $8.4 million in nonaccrual loans which have yet to reach the six consecutive months of performance required to return to accruing status in accordance with the Company's accounting policy for nonaccrual loans

The Company considers a loan to have defaulted when it reaches 90 days past due.

The table below shows the amortized cost basis of financing receivables modified during the twelve months ended December 31, 2023 that subsequently defaulted:

Term Extension Combination - Term Extension and Other Than Insignificant Payment Delay Total

December 31, 2023

Payment Status (Amortized Cost Basis)

Current 30-89 Days Past Due 90+ Days Past Due Total

(Dollars in thousands)

1 unchanged sentence

Commercial real estate 17,393 — 136 17,529

Small business 246 — — 246

Total $ 36,730 $ — $ 511 $ 37,241

At December 31, 2023, the Company did not have any additional commitments to lend to borrowers experiencing financial difficulty who were party to a loan modification.

The Company adopted the accounting and disclosure requirements for loan modifications made to borrowers experiencing financial difficulty and ceased to recognize TDRs effective January 1, 2023.

As such, there are no current year TDRs and the prior period amounts are shown in the tables below.

The following table shows the Company’s total TDRs and other pertinent TDR information as of December 31, 2022:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollars in thousands)

TDRs on accrual status $ 11,278

TDRs on nonaccrual 11,520

Total TDRs $ 22,798

Additional commitments to lend to a borrower who has been a party to a TDR $ 64

The following table shows the troubled debt restructurings which occurred for the periods indicated and the change in the recorded investment subsequent to the modifications occurring:

Year Ended December 31, 2022

Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment

(Dollars in thousands)

The Company considers a loan to have defaulted when it reaches 90 days past due.

During the twelve months ended December 31, 2024, there was one $ 11.7 million commercial real estate loan modified to a borrower experiencing financial difficulty that subsequently defaulted.

The table below shows the amortized cost basis of financing receivables modified during the twelve months ended December 31, 2023 that subsequently defaulted:

Term Extension Combination - Term Extension and Other Than Insignificant Payment Delay Total

Commercial and industrial $ 374 $ 6,505 $ 6,879

1 unchanged sentence

Total $ 510 $ 6,505 $ 7,015

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At December 31, 2024, the Company had $ 8.6 million in additional commitments to lend to borrowers experiencing financial difficulty whose loans were modified and included in the above tables for the year then ended, largely attributable to one borrower.

There were no such additional commitments at December 31, 2023.

Loan modifications to borrowers experiencing financial difficulty are evaluated on a collective basis with loans sharing similar risk characteristics in accordance with the CECL methodology.

The following table shows the TDRs which occurred for the period indicated and the change in the recorded investment subsequent to the modifications occurring:

Year Ended December 31, 2022

3 unchanged sentences

Commercial real estate 1 7,850 7,850

Small business 2 189 189

Total 5 $ 11,316 $ 11,315

(1) The pre-modification and post-modification balances represent the legal principal balance of the loan.

Activity presented in the tables above includes $14.3 million of modifications on existing TDRs during the year ended December 31, 2021.

The following table shows the Company's post-modification balance of TDR's listed by type of modification for the periods indicated:

Year Ended December 31

(Dollars in thousands)

Extended maturity $ 11,315 $ 4,153

Combination rate and maturity — 14,148

Total $ 11,315 $ 18,301

During the twelve months ended December 31, 2022 and 2021, respectively, there were no loans modified during the prior twelve months that subsequently defaulted during the respective periods.

All loans included in the post-modification balance of $ 11.3 million shown in the table above were comprised of maturity extension modifications.

During the twelve months ended December 31, 2022 there were no loans modified that subsequently defaulted.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12 unchanged sentences

Depreciation expense related to bank premises and equipment was $ 19.9 million, $ 18.9 million, and $ 18.4 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is primarily reflected in occupancy and equipment expenses.

Leased equipment held by the Company totaled $ 32.7 million and $ 32.8 million at December 31, 2023 and 2022, respectively.

Leased equipment held by the Company totaled $ 32.7 million at both December 31, 2024 and 2023.

The leased equipment is subject to a master lease agreement entered into during 2021 with a third-party lessee and the Company assumes the role of lessor in the transaction, which is deemed an operating lease for accounting purposes.

The Company recognized rental income of $ 6.4 million, $ 6.1 million and $ 890,000 for the years ended December 31, 2023, 2022 and 2021, respectively .

The Company recognized rental income of $ 6.4 million for the years ended December 31, 2024 and 2023, respectively, and $ 6.1 million for the year ended December 31, 2022 .

