What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-07 compared with 2024-11-07 · 204 added, 257 removed, 652 unchanged (41% of the section changed)

6 unchanged sentences

Such forward-looking statements involve certain risks and uncertainties and our actual results may differ materially from such forward-looking statements.

Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, in addition to those risk factors listed under the “Risk Factors” section of the 2023 Form 10-K, include but are not limited to:

Factors that may cause actual results to differ materially from those

contemplated by such forward-looking statements, in addition to those risk factors listed under the “Risk Factors” section of the 2024 Form 10-K, include but are not limited to:

• adverse economic conditions in the regional and local economies within the New England region and the Company’s market area;

• events impacting the financial services industry, including high profile bank failures, and any resulting decreased confidence in banks among depositors, investors, and other counterparties, as well as competition for deposits, significant disruption, volatility and depressed valuations of equity and other securities of banks in the capital markets;

• events impacting the financial services industry, including high profile bank failures, and any resulting decreased confidence in banks among depositors, investors, and other counterparties, as well as competition for deposits and significant disruption, volatility and depressed valuations of equity and other securities of banks in the capital markets;

• the effects to the Company of an increasingly competitive labor market, including the possibility that the Company will have to devote significant resources to attract and retain qualified personnel;

• the instability or volatility in financial markets and unfavorable domestic or global general economic, political or business conditions, whether caused by geopolitical concerns, including the Russia/Ukraine conflict, the conflict in Israel and surrounding areas and the possible expansion of such conflicts, political and policy uncertainties in connection with the U.S.

presidential election, changes in U.S.

and international trade policies, or other factors, and the potential impact of such factors on the Company and its customers, including the potential for decreases in deposits and loan demand, unanticipated loan delinquencies, loss of collateral and decreased service re venues;

• political and policy uncertainties in the U.S., changes in U.S.

and international trade policies, such as tariffs, trade wars, related uncertainty or other factors, and the potential impact of such factors on the Company and its customers, including the potential for decreases in deposits and loan demand, unanticipated loan delinquencies, loss of collateral and decreased service re venues;

• unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on the Company’s local economies or the Company's business caused by adverse weather conditions and natural disasters, changes in climate, public health crises or other external events and any actions taken by governmental authorities in response to any such events;

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• changes in interest rates and any resulting impact on interest earning assets and/or interest bearing liabilities, the level of voluntary prepayments on loans and the receipt of payments on mortgage-backed securities, decreased loan demand or increased difficulty in the ability of borrowers to repay variable rate loans;

• acquisitions may not produce results at levels or within time frames originally anticipated and may result in unforeseen integration issues or impairment of goodwill and/or other intangibles;

• failure to consummate or a delay in consummating the acquisition of Enterprise, including as a result of any failure to obtain the necessary regulatory approvals or to satisfy any of the other conditions to the proposed transaction on a timely basis or at all;

• risks related to the Company’s pending acquisition of Enterprise and acquisitions generally, including disruptions to current plans and operations;

difficulties in customer and employee retention;

fees, expenses and charges related to these transactions being significantly higher than anticipated;

unforeseen integration issues or impairment of goodwill and/or other intangibles;

and the Company’s inability to achieve expected revenues, cost savings, synergies, and other benefits at levels or within the timeframes originally anticipated;

• the effect of laws, regulations, new requirements or expectations, or additional regulatory oversight in the highly regulated financial services industry, including as a result of intensified regulatory scrutiny in the aftermath of regional bank failures and the resulting need to invest in technology to meet heightened regulatory expectations, increased costs of compliance or required adjustments to strategy;

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• any unexpected material adverse changes in the Company’s operations or earnings.

• the other risks described in the section entitled “Risk Factors” in Part I.

Item 1A of the 2023 Form 10-K.

Except as required by law, the Company disclaims any intent or obligation to update publicly any such forward-looking statements, whether in response to new information, future events or otherwise.

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Three Months Ended

2024 March 31

2025 December 31

2024 September 30

2024 March 31

(Dollars in thousands, except per share data)

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

Third Quarter 2024 Results

Net income for the three months ended September 30, 2024 was $42.9 million, or $1.01 on a diluted earnings per share basis, as compared to $60.8 million, or $1.38 on a diluted earnings per share basis, for the three months ended September 30, 2023, representing decreases of 29.4% and 26.8%, respectively, due primarily to lower net interest income and the impact of an elevated provision for credit losses attributable to specific reserve allocations on one large commercial real estate loan.

