INDEPENDENT BANK CORP 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Independent Bank Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Independent Bank Corp. (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. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 28, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved 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. 69 Allowance for credit losses Description of the matter The Company’s loan portfolio totaled $14.5 billion as of December 31, 2024, and the associated allowance for credit losses (“allowance”) was $170 million. As discussed in Notes 1 and 3 to the consolidated financial statements, the Company estimates the allowance on a collective basis for loans sharing similar risk characteristics using a quantitative model based on probability of default, loss given default and exposure at default estimates, which are derived from internal historical default and loss experience, adjusted for economic forecasts. The output is then combined with an assessment of qualitative factors, including economic and business conditions, changes to collateral values and other external factors, which factors are designed to address forecast risk and model risk inherent in the quantitative model output. Loans that do not share similar risk characteristics are individually evaluated and an allowance is determined based on a discounted cash flow or the fair value of collateral. Auditing the Company’s allowance for credit losses was complex due to the quantitative modeling used and involved subjective judgment to evaluate management’s determination of the qualitative risk factor adjustments and the allowance on individually evaluated loans described above. How we addressed the matter in our audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s allowance process, which included, among others, controls over the appropriateness of the methodology, the development, operation and monitoring of the quantitative model, the reliability and accuracy of data used in developing the estimate, and management’s review and approval process over the economic forecasts, qualitative adjustments, individually evaluated loans, and overall allowance result. With the assistance of EY Specialists we tested management’s quantitative model including evaluating the conceptual soundness of model methodology, assessing model performance and governance, and testing key modeling assumptions, including the reasonable and supportable forecast period. To test the qualitative factors, among other procedures, we assessed management’s methodology and considered whether relevant risks were reflected in the models and whether adjustments to the model output were appropriate. We tested the completeness, accuracy and relevance of the underlying data used to estimate the qualitative adjustments. We evaluated whether qualitative adjustments were reasonable based on changes in economic conditions, the loan portfolio, management’s policies and procedures, and lending personnel. For example, we evaluated the reasonableness of qualitative adjustments for economic and business conditions, changes to collateral values and other external factors. We also assessed whether qualitative adjustments were consistent with publicly available information. 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, 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. We evaluated the methodologies and the assumptions used by management in determining the likelihood of recoverability and valuation of the underlying collateral. Procedures performed included testing the completeness and accuracy of management’s population and testing the calculation of the allowance on individually evaluated loans. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2009 Boston, Massachusetts February 28, 2025 70 INDEPENDENT BANK CORP. CONSOLIDATED BALANCE SHEETS (Dollars in thousands) December 31 2024 2023 Assets Cash and due from banks $ 187,849 $ 178,861 Interest-earning deposits with banks 32,041 45,469 Securities Trading 4,245 4,987 Equities 21,204 22,510 Available for sale (amortized cost $ 1,353,964 and $ 1,459,862 ) 1,250,944 1,334,256 Held to maturity (fair value $ 1,291,801 and $ 1,417,608 ) 1,434,956 1,569,107 Total securities 2,711,349 2,930,860 Loans held for sale (at fair value) 7,271 6,368 Loans Commercial and industrial 3,047,671 2,925,823 Commercial real estate 6,756,708 6,695,671 Commercial construction 782,078 849,586 Small business 281,781 251,956 Residential real estate 2,460,600 2,424,754 Home equity - first position 490,115 518,706 Home equity - subordinate positions 650,053 578,920 Other consumer 39,372 32,654 Total loans 14,508,378 14,278,070 Less: allowance for credit losses ( 169,984 ) ( 142,222 ) Net loans 14,338,394 14,135,848 Federal Home Loan Bank stock 31,573 43,557 Bank premises and equipment, net 193,320 193,049 Goodwill 985,072 985,072 Other intangible assets 12,284 18,190 Cash surrender value of life insurance policies 303,965 297,387 Other assets 570,447 512,712 Total assets $ 19,373,565 $ 19,347,373 Liabilities and Stockholders’ Equity Deposits Noninterest-bearing demand deposits $ 4,390,703 $ 4,567,083 Savings and interest checking accounts 5,207,548 5,298,913 Money market 2,960,381 2,818,072 Time certificates of deposit 2,747,346 2,181,479 Total deposits 15,305,978 14,865,547 Borrowings Federal Home Loan Bank borrowings 638,514 1,105,541 Junior subordinated debentures (less unamortized debt issuance costs of $ 28 and $ 30 ) 62,860 62,858 Subordinated debentures (less unamortized debt issuance costs of $ 20 ) — 49,980 Total borrowings 701,374 1,218,379 Other liabilities 373,093 368,196 Total liabilities 16,380,445 16,452,122 Commitments and contingencies — — Stockholders’ Equity Preferred stock, $ 0.01 par value; authorized: 1,000,000 shares, outstanding: none — — Common stock, $ 0.01 par value; authorized: 75,000,000 shares, issued and outstanding: 42,500,611 shares at December 31, 2024 and 42,873,187 shares at December 31, 2023 (includes 199,410 and 162,812 shares of unvested participating restricted stock awards, respectively) 423 427 Value of shares held in rabbi trust at cost: 78,088 shares at December 31, 2024 and 80,222 shares at December 31, 2023 ( 3,383 ) ( 3,298 ) Deferred compensation obligation 3,383 3,298 Additional paid in capital 1,909,980 1,932,163 Retained earnings 1,172,724 1,077,488 Accumulated other comprehensive loss, net of tax ( 90,007 ) ( 114,827 ) Total stockholders’ equity 2,993,120 2,895,251 Total liabilities and stockholders’ equity $ 19,373,565 $ 19,347,373 The accompanying notes are an integral part of these consolidated financial statements. 71 INDEPENDENT BANK CORP. CONSOLIDATED STATEMENTS OF INCOME Years Ended December 31 2024 2023 2022 (Dollars in thousands, except per share data) Interest income Interest and fees on loans $ 789,274 $ 730,008 $ 577,923 Taxable interest and dividends on securities 57,092 60,336 50,354 Nontaxable interest and dividends on securities 6 6 6 Interest on loans held for sale 712 190 172 Interest on federal funds sold and short-term investments 5,669 5,186 14,385 Total interest and dividend income 852,753 795,726 642,840 Interest expense Interest on deposits 246,962 144,752 24,652 Interest on borrowings 44,062 44,453 4,939 Total interest expense 291,024 189,205 29,591 Net interest income 561,729 606,521 613,249 Provision for credit losses 36,250 23,250 6,500 Net interest income after provision for credit losses 525,479 583,271 606,749 Noninterest income Deposit account fees 26,455 23,486 23,370 Interchange and ATM fees 19,055 18,108 16,249 Investment management 42,744 40,191 36,832 Mortgage banking income 4,143 2,326 3,515 Increase in cash surrender value of life insurance policies 8,086 7,868 7,685 Gain on life insurance benefits 457 2,291 1,291 Loan level derivative income 2,117 3,327 2,932 Other noninterest income 24,957 27,012 22,793 Total noninterest income 128,014 124,609 114,667 Noninterest expenses Salaries and employee benefits 233,653 222,135 204,711 Occupancy and equipment expenses 52,072 50,582 49,841 Data processing & facilities management 9,957 9,884 9,320 Software and subscriptions 18,152 16,165 13,655 FDIC assessment 10,892 11,953 6,951 Debit card expense 6,630 9,003 7,670 Consulting expense 7,125 8,954 9,617 Amortization of intangible assets 5,905 6,878 7,655 Merger and acquisition expense 1,902 — 7,100 Other noninterest expenses 60,078 57,192 57,142 Total noninterest expenses 406,366 392,746 373,662 Income before income taxes 247,127 315,134 347,754 Provision for income taxes 55,046 75,632 83,941 Net Income $ 192,081 $ 239,502 $ 263,813 Basic earnings per share $ 4.52 $ 5.42 $ 5.69 Diluted earnings per share $ 4.52 $ 5.42 $ 5.69 Weighted average common shares (basic) 42,499,492 44,181,540 46,372,051 Common share equivalents 12,309 12,007 17,938 Weighted average common shares (diluted) 42,511,801 44,193,547 46,389,989 Cash dividends declared per common share $ 2.28 $ 2.20 $ 2.08 The accompanying notes are an integral part of these consolidated financial statements. 72 INDEPENDENT BANK CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31 2024 2023 2022 (Dollars in thousands) Net income $ 192,081 $ 239,502 $ 263,813 Other comprehensive income (loss), net of tax Net change in fair value of securities available for sale 16,743 32,426 ( 118,990 ) Net change in fair value of cash flow hedges 6,713 16,055 ( 50,767 ) Net change in other comprehensive income for defined benefit postretirement plans 1,364 ( 224 ) 4,490 Total other comprehensive income (loss) 24,820 48,257 ( 165,267 ) Total comprehensive income $ 216,901 $ 287,759 $ 98,546 The accompanying notes are an integral part of these consolidated financial statements. 73 INDEPENDENT BANK CORP. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Common Stock Outstanding Common Stock Value of Shares Held in Rabbi Trust at Cost Deferred Compensation Obligation Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total (Dollars in thousands, except per share data) Balance December 31, 2021 47,349,778 $ 472 $ ( 3,146 ) $ 3,146 $ 2,249,078 $ 766,716 $ 2,183 $ 3,018,449 Net income — — — — — 263,813 — 263,813 Other comprehensive loss — — — — — — ( 165,267 ) ( 165,267 ) Common dividend declared ($ 2.08 per share) — — — — — ( 96,087 ) — ( 96,087 ) Stock based compensation — — — — 4,464 — — 4,464 Restricted stock awards issued, net of awards surrendered 49,016 1 — — ( 1,085 ) — — ( 1,084 ) 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 — — — — Balance December 31, 2022 45,641,238 $ 455 $ ( 3,227 ) $ 3,227 $ 2,114,888 $ 934,442 $ ( 163,084 ) $ 2,886,701 Net income — — — — — 239,502 — 239,502 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 Restricted stock awards issued, net of awards surrendered 82,181 1 — — ( 1,136 ) — — ( 1,135 ) Shares issued under direct stock purchase plan 46,963 — — — 2,682 — — 2,682 Shares repurchased under share repurchase program (1) ( 2,900,433 ) ( 29 ) — — ( 190,729 ) — — ( 190,758 ) Deferred compensation and other retirement benefit obligations — — ( 71 ) 71 — — — — Balance December 31, 2023 42,873,187 $ 427 $ ( 3,298 ) $ 3,298 $ 1,932,163 $ 1,077,488 $ ( 114,827 ) $ 2,895,251 Net income — — — — — 192,081 — 192,081 Other comprehensive income — — — — — — 24,820 24,820 Common dividend declared ($ 2.28 per share) — — — — — ( 96,845 ) — ( 96,845 ) Proceeds from exercise of stock options, net of cash paid 1,667 — — — 81 — — 81 Stock based compensation — — — — 6,523 — — 6,523 Restricted stock awards issued, net of awards surrendered 99,692 1 — — ( 782 ) — — ( 781 ) Shares issued under direct stock purchase plan 58,331 — — — 3,287 — — 3,287 Shares repurchased under share repurchase program (1) ( 532,266 ) ( 5 ) — — ( 31,292 ) — — ( 31,297 ) Deferred compensation and other retirement benefit obligations — — ( 85 ) 85 — — — — Balance December 31, 2024 42,500,611 $ 423 $ ( 3,383 ) $ 3,383 $ 1,909,980 $ 1,172,724 $ ( 90,007 ) $ 2,993,120 (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. 74 INDEPENDENT BANK CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31 2024 2023 2022 (Dollars in thousands) Cash flow from operating activities Net income $ 192,081 $ 239,502 $ 263,813 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 40,889 36,102 38,799 Change in unamortized net loan costs and fees ( 1,739 ) ( 1,856 ) ( 7,119 ) (Accretion) amortization of acquired loans ( 538 ) ( 2,251 ) 175 Provision for credit losses 36,250 23,250 6,500 Deferred income tax (benefit) expense ( 10,600 ) 2,738 ( 1,254 ) Net (gain) loss on equity securities ( 423 ) ( 1,180 ) 3,061 Net loss (gain) on bank premises and equipment 155 310 ( 584 ) Realized gain on sale leaseback transaction — ( 193 ) ( 578 ) Stock based compensation 6,523 6,377 4,464 Increase in cash surrender value of life insurance policies ( 8,086 ) ( 7,877 ) ( 7,685 ) Gain on life insurance benefits ( 457 ) ( 2,291 ) ( 1,291 ) Operating lease payments ( 14,018 ) ( 13,863 ) ( 19,296 ) Change in fair value on loans held for sale 20 ( 97 ) 452 Net change in: Trading assets 742 ( 1,099 ) ( 168 ) Loans held for sale ( 923 ) ( 3,468 ) 21,424 Other assets ( 15,498 ) 23,504 65,263 Other liabilities 5,543 ( 20,614 ) 55,224 Total adjustments 37,840 37,492 157,387 Net cash provided by operating activities 229,921 276,994 421,200 Cash flows used in investing activities Proceeds from sales of equity securities — — 31 Purchases of equity securities ( 1,058 ) ( 742 ) ( 1,524 ) Proceeds from maturities and principal repayments of securities available for sale 235,144 106,713 139,923 Purchases of securities available for sale ( 129,379 ) — ( 123,289 ) Proceeds from maturities and principal repayments of securities held to maturity 138,399 140,888 166,712 Purchases of securities held to maturity — — ( 804,105 ) 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 ) Purchases of life insurance policies ( 114 ) ( 162 ) ( 163 ) Proceeds from life insurance policies 1,929 5,531 3,160 Net increase in loans ( 236,519 ) ( 378,735 ) ( 335,448 ) Purchases of bank premises and equipment ( 20,435 ) ( 15,844 ) ( 22,072 ) Proceeds from the sale of bank premises and equipment 92 113 3,344 Net cash used in investing activities ( 33,010 ) ( 211,650 ) ( 1,000,474 ) Cash flows used in financing activities Net increase (decrease) in time deposits 565,752 985,567 ( 334,381 ) 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 — Restricted stock awards issued, net of awards surrendered ( 815 ) ( 1,142 ) ( 1,084 ) Proceeds from shares issued under direct stock purchase plan 3,254 2,662 2,359 Payments for shares repurchased under share repurchase program ( 30,986 ) ( 188,910 ) ( 139,946 ) Common dividends paid ( 96,200 ) ( 98,006 ) ( 93,734 ) 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 75 Cash and cash equivalents at end of period $ 219,890 $ 224,330 $ 352,933 Cash paid during the year for Interest on deposits and borrowings $ 291,692 $ 183,068 $ 26,424 Income taxes $ 51,079 $ 43,706 $ 44,274 Supplemental schedule of noncash investing and financing activities Net increase in capital commitments relating to low-income housing project investments $ 46,070 $ 31,891 $ 17,643 Recognition of operating lease at commencement and/or extension $ 12,602 $ 7,916 $ 14,789 The accompanying notes are an integral part of these consolidated financial statements. 76 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) INDEPENDENT BANK CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Independent Bank Corp. (the “Company”) is a bank holding company, the principal subsidiary of which is Rockland Trust Company (“Rockland Trust” or the “Bank”). Rockland Trust is a state-chartered commercial bank which provides a variety of banking, investment and financial services through its retail branches, commercial banking centers, investment management offices, and mortgage lending centers located throughout Eastern Massachusetts as well as in Worcester County and Rhode Island. Rockland Trust deposits are insured by the Federal Deposit Insurance Corporation, subject to regulatory limits. The Company’s primary source of income is from providing loans to individuals and small-to-medium sized businesses in its market area. Rockland Trust is a community-oriented commercial bank, and the community banking business is the Company’s only reportable operating segment. Principles of Consolidation The consolidated financial statements include the accounts of the Company, the Bank and other wholly-owned subsidiaries, except subsidiaries that are not deemed necessary to be consolidated. All significant intercompany balances and transactions have been eliminated in consolidation. The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity under GAAP. Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities. The Company would consolidate voting interest entities in which it has all, or at least a majority of, the voting interest. As defined in applicable accounting standards, variable interest entities (“VIEs”) are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when the Company has both the power and ability to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company also owns the common stock of various trusts which have issued trust preferred securities. These trusts are VIEs in which the Company is not the primary beneficiary and, therefore, are not consolidated. The trust's only assets are junior subordinated debentures issued by the Company, which were acquired by the trust using the proceeds from the issuance of the trust preferred securities and common stock. The junior subordinated debentures are included in long-term debt and the Company’s equity interest in the trust is included in other assets in the accompanying Consolidated Balance Sheets. Interest expense on the junior subordinated debentures is reported in interest expense on long-term debt in the accompanying Consolidated Statements of Income. Reclassification 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; and • 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 77 Table of Contents 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. Concentrations of Credit Risk The vast majority of the Bank’s lending activities are conducted in New England. The Bank originates commercial and industrial loans, commercial and residential real estate loans, including construction loans, small business loans, home equity loans, and other consumer loans for its portfolio. The Bank tracks concentrations of credit across numerous categories and segments based on aggregate credit exposure, which includes direct, indirect or contingent obligations to a borrower or group of borrowers engaged in one industry and by property type. The Bank considers a concentration to exist when aggregate credit exposure of a category or segment exceeds 25% of the Bank's total risk-based capital (inclusive of Tier 2 capital instruments). Business Combinations In accordance with applicable accounting guidance, the Company recognizes assets acquired and liabilities assumed at their respective fair values as of the date of acquisition, with the related transaction costs expensed in the period incurred. The Company may use third party valuation specialists to assist in the determination of fair value of certain assets and liabilities at the acquisition date, including loans, core deposit intangibles and time deposits. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed on the acquisition date, the estimates are inherently uncertain. The allowance for credit losses on purchased credit deteriorated (“PCD”) loans is recognized within business combination accounting. The allowance for credit losses on non-PCD loans is recognized as a provision expense in the same period as the business combination. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents may include cash on hand, amounts due from banks, inclusive of interest-earning deposits held at banks, and federal funds sold. Generally, federal funds are sold for up to two week periods. Securities Investment securities are classified at the time of purchase as available for sale, held to maturity, trading, or equity. Classification is constantly re-evaluated for consistency with corporate goals and objectives. Trading and equity securities are recorded at fair value with subsequent changes in fair value recorded in earnings. Debt securities that management has the positive intent and ability to hold to maturity are classified as held to maturity and recorded at amortized cost. Securities not classified as held to maturity or trading are classified as available for sale and recorded at fair value, with changes in fair value excluded from earnings and reported in other comprehensive income, net of related tax. Purchase premiums and discounts are recognized in interest income, using the interest method, to arrive at periodic interest income at a constant effective yield, thereby reflecting the securities market yield. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method. Such gains and losses are recognized within non-interest income or non-interest expense within the Consolidated Statements of Income. Accrued interest receivable balances are excluded from the amortized cost of held to maturity securities and the fair value of available for sale securities and are included within other assets on the Consolidated Balance Sheets. Management has elected not to measure an allowance for credit losses on these balances as the Company employs a timely write-off policy. It is the Company’s policy that a security is placed on nonaccrual status at the time any principal or interest payments become 90 days delinquent, and interest earned but not collected for a security placed on non-accrual is reversed against interest income. Allowance for Credit Losses - Available for Sale Securities The Company’s available for sale securities are carried at fair value and assessed for estimated credit losses in accordance with the current expected credit loss (“CECL” methodology). For available for sale securities in an unrealized loss position, management will first evaluate whether there is intent to sell, or if it is more likely than not that the Company will be required to sell a security prior to anticipated recovery of its amortized cost basis. If either of these criteria are met, the Company will record a write-down of the security’s amortized cost basis to fair value through income. For those available for sale securities which do not meet the intent or requirement to sell criteria, management will evaluate whether the decline in fair value is a result of credit related matters or other factors. In performing this assessment, management considers the 78 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) creditworthiness of the issuer including whether the security is guaranteed by the U.S. Federal Government or other government agency, the extent to which fair value is less than amortized cost, and changes in credit rating during the period, among other factors. If this assessment indicates the existence of credit losses, the security will be written down to fair value, as determined by a discounted cash flow analysis. To the extent the estimated cash flows do not support the amortized cost, the deficiency is considered to be due to credit loss and is recognized in earnings. Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Losses are charged against the allowance when the uncollectibility of a security is confirmed, or when either of the aforementioned criteria surrounding intent or requirement to sell have been met. Allowance for Credit Losses - Held to Maturity Securities The Company measures expected credit losses on held to maturity securities on a collective basis by major security type in accordance with the CECL methodology. Management classifies the held to maturity portfolio into the following major security types: U.S. Government Agency, U.S. Treasury, Agency Mortgage-Backed Securities, Agency Collateralized Mortgage Obligations, Small Business Administration Pooled Securities, and Single Issuer Trust Preferred Securities. Securities in the Company’s held to maturity portfolio are primarily guaranteed by either the U.S. Federal Government or other government sponsored agencies with a long history of no credit losses. As a result, management has determined these securities to have a zero loss expectation and therefore does not estimate an allowance for credit losses on these securities. Loans Held for Sale 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. 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 Loans that the Company has the intent and ability to hold until maturity or payoff are carried at amortized cost (net of the allowance for credit losses). Amortized cost is the principal amount outstanding, adjusted by partial charge-offs and net of deferred loan costs or fees. For originated loans, loan fees and certain direct origination costs are deferred and amortized into interest income over the expected term of the loan using the level-yield method. When a loan is paid off, the unamortized portion is recognized in interest income. Interest income on loans is accrued based upon the daily principal amount outstanding except for loans on nonaccrual status. As a general rule, loans 90 days or more past due with respect to principal or interest are classified as nonaccrual loans, or sooner if management considers such action to be prudent. However, loans that are 90 days or more past due may be kept on an accruing status if the loan is well secured and in the process of collection. Income accruals are suspended on all nonaccrual loans in a timely manner and all previously accrued and uncollected interest is reversed against current income. A loan remains on nonaccrual status until it becomes current with respect to principal and interest and remains current for a minimum period of six months, the loan is liquidated, or when the loan is determined to be uncollectible and is charged-off against the allowance for credit losses. When doubt exists as to the collectability of a loan, any payments received are applied to reduce the amortized cost of the loan to the extent necessary to eliminate such doubt. For all loan portfolios, a charge-off occurs when the Company determines that a specific loan, or portion thereof, is uncollectible. This determination is made based on management’s review of specific facts and circumstances of the individual loan, including assessing the viability of the customer’s business or project as a going concern, the expected cash flows to repay the loan, the value of the collateral and the ability and willingness of any guarantors to perform. In the course of resolving problem loans, the Company may choose to modify the contractual terms of certain loans. The Company attempts to work out an alternative payment schedule with the borrower in order to avoid or cure a default. 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 79 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 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. Under the previously applicable guidance, loans classified as TDRs would have remained classified as such for the life of the loan, except in limited circumstances, when it was determined that the borrower was performing under the modified terms and the restructuring agreement specified an interest rate greater than or equal to an acceptable market rate for a comparable new loan at the time of the restructuring. Allowance for Credit Losses - Loans Held for Investment The allowance for credit losses is established based upon the Company’s current estimate of expected lifetime credit losses on loans measured at amortized cost, also referred to as the CECL methodology. Credit losses are charged against the allowance when management’s assessments confirm that the Company will not collect the full amortized cost basis of a loan. Subsequent recoveries, if any, are credited to the allowance. Under the CECL methodology, the Company estimates credit losses for financial assets on a collective basis for loans sharing similar risk characteristics using a quantitative model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output. The quantitative model utilizes a factor-based approach to estimate expected credit losses using Probability of Default (“PD”), Loss Given Default (“LGD”) and Exposure at Default (“EAD”), which are derived from internal historical default and loss experience. The model estimates expected credit losses using loan level data over the estimated life of the exposure, considering the effect of prepayments. Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period, beyond which is a reversion to the Company’s historical long-run average. Management has determined a reasonable and supportable period of 12 months, and a straight line reversion period of 6 months, to be appropriate for purposes of estimating expected credit losses. The qualitative risk factors impacting the expected risk of loss within the portfolio include the following: • Lending policies and procedures • Economic and business conditions • Nature and volume of loans • Changes in management • Changes in credit quality • Changes in loan review system • Changes to underlying collateral values • Concentrations of credit risk • 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. For the loans that are individually evaluated, the Company uses either a discounted cash flow (“DCF”) approach or a fair value of collateral approach. The latter approach is used for loans deemed to be collateral dependent or when foreclosure is probable. 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 80 Table of Contents 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. Management has elected not to measure an allowance for credit losses on these amounts as the Company employs a timely write-off policy. Consistent with the Company’s policy for 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. 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. Acquired Loans 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 loans. 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. Additionally, upon the purchase or acquisition of non-PCD loans, the Company measures and records a reserve for credit losses based on the Company’s methodology for determining the allowance under CECL. The allowance for non-PCD loans is recorded through a charge to provision for credit losses in the period in which the loans were purchased or acquired. Acquired loans that are classified as PCD are acquired at fair value, including any resulting discounts or premiums. Discounts and premiums are accreted or amortized into interest income over the remaining life of the loan using the interest method. In contrast to non-PCD loans, the initial allowance for credit losses on PCD loans is established through an adjustment to the acquired loan balance, rather than through a charge to provision for credit losses, in the period in which the loans were acquired. The allowance for PCD loans is determined based upon the Company’s methodology for estimating the allowance under CECL, and is recorded as an adjustment to the acquired loan balance on the date of acquisition. The Company evaluates acquired loans for deterioration in credit quality based on a variety of characteristics, including, but not limited to non-accrual and delinquency status, downgrades in credit quality since origination, loans that have been modified, along with any other factors identified by the Company through its initial analysis of acquired loans which may indicate there has been a more than insignificant deterioration in credit quality since origination. 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 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 Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. 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. 81 Table of Contents 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. Servicing rights are originally recorded at fair value within other assets, but subsequently are amortized in proportion to and over the period of estimated net servicing income, and are assessed for impairment at each reporting date. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds, default rates and losses. Impairment is determined by stratifying the rights based on predominant characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance, to the extent that fair value is less than the capitalized amount. 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. Servicing fee income is recorded for fees earned for servicing loans for investors. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan, and are recorded as income when earned. The amortization of mortgage servicing rights is recorded as a reduction of loan servicing fee income. The Company is also a party to certain instruments with off-balance-sheet risk including certain residential loans sold to investors with recourse. The Company’s policy is to record such instruments when funded. Federal Home Loan Bank Stock The Company, as a member of the Federal Home Loan Bank (“FHLB”) of Boston, is required to maintain an investment in capital stock of the FHLB. Based on redemption provisions, the stock has no quoted market value and is carried at cost. The Company continually reviews its investment to determine if impairment exists. Bank Premises and Equipment Land is carried at cost. Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line convention method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the lease terms or the estimated useful lives of the improvements. Expected terms include lease option periods to the extent that the exercise of such options is reasonably assured, not to exceed fifteen years . Leases 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. The Company makes the decision on whether to renew an option to extend a lease by considering various factors. The Company will recognize an adjustment to its ROU asset and lease liability when lease agreements are amended and executed, or in an event where the Company is reasonably certain that a renewal option will be exercised. The discount rate used in determining the present value of lease payments is based on the Company’s incremental borrowing rate for borrowings with terms similar to each lease at commencement date. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. 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. The Company may also assume lease obligations in connection with its acquisition activities, which may result in a market-based favorable or unfavorable lease position, resulting in an intangible lease asset. These intangible lease assets are amortized over the estimated remaining lease term. The Company is a party to certain equipment lease transactions where it has assumed the role of lessor for purchased assets. These lease transactions are classified by the Company as either operating leases or direct financing leases for accounting purposes, depending upon the nature of the underlying lease agreements. Under operating lease arrangements, the leased asset value is recorded within fixed assets and the Company recognizes rental income over the life of the lease. 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. 82 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Goodwill and Other Intangible Assets Goodwill represents the excess of the purchase price over the net fair value of acquired businesses. Goodwill is not amortized and is assigned to one reporting unit. Goodwill is evaluated for impairment at least annually, or more often if warranted. In assessing for impairment, the Company has the option to first perform a qualitative analysis to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount. If, after assessing the totality of such events and circumstances, the Company determines it is more-likely-than-not that the fair value is less than carrying value, a quantitative impairment test is performed to compare carrying value to the fair value of the reporting unit. The Company also has an unconditional option to bypass the assessment of qualitative factors for any period and proceed directly to the quantitative goodwill impairment test. 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. 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. Other intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Impairment of Long-Lived Assets Other Than Goodwill The Company reviews long-lived assets, including premises and equipment, for impairment whenever events or changes in business circumstances indicate that the remaining useful life may warrant revision or that the carrying amount of the long-lived asset may not be fully recoverable. The Company performs an undiscounted cash flow analysis to determine if impairment exists. When impairment is determined to exist, the related impairment loss is calculated based on fair value. Impairment losses on assets to be disposed of are based on the estimated proceeds to be received, less costs of disposal. Cash Surrender Value of Life Insurance Policies Increases in the cash surrender value (“CSV”) of life insurance policies, as well as benefits received net of any CSV, are recorded in other noninterest income, and are generally not subject to income taxes. The CSV of the policies is recorded as an asset of the Bank, with liabilities recognized for any split dollar arrangements associated with the policies. The Company reviews the financial strength of the insurance carriers prior to the purchase of life insurance policies and no less than annually thereafter. Regulatory requirements limit the total amount of CSV to be held with any individual carrier to 15% of Tier 1 capital (as defined for regulatory purposes) and the total CSV of all life insurance policies is limited to 25% of Tier 1 capital. Other Real Estate Owned and Other Foreclosed Assets Real estate properties and other assets, which have served as collateral to secure loans, are held for sale and are initially recorded at fair value less estimated costs to sell at the date control is established, resulting in a new cost basis. The amount by which the recorded investment in the loan exceeds the fair value (net of estimated costs to sell) of the foreclosed asset is charged to the allowance for credit losses. Subsequent declines in the fair value of the foreclosed asset below the new cost basis are recorded through the use of a valuation allowance. Subsequent increases in the fair value are recorded as reductions in the valuation allowance, but not below zero. Upon a sale of a foreclosed asset, any excess of the carrying value over the sale proceeds is recognized as a loss on sale. Any excess of sale proceeds over the carrying value of the foreclosed asset is first applied as a recovery to the valuation allowance, if any, with the remainder being recognized as a gain on sale. Operating expenses and changes in the valuation allowance relating to foreclosed assets are recorded in other noninterest expense. Derivatives Derivative instruments are carried at fair value in the Company’s financial statements. The accounting for changes in the fair value of a derivative instrument is determined by whether it has been designated and qualifies as part of a hedging relationship, and further, by the type of hedging relationship. At the inception of a hedge, the Company documents certain items, including but not limited to the following: the relationship between hedging instruments and hedged items, the Company’s risk management objectives, hedging strategies, and the evaluation of hedge transaction effectiveness. Documentation includes linking all derivatives designated as fair value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific forecasted transactions. 83 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For those derivative instruments that are designated and qualify for special hedge accounting, the Company designates the hedging instrument, based upon the exposure being hedged, as either a fair value hedge or a cash flow hedge. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income, net of related tax. The Company considers any economic mismatch between the hedging instrument and the hedged transaction in its ongoing assessment of hedge effectiveness. If the hedging instrument is not highly effective at achieving offsetting cash flows attributable to the revised contractually specified interest rate(s), hedge accounting will be discontinued. At that time, accumulated other comprehensive income would be frozen and amortized, as long as the forecasted transactions are still probable of occurring. For derivative instruments designated and qualifying as a fair value hedge (i.e., hedging the exposure to changes in the fair value of an asset or liability or an identified portion thereof that is attributable to the hedged risk), the gain or loss on the derivative instrument, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in current earnings during the period of the change in fair values. 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 (“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, 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. The actuarial cost method used to compute the benefit liabilities and related expense is the projected unit credit method. The projected benefit obligation is principally determined based on the present value of the projected benefit distributions at an assumed discount rate. The discount rate which is utilized is based on the investment yield of high quality corporate bonds available in the market place with maturities approximately equal to projected cash flows of future benefit payments as of the measurement date. Periodic benefit expense (or income) includes service costs and interest costs based on the assumed discount rate, amortization of prior service costs due to plan amendments and amortization of actuarial gains and losses. Service costs are included in salaries and employee benefits and all other costs are included in other noninterest expense. The amortization of actuarial gains and losses is determined using the 10% corridor minimum amortization approach and is taken over the average remaining future working lifetime of the plan participants. The underfunded status of the plans is recorded as a liability on the balance sheet. 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. 