NOTE 5 GOODWILL AND OTHER INTANGIBLE ASSETS

8 unchanged sentences

Total goodwill and other intangible assets $ 997,356 $ 1,003,262

There were no changes in the carrying value of the Company’s goodwill during the years ended December 31, 2024 and 2023, and 2022, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

2023 2022 2021

(Dollars in thousands)

Balance at beginning of year $ 985,072 $ 985,072 $ 506,206

Acquisitions — — 478,866

Balance at end of year $ 985,072 $ 985,072 985,072

The gross carrying amount and accumulated amortization of other intangible assets were as follows at the dates indicated:

21 unchanged sentences

(1) The total amount of time deposit accounts with balances equal to or greater than $250,000 at December 31, 2024 and 2023 was $ 774.9 million and $ 571.2 million, respectively.

The Company had pledged assets as collateral covering certain deposits in the amount of $ 900.2 million and $ 952.7 million at December 31, 2023 and 2022, respectively.

The Bank's deposit accounts are insured to the maximum extent permitted by law by the Deposit Insurance Fund which is administered by the FDIC.

At December 31, 2024 and 2023, the Company had a balance of $ 4.7 million and $ 2.1 million, respectively in demand deposit overdrafts.

Overdrafts are included in other consumer loans in the Consolidated Balance Sheets.

The Company had pledged assets as collateral covering certain deposits in the amount of $ 1.1 billion and $ 900.2 million at December 31, 2024 and 2023, respectively.

The Bank’s deposit accounts are insured to the maximum extent permitted by law by the DIF which is administered by the FDIC.

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

1 unchanged sentence

Federal Home Loan Bank Borrowings

During the twelve months ended December 31, 2023, the Company utilized FHLB advances for certain short-term and long-term borrowing needs, as deemed necessary.

The Company utilized FHLB advances for certain short-term and long-term borrowing needs, as deemed necessary.

To manage the interest rate risk of these advances, the Company may enter into interest rate swap agreements which effectively fixes the rate of the borrowings.

The table below shows the outstanding borrowings December 31, 2023, as well as the contractual rates and effective rates, net of any swap impact:

Average Effective Rate,

Total Contractual Net of

Outstanding Rate Swap Impact

The table below shows the outstanding borrowings as well as the contractual rates and effective rates, net of any swap impact, at the dates indicated:

December 31, 2024 December 31, 2023

Total Outstanding Weighted Average Contractual Rate Effective Rate, Net of Swap Impact Total Outstanding Weighted Average Contractual Rate Effective Rate, Net of Swap Impact

(Dollars in thousands)

Overnight Borrowings $ 705,000 5.54 % n/a

Overnight Borrowings $ 38,000 4.53 % n/a $ 705,000 5.54 % n/a

1-Month Term 400,000 4.63 % 3.74 % 400,000 5.50 % 3.83 %

Amortizing 541 1.40 % n/a

Stated Maturity 2025 200,000 4.81 % n/a — — % n/a

Amortizing 514 1.40 % n/a 541 1.40 % n/a

Total $ 638,514 $ 1,105,541

At December 31, 2022, the Company had no outstanding short-term borrowings with the FHLB and $ 637,000 of longer term amortizing advances bearing a weighted average contractual rate of 1.65 %.

At December 31, 2024 and 2023, the Company had sufficient collateral at the FHLB to support its obligations and was in compliance with the FHLB’s collateral pledging program.

The Company’s FHLB advances are collateralized by a blanket pledge agreement on the Bank’s FHLB stock, certain qualified investment securities, deposits at the FHLB, residential mortgages, and by certain commercial real estate loans held in the Bank’s portfolio.

The carrying value of loans pledged as collateral for these borrowings totaled $ 3.9 billion and $ 2.7 billion at December 31, 2023 and 2022, respectively, resulting in total borrowing capacity with the FHLB of $ 2.7 billion and $ 1.8 billion, of which $ 1.6 billion and $ 1.8 billion remained available as of December 31, 2023, and 2022, respectively.

The carrying value of loans and securities pledged as collateral for these borrowings totaled $ 3.8 billion and $ 3.9 billion at December 31, 2024 and 2023, respectively, resulting in total borrowing capacity with the FHLB of $ 2.6 billion and $ 2.7 billion, of which $ 2.0 billion and $ 1.6 billion remained available as of December 31, 2024, and 2023, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8 unchanged sentences

Total long-term debt $ 62,860 $ 112,838

The interest expense on long-term debt was $ 6.8 million, $ 4.6 million, and $ 4.5 million for the years ended December 31, 2023, 2022, and 2021, respectively.

The interest expense on long-term debt was $ 5.0 million, $ 6.8 million, and $ 4.6 million at years ended December 31, 2024, 2023, and 2022, respectively.

Junior Subordinated Debentures :

2 unchanged sentences

The proceeds from the sale of the securities and the issuance of common stock by these trusts were invested in these Junior Subordinated Debentures issued by the Company.