Despite a rise in the provision for credit losses, third quarter 2024 results reflected solid overall business activity amidst a continued challenging environment, including the following key drivers:

On December 9, 2024, the Company announced the signing of a definitive merger agreement under which the Company will acquire Enterprise Bancorp, Inc.

(“Enterprise”), with the Company as the surviving entity, and Enterprise Bank and Trust Company will merge with and into Rockland Trust (the “Merger Agreement”).

The transaction is valued at approximately $562 million.

The closing of the Enterprise acquisition, which is expected to occur during the third quarter of 2025, was approved by Enterprise’s shareholders on April 3, 2025, and remains subject to required regulatory approvals and satisfaction of other customary closing conditions set forth in the Merger Agreement.

First Quarter 2025 Results

Net income for the three months ended March 31, 2025 was $44.4 million, or $1.04 on a diluted earnings per share basis, as compared to $47.8 million, or $1.12 on a diluted earnings per share basis, for the three months ended March 31, 2024, representing decreases of 7.0% and 7.1%, respectively.

First quarter 2025 results were negatively impacted by a $15.0 million loan loss provision attributable to elevated charge-off activity and additional specific reserve allocations.

Despite a rise in the provision for credit losses, first quarter 2025 results reflected solid overall business activity amidst a continued challenging environment, including the following key drivers:

• Net interest margin expansion to 3.42%;

• Robust core deposit growth, with average deposits up $330.0 million (8.74% annualized) for the quarter;

• Strong fee income;

• Focused expense management;

• Strong capital levels, with tangible book value per share growth of $1.38 for the quarter.

• Robust deposit growth of $370.0 million (9.8% annualized);

• $300 million subordinated debt raise completed in March 2025;

• Tangible book value per share growth of $0.85.

Interest-Earning Assets

The results depicted in the following table reflect the trend of the Company's interest-earning assets over the past five quarters.

While the Company employs a longer term strategy that typically emphasizes loan growth commensurate with overall economic growth, changes over the five quarter period reflect relatively consistent balances of total interest-earning assets.

While the Company employs a longer term strategy that typically emphasizes loan growth commensurate with overall economic growth, changes over the trailing five quarter period reflect relatively consistent balances of total interest-earning assets.

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

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Funding and Net Interest Margin

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

In conjunction with deposit growth during the first nine months of 2024, total borrowings decreased by $555.0 million at September 30, 2024 as compared to December 31, 2023, primarily driven by a reduction in Federal Home Loan Bank borrowings, along with the full redemption of $50.0 million in subordinated debentures during the first quarter of 2024.

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

The first quarter of 2025 reflected an increase in the Company’s total funding sources, driven primarily by robust deposit growth of $370.0 million, largely within the money market and savings and interest checking account categories.

Net borrowings also increased by $158.5 million during the first quarter to $859.9 million at March 31, 2025, reflecting a $300.0 million subordinated debt raise in March 2025, partially offset by $138.0 million in paydowns on short-term and overnight Federal Home Loan Bank (“FHLB”) borrowings.

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

The Company's ratio of core deposits to total deposits decreased over the last five quarters, primarily attributable to core deposit outflows in conjunction with existing deposit balances shifting into higher cost time deposits.

The Company's ratio of core deposits to total deposits increased as of March 31, 2025, driven by growth in core deposit balances along with a decrease in time deposits during the first quarter.

The following chart shows the percentage of core deposits for the trailing five quarters:

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The Company’s primary expenses arise from employee salaries and benefits, as well as expenses associated with buildings and equipment.

The following chart depicts the Company's efficiency ratio (calculated by dividing noninterest expense by the sum of noninterest income and net interest income) over the past five quarters:

The following chart depicts the Company’s efficiency ratio on a GAAP basis (calculated by dividing noninterest expense by the sum of noninterest income and net interest income), as well as the Company’s efficiency ratio on a non-GAAP operating basis, (calculated by dividing noninterest expense, excluding certain noncore items, by the sum of noninterest income, excluding certain noncore items, and net interest income) over the past five quarters:

*See "Non-GAAP Measures" below for a reconciliation to GAAP financial measures.