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 diversification after initial election and therefore elections made to defer into Company stock result in both the investment and 84 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) obligation recognized within Stockholders’ Equity. Alternatively, investments not in Company stock are included in trading securities, with the correlating obligation classified as a liability. The Company has obligations with various individuals related to certain post-retirement benefits. The obligations are based on the individual’s service through retirement, with the associated cost recognized over the requisite service period. The accrual methodology results in an accrued amount at the full eligibility date equal to the then present value of all of the future benefits expected to be paid. Stock-Based Compensation The Company recognizes stock-based compensation based on the grant-date fair value of the award, with no adjustment for estimated forfeitures, as forfeitures are recognized when they occur. For restricted stock awards and units, the Company recognizes compensation expense ratably over the vesting period for the fair value of the award, measured at the grant date. For stock option awards, the Company values awards granted using the Black-Scholes option-pricing model. The Company recognizes compensation expense for these awards on a straight-line basis over the requisite service period for the entire award (straight-line attribution method), ensuring that the amount of compensation cost recognized at any date at least equals the portion of the grant-date fair value of the award that is vested at that time. The Company recognizes excess tax benefits on certain stock compensation transactions. The excess tax benefits are recorded through earnings as a discrete item within the Company’s effective tax rate during the period of the transaction. Income Taxes Deferred income tax assets and liabilities are determined using the asset and liability (or balance sheet) method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If current available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in enacted tax rates is recognized in income in the period that includes the enactment date. Income taxes are allocated to each entity in the consolidated group based on its share of taxable income. Management exercises significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets, including projections of future taxable income. Additionally, a liability for unrecognized tax benefits is recorded for uncertain tax positions taken by the Company on its tax returns for which there is less than a 50% likelihood of being recognized upon a tax examination. Low Income Housing Tax Credits The Company accounts for its investments in qualified affordable housing projects using the proportional amortization method. Under the proportional amortization method the Company amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received, and recognizes the net investment benefit as a component of income tax expense (benefit). Assets Under Administration Assets held in a fiduciary or agency capacity for customers are not included in the accompanying consolidated balance sheet, as such assets are not assets of the Company. Revenue from administrative and management activities associated with these assets is recorded on an accrual basis. Extinguishment of Debt Upon extinguishment of an outstanding debt, the Company records the difference between the exit price and the net carrying amount of the debt as a gain or loss on the extinguishment. The gain or loss is recorded as a component of other noninterest income or other noninterest expense, respectively. Earnings Per Share 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 declared and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are 85 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. unvested time-vested restricted stock). Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding (inclusive of participating securities). Diluted earnings per share have been calculated in a manner similar to that of basic earnings per share except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares (such as those resulting from the exercise of stock options or the attainment of performance measures) were issued during the period, computed using the treasury stock method. Comprehensive Income Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale, unrealized losses related to factors other than credit on debt securities, if applicable, unrealized gains and losses on cash flow hedges, deferred gains on hedge accounting transactions, and changes in the funded status of the Company’s postretirement and supplemental retirement plans. Fair Value Measurements In general, fair values of financial instruments are based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters. 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. 2024-03. 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. 2023-09. Update No. 2023-09 was issued in December 2023 and aims to enhance the transparency and decision usefulness of income tax disclosures by requiring disaggregated information related to the effective tax rate reconciliation as well as information on income taxes paid. 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 is not expected to have an impact on the Company’s financial statements. FASB ASC Topic 280 “Segment Reporting” Update No. 2023-07 . 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. 86 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 2 SECURITIES Trading Securities The Company had trading securities of $ 4.2 million and $ 5.0 million at December 31, 2024 and 2023, respectively. These securities are held in a rabbi trust and will be used for future payments associated with the Company’s non-qualified 401(k) Restoration Plan and Non-qualified Deferred Compensation Plan. Equity Securities The Company had equity securities of $ 21.2 million and $ 22.5 million at December 31, 2024 and 2023, respectively. These securities consist primarily of mutual funds held in a rabbi trust and will be used for future payments associated with the Company’s supplemental executive retirement plans. The following table represents a summary of the gains and losses recognized within non-interest income and non-interest expense within the consolidated statements of income that relate to equity securities for the periods indicated: Years Ended December 31 2024 2023 2022 (Dollars in thousands) Net gains (losses) recognized during the period on equity securities $ 423 $ 1,180 $ ( 3,061 ) Less: net gains recognized during the period on equity securities sold during the period 877 197 — 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 The following table summarizes the amortized cost, allowance for credit losses, and fair value of available for sale securities and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) at the dates indicated: December 31, 2024 December 31, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for credit losses Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for credit losses Fair Value (Dollars in thousands) U.S. government agency securities $ 229,452 $ — $ ( 19,792 ) $ — $ 209,660 $ 230,198 $ — $ ( 23,060 ) $ — $ 207,138 U.S. treasury securities 628,017 — ( 36,016 ) — 592,001 824,597 — ( 55,495 ) — 769,102 Agency mortgage-backed securities 415,918 25 ( 37,782 ) — 378,161 314,269 24 ( 37,246 ) — 277,047 Agency collateralized mortgage obligations 31,168 1 ( 2,174 ) — 28,995 35,713 6 ( 2,530 ) — 33,189 State, county, and municipal securities 197 — ( 3 ) — 194 195 — ( 5 ) — 190 Pooled trust preferred securities issued by banks and insurers 1,180 — ( 85 ) — 1,095 1,188 — ( 170 ) — 1,018 Small business administration pooled securities 48,032 — ( 7,194 ) — 40,838 53,702 — ( 7,130 ) — 46,572 Total available for sale securities $ 1,353,964 $ 26 $ ( 103,046 ) $ — $ 1,250,944 $ 1,459,862 $ 30 $ ( 125,636 ) $ — $ 1,334,256 87 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Excluded from the table above is accrued interest on available for sale securities of $ 2.9 million and $ 3.4 million at December 31, 2024 and 2023, respectively, which is included within other assets on the Consolidated Balance Sheets. Additionally, the Company did not record any write-offs of accrued interest income on available for sale securities for the years ended December 31, 2024 and 2023. Furthermore, no securities held by the Company were delinquent on contractual payments nor were any securities placed on non-accrual status at December 31, 2024 and 2023. When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. The Company had no sales of securities available for sale for the years ended December 31, 2024 and 2023, and therefore no gains or losses were realized during the periods presented. 88 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following tables show the gross unrealized losses and fair value of the Company’s available for sale securities in an unrealized loss position as of the dates indicated. These available for sale securities are aggregated by major security type and length of time that individual securities have been in a continuous unrealized loss position: December 31, 2024 Less than 12 months 12 months or longer Total # of holdings Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (Dollars in thousands) U.S. government agency securities 9 $ — $ — $ 209,660 $ ( 19,792 ) $ 209,660 $ ( 19,792 ) U.S. treasury securities 13 — — 592,001 ( 36,016 ) 592,001 ( 36,016 ) Agency mortgage-backed securities 117 127,152 ( 2,867 ) 249,098 ( 34,915 ) 376,250 ( 37,782 ) Agency collateralized mortgage obligations 11 1,153 ( 4 ) 26,890 ( 2,170 ) 28,043 ( 2,174 ) State, county, and municipal securities 1 194 ( 3 ) — — 194 ( 3 ) Pooled trust preferred securities issued by banks and insurers 1 — — 1,095 ( 85 ) 1,095 ( 85 ) Small business administration pooled securities 8 — — 40,838 ( 7,194 ) 40,838 ( 7,194 ) Total impaired available for sale securities 160 $ 128,499 $ ( 2,874 ) $ 1,119,582 $ ( 100,172 ) $ 1,248,081 $ ( 103,046 ) December 31, 2023 Less than 12 months 12 months or longer Total # of holdings Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. government agency securities 9 $ — $ — $ 207,138 $ ( 23,060 ) $ 207,138 $ ( 23,060 ) U.S. treasury securities 17 — — 769,102 ( 55,495 ) 769,102 ( 55,495 ) Agency mortgage-backed securities 115 1,091 ( 11 ) 273,447 ( 37,235 ) 274,538 ( 37,246 ) Agency collateralized mortgage obligations 12 339 ( 2 ) 31,682 ( 2,528 ) 32,021 ( 2,530 ) State, county, and municipal securities 1 190 ( 5 ) — — 190 ( 5 ) Pooled trust preferred securities issued by banks and insurers 1 — — 1,018 ( 170 ) 1,018 ( 170 ) Small business administration pooled securities 8 — — 46,572 ( 7,130 ) 46,572 ( 7,130 ) Total impaired available for sale securities 163 $ 1,620 $ ( 18 ) $ 1,328,959 $ ( 125,618 ) $ 1,330,579 $ ( 125,636 ) The Company does not intend to sell these investments and has determined, based upon available evidence, that it is more likely than not that the Company will not be required to sell each security before the recovery of its amortized cost basis. In addition, management does not believe that any of the securities are impaired due to reasons of credit quality. As a result, the Company did not recognize a provision for credit losses on these investments for the years ended December 31, 2024 and 2023. The Company made this determination by reviewing various qualitative and quantitative factors regarding each investment category, such as current market conditions, extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, and current analysts’ evaluations. As a result of the Company’s review of these qualitative and quantitative factors, the causes of the impairments listed in the table above by category were as follows at December 31, 2024: 89 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) • U.S. Government Agency Securities, U.S. Treasury Securities, Agency Mortgage-Backed Securities, Agency Collateralized Mortgage Obligations and Small Business Administration Pooled Securities: These portfolios have contractual terms that generally do not permit the issuer to settle the securities at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. Additionally, these securities are implicitly guaranteed by the U.S. Government or one of its agencies. • State, County and Municipal Securities : This portfolio has contractual terms that generally do not permit the issuer to settle the securities at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. • Pooled Trust Preferred Securities: This portfolio consists of one security which is performing. The unrealized loss on this security is attributable to the illiquid nature of the trust preferred market in the current economic and regulatory environment. Management evaluates collateral credit and instrument structure, including current and expected deferral and default rates and timing. In addition, discount rates are determined by evaluating comparable spreads observed currently in the market for similar instruments. Held to Maturity Securities The following table summarizes the amortized cost, fair value and allowance for credit losses of held to maturity securities and the corresponding amounts of gross unrealized gains and losses at the dates indicated: December 31, 2024 December 31, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for credit losses Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for credit losses Fair Value (Dollars in thousands) U.S. government agency securities $ — $ — $ — $ — $ — $ 29,521 $ — $ ( 1,113 ) — $ 28,408 U.S. treasury securities 100,791 — ( 7,769 ) — 93,022 100,712 — ( 9,177 ) — 91,535 Agency mortgage-backed securities 788,470 90 ( 62,198 ) — 726,362 829,431 175 ( 65,878 ) — 763,728 Agency collateralized mortgage obligations 422,827 — ( 65,143 ) — 357,684 477,517 — ( 69,606 ) — 407,911 Single issuer trust preferred securities issued by banks — — — — — 1,500 — ( 127 ) — 1,373 Small business administration pooled securities 122,868 — ( 8,135 ) — 114,733 130,426 384 ( 6,157 ) — 124,653 Total held to maturity securities $ 1,434,956 $ 90 $ ( 143,245 ) $ — $ 1,291,801 $ 1,569,107 $ 559 $ ( 152,058 ) $ — $ 1,417,608 Substantially all held to maturity securities held by the Company are guaranteed by the U.S. federal government or other government sponsored agencies and have a long history of no credit losses. As a result, management has determined these securities to have a zero loss expectation and therefore the Company did not record a provision for estimated credit losses on any held to maturity securities for the years ended December 31, 2024 and 2023. Excluded from the table above is accrued interest on held to maturity securities of $ 3.8 million and $ 4.3 million at December 31, 2024 and 2023, respectively, which is included within other assets on the Consolidated Balance Sheets. Additionally, the Company did not record any write-offs of accrued interest income on held to maturity securities for the years ended December 31, 2024 and 2023. Furthermore, no securities held by the Company were delinquent on contractual payments nor were any securities placed on non-accrual status at December 31, 2024 and 2023. When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. The Company had no sales of held to maturity securities for the years ended December 31, 2024 and 2023, and therefore no gains or losses were realized during the periods presented. The Company monitors the credit quality of held to maturity securities through the use of credit ratings. Credit ratings are monitored by the Company on at least a quarterly basis. At December 31, 2024 and 2023, all held to maturity securities held by the Company were rated investment grade or higher. 90 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The actual maturities of certain available for sale or held to maturity securities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. A schedule of the contractual maturities of securities available for sale and securities held to maturity at December 31, 2024 is presented below: Due in one year or less Due after one year to five years Due after five to ten years Due after ten years Total Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value (Dollars in thousands) Available for sale securities U.S. government agency securities $ — $ — $ 229,452 $ 209,660 $ — $ — $ — $ — $ 229,452 $ 209,660 U.S. treasury securities 149,764 147,143 478,253 444,858 — — — — 628,017 592,001 Agency mortgage-backed securities 51 50 185,404 173,011 46,225 40,726 184,238 164,374 415,918 378,161 Agency collateralized mortgage obligations — — — — 2,508 2,314 28,660 26,681 31,168 28,995 State, county, and municipal securities — — 197 194 — — — — 197 194 Pooled trust preferred securities issued by banks and insurers — — — — — — 1,180 1,095 1,180 1,095 Small business administration pooled securities — — — — — — 48,032 40,838 48,032 40,838 Total available for sale securities $ 149,815 $ 147,193 $ 893,306 $ 827,723 $ 48,733 $ 43,040 $ 262,110 $ 232,988 $ 1,353,964 $ 1,250,944 Held to maturity securities U.S. Treasury securities $ — $ — $ 99,798 $ 92,205 $ 993 $ 817 $ — $ — $ 100,791 $ 93,022 Agency mortgage-backed securities 81 80 463,524 435,908 163,379 143,000 161,486 147,374 788,470 726,362 Agency collateralized mortgage obligations — — 61,215 57,331 16,776 14,963 344,836 285,390 422,827 357,684 Small business administration pooled securities — — — — 6,555 6,043 116,313 108,690 122,868 114,733 Total held to maturity securities $ 81 $ 80 $ 624,537 $ 585,444 $ 187,703 $ 164,823 $ 622,635 $ 541,454 $ 1,434,956 $ 1,291,801 Total $ 149,896 $ 147,273 $ 1,517,843 $ 1,413,167 $ 236,436 $ 207,863 $ 884,745 $ 774,442 $ 2,788,920 $ 2,542,745 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 $ 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. 91 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 3 LOANS, ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY Loans Held for Investment and Allowance for Credit Losses The following table summarizes the change in allowance for credit losses by loan category, and bifurcates the amount of loans allocated to each loan category for the periods indicated: Years Ended December 31, 2024 (Dollars in thousands) Commercial and Industrial Commercial Real Estate Commercial Construction Small Business Residential Real Estate Home Equity Other Consumer Total Allowance for credit losses Beginning balance $ 33,317 $ 60,074 $ 7,683 $ 3,963 $ 23,637 $ 12,797 $ 751 $ 142,222 Charge-offs ( 5,897 ) — — ( 696 ) — ( 380 ) ( 3,374 ) ( 10,347 ) Recoveries 93 — — 101 — 343 1,322 1,859 Provision for credit losses 287 32,461 483 814 1,601 ( 1,753 ) 2,357 36,250 Ending balance (1) $ 27,800 $ 92,535 $ 8,166 $ 4,182 $ 25,238 $ 11,007 $ 1,056 $ 169,984 Years Ended December 31, 2023 (Dollars in thousands) Commercial and Industrial Commercial Real Estate Commercial Construction Small Business Residential Real Estate Home Equity Other Consumer Total Allowance for credit losses Beginning balance $ 42,153 $ 63,205 $ 10,762 $ 2,834 $ 20,973 $ 11,504 $ 988 $ 152,419 Charge-offs ( 23,564 ) ( 7,855 ) — ( 484 ) — ( 47 ) ( 2,832 ) ( 34,782 ) Recoveries 145 — — 92 — 62 1,036 1,335 Provision for credit losses 14,583 4,724 ( 3,079 ) 1,521 2,664 1,278 1,559 23,250 Ending balance (1) $ 33,317 $ 60,074 $ 7,683 $ 3,963 $ 23,637 $ 12,797 $ 751 $ 142,222 Year Ended December 31, 2022 (Dollars in thousands) Commercial and Industrial Commercial Real Estate Commercial Construction Small Business Residential Real Estate Home Equity Other Consumer Total Allowance for credit losses Beginning balance $ 29,023 $ 68,865 $ 12,316 $ 3,508 $ 14,484 $ 17,986 $ 740 $ 146,922 Charge-offs — ( 62 ) — ( 196 ) — ( 122 ) ( 2,272 ) ( 2,652 ) Recoveries 49 333 — 149 — 121 997 1,649 Initial reserve on PCD loans Provision for credit losses 13,081 ( 5,931 ) ( 1,554 ) ( 627 ) 6,489 ( 6,481 ) 1,523 6,500 Ending balance (1) $ 42,153 $ 63,205 $ 10,762 $ 2,834 $ 20,973 $ 11,504 $ 988 $ 152,419 (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 $ 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. Each of these loan categories possesses unique risk characteristics that are considered when determining the appropriate level of allowance for each segment. Some of the characteristics unique to each loan category include: 92 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Commercial Portfolio • 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, 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. The primary source of repayment is operating cash flow and, secondarily, liquidation of assets. • 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 non-owner-occupied commercial properties. Loans are typically written with amortizing payment structures. Collateral values are determined based upon third party appraisals and evaluations. Permissible loan to value ratios at origination are governed by Company policy and regulatory guidelines. The primary source of repayment is cash flow from operating leases and rents and, secondarily, liquidation of assets. • Commercial Construction : Consists of short-term construction loans, revolving and nonrevolving credit lines and construction/permanent loans to finance the acquisition, development and construction or rehabilitation of real property. Project types include residential land development, one-to-four family, condominium, and multi-family home construction, commercial/retail, office, industrial, hotels, educational and healthcare facilities as well as other specific use properties. Loans may be written with nonamortizing or hybrid payment structures depending upon the type of project. Collateral values are determined based upon third party appraisals and evaluations. Permissible loan to value ratios at origination are governed by Company policy and regulatory guidelines. Repayment sources vary depending upon the type of project and may consist of proceeds from the sale or lease of units, operating cash flows or liquidation of other assets. • Small Business: Consists of revolving, term loan and mortgage obligations extended to sole proprietors and small businesses for purposes of financing working capital and/or capital investment. Collateral generally consists of pledges of business assets including, but not limited to, accounts receivable, inventory, plant and equipment, or real estate if applicable. The primary source of repayment is operating cash flows and, secondarily, liquidation of assets. For the commercial portfolio the Company typically obtains personal guarantees for payment from individuals holding material ownership interests in the borrowing entities. Consumer Portfolio • Residential Real Estate : Residential mortgage loans held in the Company’s portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors such as current and expected income, employment status, current assets, other financial resources, credit history and the value of the collateral. Collateral consists of mortgage liens on one-to-four family residential properties. Residential mortgage loans also include loans to construct owner-occupied one-to-four family residential properties. • Home Equity : Home equity loans and credit lines are made to qualified individuals and are primarily secured by senior or junior mortgage liens on one-to-four family homes, condominiums or vacation homes. Each home equity loan has a fixed rate and is billed in equal payments comprised of principal and interest. The majority of home equity lines of credit have a variable rate and are billed in interest-only payments during the draw period. At the end of the draw period, the home equity line of credit is billed as a percentage of the then outstanding principal balance plus all accrued interest over a predetermined repayment period, as set forth in the note. Additionally, the Company has the option of renewing each line of credit for additional draw periods. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan to value ratios within established policy guidelines. • Other Consumer: Other consumer loan products include personal lines of credit and amortizing loans made to qualified individuals for various purposes such as debt consolidation, personal expenses or overdraft protection. Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines. These loans may be secured or unsecured. Credit Quality The Company continually monitors the asset quality of the loan portfolio using all available information. Based on this information, loans demonstrating certain payment issues or other weaknesses may be categorized as adversely risk-rated, delinquent, nonperforming and/or put on nonaccrual status. Additionally, in the course of resolving such loans, the Company may choose to modify the contractual terms of certain loans to match the borrower’s ability to repay the loan based on their current financial condition. 93 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company reviews numerous credit quality indicators when assessing the risk in its loan portfolio. For the commercial portfolio, the Company utilizes a 10-point credit risk-rating system, which assigns a risk-grade to each loan obligation based on a number of quantitative and qualitative factors associated with a commercial or small business loan transaction. Factors considered include industry and market conditions, position within the industry, earnings trends, operating cash flow, asset/liability values, debt capacity, guarantor strength, management and controls, financial reporting, collateral, and other considerations. The risk-rating categories for the commercial portfolio are defined as follows: • Pass: Risk-rating “1” through “6” comprises loans ranging from ‘Substantially Risk Free’ which indicates borrowers are of unquestioned credit standing and the pinnacle of credit quality, well established companies with a very strong financial condition, and loans fully secured by cash collateral, through ‘Acceptable Risk,’ which indicates borrowers may exhibit declining earnings, strained cash flow, increasing or above average leverage and/or weakening market fundamentals that indicate below average asset quality, margins and market share. Collateral coverage is protective. • Special Mention: Borrowers exhibit potential credit weaknesses or downward trends deserving management’s close attention. If not checked or corrected, these trends will weaken the Company’s asset and position. While potentially weak, currently these borrowers are marginally acceptable; no loss of principal or interest is envisioned. • Substandard: Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt. Loans may be inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. However, there is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Collateral coverage may be inadequate to cover the principal obligation. • Doubtful: Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt with the added provision that the weaknesses make collection of the debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Serious problems exist to the point where partial loss of principal is likely. • Loss: Borrowers deemed incapable of repayment. Loans to such borrowers are considered uncollectible and of such little value that continuation as active assets of the Company is not warranted. The Company utilizes a comprehensive, continuous strategy for evaluating and monitoring commercial credit quality. Initially, credit quality is determined at loan origination and is re-evaluated when subsequent actions, such as renewals, modifications or reviews, occur. Actively managed commercial borrowers are required to provide updated financial information at least annually which is carefully evaluated for any changes in credit quality. Larger loan relationships are subject to a full annual credit review by experienced credit professionals, while continuous portfolio monitoring techniques are employed to evaluate changes in credit quality for smaller loan relationships. Any changes in credit quality are reflected in risk-rating changes. Additionally, the Company retains an independent loan review firm to evaluate the credit quality of the commercial loan portfolio. The independent loan review process achieves significant penetration into the commercial loan portfolio and reports the results of these reviews to the Audit Committee of the Board of Directors on a quarterly basis. For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower. As a result, for this portfolio the Company utilizes a pass/default risk-rating system, based on an age analysis (i.e., days past due) associated with each consumer loan. 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. 94 Table of Contents 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: December 31, 2024 2024 2023 2022 2021 2020 Prior Revolving Loans Revolving converted to Term Total (1) (Dollars in thousands) Commercial and industrial Pass $ 690,411 $ 302,384 $ 351,296 $ 243,361 $ 166,779 $ 504,804 $ 623,730 $ 1,117 $ 2,883,882 Special Mention 18,600 554 2,394 10,610 871 2,458 40,927 — 76,414 Substandard 16,933 4,195 5,276 27,641 139 22 21,517 — 75,723 Doubtful — — — — — — 11,652 — 11,652 Loss — — — — — — — — — Total commercial and industrial $ 725,944 $ 307,133 $ 358,966 $ 281,612 $ 167,789 $ 507,284 $ 697,826 $ 1,117 $ 3,047,671 Current-period gross write-offs $ — $ — $ — $ — $ — $ — $ 5,897 $ — $ 5,897 Commercial real estate Pass $ 774,331 $ 866,492 $ 907,629 $ 1,036,174 $ 997,858 $ 1,823,148 $ 98,473 $ 241 $ 6,504,346 Special Mention 16,243 5,935 — 760 — 60,184 198 — 83,320 Substandard 53,532 13,017 12,967 10,145 916 5,836 — — 96,413 Doubtful — 53,752 — 11,660 — 7,217 — — 72,629 Loss — — — — — — — — — Total commercial real estate $ 844,106 $ 939,196 $ 920,596 $ 1,058,739 $ 998,774 $ 1,896,385 $ 98,671 $ 241 $ 6,756,708 Current-period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial construction Pass $ 288,979 $ 173,856 $ 130,245 $ 62,972 $ — $ 24,583 $ 32,077 $ 1,756 $ 714,468 Special Mention — 2,316 15,622 9,078 — — — — 27,016 Substandard 31,549 — 9,045 — — — — — 40,594 Doubtful — — — — — — — — — Loss — — — — — — — — — Total commercial construction $ 320,528 $ 176,172 $ 154,912 $ 72,050 $ — $ 24,583 $ 32,077 $ 1,756 $ 782,078 Current-period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Small business Pass $ 56,869 $ 44,676 $ 43,925 $ 32,858 $ 21,527 $ 26,457 $ 52,919 $ 1 $ 279,232 Special Mention — 102 16 114 93 218 607 — 1,150 Substandard 199 259 63 1 180 329 368 — 1,399 Doubtful — — — — — — — — — Loss — — — — — — — — — Total small business $ 57,068 $ 45,037 $ 44,004 $ 32,973 $ 21,800 $ 27,004 $ 53,894 $ 1 $ 281,781 Current-period gross write-offs $ 48 $ 39 $ 35 $ 54 $ — $ — $ 520 $ — $ 696 Residential real estate Pass $ 197,985 $ 472,546 $ 607,105 $ 381,182 $ 173,047 $ 625,111 $ — $ — $ 2,456,976 Default — 209 636 373 742 1,664 — — 3,624 Total residential real estate $ 197,985 $ 472,755 $ 607,741 $ 381,555 $ 173,789 $ 626,775 $ — $ — $ 2,460,600 Current-period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Home equity Pass $ 14,888 $ 24,020 $ 32,577 $ 49,290 $ 45,322 $ 127,029 $ 829,688 $ 16,229 $ 1,139,043 Default — — — — — 226 803 96 1,125 Total home equity $ 14,888 $ 24,020 $ 32,577 $ 49,290 $ 45,322 $ 127,255 $ 830,491 $ 16,325 $ 1,140,168 Current-period gross write-offs $ — $ — $ — $ — $ — $ — $ 241 $ 139 $ 380 95 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Other consumer (2) Pass $ 651 $ 445 $ 151 $ 599 $ 211 $ 1,158 $ 36,157 $ — $ 39,372 Default — — — — — — — — — Total other consumer $ 651 $ 445 $ 151 $ 599 $ 211 $ 1,158 $ 36,157 $ — $ 39,372 Current-period gross write-offs $ 3,339 $ — $ — $ — $ — $ 19 $ 16 $ — $ 3,374 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 Total current-period gross write-offs $ 3,387 $ 39 $ 35 $ 54 $ — $ 19 $ 6,674 $ 139 $ 10,347 December 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Revolving converted to Term Total (1) (Dollars in thousands) Commercial and industrial Pass $ 495,341 $ 416,975 $ 291,956 $ 205,587 $ 130,524 $ 478,736 $ 695,539 $ 90 $ 2,714,748 Special Mention 10,101 12,998 30,718 10,427 1,746 62,394 28,218 — 156,602 Substandard 8,644 1,329 902 3,751 2,626 4,493 32,728 — 54,473 Doubtful — — — — — — — — — Loss — — — — — — — — — 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 Pass $ 951,249 $ 945,049 $ 1,095,168 $ 1,135,865 $ 507,403 $ 1,710,045 $ 76,759 $ 3,359 $ 6,424,897 Special Mention 56,424 25,180 21,365 12,199 135 56,253 — — 171,556 Substandard 30,525 18,321 22,844 916 6,172 12,090 — — 90,868 Doubtful — — — — 8,350 — — — 8,350 Loss — — — — — — — — — 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 Pass $ 180,045 $ 381,352 $ 127,431 $ 44,953 $ 23,823 $ 1,561 $ 17,503 $ — $ 776,668 Special Mention 12,106 — 5,292 — — — — — 17,398 Substandard 10,955 26,146 18,419 — — — — — 55,520 Doubtful — — — — — — — — — Loss — — — — — — — — — 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 Pass $ 50,734 $ 51,157 $ 39,435 $ 25,643 $ 12,944 $ 22,412 $ 46,130 $ — $ 248,455 Special Mention — — — 154 — 184 314 — 652 Substandard 530 282 90 475 — 669 803 — 2,849 Doubtful — — — — — — — — — Loss — — — — — — — — — 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 Pass $ 505,517 $ 638,223 $ 405,386 $ 184,833 $ 88,473 $ 598,562 $ — $ — $ 2,420,994 Default — — — — 854 2,906 — — 3,760 Total residential real estate $ 505,517 $ 638,223 $ 405,386 $ 184,833 $ 89,327 $ 601,468 $ — $ — $ 2,424,754 Current-period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 96 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Home equity Pass $ 28,903 $ 38,401 $ 54,944 $ 49,803 $ 29,103 $ 121,286 $ 770,074 $ 4,583 $ 1,097,097 Default — — — — — 63 324 142 529 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) Pass $ 639 $ 263 $ 1,178 $ 706 $ 256 $ 1,835 $ 27,769 $ — $ 32,646 Default — — — — 1 — 7 — 8 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. For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower. However, the Company does supplement performance data with current Fair Isaac Corporation (“FICO”) scores and Loan to Value (“LTV”) estimates. Current FICO data is purchased and appended to all consumer loans on a regular basis. In addition, automated valuation services and broker opinions of value are used to supplement original value data for the residential real estate and home equity portfolios, periodically. The following table shows the weighted average FICO scores and the weighted average combined LTV ratios at the dates indicated below: December 31 2024 December 31 2023 Residential portfolio FICO score (re-scored)(1) 755 754 LTV (re-valued)(2) 57.9 % 59.8 % Home equity portfolio FICO score (re-scored)(1) 769 770 LTV (re-valued)(2)(3) 43.9 % 43.3 % (1) The average FICO scores at December 31, 2024 are based upon rescores from December 2024, as available for previously originated loans, or origination score data for loans booked in December 2024. The average FICO scores at December 31, 2023 were based upon rescores from December 2023, as available for previously originated loans, or origination score data for loans booked in December 2023. (2) The combined LTV ratios for December 31, 2024 are based upon updated automated valuations as of November 2024, when available, and/or the most current valuation data available. The combined LTV ratios for December 31, 2023 were based upon updated automated valuations as of November 2023, when available, and/or the most current valuation data available as of such date. The updated automated valuations provide new information on loans that may be available since the previous valuation was obtained. If no new information is available, the valuation will default to the previously obtained data or most recent appraisal. (3) For home equity loans and lines in a subordinate lien, the LTV data represents a combined LTV, taking into account the senior lien data for loans and lines. Unfunded Commitments Management evaluates the need for a reserve on unfunded lending commitments in a manner consistent with loans held for investment. At December 31, 2024 and 2023, the Company’s estimated reserve for unfunded commitments amounted to $ 1.4 million and $ 1.5 million, respectively. Asset Quality The Company’s philosophy toward managing its loan portfolios is predicated upon careful monitoring, which stresses early detection and response to delinquent and default situations. Delinquent loans are managed by a team of collection specialists and the Company seeks to make arrangements to resolve any delinquent or default situation over the shortest possible time frame. As a general rule, loans 90 days or more past due with respect to principal or interest are classified as nonaccrual loans. 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. 97 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following table shows information regarding nonaccrual loans at the dates indicated: Nonaccrual Balances December 31, 2024 December 31, 2023 With Allowance for Credit Losses Without Allowance for Credit Losses (1) Total With Allowance for Credit Losses Without Allowance for Credit Losses (1) Total (Dollars in thousands) Commercial and industrial $ 2,500 $ 11,652 $ 14,152 $ 26,507 $ 298 $ 26,805 Commercial real estate 67,126 7,217 74,343 5,294 11,041 16,335 Small business 302 — 302 394 4 398 Residential real estate 10,243 — 10,243 7,634 — 7,634 Home equity 2,479 — 2,479 3,171 — 3,171 Other consumer 10 — 10 40 — 40 Total nonaccrual loans $ 82,660 $ 18,869 $ 101,529 $ 43,040 $ 11,343 $ 54,383 (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 $ 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: December 31, 2024 December 31, 2023 (Dollars in thousands) Foreclosed residential real estate property held by the creditor $ — $ 110 Recorded investment in mortgage loans collateralized by residential real estate property that are in the process of foreclosure $ 1,301 $ 1,697 The following tables show the age analysis of past due financing receivables at the dates indicated: December 31, 2024 30-59 days 60-89 days 90 days or more Total Past Due Total Financing Receivables (2) Number of Loans Principal Balance Number of Loans Principal Balance Number of Loans Principal Balance Number of Loans Principal Balance Current (Dollars in thousands) Commercial and industrial 120 $ 5,807 1 $ 5 5 $ 13,843 126 $ 19,655 $ 3,028,016 $ 3,047,671 Commercial real estate 3 33,087 — — 3 20,458 6 53,545 6,703,163 6,756,708 Commercial construction — — — — — — — — 782,078 782,078 Small business 6 830 4 24 3 29 13 883 280,898 281,781 Residential real estate 27 6,310 9 1,401 10 2,224 46 9,935 2,450,665 2,460,600 Home equity 9 1,046 11 764 10 1,126 30 2,936 1,137,232 1,140,168 Other consumer (1) 596 441 3 7 6 6 605 454 38,918 39,372 Total 761 $ 47,521 28 $ 2,201 37 $ 37,686 826 $ 87,408 $ 14,420,970 $ 14,508,378 98 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) December 31, 2023 30-59 days 60-89 days 90 days or more Total Past Due Total Financing Receivables (2) Number of Loans Principal Balance Number of Loans Principal Balance Number of Loans Principal Balance Number of Loans Principal Balance Current (Dollars in thousands) Commercial and industrial 7 $ 785 1 $ 17,538 2 $ 673 10 $ 18,996 $ 2,906,827 $ 2,925,823 Commercial real estate 7 14,287 2 8,419 3 7,279 12 29,985 6,665,686 6,695,671 Commercial construction — — — — — — — — 849,586 849,586 Small business 6 400 1 20 6 243 13 663 251,293 251,956 Residential real estate 24 6,216 7 2,187 13 1,573 44 9,976 2,414,778 2,424,754 Home equity 23 1,640 4 1,238 10 529 37 3,407 1,094,219 1,097,626 Other consumer (1) 413 288 14 31 6 8 433 327 32,327 32,654 Total 480 $ 23,616 29 $ 29,433 40 $ 10,305 549 $ 63,354 $ 14,214,716 $ 14,278,070 (1) Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances. (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. Loan Modifications 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 Amortized Cost Basis % of Total Class of Financing Receivable Financial Effect (Dollars in thousands) 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 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 % Total $ 99 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 99 Table of Contents 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 % Total $ 660 Combination - Term Extension and Other Than Insignificant Payment Delay 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 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 Commercial and industrial $ 11,010 0.38 % Added a weighted-average contractual term of 3 months to the life of the loans Commercial real estate 17,530 0.26 % Added a weighted-average contractual term of 3.0 years to the life of the loans Small business 208 0.08 % Added a weighted-average contractual term of 4.7 years to the life of the loans 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 Total $ 123 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 $ 8,370 100 Table of Contents 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 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 (Dollars in thousands) Loan Type Commercial and industrial $ 24,755 $ — $ — $ 24,755 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 December 31, 2023 Payment Status (Amortized Cost Basis) Current 30-89 Days Past Due 90+ Days Past Due Total (Dollars in thousands) Loan Type Commercial and industrial $ 19,091 $ — $ 375 $ 19,466 Commercial real estate 17,393 — 136 17,529 Small business 246 — — 246 Total $ 36,730 $ — $ 511 $ 37,241 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 Commercial real estate 136 — 136 Total $ 510 $ 6,505 $ 7,015 101 Table of Contents 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 Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment (Dollars in thousands) Commercial and industrial 4 $ 3,466 $ 3,465 Commercial real estate 1 7,850 7,850 Total 5 $ 11,316 $ 11,315 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. 102 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 4 BANK PREMISES AND EQUIPMENT Bank premises and equipment at December 31, were as follows: 2024 2023 Estimated Useful Life (Dollars in thousands) (In years) Cost Land $ 52,831 $ 52,844 n/a Bank premises 104,899 99,973 5 - 40 Leasehold improvements 55,243 50,682 1 - 15 Furniture and equipment 112,600 102,251 1 - 10 Leased equipment 32,654 32,654 5 Total cost 358,227 338,404 Accumulated depreciation ( 164,907 ) ( 145,355 ) Net bank premises and equipment $ 193,320 $ 193,049 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 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 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 The following table sets forth the carrying value of goodwill and other intangible assets, net of accumulated amortization, at December 31: 2024 2023 (Dollars in thousands) Balances not subject to amortization Goodwill $ 985,072 $ 985,072 Balances subject to amortization Core deposit intangibles 10,689 15,237 Other intangible assets 1,595 2,953 Total other intangible assets 12,284 18,190 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. 