These trust preferred securities bear interest at a rate of three-month Secured Overnight Financing Rate ("SOFR") plus the London Interbank Offered Rate ("LIBOR") credit spread (combined 5.65 % at December 31, 2023), plus an applicable credit spread.

These trust preferred securities bear interest at a rate of three-month SOFR plus the London Interbank Offered Rate (“LIBOR”) credit spread (combined 4.62 % at December 31, 2024), plus an applicable credit spread.

Information relating to these trust preferred securities at December 31, 2024 is as follows:

6 unchanged sentences

Subordinated Debentures :

On March 14, 2019 the Company issued subordinated debentures with an aggregate principal amount of $ 50.0 million in a private placement transaction to institutional accredited investors, which remained outstanding at both December 31, 2023 and 2022.

The subordinated debentures mature on March 15, 2029.

However, with regulatory approval, the Company may redeem the subordinated debentures without penalty at any scheduled payment date on or after March 15, 2024 with 30 days' notice.

The subordinated debentures carry a fixed rate of interest of 4.75 % through March 15, 2024, after which interest converts to a variable rate of the then current three-month SOFR rate plus 219 basis points.

On March 14, 2019 the Company issued subordinated debentures with an aggregate principal amount of $ 50.0 million in a private placement transaction to institutional accredited investors.

These subordinated debentures were fully redeemed during the first quarter of 2024.

At December 31, 2024, the Company held no long-term debt scheduled to mature within the next 5 years.

3 unchanged sentences

Shares from the 2018 Plan may be awarded in the form of stock options or restricted stock, and shares from the 2023 Plan may be awarded in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, or other stock-based awards from its pool of authorized but unissued shares.

Upon adoption of the 2023 Plan on May 18, 2023, the Second Amended and Restated 2005 Employee Stock Plan (the "2005 Plan") was terminated in its entirety and the Company will no longer grant awards under the 2005 Plan, however awards outstanding under the 2005 Plan will continue to remain outstanding in accordance with their terms.

Upon adoption of the 2023 Plan on May 18, 2023, the Second Amended and Restated 2005 Employee Stock Plan (the “2005 Plan”) was terminated in its entirety and the Company no longer grants awards under the 2005 Plan.

However, awards outstanding under the 2005 Plan will continue to remain outstanding in accordance with their terms.

The following table presents the amount of cumulatively granted stock option awards and restricted stock awards, net of forfeitures and expirations, granted through December 31, 2024:

20 unchanged sentences

(1) any unvested options or unvested restricted stock vest upon a Change of Control;

and, that (2) any stock options which vest pursuant to a Change of Control, which is an event described in Section 280G of the Internal Revenue Code of 1986, will be cashed out at the difference between the acquisition price and the exercise price of the stock option.

and, that (2) any stock options which vest pursuant to a Change of Control, which is an event described in Section 280G of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), will be cashed out at the difference between the acquisition price and the exercise price of the stock option.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

28 unchanged sentences

(2) Represents vested stock options outstanding to Directors.

For the year ended December 31, 2023, all outstanding stock option awards are vested and there is no unrecognized compensation expense related to those options.

At December 31, 2024, all outstanding stock option awards are vested and there is no unrecognized compensation expense related to those options.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

1 unchanged sentence

The Company grants both time-vested restricted stock awards as well as performance-based restricted stock awards.

The fair value of the restricted stock awards are based upon the average of the high and low prices at which the Company’s common stock traded on the date of grant.

The fair value of the restricted stock awards is based upon the average of the high and low prices at which the Company’s common stock traded on the date of grant.

The holders of time-vested restricted stock awards participate fully in the rewards of stock ownership of the Company, including voting and dividend rights.

4 unchanged sentences

2/22/2024 106,200 2023 $ 52.73 Ratably over 3 years from grant date

2/16/2023 12,309 2005 $ 80.65 Ratably over 5 years beginning on February 6, 2023

4/15/2024 1,650 2023 $ 48.49 Ratably over 3 years from grant date

4 unchanged sentences

2/16/2023 77,525 2005 $ 80.65 Ratably over 3 years from grant date

2/16/2023 12,309 2005 $ 80.65 Ratably over 5 years, on each anniversary of February 6, 2023 start date

5/15/2023 1,080 2005 $ 46.21 Ratably over 3 years from grant date

2 unchanged sentences

9/15/2023 5,270 2023 $ 51.44 Ratably over 5 years from grant date

5/25/2021 7,680 2018 $ 78.18 Immediately upon grant date

9/15/2023 3,020 2023 $ 51.44 Ratably over 3 years from grant date

12/15/2023 460 2023 $ 66.24 Ratably over 3 years from grant date

2/17/2022 52,100 2005 $ 84.70 Ratably over 5 years from grant date

5/24/2022 8,099 2018 $ 80.39 Immediately upon grant date

9/15/2022 646 2005 $ 77.44 Ratably over 5 years from grant date

Performance-based

26 unchanged sentences

(1) Forfeited amounts are inclusive of 2,968 performance-based shares that were not vested based on performance objective criteria results, and 2,871 performance-based shares that were cancelled based on the departure of certain executives of the Company.