The Company's approach with respect to revenue and expense is designed to promote long-term earnings growth, which in turn contributes to capital growth.

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*See "Non-GAAP Measures" below for a reconciliation to GAAP financial measures.

The Company declared a quarterly cash dividend of $0.57 per share for the third quarter of 2024, representing an increase of 3.6% from the 2023 third quarter dividend rate of $0.55.

The Company declared a quarterly cash dividend of $0.59 per share for the first quarter of 2025, representing an increase of 3.5% from the 2024 first quarter dividend rate of $0.57.

Non-GAAP Measures

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

The following table summarizes the calculation of tangible common equity to tangible assets ratio and tangible book value per share and shows the reconciliation of non-GAAP measures:

The following table summarizes the impact of noncore items on net income and reconciles non-GAAP net operating earnings to net income available to common shareholders for the periods indicated:

Three Months Ended March 31

Net Income Diluted

Earnings Per Share

2025 2024 2025 2024

(Dollars in thousands, except per share data)

Net income available to common shareholders (GAAP) $ 44,424 $ 47,770 $ 1.04 $ 1.12

Non-GAAP adjustments

Noninterest expense components

merger and acquisition expenses 1,155 — 0.03 —

Noncore increases to income before taxes 1,155 — 0.03 —

Net tax benefit associated with noncore items (1) (325) — (0.01) —

Noncore increases to net income 830 — 0.02 —

Operating net income (Non-GAAP) $ 45,254 $ 47,770 $ 1.06 $ 1.12

(1) The net tax benefit associated with noncore items is determined by assessing whether each noncore item is included or excluded from net taxable income and applying the Company’s combined marginal tax rate to only those items included in net taxable income.

The following table summarizes the impact of noncore items with respect to the Company’s total revenue, noninterest income as a percentage of total revenue, and the efficiency ratio for the periods indicated:

Three Months Ended

2025 December 31

2024 September 30

2024 March 31

(Dollars in thousands)

Net interest income (GAAP) $ 145,505 $ 144,661 $ 141,703 $ 137,926 $ 137,439 (a)

Noninterest income (GAAP) $ 32,539 $ 32,191 $ 33,549 $ 32,330 $ 29,943 (b)

Noninterest expense (GAAP) $ 105,878 $ 106,422 $ 100,443 $ 99,614 $ 99,887 (c)

Merger and acquisition expense 1,155 1,902 — — —

Noninterest expense on an operating basis (Non-GAAP) $ 104,723 $ 104,520 $ 100,443 $ 99,614 $ 99,887 (d)

Total revenue (GAAP) $ 178,044 $ 176,852 $ 175,252 $ 170,256 $ 167,382 (a+b)

Efficiency ratio (GAAP) (calculated by dividing total noninterest expense by total revenue) 59.47 % 60.18 % 57.31 % 58.51 % 59.68 % (c/(a+b))

Efficiency ratio on an operating basis (Non-GAAP) (calculated by dividing total noninterest expense on an operating basis by total revenue) 58.82 % 59.10 % 57.31 % 58.51 % 59.68 % (d/(a+b))

The following table summarizes the calculation of tangible common equity to tangible assets ratio and tangible book value per share and shows the reconciliation of non-GAAP measures:

2025 December 31

2024 September 30

2024 March 31

Tangible common equity (Dollars in thousands, except per share data)

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These critical accounting estimates are defined as estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on financial condition or results of operations.

There have been no material changes in critical accounting estimates during the first nine months of 2024.

There have been no material changes in critical accounting estimates during the first three months of 2025.

Refer to “Critical Accounting Estimates” in Item 7.

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

Total securities decreased by $165.3 million, or 5.6%, at September 30, 2024 as compared to December 31, 2023, driven primarily by paydowns, calls and maturities, offset partially by new purchases of $48.3 million and $38.1 million of unrealized gains in the available for sale portfolio.

As a result, the Company's ratio of securities to total assets decreased to 14.2% at September 30, 2024 compared to 15.1% at December 31, 2023.