103 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The gross carrying amount and accumulated amortization of other intangible assets were as follows at the dates indicated: December 31 2024 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (Dollars in thousands) Core deposit intangibles $ 44,160 $ ( 33,471 ) $ 10,689 $ 46,770 $ ( 31,533 ) $ 15,237 Other intangible assets 6,100 ( 4,505 ) 1,595 6,100 ( 3,147 ) 2,953 Total $ 50,260 $ ( 37,976 ) $ 12,284 $ 52,870 $ ( 34,680 ) $ 18,190 The following table sets forth the estimated annual amortization expense of intangible assets for each of the next five years: Year Amount (Dollars in thousands) 2025 $ 4,716 2026 $ 2,820 2027 $ 2,077 2028 $ 1,377 2029 $ 710 The original weighted average amortization period for intangible assets is 9.4 years. 104 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 6 DEPOSITS The following is a summary of the scheduled maturities of time deposits at December 31: 2024 2023 (Dollars in thousands) 1 year or less $ 2,680,063 97.5 % $ 2,056,543 94.3 % Over 1 year to 2 years 43,773 1.6 % 97,055 4.4 % Over 2 years to 3 years 11,576 0.4 % 15,594 0.7 % Over 3 years to 4 years 4,215 0.2 % 8,585 0.4 % Over 4 years to 5 years 7,719 0.3 % 3,702 0.2 % Total (1) $ 2,747,346 100.0 % $ 2,181,479 100.0 % (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. 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. NOTE 7 BORROWINGS Federal Home Loan Bank Borrowings 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 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 $ 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 % 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, 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 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. 105 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Long-Term Debt The following table summarizes long-term debt, net of debt issuances costs, at the dates indicated: December 31 2024 2023 (Dollars in thousands) Junior subordinated debentures Capital Trust V $ 51,519 $ 51,517 Central Trust I 5,258 5,258 Central Trust II 6,083 6,083 Subordinated debentures — 49,980 Total long-term debt $ 62,860 $ 112,838 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 : The junior subordinated debentures are issued to various trust subsidiaries of the Company. These trusts were formed for the purpose of issuing trust preferred securities, which were then sold in a private placement offering. 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 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: Trust Principal Amount Maturity Date Credit Spread All-in Rate (Dollars in thousands) Capital Trust V $ 50,000 3/15/2037 1.48 % 6.10 % Central Trust I (1) $ 5,100 9/16/2034 2.44 % 7.06 % Central Trust II (1) $ 5,900 3/15/2037 1.65 % 6.27 % (1) These securities noted above are callable quarterly until maturity. 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. 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. 106 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 8 STOCK BASED COMPENSATION The Company’s stock based plans include the 2018 Non-Employee Director St ock Plan (the “2018 Plan”) and the 2023 Omnibus Incentive Plan (the “2023 Plan”), which have been approved by the Company’s Board of Directors and shareholders. 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 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: Authorized Awards Cumulatively Granted, Net of Forfeitures and Expirations Total Authorized but Unissued Stock Option Awards Restricted Stock Awards 2005 Plan 1,650,000 387,258 1,044,533 1,431,791 n/a 2018 Plan 300,000 — 62,107 62,107 237,893 2023 Plan 1,126,886 — 153,236 153,236 973,650 The following table presents the pre-tax expense associated with stock option and restricted stock awards and the related tax benefits recognized for the periods presented: Years Ended December 31 2024 2023 2022 (Dollars in thousands) Stock based compensation expense Restricted stock awards (1) $ 5,923 $ 5,777 $ 3,791 Directors’ fee expense (2) Restricted stock awards 600 600 673 Total stock based award expense $ 6,523 $ 6,377 $ 4,464 Related tax benefits recognized in earnings $ 1,834 $ 1,793 $ 1,255 (1) Inclusive of compensation expense associated with time-vested and performance-based restricted stock awards. (2) Expense related to awards issued to directors is recognized as directors’ fees within other noninterest expense. The Company has standard form agreements used for stock option and restricted stock awards. The standard form agreements used for the Chief Executive Officer and all other Executive Officers have previously been disclosed in Securities and Exchange Commission filings and generally provide that: (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, 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. 107 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Stock Options The fair value of each stock option grant is estimated on the date of the grant using the Black-Scholes option-pricing model with the following assumptions used for grants under the identified plans: • Expected volatility is based on the standard deviation of the historical volatility of the weekly adjusted closing price of the Company’s shares for a period equivalent to the expected life of the option. • Expected life represents the period of time that the option is expected to be outstanding, taking into account the contractual term, historical exercise/forfeiture behavior, and the vesting period, if any. • Expected dividend yield is an annualized rate calculated using the most recent dividend payment at time of grant and the Company’s average trailing twelve-month daily closing stock price. • The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for a period equivalent to the expected life of the option. • Forfeitures on stock compensation are recognized when they occur. For the years ended December 31, 2024, 2023 and 2022, there were no awards granted by the Company of nonqualified options to purchase shares of common stock. Under all of the Company’s stock based plans, the option exercise price is based upon the average of the high and low trading value of the stock on the date of grant. Stock option awards granted to date under all plans expire at various dates through 2028. The following table presents relevant information relating to the Company’s stock options for the periods presented: Years Ended December 31 2024 2023 2022 (Dollars in thousands, except per share data) Fair value of stock options vested based on grant date fair value $ — $ — $ — Intrinsic value of stock options exercised $ 43 $ 139 $ — Cash received from stock option exercises $ 80 $ 257 $ — Tax benefit realized on stock option exercises $ 12 $ 39 $ — The following table presents a summary of stock option award activity for the year ended December 31, 2024: Outstanding Stock Option Awards Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (1) (Dollars in thousands, except per share data) Balance at January 1, 2024 13,334 $ 64.94 Granted — — Exercised ( 1,667 ) 48.10 Balance of options outstanding, vested and exercisable at December 31, 2024 11,667 (2) $ 67.35 2.68 years $ 27 (1) The aggregate intrinsic value represents the total pre-tax intrinsic value, based on the average of the high price and low price at which the Company’s common stock traded on December 31, 2024 of $ 64.57 , which would have been received by in-the-money option holders had they all exercised their options as of that date. (2) Represents vested stock options outstanding to Directors. At December 31, 2024, all outstanding stock option awards are vested and there is no unrecognized compensation expense related to those options. 108 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Restricted Stock 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 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. The holders of performance-based restricted stock awards do not participate in the rewards of stock ownership of the Company until vested. The holders of all restricted stock awards are not required to pay any consideration to the Company for the awards. During the years ended December 31, 2024, 2023, and 2022 the Company made the following restricted stock award grants: Shares Granted Plan Fair Value Vesting Period Time-vested 2024 2/22/2024 106,200 2023 $ 52.73 Ratably over 3 years from grant date 4/15/2024 1,650 2023 $ 48.49 Ratably over 3 years from grant date 5/21/2024 11,340 2018 $ 52.94 Immediately upon grant date 8/15/2024 3,703 2023 $ 59.42 Ratably over 3 years from grant date 10/15/2024 1,120 2023 $ 62.32 Ratably over 3 years from grant date 12/15/2024 1,060 2023 $ 70.89 Ratably over 3 years from grant date 2023 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 5/23/2023 12,410 2018 $ 48.35 Immediately upon grant date 5/30/2023 890 2023 $ 45.09 Ratably over 3 years from grant date 9/15/2023 5,270 2023 $ 51.44 Ratably over 5 years from 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 2022 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 2/22/2024 41,200 2023 $ 52.73 The earlier of: the date on which it is determined if the performance goal has been achieved; or, March 31, 2027. 2/16/2023 32,200 2005 $ 80.65 The earlier of: the date on which it is determined if the performance goal has been achieved; or, March 31, 2026. 2/17/2022 20,700 2005 $ 84.70 The earlier of: the date on which it is determined if the performance goal has been achieved; or, March 31, 2025. 109 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following table presents the fair value of restricted stock awards that vested during the periods presented: Years Ended December 31 2024 2023 2022 (Dollars in thousands) Fair value of restricted stock awards upon vesting $ 4,158 $ 5,003 $ 5,148 The following table presents a summary of restricted stock award activity for the year ended December 31, 2024: Outstanding Restricted Stock Awards Weighted Average Grant Price ($) Balance at January 1, 2024 217,207 $ 79.65 Granted 166,273 53.03 Vested/released ( 78,563 ) 75.48 Forfeited (1) ( 27,625 ) 69.44 Balance at December 31, 2024 277,292 $ 65.88 Unrecognized compensation cost (in thousands) $ 9,624 Weighted average remaining recognition period (years) 1.94 years (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. NOTE 9 DERIVATIVES AND HEDGING ACTIVITIES The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally to manage the Company’s interest rate risk. Additionally, the Company enters into interest rate derivatives, foreign exchange contracts and risk participation agreements to accommodate the business requirements of its customers (“customer related positions”). The Company minimizes the market and liquidity risks of customer related positions by entering into similar offsetting positions with broker-dealers. Derivative instruments are carried at fair value in the Company’s financial statements. The accounting for changes in the fair value of a derivative instrument is dependent upon whether or not it qualifies as a hedge for accounting purposes, and further, by the type of hedging relationship. The Company does not enter into proprietary trading positions for any derivatives. The Company is subject to over-the-counter derivative clearing requirements which require certain derivatives to be cleared through central clearing houses. Accordingly, the Company clears certain derivative transactions through the Chicago Mercantile Exchange Clearing House (“CME”). This clearing house requires the Company to post initial and variation margin to mitigate the risk of non-payment, the latter of which is received or paid daily based on the net asset or liability position of the contracts. Interest Rate Positions The Company may utilize various interest rate derivatives as hedging instruments against interest rate risk associated with the Company’s borrowings and loan portfolios. An interest rate derivative is an agreement whereby one party agrees to pay a floating rate of interest on a notional principal amount in exchange for receiving a fixed rate of interest on the same notional amount, for a predetermined period of time, from a second party. The amounts relating to the notional principal amount are not actually exchanged. 110 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following tables reflect information about the Company’s derivative positions at the dates indicated below for interest rate swaps which qualify as cash flow hedges for accounting purposes: December 31, 2024 Weighted Average Rate Notional Amount Weighted Average Maturity Current Rate Received Pay Fixed Swap Rate Fair Value (in thousands) (in years) (in thousands) Interest rate swaps on borrowings $ 400,000 1.58 4.56 % 3.67 % $ 2,724 Current Rate Paid Receive Fixed Swap Rate Interest rate swaps on loans 750,000 1.77 4.57 % 2.78 % ( 21,205 ) Current Rate Paid Receive Fixed Swap Rate Cap - Floor Interest rate collars on loans 150,000 1.94 4.70 % 3.94 % - 2.33 % ( 1,529 ) Total $ 1,300,000 $ ( 20,010 ) December 31, 2023 Weighted Average Rate Notional Amount Average Maturity Current Rate Received Pay Fixed Swap Rate Fair Value (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 Swap Rate Interest rate swaps on loans 850,000 2.50 5.36 % 2.72 % ( 27,350 ) Current Rate Paid Receive Fixed Swap Rate Cap - Floor Interest rate collars on loans 350,000 1.48 5.45 % 3.09 % - 2.12 % ( 4,714 ) Total $ 1,600,000 $ ( 30,163 ) The maximum length of time over which the Company is currently hedging its exposure to the variability in future cash flows for forecasted transactions related to the payment of variable interest on existing financial instruments is 4.2 years. 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 $ 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. The Company had no fair value hedges for the years ended December 31, 2024 and 2023. 111 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Customer Related Positions Loan level derivatives, primarily interest rate swaps, offered to commercial borrowers through the Company’s loan level derivative program do not qualify as hedges for accounting purposes. The Company believes that its exposure to commercial customer derivatives is limited because these contracts are simultaneously matched at inception with an offsetting dealer transaction. Derivatives with dealer counterparties are then either cleared through a clearinghouse or settled directly with a single counterparty. The commercial customer derivative program allows the Company to retain variable-rate commercial loans while allowing the customer to synthetically fix the loan rate by entering into a variable-to-fixed interest rate swap. The amounts relating to the notional principal amount are not actually exchanged. Foreign exchange contracts offered to commercial borrowers through the Company’s derivative program do not qualify as hedges for accounting purposes. The Company acts as a seller and buyer of foreign exchange contracts to accommodate its customers. To mitigate the market and liquidity risk associated with these derivatives, the Company enters into similar offsetting positions. The amounts relating to the notional principal amount are exchanged. The Company has entered into risk participation agreements with other dealer banks in commercial loan agreements. Participating banks guarantee the performance on borrower-related interest rate swap contracts. These derivatives are not designated as hedges and, therefore, changes in fair value are recognized in earnings. Under a risk participation-out agreement, a derivative asset, the Company participates out a portion of the credit risk associated with the interest rate swap position executed with the commercial borrower for a fee paid to the participating bank. Under a risk participation-in agreement, a derivative liability, the Company assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower for a fee received from the other bank. 112 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following tables reflect the Company’s customer related derivative positions at the dates indicated below for those derivatives not designated as hedging: Number of Positions (1) Notional Amount Maturing Less than 1 year Less than 2 years Less than 3 years Less than 4 years Thereafter Total Fair Value December 31, 2024 (Dollars in thousands) Loan level swaps Receive fixed, pay variable 276 $ 261,222 $ 225,043 $ 252,911 $ 208,762 $ 869,095 $ 1,817,033 $ ( 92,913 ) Pay fixed, receive variable 276 261,222 225,043 252,911 208,762 869,095 1,817,033 92,875 Foreign exchange contracts Buys foreign currency, sells U.S. currency 34 112,156 12,120 — — — 124,276 ( 5,363 ) Buys U.S. currency, sells foreign currency 34 112,156 12,120 — — — 124,276 5,424 Risk participation agreements Participation out 18 23,672 — 27,140 21,256 91,053 163,121 56 Participation in 12 — 13,016 22,904 15,334 — 51,254 ( 12 ) Number of Positions (1) Notional Amount Maturing Less than 1 year Less than 2 years Less than 3 years Less than 4 years Thereafter Total Fair Value December 31, 2023 (Dollars in thousands) Loan level swaps Receive fixed, pay variable 281 $ 80,682 $ 252,260 $ 223,928 $ 230,513 $ 997,108 $ 1,784,491 $ ( 88,415 ) Pay fixed, receive variable 281 80,682 252,260 223,928 230,513 997,108 1,784,491 88,280 Foreign exchange contracts Buys foreign currency, sells U.S. currency 22 65,586 12,957 — — — 78,543 2,197 Buys U.S. currency, sells foreign currency 22 65,586 12,957 — — — 78,543 ( 2,160 ) Risk participation agreements Participation out 17 — 24,193 — 13,119 114,027 151,339 200 Participation in 8 — — 13,016 18,989 15,725 47,730 ( 44 ) (1) The Company may enter into one dealer swap agreement which offsets multiple commercial borrower swap agreements. Mortgage Derivatives The Company enters into commitments to fund residential mortgage loans at specified rates and times in the future, with the intention that loans may be sold subsequently in the secondary market. Mortgage loan commitments are referred to as derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. These commitments are recognized at fair value on the Consolidated Balance Sheet in other assets and other liabilities with changes in their fair values recorded within mortgage banking income. In addition, the Company has elected the fair value option to carry loans held for sale at fair value. 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 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. 113 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Outstanding loan commitments expose the Company to the risk that the price of the loans arising from exercise of the loan commitment might change from inception of the rate lock to funding of the loan due to changes in mortgage interest rates. If interest rates increase, the value of these loan commitments decreases. Conversely, if interest rates decrease, the value of these loan commitments increases. To protect against the price risk inherent in derivative loan commitments, the Company utilizes both “mandatory delivery” and “best efforts” forward loan sale commitments to mitigate the risk of potential decreases in the values of loans that would result from the exercise of the derivative loan commitments. Mandatory delivery contracts are accounted for as derivative instruments. Included in the mandatory delivery forward commitments are To Be Announced securities (“TBAs”). Certain assumptions, including pull through rates and rate lock periods, are used in managing the existing and future hedges. The accuracy of underlying assumptions will impact the ultimate effectiveness of any hedging strategies. With mandatory delivery contracts, the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. If the Company fails to deliver the amount of mortgages necessary to fulfill the commitment by the specified date, it is obligated to pay a “pair-off” fee, based on then-current market prices, to the investor/counterparty to compensate the investor for the shortfall. Generally, the Company makes this type of commitment once mortgage loans have been funded and are held for sale, in order to minimize the risk of failure to deliver the requisite volume of loans to the investor and paying pair-off fees as a result. The Company also sells TBA securities to offset potential changes in the fair value of derivative loan commitments. Generally, the Company sells TBA securities by entering into derivative loan commitments for settlement in 30 to 90 days. The Company expects that mandatory delivery contracts, including TBA securities, will experience changes in fair value opposite to the changes in the fair value of derivative loan commitments. With best effort contracts, the Company commits to deliver an individual mortgage loan of a specified principal amount and quality to an investor if the loan to the underlying borrower closes. Generally, best efforts cash contracts have no pair off risk regardless of market movement. The price the investor will pay the seller for an individual loan is specified prior to the loan being funded (e.g., on the same day the lender commits to lend funds to a potential borrower). 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 $ 4.1 million, $ 1.0 million and $ 562,000 for the years ended December 31, 2024, 2023 and 2022, respectively. Balance Sheet Offsetting The Company does not offset fair value amounts recognized for derivative instruments. The Company does net the amount recognized for the right to reclaim cash collateral against the obligation to return cash collateral arising from derivative instruments executed with the same counterparty under a master netting arrangement. Collateral legally required to be maintained at dealer banks by the Company is monitored and adjusted as necessary. A daily settlement occurs through the CME for changes in the fair value of centrally cleared derivatives. Not all of the derivatives are required to be cleared through the daily clearing agent. As a result, the total fair values of loan level derivative assets and liabilities recognized on the Company’s financial statements are not equal and offsetting. 