(2) There are no unvested restricted stock awards outstanding to Directors and therefore no related unrecognized compensation cost for Directors.

NOTE 9 DERIVATIVES AND HEDGING ACTIVITIES

32 unchanged sentences

(in thousands) (in years) (in thousands)

Interest rate swaps on borrowings $ 400,000 2.58 5.34 % 3.67 % $ 1,901

Current Rate Paid Receive Fixed

Interest rate swaps on loans 850,000 2.50 5.36 % 2.72 % ( 27,350 )

4 unchanged sentences

For derivative instruments that are designated and qualify as cash flow hedging instruments, the effective portion of the gains or losses is reported as a component of other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

The Company expects approximately $ 3.9 million (pre-tax) to be reclassified as an increase to interest income and $ 19.9 million (pre-tax) to be reclassified as an increase to interest expense, from OCI related to the Company’s cash flow hedges in the twelve months following December 31, 2023.

The Company expects approximately $ 1.7 million (pre-tax) to be reclassified as an increase to net interest income and $ 10.3 million (pre-tax) to be reclassified as a decrease to net interest income, from other comprehensive income related to the Company’s cash flow hedges in the twelve months following December 31, 2024.

This reclassification is due to anticipated payments that will be made and/or received on the swaps based upon the forward curve at December 31, 2024.

53 unchanged sentences

The change in fair value of loans held for sale is recorded in current period earnings as a component of mortgage banking income in accordance with the Company’s fair value election.

The fair value of loans held for sale increased by $ 97,000 for the year ended December 31, 2023 and decreased by $ 452,000 and $ 1.7 million for the years ended December 31, 2022 and 2021, respectively.

The fair value of loans held for sale decreased by $ 20,000 , increased by $ 97,000 and decreased by $ 452,000 for the years ended December 31, 2024, 2023 and 2022, respectively.

These amounts were offset in earnings by the change in the fair value of mortgage derivatives.

18 unchanged sentences

The Company expects that these best efforts forward loan sale commitments will experience a net neutral shift in fair value with related derivative loan commitments.

The aggregate amount of net realized gains on sales of mortgage loans included within mortgage banking income was $ 1.0 million, $ 562,000 and $ 19.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The aggregate amount of net realized gains on sales of mortgage loans included within mortgage banking income was $ 4.1 million, $ 1.0 million and $ 562,000 for the years ended December 31, 2024, 2023 and 2022, respectively.

Balance Sheet Offsetting

21 unchanged sentences

Forward sale loan commitments 13 17 — —

Forward sale hedge commitments 58 — — —

Total derivatives not designated as hedges 101,234 102,021 101,021 101,778

7 unchanged sentences

(2) All liability derivatives are located in other liabilities on the balance sheet .

(3) As of December 31, 2023, approximately $ 316,000 and $ 3.0 million of accrued interest receivable is included in the fair value of interest rate and loan level derivative assets, respectively.

Accrued interest receivable of approximately $ 2.2 million is included in the fair value of loan level derivative assets at December 31, 2022.

(4) Approximately $ 1.9 million and $ 3.0 million of accrued interest payable is included in the fair value of interest rate and loan level derivative liabilities, respectively, at December 31, 2023, in comparison to accrued interest payable of approximately $ 1.3 million and $ 2.2 million, respectively, at December 31, 2022.

(3) A pproximately $ 195,000 and $ 2.2 million of accrued interest receivable is included in the fair value of interest rate and loan level derivative assets, respectively, at December 31, 2024, in comparison to accrued interest receivable of approximately $ 316,000 and $ 3.0 million, respectively at December 31, 2023.

(4) Approximately $ 825,000 and $ 2.2 million of accrued interest payable is included in the fair value of interest rate and loan level derivative liabilities, respectively, at December 31, 2024, in comparison to accrued interest payable of approximately $ 1.9 million and $ 3.0 million, respectively, at December 31, 2023.

(5) Netting adjustments represent the amounts recorded to convert derivative assets and liabilities cleared through CME from a gross basis to a net basis, inclusive of the variation margin payments, in accordance with applicable accounting guidance.