Total securities remained consistent at $2.7 billion during the first quarter of 2025 as new purchases of $70.8 million and unrealized gains of $21.3 million in the available for sale portfolio were offset by maturities, calls, and paydowns, in the combined available for sale and held to maturity portfolios during the quarter.

Total securities represented 13.7% and 14.0% of total assets at March 31, 2025 and December 31, 2024, respectively.

The Company estimates expected credit losses for its available for sale and held to maturity securities in accordance with the current expected credit loss ("CECL") methodology.

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The Company may be required to either repurchase mortgage loans or to indemnify the purchaser from losses if representations and warranties are found to be not accurate in all material respects.

The Company incurred no material losses related to residential mortgage repurchases during the three and nine months ended September 30, 2024 and 2023, respectively.

The Company experienced a lower volume of residential real estate loan sales for the three and nine months ended September 30, 2024 as compared to the same periods ended September 30, 2023, driven primarily by reduced customer demand in the current interest rate environment.

The Company incurred no material losses related to residential mortgage repurchases during the three months ended March 31, 2025 and 2024, respectively.

The following table shows the total residential real estate loans closed and the breakdown of amounts held in portfolio or sold (or held for sale) in the secondary market during the periods indicated:

Table 1 - Closed Residential Real Estate Loans

Three Months Ended September 30 Nine Months Ended September 30

2024 2023 2024 2023

Three Months Ended March 31

(Dollars in thousands)

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Total closed loans $ 83,522 $ 77,039

During the three and nine months ended September 30, 2024, a larger portion of new originations were sold in the secondary market versus retained in the Company's portfolio as compared to the same prior year periods, reflecting the Company's 2024 strategy to shift its residential production to the saleable market.

The table below reflects additional information related to the loans sold during the periods indicated and the sale or retention of the related servicing rights:

Table 2 - Residential Mortgage Loan Sales

Three Months Ended September 30 Nine Months Ended September 30

2024 2023 2024 2023

Three Months Ended March 31

(Dollars in thousands)

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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.

The principal balance of loans serviced by the Bank on behalf of investors was $286.4 million, $298.8 million and $304.7 million at September 30, 2024, December 31, 2023, and September 30, 2023, respectively.

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.

The principal balance of loans serviced by the Bank on behalf of investors was $275.8 million, $280.2 million and $296.0 million at March 31, 2025, December 31, 2024, and March 31, 2024, respectively.

The following table shows the adjusted cost of the servicing rights associated with these loans and the changes for the periods indicated:

Table 3 - Mortgage Servicing Asset

Three Months Ended September 30 Nine Months Ended September 30

2024 2023 2024 2023

Three Months Ended March 31

(Dollars in thousands)

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Item 1 of this Report for more information on mortgage activity and mortgage related derivatives.

Loan Portfolio The Company's total loan portfolio at September 30, 2024 increased by $82.7 million, or 0.6% (0.8% on an annualized basis), when compared to December 31, 2023.

The 2024 year-to-date growth was driven primarily by the consumer portfolio, which increased by $53.8 million, or 1.5%, during the period.

Total commercial loans also increased by $28.9 million, or 0.27%, during the first nine months of 2024, fueled primarily by continued steady growth in the small business portfolio, which rose $18.1 million, or 7.2%, while the combined commercial real state and construction portfolios remained relatively flat, increasing by $13.0 million, or 0.1%.

Loan Portfolio The Company's total loan portfolio at March 31, 2025 remained consistent at $14.5 billion when compared to December 31, 2024.

On the commercial side, growth within the commercial and industrial portfolio of $62.8 million, or 2.1% (8.4% annualized), was offset by decreases in the combined commercial real estate and construction categories.

The small business portfolio also continued its steady growth, rising by $7.4 million, or 2.6% (10.6% annualized), during the first quarter.

On the consumer side, the total loan portfolio grew slightly by $4.6 million, or 0.1% from the prior quarter, as modest growth in residential real estate and home equity products were partially offset by a decrease in other consumer loans.

The Company’s commercial real estate loan portfolio, inclusive of commercial construction, is the Company’s largest loan type concentration.