114 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The table below presents the fair value of the Company’s derivative financial instruments, as well as their classification on the balance sheet at the dates indicated: Asset Derivatives (1) Liability Derivatives (2) Fair Value at Fair Value at Fair Value at Fair Value at December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 (Dollars in thousands) Derivatives designated as hedges Interest rate derivatives $ 2,724 (3) $ 1,927 (3) $ 22,734 (4) $ 32,090 (4) Derivatives not designated as hedges Customer Related Positions: Loan level derivatives 95,606 (3) 99,416 (3) 95,644 (4) 99,551 (4) Foreign exchange contracts 5,424 2,220 5,363 2,183 Risk participation agreements 56 200 12 44 Mortgage Derivatives Interest rate lock commitments 77 168 2 — 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 Total 103,958 103,948 123,755 133,868 Netting Adjustments (5) ( 46,664 ) ( 48,253 ) 21,078 25,360 Net Derivatives on the Balance Sheet 57,294 55,695 102,677 108,508 Financial instruments (6) 2,894 12,018 2,894 12,018 Cash collateral pledged (received) ( 33,283 ) ( 17,076 ) — — Net Derivative Amounts $ 21,117 $ 26,601 $ 99,783 $ 96,490 (1) All asset derivatives are located in other assets on the balance sheet . (2) All liability derivatives are located in other liabilities on the balance sheet . (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. (6) Reflects offsetting derivative positions with the same counterparty that are not netted on the balance sheet. 115 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The table below presents the effect of the Company’s derivative financial instruments included in OCI and current earnings for the periods indicated: Years Ended December 31 2024 2023 2022 (Dollars in thousands) Derivatives designated as hedges Gain (loss) in OCI on derivatives (effective portion), net of tax $ 6,713 $ 16,055 $ ( 50,767 ) (Loss) gain reclassified from OCI into interest income or interest expense (effective portion) $ ( 19,372 ) $ ( 27,414 ) $ 5,054 Derivatives not designated as hedges Changes in fair value of customer related positions Other income $ 231 $ 517 $ 260 Other expenses ( 212 ) ( 679 ) ( 268 ) Changes in fair value of mortgage derivatives Mortgage banking income ( 38 ) 112 ( 679 ) Total $ ( 19 ) $ ( 50 ) $ ( 687 ) The Company’s derivative agreements with institutional counterparties contain various credit-risk related contingent provisions, such as requiring the Company to maintain a well-capitalized capital position. If the Company fails to meet these conditions, the counterparties could request the Company make immediate payment or demand that the Company provide immediate and ongoing full collateralization on derivative positions in net liability positions. All derivative instruments with credit-risk related contingent features were in a net asset position at December 31, 2024 and December 31, 2023. By using derivatives, the Company is exposed to credit risk to the extent that counterparties to the derivative contracts do not perform as required. Should a counterparty fail to perform under the terms of a derivative contract, the Company’s credit exposure on interest rate swaps is limited to the net positive fair value and accrued interest of all swaps with each counterparty. The Company seeks to minimize counterparty credit risk through credit approvals, limits, monitoring procedures, and obtaining collateral, where appropriate. Institutional counterparties must have an investment grade credit rating and be approved by the Company’s Board of Directors. In addition, certain derivative contracts executed bilaterally with a dealer counterparty in the over-the-counter market are cleared through a clearinghouse, whereby the clearinghouse becomes the counterparty to the transaction. As such, management believes the risk of incurring credit losses on derivative contracts with those counterparties is remote. The Company’s exposure relating to institutional counterparties was $ 97.0 million and $ 95.8 million at December 31, 2024 and 2023, respectively. The Company’s exposure relating to customer counterparties was approximately $ 1.4 million and $ 5.6 million at December 31, 2024 and 2023, respectively. Credit exposure may be reduced by the value of collateral pledged by the counterparty. 116 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 10 INCOME TAXES The provision for income taxes is comprised of the following components: Years Ended December 31 2024 2023 2022 (Dollars in thousands) Current expense Federal $ 47,830 $ 51,771 $ 60,216 State 17,816 21,123 24,979 Total current expense 65,646 72,894 85,195 Deferred expense (benefit) Federal ( 7,671 ) 1,336 ( 970 ) State ( 2,929 ) 1,402 ( 284 ) Total deferred expense (benefit) ( 10,600 ) 2,738 ( 1,254 ) Total expense $ 55,046 $ 75,632 $ 83,941 The difference between the statutory federal income tax rate and the effective income tax rate reported for the last three years is detailed below: Years Ended December 31 2024 2023 2022 (Dollars in thousands) Computed statutory federal income tax provision $ 51,897 21.00 % $ 66,178 21.00 % $ 73,028 21.00 % State taxes, net of federal tax benefit 12,143 4.91 % 17,992 5.71 % 19,728 5.67 % Low Income Housing Project Investments ( 4,496 ) ( 1.82 ) % ( 3,740 ) ( 1.19 ) % ( 3,364 ) ( 0.97 ) % Nontaxable interest, net ( 3,653 ) ( 1.48 ) % ( 3,508 ) ( 1.11 ) % ( 3,191 ) ( 0.92 ) % Increase in cash surrender value of life insurance ( 1,794 ) ( 0.73 ) % ( 2,133 ) ( 0.68 ) % ( 1,885 ) ( 0.54 ) % Increase (decrease) in uncertain positions ( 1,215 ) ( 0.49 ) % ( 655 ) ( 0.21 ) % ( 1,035 ) ( 0.30 ) % Revaluation of net deferred tax assets ( 29 ) ( 0.01 ) % 255 0.08 % — — % Stock-based compensation 165 0.07 % ( 127 ) ( 0.04 ) % ( 202 ) ( 0.06 ) % Change in valuation allowance 65 0.03 % 109 0.03 % 52 0.01 % Other tax credits — — % ( 76 ) ( 0.02 ) % — — % Other, net 1,963 0.79 % 1,337 0.43 % 810 0.25 % Total expense $ 55,046 22.27 % $ 75,632 24.00 % $ 83,941 24.14 % 117 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The tax-effected components of the net deferred tax asset at December 31 of the years presented were as follows: 2024 2023 (Dollars in thousands) Deferred tax assets Accrued expenses not deducted for tax purposes $ 17,720 $ 14,646 Allowance for credit losses 46,372 38,774 Derivatives fair value adjustment 5,304 7,825 Employee and director equity compensation 1,930 1,660 Foreign Tax Credit Carryforward 89 89 Loan basis difference fair value adjustment 1,612 1,811 Net operating loss carry-forward 627 633 Net unrealized loss on securities available for sale 23,795 29,536 Operating lease liability 15,471 15,387 State purchased credits 21,448 — Other 621 587 Gross deferred tax assets $ 134,989 $ 110,948 Valuation allowance (1) ( 531 ) ( 467 ) Total deferred tax assets net of valuation allowance $ 134,458 $ 110,481 Deferred tax liabilities Core deposit and other intangibles $ 1,453 $ 2,865 Deferred loan fees, net 8,080 8,160 Fixed assets 14,747 16,606 Goodwill 11,476 11,291 Prepaid pension 7,260 3,482 Right of use asset 14,921 14,781 Other 1,868 1,884 Gross deferred tax liabilities $ 59,805 $ 59,069 Total net deferred tax asset $ 74,653 $ 51,412 (1) Deferred tax assets are to be reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of the tax benefit depends upon the existence of sufficient taxable income in future periods. 118 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Uncertainty in Income Taxes The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction as well as in various states. The Company is subject to U.S. federal, state and local income tax examinations by tax authorities for the 2021 through 2023 tax years including any related income tax filings from its recent acquisitions. The Company believes that its income tax returns have been filed based upon applicable statutes, regulations and case law in effect at the time of filing, however, the Internal Revenue Service (“IRS”) and /or state jurisdictions could disagree with the Company’s interpretation upon examination. The Company accounts for uncertainties in income taxes by providing a tax reserve for certain positions. The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits: (Dollars in thousands) Balance at December 31, 2021 $ 2,878 Reduction of tax positions for prior years ( 1,047 ) Increase for prior year tax positions 128 Increase for current year tax positions 761 Balance at December 31, 2022 $ 2,720 Reduction of tax positions for prior years ( 959 ) Balance at December 31, 2023 $ 1,761 Reduction of tax positions for prior years ( 999 ) Balance at December 31, 2024 $ 762 Increases to the Company’s unrealized tax positions occur as a result of accruing for any unrecognized tax benefit, as well as the accrual of interest and penalties related to prior year positions. Decreases in the Company’s unrealized tax positions occur as a result of the statute of limitation lapsing on prior year positions and/or settlements relating to outstanding positions. Additionally, the balances noted in the table above do not include the indirect federal benefit of state tax positions of approximately $ 160,000 , $ 343,000 , and $ 544,000 at December 31, 2024, 2023, and 2022, respectively. The following table summarizes the changes in accrued interest and penalties related to uncertain tax positions for the periods presented: As of December 31 2024 2023 2022 (Dollars in thousands) Beginning Balance $ 689 $ 585 $ 920 Expense (benefit) recognized in provision for income taxes ( 306 ) 104 ( 335 ) Ending Balance $ 383 $ 689 $ 585 119 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 11 LOW INCOME HOUSING PROJECT INVESTMENTS The Company has invested in low income housing projects that generate Low Income Housing Tax Credits (“LIHTC”) which provide the Company with tax credits and operating loss tax benefits over a minimum of 15 years. None of the original investment is expected to be repaid. The following table presents certain information related to the Company’s investments in low income housing projects as of December 31 of the years presented: 2024 2023 2022 (Dollars in thousands) Original investment value $ 275,085 $ 229,015 $ 197,124 Current recorded investment 184,373 156,984 139,454 Unfunded liability obligation 71,748 58,731 57,913 Tax credits and benefits earned during the year 23,185 18,101 17,011 Amortization of investments during the year 18,676 14,360 13,647 Net income tax benefit recognized during the year 4,509 3,740 3,364 NOTE 12 EMPLOYEE BENEFIT PLANS Pension Plans The Company maintains a multiemployer defined benefit pension plan (the “Pension Plan”) administered by Pentegra Retirement Services (the “Fund” or “Pentegra Defined Benefit Plan for Financial Institutions”). The Fund does not segregate the assets or liabilities of all participating employers and accordingly, disclosure of plan assets, accumulated vested and nonvested benefits is not possible. Effective July 1, 2006, the Company froze the defined benefit plan by eliminating all future benefit accruals. 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 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. The “EIN/Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the three-digit plan number. The funding status of the Pension Plans is determined on the basis of the financial statements provided by the Fund using total plan assets and accumulated benefit obligation. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. The “Expiration Date of Collective-Bargaining Agreement” column lists the expiration dates of any collective-bargaining agreement(s) to which the Pension Plans are subject. Financial information for the Fund is made available through the public Form 5500 which is available by April 15 th of the year following the plan year end. Funding Status of Pension Plan FIP/RP Status Pending/ Implemented Surcharge Imposed Expiration Date of Collective- Bargaining Agreement Minimum Contributions Required for Future Periods EIN/Pension Plan Number 2024 2023 Pentegra defined benefit plan for financial institutions 13-5645888/333 At least 80 percent At least 80 percent No No N/A $ — 120 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Contributions to the Fund are based on each individual employer’s experience. The Company bears the market risk relating to the Pension Plan and will continue to fund the Pension Plan as required. The Pension Plan year is July 1 through June 30. 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 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: Required Contributions - Plan Year Allocation Contribution 2024-2025 2023-2024 2022-2023 (Dollars in thousands) 2024 $ 663 $ 369 $ 294 $ — 2023 $ 476 $ — $ 476 $ — 2022 $ 499 $ — $ — $ 499 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 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. Information pertaining to the BHB Plan is as follows: Years Ended December 31 2024 2023 2022 (Dollars in thousands) Change in plan assets: Fair value of plan assets at beginning of year $ 9,632 $ 9,889 $ 14,099 Actual return on plan assets 508 509 ( 2,126 ) Benefits paid ( 391 ) ( 766 ) ( 2,084 ) Fair value of plan assets at end of year $ 9,749 $ 9,632 $ 9,889 Change in benefit obligation: Benefit obligation at beginning of year 8,385 8,716 13,939 Interest cost 388 420 366 Actuarial (gain) loss ( 484 ) 15 ( 3,505 ) Benefits paid ( 391 ) ( 766 ) ( 2,084 ) Benefit obligation at end of year $ 7,898 $ 8,385 $ 8,716 Funded status at end of year $ 1,851 $ 1,247 $ 1,173 At December 31, 2024 and 2023, the discount rate used to determine the benefit obligation was 5.44 % and 4.77 %, respectively. 121 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The components of net period pension expense (benefit) are as follows: Years Ended December 31 2024 2023 2022 (Dollars in thousands) Interest cost $ 388 $ 420 $ 366 Expected return on plan assets ( 258 ) ( 144 ) ( 966 ) Amortization of net actuarial (gain) loss ( 54 ) ( 17 ) 28 Settlement gain — ( 25 ) ( 31 ) Net period pension expense (benefit) $ 76 $ 234 $ ( 603 ) The key assumptions used to determine net periodic pension expense (benefit) are as follows: Years Ended December 31 2024 2023 2022 Discount rate 4.77 % 4.97 % 2.68 % Expected long-term rate of return on plan assets 2.75 % 1.50 % 7.00 % 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. 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 estimated future benefit payments for the BHB Plan. These payments reflect calculated amounts prior to the approval of the BHB Plan's termination. Amount (Dollars in thousands) 2025 $ 565 2026 $ 501 2027 $ 530 2028 $ 518 2029 $ 486 2030-2034 $ 2,744 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 The Bank maintains frozen defined benefit supplemental executive retirement plans (“SERP”) for certain highly compensated employees designed to offset the impact of regulatory limits on benefits under qualified pension plans. The Bank also maintains defined benefit SERPs acquired from previous acquisitions. The Bank has established and funded rabbi trusts to accumulate funds in order to satisfy the contractual liability of these supplemental retirement plan benefits. 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 equity securities portfolio totaled $ 18.7 million and $ 20.0 million at December 31, 2024 and 2023, respectively. 122 Table of Contents 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: 2024 2023 2022 (Dollars in thousands) Retirement expense $ 749 $ 703 $ 1,681 Benefits paid $ 1,120 $ 450 $ 475 Expected future benefit payments for the defined benefit supplemental executive retirement plans are presented below: Defined Benefit Supplemental Executive Retirement Plans Expected Benefit Payments (Dollars in thousands) 2025 $ 1,093 2026 $ 1,093 2027 $ 1,063 2028 $ 1,050 2029 $ 1,045 2030-2034 $ 5,814 123 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The measurement date used to determine the defined benefit supplemental executive retirement plans’ benefits is December 31 for each of the years reported. The following table illustrates the status of the defined benefit supplemental executive retirement plans at December 31 for the years presented: Defined Benefit Supplemental Executive Retirement Benefits 2024 2023 2022 (Dollars in thousands) Change in accumulated benefit obligation Benefit obligation at beginning of year $ 16,394 $ 15,711 $ 19,498 Service cost — 380 561 Interest cost 745 761 492 Actuarial gain ( 1,046 ) ( 8 ) ( 4,365 ) Benefits paid ( 1,120 ) ( 450 ) ( 475 ) Benefit obligation at end of year $ 14,973 $ 16,394 $ 15,711 Change in plan assets Fair value of plan assets at beginning of year $ — $ — $ — Employer contribution 1,120 450 475 Benefits paid ( 1,120 ) ( 450 ) ( 475 ) Fair value of plan assets at end of year $ — $ — $ — Funded status at end of year $ ( 14,973 ) $ ( 16,394 ) $ ( 15,711 ) Assets — — — Liabilities ( 14,973 ) ( 16,394 ) ( 15,711 ) Funded status at end of year $ ( 14,973 ) $ ( 16,394 ) $ ( 15,711 ) Amounts recognized in accumulated other comprehensive income (“AOCI”) Net gain $ ( 2,567 ) $ ( 1,518 ) $ ( 1,970 ) Prior service cost — — 22 Amounts recognized in AOCI $ ( 2,567 ) $ ( 1,518 ) $ ( 1,948 ) Information for plans with an accumulated benefit obligation in excess of plan assets Projected benefit obligation $ 14,973 $ 16,394 $ 15,711 Accumulated benefit obligation $ 14,973 $ 16,394 $ 15,711 Net periodic benefit cost Service cost $ — $ 380 $ 561 Interest cost 745 761 492 Amortization of prior service cost — 22 22 Recognized net actuarial loss (gain) 4 ( 460 ) 606 Net periodic benefit cost $ 749 $ 703 $ 1,681 Discount rate used for benefit obligation 4.58 % - 5.41 % 4.62 % - 4.75 % 4.67 % - 4.93 % Discount rate used for net periodic benefit cost 4.62 % - 4.75 % 4.67 % - 4.93 % 1.28 % - 2.57 % Rate of compensation increase n/a n/a n/a Other Employee Benefits The Bank may choose to create an incentive compensation plan for senior management and other officers to participate in at varying levels. In addition, the Bank may also pay a discretionary bonus to senior management, officers, and/or non-officers of the Bank. The expense for these incentive plans amounted to $ 21.3 million, $ 18.6 million and $ 24.3 million in 2024, 2023 and 2022, respectively. 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 IRS annual contribution limits. The Bank matches 25 % of each employee’s contributions up to the first 6 % of the 124 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) employee’s eligible earnings. The 401(k) Plan incorporates an Employee Stock Ownership Plan for contributions invested in the Company’s common stock. The Company also provides three defined contributions under this Plan, providing the employees are deemed eligible. To be eligible for these contributions, an employee must complete one year and 1,000 hours of service. The defined contributions are made up of a safe harbor contribution, in which eligible employees receive a 3 % cash contribution of eligible earnings to the social security limit, a discretionary contribution in which eligible employees receive a 2 % cash contribution of eligible earnings up to the social security limit and a 5 % cash contribution of eligible earnings over the social security limit up to the maximum amount permitted by law. Benefits contributed to employees under this defined contribution plan vest immediately. The defined contribution plan expense was $ 9.6 million, $ 9.3 million and $ 8.7 million for the years ended December 2024, 2023 and 2022, respectively. The Company has a non-qualified deferred compensation plan which allows for deferrals of base salary and incentive payments until an elected distribution date in the future. This deferred compensation plan is available to certain highly compensated employees. Deferrals are invested at the election of the participant into one of the actively managed funds made available to the participant through the Company’s Investment Management Group. The funds are held in a rabbi trust until the elected date of distribution. The Company has a non-qualified 401(k) Restoration Plan (“Restoration Plan”) for certain executive officers. The Restoration Plan is intended to contribute to each participant the amount of matching and discretionary contributions which would have been made to the existing Rockland Trust 401(k) plan on the participant’s behalf, but were prohibited due to Internal Revenue Code limitations. Deferrals are invested at the election of the participant into one of the actively managed funds made available to the participant through the Company’s Investment Management Group or in the Company’s stock. These funds are held in a rabbi trust until the elected date of distribution. The Company recognized expense of $ 659,000 , $ 524,000 and $ 505,000 related to this plan for services performed for the years ended December 31, 2024, 2023 and 2022, respectively. Also, as part of the Peoples acquisition in 2015, the Company assumed various Salary Continuation Agreements with certain current and former senior executives. The agreements require the payment of specified benefits upon retirement over periods of ten or twenty years as described in each agreement. Expense related to the Salary Continuation Agreements was $ 221,000 , $ 217,000 and $ 213,000 for the years ended December 31, 2024, 2023 and 2022, respectively. Director Benefits The Company maintains two deferred compensation plans for the Company’s Board of Directors which permit non-employee directors to defer cash fees, one of which was in effect through December 31, 2018 and a new plan which was adopted effective January 1, 2019. Under the plan in effect through December 31, 2018, deferred compensation was invested in Company stock and held by the Company’s Investment Management Group. 