56 unchanged sentences

Other tax credits — — % ( 76 ) ( 0.02 ) % — — %

Merger and other related costs (non-deductible) — — % — — % 630 0.40 %

Other, net 1,963 0.79 % 1,337 0.43 % 810 0.25 %

13 unchanged sentences

Operating lease liability 15,471 15,387

State purchased credits 21,448 —

Other 621 587

5 unchanged sentences

Deferred loan fees, net 8,080 8,160

Derivatives fair value adjustment — —

Fixed assets 14,747 16,606

19 unchanged sentences

Reduction of tax positions for prior years ( 1,047 )

Increase for prior year tax positions 128

Increase for current year tax positions 761

1 unchanged sentence

Reduction of tax positions for prior years ( 959 )

Increase for prior year tax position 128

Increase for current year tax positions 761

Balance at December 31, 2023 $ 1,761

10 unchanged sentences

Expense (benefit) recognized in provision for income taxes ( 306 ) 104 ( 335 )

Acquired obligation for interest and penalties (1) — — 756

Ending Balance $ 383 $ 689 $ 585

18 unchanged sentences

In conjunction with the acquisition of Peoples Federal Bancshares, Inc., the parent of Peoples Federal Savings Bank (“Peoples”) in 2015, the Company acquired the Peoples Federal Defined Benefit Pension Plan (“Peoples Plan”).

The Peoples Plan was frozen at the date of acquisition and will be maintained in the same manner as the Pension Plan.

The Peoples Plan is also administered by Pentegra Retirement Services under the same Fund as the Pension Plan.

The Peoples Plan was frozen at the date of acquisition and maintained in the same manner as the Pension Plan.

The Peoples Plan was also administered by Pentegra Retirement Services under the same Fund as the Pension Plan.

Effective July 1, 2024, the Company withdrew The Peoples Bank from the Pension Plan and adopted The Peoples Bank Defined Benefit Pension Plan (“the Peoples DBP Plan”) as a qualified successor plan, which was fully funded.

Subsequent to year end, the Company’s Board of Directors voted to terminate the Peoples DBP Plan.

Pursuant to the Peoples DBP Plan’s pending termination, all obligations due under the terms of the Peoples DBP Plan will be satisfied during the year ending December 31, 2025.

The Company’s participation in the Pension Plan and the Peoples Plan (the “Pension Plans”) for the annual period ended December 31, 2024, is outlined in the table below.

12 unchanged sentences

Pentegra defined benefit plan for financial institutions 13-5645888/333 At least 80 percent At least 80 percent No No N/A $ —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Contributions to the Fund are based on each individual employer’s experience.

2 unchanged sentences

The Company’s total contributions to the Pension Plan did not represent more than 5 % of the total contributions to the Pension Plan as indicated in the Pension Plan’s most recently available annual report dated June 30, 2024.

The comparability

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of employer contributions is impacted by asset performance, discount rates and the reduction in the number of covered employees year over year.

The comparability of employer contributions is impacted by asset performance, discount rates and the reduction in the number of covered employees year over year.

The Company’s contributions to the Pension Plans were as follows for the periods indicated:

6 unchanged sentences

In conjunction with the acquisition of Blue Hills Bancorp, Inc., parent of Blue Hills Bank (collectively, “BHB”) in 2019, the Company acquired the Savings Banks Employees Retirement Association Pension Plan as adopted by BHB (the “BHB Plan”).

The BHB Plan is administered by Savings Banks Employees Retirement Association ("SBERA") and was frozen on October 31, 2014.

The BHB Plan is administered by Savings Banks Employees Retirement Association and was frozen on October 31, 2014.

Accumulated benefits for participants earned through the end of October 2014 remain secured by the BHB Plan assets as of December 31, 2024 and 2023.

6 unchanged sentences

Actual return on plan assets 508 509 ( 2,126 )

Employer contribution — — 950

Benefits paid ( 391 ) ( 766 ) ( 2,084 )

3 unchanged sentences

Interest cost 388 420 366

Actuarial loss (gain) 15 ( 3,505 ) ( 901 )

Actuarial (gain) loss ( 484 ) 15 ( 3,505 )

Benefits paid ( 391 ) ( 766 ) ( 2,084 )

2 unchanged sentences

At December 31, 2024 and 2023, the discount rate used to determine the benefit obligation was 5.44 % and 4.77 %, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The components of net period pension expense (benefit) are as follows:

7 unchanged sentences

Net period pension expense (benefit) $ 76 $ 234 $ ( 603 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The key assumptions used to determine net periodic pension expense (benefit) are as follows:

4 unchanged sentences

Assumptions with respect to the expected long-term rate of return are based on prevailing yields on high-quality, fixed-income investments increased by a premium for equity return expectations.

During the year ended December 31, 2022, the Company's Board of Directors voted to terminate the BHB Plan.

In 2022, the Company’s Board of Directors voted to terminate the BHB Plan.

As a result, the assets of the BHB plan were transferred to a money market account until the termination is approved by all regulatory bodies, which resulted in a lower long term rate of return on plan assets.