The Company believes that this portfolio is also well-diversified with loans secured by a variety of property types, such as owner-occupied and nonowner-occupied commercial, retail, office, industrial, warehouse, and other special purpose properties, such as hotels, motels, nursing homes, restaurants, churches, recreational facilities, marinas, and golf courses.

The Company believes that this portfolio is also well-diversified with loans secured by a variety of property types, such as nonowner-occupied commercial real estate, retail, office, industrial, warehouse, and other special purpose properties, such as hotels, motels, nursing homes, restaurants, churches, recreational facilities, marinas, and golf courses.

Commercial real estate also includes loans secured by certain residential-related property types, including multi-family apartment buildings, residential development tracts and condominiums.

The following pie chart shows the diversification of the commercial real estate loan portfolio as of September 30, 2024:

(1) Included in the total commercial real estate portfolio is $1.4 billion of owner occupied commercial real estate loans .

The following pie chart shows the diversification of the commercial real estate loan portfolio as of March 31, 2025:

* Inclusive of commercial construction balances.

Select Statistics Regarding the Commercial Real Estate Portfolio

(Dollars in thousands)

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Commercial real estate nonperforming loans/commercial real estate loans 0.88 %

Management considers the Company’s commercial and industrial portfolio to be well-diversified with loans to various types of industries.

The following pie chart shows the diversification of the commercial and industrial portfolio as of September 30, 2024:

Commercial and industrial loans consist of both term loans and revolving or non-revolving lines of credit.

Term loans generally have a repayment schedule of five years or less.

In addition, the Bank generally obtains personal guarantees from the principal owners of the borrower for its commercial and industrial loans.

Lines of credit, including asset-based lines, are typically collateralized by accounts receivable, inventory, or both, as well as other business assets.

Commercial lines of credit and asset-based lines generally are reviewed on an annual basis and usually require either a borrowing base formula or reflect varying levels of repayment of principal during the course of a year.

Additionally, other commercial term loans are typically secured by machinery and equipment, and/or owner occupied commercial real estate.

To limit the risk within this portfolio, the loans are made across a diverse set of industry groups.

The following pie chart shows the diversification of the commercial and industrial portfolio as of March 31, 2025:

Select Statistics Regarding the Commercial and Industrial Portfolio

(Dollars in thousands)

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Other consumer loans primarily consist of installment loans and overdraft protections.

The residential real estate, home equity and other consumer portfolios totaled $3.6 billion at September 30, 2024, as noted below:

The residential real estate, home equity and other consumer portfolios totaled $3.6 billion at March 31, 2025, as noted below:

(Dollars in thousands)

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2025 December 31

2023 September 30

2024 March 31

(Dollars in thousands)

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Other consumer 8 10 20

Total $ 104,248 $ 54,383 $ 39,168

Loans past due 90 days or more but still accruing

Other consumer — — 3

Total $ — $ — $ 3

Total nonperforming loans $ 89,493 $ 101,529 $ 56,941

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Table 5 - Activity in Nonperforming Assets

Three Months Ended Nine Months Ended

2024 September 30

2023 September 30

2024 September 30

Three Months Ended

2025 March 31

(Dollars in thousands)

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

In accordance with the CECL methodology, the Company estimates credit losses for financial assets on a collective basis for loans sharing similar risk characteristics using a quantitative model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output.

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

Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period of one year, beyond

which is a reversion to the Company's historical long-run average for a period of six months.

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

In accordance with its Allowance for Credit Losses Program, the Company uses the Current Expected Credit Losses (or “CECL”) model methodology to estimate credit losses for financial assets on a collective basis for loans sharing similar risk characteristics using a quantitative model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output.

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

Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period of 12 months, beyond which is a reversion to the Company’s historical long-run average over a period of six months.

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

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

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

For the loans that will

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

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

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

As of September 30, 2024, the forecast selected by management assumes that the Federal Reserve will cut the policy rate by 25 basis points during the fourth quarter of 2024, that inflation will stabilize and return to 2% target by early 2025, that new home sales will remain stable given the current national housing deficit, and that the outlook for office real estate will remain bearish as uncertainty over occupancy and operating cash flows persists.