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 2024 and 2023. Compensation of $ 113,000 was deferred during 2022. NOTE 13 FAIR VALUE MEASUREMENTS Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the assumptions applied by the Company when determining fair value reflect those that the Company determines market participants would use to price the asset or liability at the measurement date. If there has been a significant decrease in the volume and level of activity for the asset or liability, regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. Fair value is the price that would be received if the asset were to be sold or that would be paid if the liability were to be transferred in an orderly market transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. When determining fair value, the Company considers pricing information and other inputs that are current as of the measurement date. In periods of market dislocation, the observability of prices and other inputs may be reduced for certain instruments, or not available at all. The unavailability or reduced availability of pricing or other input information could cause an instrument to be reclassified from one level to another. The Fair Value Measurements and Disclosures Topic of the FASB ASC defines fair value and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to 125 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the Fair Value Measurements and Disclosures Topic of the FASB ASC are described below: Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation Techniques There were no changes in the valuation techniques used during the year ended December 31, 2024. Securities Trading and Equity Securities These equity securities are valued based on market quoted prices. These securities are categorized in Level 1 as they are actively traded and no valuation adjustments have been applied. U.S. Government Agency and U.S. Treasury Securities Fair value is estimated using either multi-dimensional spread tables or benchmarks. The inputs used include benchmark yields, reported trades, and broker/dealer quotes. These securities are classified as Level 2. Agency Mortgage-Backed Securities Fair value is estimated using either a matrix or benchmarks. The inputs used include benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. These securities are categorized as Level 2. Agency Collateralized Mortgage Obligations and Small Business Administration Pooled Securities The valuation model for these securities is volatility-driven and ratings based, and uses multi-dimensional spread tables. The inputs used include benchmark yields, reported trades, new issue data, broker dealer quotes, and collateral performance. If there is at least one significant model assumption or input that is not observable, these securities are categorized as Level 3 within the fair value hierarchy; otherwise, they are classified as Level 2. State, County, and Municipal Securities The fair value is estimated using a valuation matrix with inputs including bond interest rate tables, recent transaction, and yield relationships. These securities are categorized as Level 2. Single and Pooled Issuer Trust Preferred Securities The fair value of trust preferred securities, including pooled and single issuer preferred securities, is estimated using external pricing models, discounted cash flow methodologies or similar techniques. The inputs used in these valuations include benchmark yields, reported trades, new issue data, broker dealer quotes, and collateral performance. If there is at least one significant model assumption or input that is not observable, these securities are classified as Level 3 within the fair value hierarchy; otherwise, they are classified as Level 2. 126 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Loans Held for Sale The Company has elected the fair value option to account for originated closed loans intended for sale. The fair value is measured on an individual loan basis using quoted market prices and when not available, comparable market value or discounted cash flow analysis may be utilized. These assets are typically classified as Level 2. Derivative Instruments Derivatives The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Company incorporates credit valuation adjustments to appropriately reflect nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings. Additionally, in conjunction with fair value measurement guidance, the Company has made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. Although the Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its interest rate derivatives and risk participation agreements may also utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of December 31, 2024 and 2023, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are properly classified as Level 2. Mortgage Derivatives The fair value of mortgage derivatives is determined based on current market prices for similar assets in the secondary market and, therefore, classified as Level 2 within the fair value hierarchy. Individually Assessed Collateral Dependent Loans In accordance with the CECL standard, expected credit losses on individually assessed loans deemed to be collateral dependent are valued based upon the lower of amortized cost or fair value of the underlying collateral less costs to sell. The inputs used in the appraisals of the collateral are not always observable, and in such cases the loans may be classified as Level 3 within the fair value hierarchy; otherwise, they are classified as Level 2. Other Real Estate Owned and Other Foreclosed Assets Other Real Estate Owned (“OREO”) and Other Foreclosed Assets, when applicable, are valued at the lower of cost or fair value of the property, less estimated costs to sell. The fair values are generally estimated based upon recent appraisal values of the property less costs to sell the property. Certain inputs used in appraisals are not always observable, and therefore OREO and Other Foreclosed Assets may be classified as Level 3 within the fair value hierarchy. Goodwill and Other Intangible Assets Goodwill and identified intangible assets are subject to impairment testing. The Company conducts an annual impairment test of goodwill in the third quarter of each year, or more frequently if necessary. Other intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. To estimate the fair value of goodwill and, if necessary, other intangible assets, the Company utilizes both a comparable analysis of relevant price multiples in recent market transactions and a discounted cash flow analysis. Both valuation models require a significant degree of management judgment. In the event the fair value as determined by the valuation model is less than the carrying value, the intangibles may be impaired. If the impairment testing resulted in impairment, the Company would classify the impaired goodwill and other intangible assets subjected to nonrecurring fair value adjustments as Level 3. 127 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Assets and liabilities measured at fair value on a recurring and nonrecurring basis were as follows at the dates indicated: Fair Value Measurements at Reporting Date Using Balance Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2024 (Dollars in thousands) Recurring fair value measurements Assets Trading securities $ 4,245 $ 4,245 $ — $ — Equity securities 21,204 21,204 — — Securities available for sale U.S. government agency securities 209,660 — 209,660 — U.S. treasury securities 592,001 — 592,001 — Agency mortgage-backed securities 378,161 — 378,161 — Agency collateralized mortgage obligations 28,995 — 28,995 — State, county, and municipal securities 194 — 194 — Pooled trust preferred securities issued by banks and insurers 1,095 — 1,095 — Small business administration pooled securities 40,838 — 40,838 — Loans held for sale 7,271 — 7,271 — Derivative instruments 103,958 — 103,958 — Liabilities Derivative instruments 123,755 — 123,755 — Total recurring fair value measurements, net $ 1,263,867 $ 25,449 $ 1,238,418 $ — Nonrecurring fair value measurements Assets Individually assessed collateral dependent loans (1) $ 43,766 $ — $ — $ 43,766 Total nonrecurring fair value measurements $ 43,766 $ — $ — $ 43,766 128 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Fair Value Measurements at Reporting Date Using Balance Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2023 (Dollars in thousands) Recurring fair value measurements Assets Trading securities $ 4,987 $ 4,987 $ — $ — Equity securities 22,510 22,510 — — Securities available for sale U.S. government agency securities 207,138 — 207,138 — U.S. treasury securities 769,102 — 769,102 — Agency mortgage-backed securities 277,047 — 277,047 — Agency collateralized mortgage obligations 33,189 — 33,189 — State, county, and municipal securities 190 — 190 — Pooled trust preferred securities issued by banks and insurers 1,018 — 1,018 — Small business administration pooled securities 46,572 — 46,572 — Loans held for sale 6,368 — 6,368 — Derivative instruments 103,948 — 103,948 — Liabilities Derivative instruments 133,868 — 133,868 — Total recurring fair value measurements, net $ 1,338,201 $ 27,497 $ 1,310,704 $ — Nonrecurring fair value measurements Assets Individually assessed collateral dependent loans (1) $ 28,881 $ — $ — $ 28,881 Total nonrecurring fair value measurements $ 28,881 $ — $ — $ 28,881 (1) The carrying value of individually assessed collateral dependent loans is based on the lower of amortized cost or fair value of the underlying collateral less costs to sell. The fair value of the underlying collateral is generally determined through independent appraisals, which generally include various Level 3 inputs which are not identifiable. Appraisals may be adjusted by management for qualitative factors such as economic factors and estimated liquidation expenses. The range of these possible adjustments may vary. . 129 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The estimated fair values and related carrying amounts for assets and liabilities for which fair value is only disclosed are shown below at the dates indicated: Fair Value Measurements at Reporting Date Using Carrying Value Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2024 (Dollars in thousands) Financial assets Securities held to maturity (a) U.S. treasury securities $ 100,791 $ 93,022 $ — $ 93,022 $ — Agency mortgage-backed securities 788,470 726,362 — 726,362 — Agency collateralized mortgage obligations 422,827 357,684 — 357,684 — Small business administration pooled securities 122,868 114,733 — 114,733 — Loans, net of allowance for credit losses (b) 14,294,628 13,213,596 — — 13,213,596 Federal Home Loan Bank stock (c) 31,573 31,573 — 31,573 — Cash surrender value of life insurance policies (d) 303,965 303,965 — 303,965 — Financial liabilities Deposit liabilities, other than time deposits (e) $ 12,558,632 $ 12,558,632 $ — $ 12,558,632 $ — Time certificates of deposits (f) 2,747,346 2,739,606 — 2,739,606 — Federal Home Loan Bank borrowings (f) 638,514 638,489 — 638,489 — Junior subordinated debentures (g) 62,860 61,661 — 61,661 — 130 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Fair Value Measurements at Reporting Date Using Carrying Value Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2023 Financial assets (Dollars in thousands) Securities held to maturity (a) U.S. government agency securities $ 29,521 $ 28,408 $ — $ 28,408 $ — U.S. treasury securities 100,712 91,535 $ — 91,535 — Agency mortgage-backed securities 829,431 763,728 — 763,728 — Agency collateralized mortgage obligations 477,517 407,911 — 407,911 — Single issuer trust preferred securities issued by banks 1,500 1,373 — 1,373 — Small business administration pooled securities 130,426 124,653 — 124,653 — Loans, net of allowance for loan losses (b) 14,106,967 13,079,368 — — 13,079,368 Federal Home Loan Bank stock (c) 43,557 43,557 — 43,557 — Cash surrender value of life insurance policies (d) 297,387 297,387 — 297,387 — Financial liabilities Deposit liabilities, other than time deposits (e) $ 12,684,068 $ 12,684,068 $ — $ 12,684,068 $ — Time certificates of deposits (f) 2,181,479 2,166,573 — 2,166,573 — Federal Home Loan Bank borrowings (f) 1,105,541 1,103,845 — 1,103,845 — Junior subordinated debentures (g) 62,858 58,911 — 58,911 — Subordinated debentures (f) 49,980 49,613 — — 49,613 (a) The fair values presented are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments and/or discounted cash flow analysis. (b) Fair value of loans is measured using the exit price valuation method, determined primarily by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities or cash flows, while incorporating liquidity and credit assumptions. Additionally, this amount excludes individually assessed collateral dependent loans, which are deemed to be marked to fair value on a nonrecurring basis. (c) Federal Home Loan Bank stock has no quoted market value and is carried at cost, therefore the carrying amount approximates fair value. (d) Cash surrender value of life insurance is recorded at its cash surrender value (or the amount that can be realized upon surrender of the policy), therefore, carrying amount approximates fair value. (e) Fair value of demand deposits, savings and interest checking accounts and money market deposits is the amount payable on demand at the reporting date. (f) Fair value was determined by discounting anticipated future cash payments using rates currently available for instruments with similar remaining maturities. (g) Fair value was determined based upon market prices of securities with similar terms and maturities. This summary excludes certain financial assets and liabilities for which the carrying value approximates fair value. For financial assets, these may include cash and due from banks, federal funds sold and short-term investments. For financial liabilities, these may include federal funds purchased. These instruments would all be considered to be classified as Level 1 within the fair value hierarchy. Also excluded from the summary are financial instruments measured at fair value on a recurring and nonrecurring basis, as previously described. The Company considers its current use of financial instruments to be the highest and best use of the instruments. 131 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 14 REVENUE RECOGNITION A portion of the Company’s noninterest income is derived from contracts with customers, and as such, the revenue recognized depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company accounts for such revenues in accordance with ASC 606 - Revenue from Contracts with Customers and considers the terms of the contract and all relevant facts and circumstances when applying this guidance. To ensure its alignment with this core principle, the Company measures revenue and the timing of recognition by applying the following five steps: 1. Identify the contract(s) with customers 2. Identify the performance obligations 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations 5. Recognize revenue when (or as) the entity satisfies a performance obligation The Company has disaggregated its revenue from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The following table presents the revenue streams that the Company has disaggregated for the periods indicated: Years Ended December 31 2024 2023 2022 (Dollars in thousands) Deposit account fees (inclusive of cash management fees) $ 26,455 $ 23,486 $ 23,370 Interchange fees 12,513 11,865 10,881 ATM fees 4,568 4,243 3,866 Investment management - wealth management and advisory services 38,311 34,588 32,774 Investment management - retail investments and insurance revenue 4,433 5,603 4,058 Payment processing income 1,848 1,675 1,534 Credit card income 2,341 2,119 1,833 Other noninterest income 5,343 5,684 6,099 Total noninterest income in-scope of ASC 606 95,812 89,263 84,415 Total noninterest income out-of-scope of ASC 606 32,202 35,346 30,252 Total noninterest income $ 128,014 $ 124,609 $ 114,667 In each of the revenue streams identified above, there were no significant judgments made in determining or allocating the transaction price, as the consideration and service requirements are generally explicitly identified in the associated contracts. Additional information related to each of the revenue streams is further noted below. Deposit Account Fees The Company offers various deposit account products to its customers governed by specific deposit agreements applicable to either personal customers or business customers. These agreements identify the general conditions and obligations of both parties, and include standard information regarding deposit account related fees. Deposit account services include providing access to deposit accounts as well as access to the various deposit transactional services of the Company. These transactional services are primarily those that are identified in the standard fee schedule, and include, but are not limited to, services such as overdraft protection, wire transfer, and check collection. Revenue is recognized in conjunction with the various services being provided. For example, the Company may assess monthly fixed service fees associated with the customer having access to the deposit account, which can vary depending on the account type and daily account balance. In addition, the Company may also assess separate fixed fees associated with and at the time specific transactions are entered into by the customer. As such, the Company considers its performance obligations to be met concurrently with providing the account access or completing the requested deposit transaction. 