Presented in the table below are the e stimated future benefit payments for the BHB Plan.

These payments were calculated prior to the approval of the BHB Plan's termination.

Presented in the table below are the estimated future benefit payments for the BHB Plan.

These payments reflect calculated amounts prior to the approval of the BHB Plan's termination.

(Dollars in thousands)

2030-2034 $ 2,744

The Company’s total defined benefit plan expense was $ 487,000 , $ 562,000 , and $ 1.2 million, for the years ending December 31, 2023, 2022, and 2021, respectively.

The Company’s total defined benefit plan expense was $ 716,000 , $ 487,000 , and $ 562,000 , for the years ending December 31, 2024, 2023, and 2022, respectively.

The 2024 increase in expense was attributable to the newly adopted Peoples DBP Plan, as described above.

Supplemental Executive Retirement Plans

3 unchanged sentences

These agreements provide for the Bank to pay all benefits from its general assets, and the establishment of these trust funds does not reduce nor otherwise affect the Bank’s continuing liability to pay benefits from such assets except that the Bank’s liability shall be offset by actual benefit payments made from the trusts.

The related trust assets included in the Company's available for sale securities portfolio totaled $ 20.0 million and $ 18.6 million at December 31, 2023 and 2022, respectively.

The related trust assets included in the Company’s equity securities portfolio totaled $ 18.7 million and $ 20.0 million at December 31, 2024 and 2023, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table shows the defined benefit supplemental retirement expense, and the contributions paid to the plans which were used only to pay the current year benefits for the years indicated:

3 unchanged sentences

Benefits paid $ 1,120 $ 450 $ 475

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Expected future benefit payments for the defined benefit supplemental executive retirement plans are presented below:

27 unchanged sentences

Amounts recognized in accumulated other comprehensive income (“AOCI”)

Net (gain) loss $ ( 1,518 ) $ ( 1,970 ) $ 3,002

Net gain $ ( 2,567 ) $ ( 1,518 ) $ ( 1,970 )

Prior service cost — — 22

7 unchanged sentences

Amortization of prior service cost — 22 22

Recognized net actuarial (gain) loss ( 460 ) 606 1,103

Recognized net actuarial loss (gain) 4 ( 460 ) 606

Net periodic benefit cost $ 749 $ 703 $ 1,681

11 unchanged sentences

The Bank has an Employee Savings Plan that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code.

Under the Employee Savings Plan, participating employees may defer a portion of their earnings, not to exceed the Internal Revenue Service annual contribution limits.

The Bank matches 25 % of each employee’s contributions up to

Under the Employee Savings Plan, participating employees may defer a portion of their earnings, not to exceed the IRS annual contribution limits.

The Bank matches 25 % of each employee’s contributions up to the first 6 % of the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the first 6 % of the employee’s eligible earnings.

employee’s eligible earnings.

The 401(k) Plan incorporates an Employee Stock Ownership Plan for contributions invested in the Company’s common stock.

20 unchanged sentences

Under the plan that took effect January 1, 2019, participating directors may defer all or a portion of their cash compensation into a choice of diversified investment portfolios comprised of stocks, bonds and cash.

There was no compensation deferred during 2023 and compensation of $ 113,000 and $ 84,000 was deferred during 2022 and 2021, respectively.

There was no compensation deferred during 2024 and 2023.

Compensation of $ 113,000 was deferred during 2022.

NOTE 13 FAIR VALUE MEASUREMENTS

143 unchanged sentences

Securities held to maturity (a)

government agency securities $ 29,521 $ 28,408 $ — $ 28,408 $ —

treasury securities $ 100,791 $ 93,022 $ — $ 93,022 $ —

1 unchanged sentence

Agency collateralized mortgage obligations 422,827 357,684 — 357,684 —

Single issuer trust preferred securities issued by banks 1,500 1,373 — 1,373 —

Small business administration pooled securities 122,868 114,733 — 114,733 —

7 unchanged sentences

Junior subordinated debentures (g) 62,860 61,661 — 61,661 —

Subordinated debentures (f) 49,980 49,613 — — 49,613

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

124 unchanged sentences

The safe deposit box rental fee is paid upfront and is recognized as revenue ratably over the annual term of the contract.

1031 Exchange Fee Revenue

The Company provides like-kind exchange services pursuant to Section 1031 of the Internal Revenue Code.

Fee income is recognized in conjunction with completing the exchange transactions.

The like-kind exchange services provided in connection with this revenue stream ceased during 2023.