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

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

As of March 31, 2025, management utilized the Moody’s Baseline forecast to estimate the effect of anticipated current and future economic conditions on the Company’s allowance for credit losses.

This scenario selected by management assumes that general economic conditions will reflect a level of increased uncertainty regarding near-term growth, monetary policy will be impacted by a gradual reduction in Federal Reserve policy rates, and that progress toward inflation will be slowed as a result of changes in international trade policies.

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

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

Table 6 - Summary of Net Charge-Offs/(Recoveries) to Average Loans Outstanding

Net Charge-Offs/(Recoveries) Average Loans Outstanding Ratio of Annualized Net Charge-Offs/(Recoveries) to Average Loans Net Charge-Offs/ (Recoveries) Average Loans Outstanding Ratio of Annualized Net Charge-Offs/(Recoveries) to Average Loans

Net Charge-Offs/ (Recoveries) Average Loans Outstanding Ratio of Annualized Net Charge-Offs/(Recoveries) to Average Loans

(Dollars in thousands)

Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Commercial and industrial $ 53 $ 3,045,816 0.01 %

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Total $ 40,892 $ 14,484,149 1.14 %

Net Charge-Offs/ (Recoveries) Average Loans Outstanding Ratio of Annualized Net Charge-Offs/(Recoveries) to Average Loans Net Charge-Offs/ (Recoveries) Average Loans Outstanding Ratio of Annualized Net Charge-Offs/(Recoveries) to Average Loans

Net Charge-Offs/ (Recoveries) Average Loans Outstanding Ratio of Annualized Net Charge-Offs/(Recoveries) to Average Loans

(Dollars in thousands)

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Commercial and industrial $ (85) $ 2,949,499 (0.01) %

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(1) Other consumer portfolio is inclusive of deposit account overdrafts recorded as loan balances and the associated net charge-offs.

Net charge-offs for the three months ended March 31, 2025 were $40.9 million compared to $274,000 at March 31, 2024.

The elevated charge-off activity for the first quarter of 2025 was primarily attributable to three previously classified commercial loans, two of which had been specifically reserved for in a prior period.

For purposes of the allowance for credit losses, management segregates the portfolio based upon loans sharing similar risk characteristics.

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2025 December 31

Amount Allowance Amount as a Percentage of Total Allowance Category of Loan as a Percentage of Total Loans Allowance

Amount Allowance Amount as a Percentage of Total Allowance Category of Loan as a Percentage of Total Loans

Amount Allowance Amount as a Percentage of Total Allowance Percent of Loans in Category to Total Loans Allowance

Amount Allowance Amount as a Percentage of Total Allowance Percent of Loans in Category to Total Loans

(Dollars in thousands)

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

The Company's investments in FHLB of Boston stock decreased to $29.9 million at September 30, 2024 compared to $43.6 million at December 31, 2023, in conjunction with reduced levels of outstanding FHLB borrowings.

Goodwill and Other Intangible Assets Goodwill and other intangible assets were $1.0 billion at both September 30, 2024 and December 31, 2023.

The Company's investments in FHLB of Boston stock decreased to $25.8 million at March 31, 2025 from $31.6 million at December 31, 2024 in conjunction with paydowns of short term FHLB borrowings during the first quarter of 2025.

Goodwill and Other Intangible Assets Goodwill and other intangible assets were $996.0 million and $997.4 million at both March 31, 2025 and December 31, 2024.

The Company typically performs its annual goodwill impairment testing during the third quarter of the year, unless certain indicators suggest earlier testing to be warranted.

Accordingly, the Company performed its annual goodwill impairment testing during the third quarter of 2024 and determined that the Company’s goodwill was not impaired as of September 30, 2024.

Accordingly, the Company performed its annual goodwill impairment testing during the third quarter of 2024 and determined that the Company’s goodwill was not impaired as of August 31, 2024.

Other intangible assets are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

There were no other events or changes during the third quarter of 2024 that indicated impairment of goodwill and other intangible assets.

There were no other events or changes during the first quarter of 2025 that indicated impairment of goodwill and other intangible assets.

Cash Surrender Value of Life Insurance Policies The Bank holds life insurance policies for the purpose of offsetting its future obligations to its employees under its retirement and benefits plans.