132 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Cash Management Cash management services are a subset of the Deposit account fees revenue stream. These services primarily include ACH transaction processing, positive pay and remote deposit services. These services are also governed by separate agreements entered into with the customer. The fee arrangement for these services is structured to assess fees under one of two scenarios, either a per transaction fee arrangement or an earnings credit analysis arrangement. Under the per transaction fee arrangement, fixed fees are assessed concurrently with customers executing the transactions, and as such, the Company considers its performance obligations to be met concurrently with completing the requested transaction. Under the earnings credit analysis arrangement, the Company provides a monthly earnings credit to the customer that is negotiated and determined based on various factors. The credit is then available to absorb the per transaction fees that are assessed on the customer's deposit account activity for the month. Any amount of the transactional fees in excess of the earnings credit is recognized as revenue in that month. Interchange Fees The Company earns interchange revenue from its issuance of credit and debit cards granted through its membership in various card payment networks. The Company provides credit cards and debit cards to its customers which are authorized and settled through these payment networks, and in exchange, the Company earns revenue as determined by each payment network's interchange program. The revenue is recognized concurrently with the settlement of card transactions within each network. ATM Fees The Company deploys automated teller machines (ATMs) as part of its overall branch network. Certain transactions performed at the ATMs require customers to acknowledge and pay a fee for the requested service. Certain ATM fees are disclosed in the deposit account agreement fee schedules, whereas those assessed to non-Rockland Trust deposit holders are solely determined during the transaction at the machine. The ATM fee is a fixed dollar per transaction amount, and as such, is recognized concurrently with the overall daily processing and settlement of the ATM activity. Investment Management - Wealth Management and Advisory Services The Company offers investment management and trust services to individuals, institutions, small businesses and charitable institutions. Each investment management product is governed by its own contract along with a separate identifiable fee schedule unique to that product. The Company also offers additional services, such as estate settlement, financial planning, tax services and other special services quoted at the client’s request. Asset management and/or custody fees are based upon a percentage of the monthly valuation of the principal assets in the customer’s account, whereas fees for additional or special services are fixed in nature and are charged as services are rendered. As the fees are dependent on assets under management, which are susceptible to market factors outside of the Company’s control, this variable consideration is constrained and therefore no revenue is estimated at contract initiation. As such, all revenue is recognized in correlation to the monthly management fee determinations or as transactional services are provided. Due to the fact that payments are primarily made subsequent to the valuation period, the Company records a receivable for revenue earned but not received. The following table provides the amount of investment management revenue earned but not received as of the dates indicated: December 31, 2024 December 31, 2023 (Dollars in thousands) Receivables, included in other assets $ 5,968 $ 5,509 Investment Management - Retail Investments and Insurance Revenue The Company offers the sale of mutual fund shares, unit investment trust shares, third party model portfolios, general securities, fixed and variable annuities and life insurance products through registered representatives who are both employed by the Company and licensed and contracted with various Broker General Agents to offer these products to the Company’s customer base. As such, the Company performs these services as an agent and earns a fixed commission on the sales of these 133 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) products and services. To a lesser degree, production bonus commissions can also be earned based upon the Company meeting certain volume thresholds. In general, the Company recognizes commission revenue at the point of sale, and for certain insurance products, may also earn and recognize annual residual commissions commensurate with annual premiums being paid. Payment Processing Income The Company refers customers to third party payment processing partners in exchange for commission and fee income. The income earned is comprised of multiple components, including a fixed referral fee per each referred customer, a rebate amount determined primarily as a percentage of net revenue earned by the third party from services provided to each referred customer, and overall production bonus commissions if certain new account production thresholds are met. Payment processing income is recognized in conjunction with either completing the referral to earn the fixed fee amount or as the merchant activity is processed to derive the Company’s rebate and/or production bonus amounts. Credit Card Income The Company provides consumer and business credit card solutions to its customers by soliciting new accounts on behalf of a third party credit card provider in exchange for a fee. The income earned is comprised of new account incentive payments as well as a percentage of interchange income earned by the third party provider offering the consumer and business purpose revolving credit accounts. The credit card income is recognized in conjunction with the establishment of each new credit card member or as the interchange is earned by the third party in connection with net purchase transactions made by the credit card member. Other Noninterest Income The Company earns various types of other noninterest income that fall within the scope of the new revenue recognition rules, and have been aggregated into one general revenue stream in the table noted above. This amount includes, but is not limited to, the following types of revenue with customers: Safe Deposit Rent The Company rents out the use of safe deposit boxes to its customers, which can be accessed when the bank is open for business. The safe deposit box rental fee is paid upfront and is recognized as revenue ratably over the annual term of the contract. Foreign Currency The Company earns fee income associated with various transactions related to foreign currency product offerings, including foreign currency bank notes and drafts and foreign currency wires. The majority of this income is derived from commissions earned related to customers executing the above mentioned foreign currency transactions through arrangements with third party correspondents. 134 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 15 OTHER COMPREHENSIVE INCOME (LOSS) The following tables present a reconciliation of the changes in the components of other comprehensive income (loss) for the periods indicated, including the amount of income tax (expense) benefit allocated to each component of other comprehensive income (loss): Year Ended December 31, 2024 Pre-Tax Amount Tax (Expense) Benefit After Tax Amount (Dollars in thousands) Change in fair value of securities available for sale $ 22,586 $ ( 5,843 ) $ 16,743 Less: net security losses reclassified into other noninterest expense — — — Net change in fair value of securities available for sale 22,586 ( 5,843 ) 16,743 Change in fair value of cash flow hedges ( 10,133 ) 2,770 ( 7,363 ) Less: net cash flow hedge losses reclassified into interest income or interest expense ( 19,372 ) 5,296 ( 14,076 ) Net change in fair value of cash flow hedges 9,239 ( 2,526 ) 6,713 Net unamortized gain related to defined benefit pension and other postretirement adjustments arising during the period 1,953 ( 534 ) 1,419 Amortization of net actuarial gains ( 93 ) 26 ( 67 ) Amortization of net prior service costs 17 ( 5 ) 12 Net change in other comprehensive income for defined benefit postretirement plans (1) 1,877 ( 513 ) 1,364 Total other comprehensive income $ 33,702 $ ( 8,882 ) $ 24,820 Year Ended December 31, 2023 Pre-Tax Amount Tax (Expense) Benefit After Tax Amount (Dollars in thousands) Change in fair value of securities available for sale $ 42,019 $ ( 9,593 ) $ 32,426 Less: net security losses reclassified into other noninterest expense — — — Net change in fair value of securities available for sale 42,019 ( 9,593 ) 32,426 Change in fair value of cash flow hedges ( 5,078 ) 1,428 ( 3,650 ) Less: 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 gains ( 536 ) 151 ( 385 ) Amortization of net prior service costs 39 ( 11 ) 28 Amortization of net settlement credits ( 25 ) 7 ( 18 ) Net change in other comprehensive income for defined benefit postretirement plans (1) ( 312 ) 88 ( 224 ) Total other comprehensive income $ 64,043 $ ( 15,786 ) $ 48,257 135 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended December 31, 2022 Pre-Tax Amount Tax (Expense) Benefit After Tax Amount (Dollars in thousands) Change in fair value of securities available for sale $ ( 155,037 ) $ 36,047 $ ( 118,990 ) Less: net security losses reclassified into other noninterest expense — — — Net change in fair value of securities available for sale ( 155,037 ) 36,047 ( 118,990 ) Change in fair value of cash flow hedges ( 65,586 ) 18,452 ( 47,134 ) Less: net cash flow hedge gains reclassified into interest income or interest expense 5,054 ( 1,421 ) 3,633 Net change in fair value of cash flow hedges ( 70,640 ) 19,873 ( 50,767 ) Net unamortized gain related to defined benefit pension and other postretirement adjustments arising during the period 5,603 ( 1,575 ) 4,028 Amortization of net actuarial losses 635 ( 179 ) 456 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 Total other comprehensive loss $ ( 219,431 ) $ 54,164 $ ( 165,267 ) (1) The amortization of prior service costs is included in the computation of net periodic pension costs as disclosed in Note 12 - Employee Benefit Plans within the Notes to the Consolidated Financial Statements in Item 8. Information on the Company’s accumulated other comprehensive income (loss), net of tax, is comprised of the following components as of the dates indicated: Unrealized Gain (Loss) on Securities Unrealized Gain (Loss) on Cash Flow Hedge Defined Benefit Postretirement Plans Accumulated Other Comprehensive Income (Loss) (Dollars in Thousands) Beginning balance: January 1, 2022 $ ( 9,667 ) $ 14,137 $ ( 2,287 ) $ 2,183 Other comprehensive (loss) income ( 118,990 ) ( 50,767 ) 4,490 ( 165,267 ) Ending balance: December 31, 2022 $ ( 128,657 ) $ ( 36,630 ) $ 2,203 $ ( 163,084 ) Other comprehensive income (loss) 32,426 16,055 ( 224 ) 48,257 Ending balance: December 31, 2023 $ ( 96,231 ) $ ( 20,575 ) $ 1,979 $ ( 114,827 ) Other comprehensive income 16,743 6,713 1,364 24,820 Ending balance: December 31, 2024 $ ( 79,488 ) $ ( 13,862 ) $ 3,343 $ ( 90,007 ) 136 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 16 LEASES As of December 31, 2024, the Company had entered into 117 noncancellable operating lease agreements for office space, parking , space for ATM locations and certain branch locations, several of which contain renewal options to extend lease terms for a period of 2 to 20 years. The Company has no material financing leases outstanding and no leases with residual value guarantees. As of December 31, 2024, the Company did not have any material sub-lease agreements. The Company’s right-of-use asset related to operating leases totaled $ 54.5 million and $ 54.1 million at December 31, 2024 and 2023, respectively, and is recognized in the Company’s Consolidated Balance Sheet within other assets . 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 $ 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: Years Ended December 31 2024 2023 2022 (Dollars in thousands) Operating lease costs (1) $ 14,365 $ 14,472 $ 17,322 Short-term lease costs 37 28 72 Variable lease costs — — — Total lease costs $ 14,402 $ 14,500 $ 17,394 Weighted-average remaining lease term - operating leases 5.99 years 5.61 years 5.46 years Weighted-average discount rate - operating leases 3.49 % 2.98 % 2.43 % (1) Operating lease costs for the periods presented are inclusive of lease exit costs noted above. The following table sets forth the undiscounted cash flows of base rent related to operating leases outstanding at December 31, 2024 with payments scheduled over the next five years and thereafter, including a reconciliation to the operating lease liability recognized in the Company’s Consolidated Balance Sheet in other liabilities: (Dollars in thousands) 2025 $ 13,899 2026 12,915 2027 10,300 2028 7,302 2029 5,424 Thereafter 13,728 Total minimum lease payments 63,568 Less: amount representing interest 7,037 Present value of future minimum lease payments $ 56,531 137 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 17 COMMITMENTS AND CONTINGENCIES Financial Instruments with Off-Balance Sheet Risk In the normal course of business, the Company enters into various transactions to meet the financing needs of its customers, which, in accordance with GAAP, are not included in its consolidated balance sheets. These transactions include commitments to extend credit, standby letters of credit, and loans sold with recourse, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. The Company minimizes its exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures. The Company enters into contractual commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Substantially all of these commitments to extend credit are contingent upon customers maintaining specific credit standards at the time of loan funding. Standby letters of credit are written conditional commitments issued to guarantee the performance of a customer to a third party. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment. The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount of the commitment. If the commitment were funded, the Company would be entitled to seek recovery from the customer. The Company’s policies generally require that standby letter of credit arrangements contain security and other covenants similar to those contained in loan agreements. The fees collected in connection with the issuance of standby letters of credit are representative of the fair value of the obligation undertaken in issuing the guarantee. In accordance with applicable accounting standards related to guarantees, fees collected in connection with the issuance of standby letters of credit are deferred. The fees are then recognized in income proportionately over the life of the standby letter of credit agreement. The deferred standby letter of credit fees represent the fair value of the Company’s potential obligations under the standby letter of credit guarantees. The following table summarizes the above financial instruments at the dates indicated: As of December 31 2024 2023 (Dollars in thousands) Commitments to extend credit $ 4,663,314 $ 4,632,105 Loan exposures sold with recourse $ 141,151 $ 153,850 Standby letters of credit $ 24,863 $ 21,427 Deferred standby letter of credit fees $ 213 $ 155 Other Contingencies At December 31, 2024, Rockland Trust was involved in pending lawsuits that arose in the ordinary course of business. Management has reviewed these pending lawsuits with legal counsel and has taken into consideration the view of counsel as to their outcome. In the opinion of management, the final disposition of pending lawsuits is not expected to have a material adverse effect on the Company’s financial position or results of operations. NOTE 18 REGULATORY MATTERS Regulatory Capital Requirements The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities and certain off- 138 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. 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. 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. The Company’s and the Bank’s actual capital amounts and ratios as of December 31, 2024 and 2023 are also presented in the table that follows: Actual For Capital Adequacy Purposes To Be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio December 31, 2024 (Dollars in thousands) Independent Bank Corp. Total capital (to risk weighted assets) $ 2,299,003 16.04 % $ 1,146,816 ≥ 8.0 % N/A N/A Common equity tier 1 capital (to risk weighted assets) $ 2,100,158 14.65 % $ 645,084 ≥ 4.5 % N/A N/A Tier 1 capital (to risk weighted assets) $ 2,100,158 14.65 % $ 860,112 ≥ 6.0 % N/A N/A Tier 1 capital (to average assets) leverage $ 2,100,158 11.32 % $ 741,953 ≥ 4.0 % N/A N/A Rockland Trust Company Total capital (to risk weighted assets) $ 2,210,775 15.43 % $ 1,146,528 ≥ 8.0 % $ 1,433,159 ≥ 10.0 % Common equity tier 1 capital (to risk weighted assets) $ 2,072,930 14.46 % $ 644,922 ≥ 4.5 % $ 931,554 ≥ 6.5 % Tier 1 capital (to risk weighted assets) $ 2,072,930 14.46 % $ 859,896 ≥ 6.0 % $ 1,146,528 ≥ 8.0 % Tier 1 capital (to average assets) leverage $ 2,072,930 11.18 % $ 741,843 ≥ 4.0 % $ 927,303 ≥ 5.0 % December 31, 2023 (Dollars in thousands) Independent Bank Corp. Total capital (to risk weighted assets) $ 2,268,863 15.91 % $ 1,140,554 ≥ 8.0 % N/A N/A Common equity tier 1 capital (to risk weighted assets) $ 2,022,873 14.19 % $ 641,562 ≥ 4.5 % N/A N/A Tier 1 capital (to risk weighted assets) $ 2,022,873 14.19 % $ 855,416 ≥ 6.0 % N/A N/A Tier 1 capital (to average assets) $ 2,022,873 10.96 % $ 737,984 ≥ 4.0 % N/A N/A Rockland Trust Company Total capital (to risk weighted assets) $ 2,183,436 15.32 % $ 1,140,550 ≥ 8.0 % $ 1,425,687 ≥ 10.0 % Common equity tier 1 capital (to risk weighted assets) $ 2,048,426 14.37 % $ 641,559 ≥ 4.5 % $ 926,696 ≥ 6.5 % Tier 1 capital (to risk weighted assets) $ 2,048,426 14.37 % $ 855,412 ≥ 6.0 % $ 1,140,550 ≥ 8.0 % Tier 1 capital (to average assets) $ 2,048,426 11.10 % $ 738,055 ≥ 4.0 % $ 922,568 ≥ 5.0 % In addition to the minimum risk-based capital requirements outlined in the table above, the Company is required to maintain a minimum capital conservation buffer, in the form of common equity, in order to avoid restrictions on capital distributions and discretionary bonuses. The required amount of the capital conservation buffer is 2.5%. The Company’s capital levels exceeded the minimum requirement plus the buffer of 2.5% as of December 31, 2024 and 2023. 139 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Dividend Restrictions The Company is subject to capital and dividend requirements administered by federal and state bank regulators, and the Company will not declare a cash dividend that would cause the Company to violate regulatory requirements. The Company is, in the ordinary course of business, dependent upon the receipt of cash dividends from the Bank to pay cash dividends to shareholders and satisfy the Company’s other cash needs. Federal and state law impose limits on capital distributions by the Bank. Massachusetts-chartered banks, such as the Bank, may declare from net profits cash dividends not more frequently than quarterly and non-cash dividends at any time. No dividends may be declared, credited, or paid if the Bank’s capital stock would be impaired. Massachusetts Bank Commissioner approval is required if the total of all dividends declared by the Bank in any calendar year would exceed the total of its net profits for that year combined with its retained net profits of the preceding two years, less any required transfer to surplus or a fund for the retirement of any preferred stock. Dividends paid by the Bank to the Company for the years ended December 31, 2024 and 2023 totaled $ 183.8 million and $ 228.9 million, respectively. Trust Preferred Securities 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, 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 Condensed financial information relative to the balance sheets of Independent Bank Corp., as the parent company, at December 31, 2024 and 2023 and the related statements of income and cash flows for the years ended December 31, 2024, 2023, and 2022 are presented below. The statement of stockholders’ equity is not presented below as the parent company’s stockholders’ equity is that of the consolidated Company. BALANCE SHEETS December 31 2024 2023 (Dollars in thousands) Assets Cash (1) $ 110,097 $ 108,788 Investments in subsidiaries (2) 2,967,786 2,922,698 Prepaid income taxes 2,309 2,488 Deferred tax asset 430 429 Total assets $ 3,080,622 $ 3,034,403 Liabilities and stockholders’ equity Dividends payable $ 24,225 $ 23,580 Junior subordinated debentures (less unamortized debt issuance costs of $ 28 and $ 30 ) 62,860 62,858 Subordinated debentures (less unamortized debt issuance costs of $ 20 ) — 49,980 Other liabilities 417 2,734 Total liabilities 87,502 139,152 Stockholders’ equity 2,993,120 2,895,251 Total liabilities and stockholders’ equity $ 3,080,622 $ 3,034,403 (1) Entire balance eliminates in consolidation. (2) Majority of balance eliminates in consolidation . 140 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) STATEMENTS OF INCOME Years Ended December 31 2024 2023 2022 (Dollars in thousands) Income Dividends received from subsidiaries (1) $ 183,961 $ 229,046 $ 209,257 Total income 183,961 229,046 209,257 Expenses Interest expense 5,014 6,829 4,626 Other expenses 2,891 3,156 1,680 Total expenses 7,905 9,985 6,306 Income before income taxes and equity in undistributed income of subsidiaries 176,056 219,061 202,951 Income tax benefit ( 2,280 ) ( 2,785 ) ( 1,731 ) Income of parent company 178,336 221,846 204,682 Equity in undistributed income of subsidiaries 13,745 17,656 59,131 Net income $ 192,081 $ 239,502 $ 263,813 (1) Majority of balance eliminated in consolidation. 141 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) STATEMENTS OF CASH FLOWS Years Ended December 31 2024 2023 2022 (Dollars in thousands) Cash flows from operating activities Net income $ 192,081 $ 239,502 $ 263,813 Adjustments to reconcile net income to cash provided by operating activities Amortization 22 98 96 Deferred income tax (benefit) expense ( 1 ) 24 28 Change in prepaid income taxes and other assets 179 2,107 ( 623 ) Change in other liabilities ( 2,560 ) 52 143 Equity in undistributed income of subsidiaries ( 13,745 ) ( 17,656 ) ( 59,131 ) Net cash provided by operating activities 175,976 224,127 204,326 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 ) Net proceeds from exercise of stock options 80 80 — Proceeds from shares issued under direct stock purchase plan 3,254 2,662 2,359 Payments for shares repurchased under share repurchase programs ( 30,986 ) ( 188,910 ) ( 139,946 ) Common dividends paid ( 96,200 ) ( 98,006 ) ( 93,734 ) Net cash used in financing activities ( 174,667 ) ( 285,316 ) ( 246,468 ) 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 $ 169,977 142 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) NOTE 20 TRANSACTIONS WITH RELATED PARTIES Certain directors and officers (including their affiliates, certain family members and entities in which they are principal owners) of the Company are customers of and have had, and are expected to have, transactions with the Company, within the ordinary course of business. These transactions include, but are not limited to, lending activities, deposit services, investment management, and property lease commitments. In the opinion of management, such transactions are consistent with prudent banking practices and are within applicable banking regulations. Lending Activities The following information represents annual activity of loans to related parties for the periods indicated: 2024 2023 2022 (Dollars in thousands) Principal balance of loans outstanding at beginning of year $ 11,927 $ 26,721 $ 45,033 Loan advances — 911 40,427 Loan payments/payoffs ( 519 ) ( 1,336 ) ( 43,147 ) Reduction for retired directors and/or changes in director status — ( 14,369 ) ( 15,592 ) Principal balance of loans outstanding at end of year $ 11,408 $ 11,927 $ 26,721 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. Deposits At December 31, 2024 and 2023, the amount of deposit balances of related parties totaled $ 3.6 million and $ 3.9 million, respectively. Lease Commitments 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 143 Table of Contents 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. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None