Foreign Currency

17 unchanged sentences

Amortization of net prior service costs 17 ( 5 ) 12

Amortization of net settlement credits ( 25 ) 7 ( 18 )

Net change in other comprehensive income for defined benefit postretirement plans (1) 1,877 ( 513 ) 1,364

8 unchanged sentences

Change in fair value of cash flow hedges ( 5,078 ) 1,428 ( 3,650 )

net cash flow hedge gains reclassified into interest income or interest expense 5,054 ( 1,421 ) 3,633

net cash flow hedge losses reclassified into interest income or interest expense ( 27,414 ) 7,709 ( 19,705 )

Net change in fair value of cash flow hedges 22,336 ( 6,281 ) 16,055

Net unamortized gain related to defined benefit pension and other postretirement adjustments arising during the period 210 ( 59 ) 151

Amortization of net actuarial losses 635 ( 179 ) 456

Amortization of net actuarial gains ( 536 ) 151 ( 385 )

Amortization of net prior service costs 39 ( 11 ) 28

1 unchanged sentence

Net change in other comprehensive income for defined benefit postretirement plans (1) ( 312 ) 88 ( 224 )

Total other comprehensive loss $ ( 219,431 ) $ 54,164 $ ( 165,267 )

Total other comprehensive income $ 64,043 $ ( 15,786 ) $ 48,257

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12 unchanged sentences

Amortization of net prior service costs 39 ( 11 ) 28

Amortization of net settlement credits ( 31 ) 9 ( 22 )

Net change in other comprehensive income for defined benefit postretirement plans (1) 6,246 ( 1,756 ) 4,490

6 unchanged sentences

January 1, 2022 $ ( 9,667 ) $ 14,137 $ ( 2,287 ) $ 2,183

Other comprehensive income (loss) ( 22,922 ) ( 19,139 ) 3,549 ( 38,512 )

Other comprehensive (loss) income ( 118,990 ) ( 50,767 ) 4,490 ( 165,267 )

Ending balance:

3 unchanged sentences

December 31, 2023 $ ( 96,231 ) $ ( 20,575 ) $ 1,979 $ ( 114,827 )

Other comprehensive income (loss) 32,426 16,055 ( 224 ) 48,257

Other comprehensive income 16,743 6,713 1,364 24,820

Ending balance:

7 unchanged sentences

When a decision is made to exit a leased location, the Company may incur certain termination costs and/or lease impairment charges, if applicable.

Accordingly, the Company recognized $ 589,000 , $ 4.4 million, and $ 2.3 million of such exit costs during the years ended December 31, 2023, 2022, and 2021, respectively, with the 2022 and 2021 costs recorded through merger and acquisition expense within the consolidated income statements in relation to the Meridian acquisition.

Accordingly, the Company recognized $ 555,000 , $ 589,000 , and $ 4.4 million of such exit costs during the years ended December 31, 2024, 2023, and 2022, respectively, with the 2022 costs recorded through merger and acquisition expense within the Consolidated Income Statements in relation to the Meridian acquisition.

The following table provides information related to the Company’s lease costs for the periods indicated:

52 unchanged sentences

The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

At December 31, 2023 the most recent notification from the Federal Deposit Insurance Corporation indicated that the Bank's capital levels met or exceeded the minimum levels to be considered "well capitalized" for bank regulatory purposes.

At December 31, 2024 the Bank’s capital levels met or exceeded the minimum levels to be considered “well capitalized” for bank regulatory purposes.

To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based, Common equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables.

There are no conditions or events since the notification that management believes have changed the Bank’s category.

Management believes, as of December 31, 2024 and 2023, that the Company and the Bank met all capital adequacy requirements to which they are subject.

42 unchanged sentences

In accordance with the applicable accounting standard related to variable interest entities, the common stock of trusts which have issued trust preferred securities have not been included in the consolidated financial statements of the Company.

At both December 31, 2023 and 2022, there were $ 61.0 million in trust preferred securities that have been included within total capital of the Company for regulatory reporting purposes pursuant to the Federal Reserve's capital adequacy guidelines.

For regulatory purposes, bank holding companies are allowed to include trust preferred securities in Tier 1 capital up to a certain limit.

Provisions in the Dodd-Frank Act generally exclude trust preferred securities from Tier 1 capital, however, holding companies with consolidated assets of less than $15 billion at December 31, 2009, are able to permanently include these instruments in Tier 1 capital, unless the Company crosses the consolidated assets threshold as a result of merger and acquisition activity.

Accordingly, as the Company’s 2021 acquisition of Meridian resulted in the crossing of $15 billion in its consolidated assets, its trust preferred securities were phased out of Tier 1 capital and included within Tier 2 capital as of December 31, 2021, in accordance with applicable regulatory guidance.

All obligations under these trust preferred securities are unconditionally guaranteed by the Company.

At both December 31, 2024 and 2023, there were $ 61.0 million in trust preferred securities that have been included within Tier 2 Capital of the Company for regulatory reporting purposes, pursuant to the Federal Reserve’s capital adequacy guidelines.