The cash surrender value of life insurance policies was $302.1 million at September 30, 2024 compared to $297.4 million at December 31, 2023.

The Company recorded tax exempt income from life insurance policies of $2.0 million for each of the three months ended September 30, 2024 and 2023, and $5.9 million and $5.8 million for the nine months ended September 30, 2024 and 2023, respectively.

The Company recorded no gains on life insurance benefits for the three months ended September 30, 2024 as compared to gains of $1.9 million for the three months ended September 30, 2023, and recorded gains of $263,000, and $2.1 million for the nine months ended September 30, 2024 and 2023, respectively.

Deposits As of September 30, 2024, total deposits were $15.4 billion, representing a $575.5 million, or 3.9%, increase from December 31, 2023.

This increase was primarily driven by continued consumer demand for higher cost time deposits, along with strong business and municipal deposit inflows.

Total noninterest bearing demand deposits comprised 29.3% of total deposits at September 30, 2024, as compared to 30.7% at December 31, 2023.

The total cost of deposits was 1.74% and 1.07% for the three months ended September 30, 2024 and 2023, respectively, and 1.62% and 0.84% for the nine months ended September 30, 2024 and 2023, respectively.

The cash surrender value of life insurance policies was $306.1 million at March 31, 2025 compared to $304.0 million at December 31, 2024.

The Company recorded tax exempt income from life insurance policies of $2.1 million and $1.9 million for the three months ended March 31, 2025 and 2024, respectively.

There were no gains on life insurance benefits recorded for the three months ended March 31, 2025 and $263,000 for the three months ended March 31, 2024.

Deposits As of March 31, 2025, total deposits were $15.7 billion, representing a $370.0 million, or 2.4%, increase from December 31, 2024.

This growth was driven by increases in non-maturity consumer, business and municipal categories, partially offset by a decline in higher cost time deposits.

Total noninterest bearing demand deposits comprised 28.1% of total deposits at March 31, 2025, as compared to 28.7% at December 31, 2024.

The total cost of deposits was 1.56% and 1.48% for the three months ended March 31, 2025 and 2024, respectively.

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

The Company's ratio of core deposits to total deposits represented 81.7% and 84.6% of total deposits as of September 30, 2024 and December 31, 2023, respectively, with the decrease driven primarily by core deposit outflows in conjunction with growth in higher yielding time deposits.

In addition, the Company may also utilize brokered deposit sources, as needed, with balances of $61.2 million and $100.9 million outstanding at September 30, 2024 and December 31, 2023, respectively.

The Company's ratio of core deposits to total deposits represented 82.7% and 81.7% of total deposits as of March 31, 2025 and December 31, 2024, respectively, with the increase driven primarily by core deposit inflows.

In addition, the Company may also utilize brokered deposit sources, as needed, with balances of $51.7 million and $61.2 million outstanding at March 31, 2025 and December 31, 2024, respectively.

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

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

This channel allows the Company to access a reciprocal deposit exchange that can be used to benefit customers seeking increased FDIC insurance protection, and amounted to $1.0 billion and $959.1 million at September 30, 2024 and December 31, 2023, respectively.

The estimated balances of uninsured deposits at the Bank were $5.1 billion and $4.6 billion as of September 30, 2024 and December 31, 2023, respectively.

Included in these amounts are $836.3 million and $720.5 million of collateralized deposits, which offer additional protection.

This channel allows the Company to access a reciprocal deposit exchange that can be used to benefit customers seeking increased FDIC insurance protection, and amounted to $1.1 billion at each of March 31, 2025 and December 31, 2024.

The estimated balances of uninsured deposits at the Bank were $5.3 billion and $5.0 billion as of March 31, 2025 and December 31, 2024, respectively.

Included in these amounts were $917.9 million and $814.0 million of collateralized deposits, which offer additional protection.

Borrowings The Company's borrowings consist of both short-term and long-term borrowings and provide the Bank with one of its primary sources of funding.

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

Borrowings were $663.4 million at September 30, 2024, representing a decrease of $555.0 million as compared to December 31, 2023.

This decrease was experienced primarily within Federal Home Loan Bank borrowings, which decreased $505.0 million in conjunction with deposit balance growth over the first nine months of 2024.