NOTE 19 PARENT COMPANY FINANCIAL STATEMENTS

1 unchanged sentence

The statement of stockholders’ equity is not presented below as the parent company’s stockholders’ equity is that of the consolidated Company.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

BALANCE SHEETS

4 unchanged sentences

Deferred tax asset 430 429

Other assets (2) — 2,297

Total assets $ 3,080,622 $ 3,034,403

3 unchanged sentences

62,860 62,858

Subordinated debentures (less unamortized debt issuance costs of $ 20 and $ 115 )

49,980 49,885

Subordinated debentures (less unamortized debt issuance costs of $ 20 )

Other liabilities 417 2,734

4 unchanged sentences

(2) Majority of balance eliminates in consolidation .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

STATEMENTS OF INCOME

22 unchanged sentences

Amortization 22 98 96

Deferred income tax expense 24 28 12

Deferred income tax (benefit) expense ( 1 ) 24 28

Change in prepaid income taxes and other assets 179 2,107 ( 623 )

2 unchanged sentences

Net cash provided by operating activities 175,976 224,127 204,326

Cash flows provided by investing activities

Net cash acquired in business combinations — — 119,816

Net cash provided by in investing activities — — 119,816

Cash flows used in financing activities

Repayments of long-term debt, net of issuance costs — — ( 14,063 )

Repayments of subordinated debentures, net of issuance costs ( 50,000 ) — —

Restricted stock awards issued, net of awards surrendered ( 815 ) ( 1,142 ) ( 1,084 )

4 unchanged sentences

Net cash used in financing activities ( 174,667 ) ( 285,316 ) ( 246,468 )

Net (decrease) increase in cash and cash equivalents ( 61,189 ) ( 42,142 ) 111,515

Net increase (decrease) in cash and cash equivalents 1,309 ( 61,189 ) ( 42,142 )

Cash and cash equivalents at the beginning of the year 108,788 169,977 212,119

Cash and cash equivalents at the end of the year $ 110,097 $ 108,788 $ 169,977

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 20 TRANSACTIONS WITH RELATED PARTIES

11 unchanged sentences

Principal balance of loans outstanding at end of year $ 11,408 $ 11,927 $ 26,721

(1) The 2021 amount includes $ 10.6 million of loans associated with a new director, which represent the outstanding loans balances at the effective date of appointment.

At December 31, 2024 and 2023, there were no loans to related parties which were past due, on nonaccrual status or that had been restructured due to financial difficulty.

2 unchanged sentences

At December 31, 2024 and 2023, there were no material leases with related parties.

NOTE 21 SEGMENT INFORMATION

The Company is a bank holding company, the principal subsidiary of which is the Bank.

The Bank provides a variety of banking, investment, and financial services through its retail branches, commercial banking centers, investment management offices, and mortgage lending centers throughout Eastern Massachusetts, as well as Worcester County (Massachusetts) and Rhode Island.

The Bank is a community-oriented commercial bank, and has only one reportable segment, which is community banking.

The community banking segment derives revenues primarily from providing loans to individuals and small-to-medium sized businesses in its market area.

The accounting policies of the community banking segment are the same as those described in Note 1, “Summary of Significant Accounting Policies” within the Notes to Consolidated Financial Statements included in Item 8.

The Company’s reportable segment is determined by the Chief Executive Officer and Chief Financial Officer, who are the Company’s designated chief operating decision makers ("CODMs"), based upon information about the Company’s products and services offered to customers as part of its community banking operations.

The CODMs assess performance for the community banking segment and decide how to allocate resources based on the Company’s consolidated net income and diluted earnings per share, as reported in the Consolidated Statements of Income.

The significant expense categories reviewed by the CODMs are also consistent with those presented on the Consolidated Statements of Income, with an emphasis on interest expense on deposits and borrowings, as well as provision for credit losses, salaries and benefits, and occupancy and equipment costs.

Other segment expenses are comprised of the remaining expense categories presented on the Consolidated Statements of income, including other non-interest expenses.

Other non-interest expenses are inclusive of costs related to professional services, advertising, technology and communications costs, and various other general and administrative costs.

Net income and diluted earnings per share are used by the CODMs to monitor management’s budgeted results versus actual, as we ll as to benchmark the Company’s relative performance against other banking institutions in its peer group.

The results of these mon itoring and benchmarking analyses are used in assessing performance of the community banking segment and to inform decisions surrounding general corporate strategy, capital allocations, and compensation.

A sset details provided to the CODMs

are consistent with those reported on the Consolidated Balance Sheets, with an emphasis on interest-earning assets, including loans and investment securities, which provide the majority of revenues generated by the community banking segment.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data