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

The Company had $8.8 billion and $8.5 billion of assets pledged as collateral against borrowings at September 30, 2024 and December 31, 2023, respectively.

Borrowings were $859.9 million at March 31, 2025, representing an increase of $158.5 million as compared to December 31, 2024.

The first quarter 2025 increase was driven by the issuance of $300.0 million in fixed-to-floating subordinated notes, partially offset by paydowns on short-term and overnight FHLB borrowings of $100.0 million and $38.0 million, respectively.

Refer to Note 5, “Borrowings” within the Notes to Consolidated Financial Statements included in Part I.

Item 1 of this Report, for further details surrounding the subordinated notes.

The Company had $8.8 billion and $8.7 billion of assets pledged as collateral against borrowings at March 31, 2025 and December 31, 2024, respectively.

These assets are primarily pledged to the FHLB of Boston and the Federal Reserve Bank of Boston.

Capital Resources On September 19, 2024 the Company’s Board of Directors declared a cash dividend of $0.57 per share to shareholders of record as of the close of business on September 30, 2024.

This dividend was paid on October 4, 2024.

Capital Resources On March 20, 2025 the Company’s Board of Directors declared a cash dividend of $0.59 per share to shareholders of record as of the close of business on March 31, 2025.

This dividend was paid on April 7, 2025.

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies.

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Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of Total, Tier 1 Capital and Common Equity Tier 1 Capital (as defined for regulatory purposes) to risk weighted assets (as defined for regulatory purposes) and Tier 1 Capital to average assets (as defined for regulatory purposes).

At September 30, 2024 and December 31, 2023, the Company and the Bank exceeded the minimum requirements for all applicable ratios that were in effect during the respective periods.

Total capital consists of Tier 1 Capital and Tier 2 Capital, as defined in the regulations.

Tier 2 capital includes the permissible portions of qualifying subordinated debt, trust preferred securities, and the allowance for credit losses.

At March 31, 2025 and December 31, 2024, the Company and the Bank exceeded the minimum requirements for all applicable ratios that were in effect during the respective periods.

The Company’s and the Bank’s capital amounts and ratios are presented in the following table, along with the applicable minimum requirements as of each date indicated:

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Amount Ratio Amount Ratio Amount Ratio

September 30, 2024

March 31, 2025

(Dollars in thousands)

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The required amount of the capital conservation buffer is 2.5%.

At September 30, 2024, the Company's capital levels exceeded the buffer.

At March 31, 2025, the Company's capital levels exceeded the buffer.

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.

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.

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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 totaled $45.3 million and $56.0 million for the three months ended September 30, 2024 and 2023, respectively and totaled $138.5 million and $178.2 million for the nine months ended September 30, 2024 and 2023, 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 has not been included in the consolidated financial statements of the Company.

At both September 30, 2024 and December 31, 2023 there were $61.0 million in trust preferred securities included in the Tier 2 capital of the Company for regulatory reporting purposes pursuant to the Federal Reserve's capital adequacy guidelines.

Dividends paid by the Bank to the Company totaled $36.1 million and $47.9 million for the three months ended March 31, 2025 and 2024, respectively.

Investment Management The following table presents total assets under administration and number of accounts held by the Rockland Trust Investment Management Group at the following dates:

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2025 December 31

2023 September 30

2024 March 31

(Dollars in thousands)

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The Bank receives fees dependent upon the level and type of service(s) provided.

The Investment Management Group generated gross fee revenues of $9.7 million and $8.7 million for the three months ended September 30, 2024 and 2023, respectively and $28.4 million and $25.7 million for the nine months ended September 30, 2024 and 2023, respectively.

Total assets under administration at September 30, 2024 were $7.2 billion, including $427.8 million of investment solutions designed by Rockland Trust that are administered and executed through its agreement with LPL Financial ("LPL"), compared to $6.5 billion and $383.0 million, respectively, at December 31, 2023.

The Investment Management Group generated gross fee revenues of $10.0 million and $9.1 million for the three months ended March 31, 2025 and 2024, respectively.

Total assets under administration at March 31, 2025 were $7.1 billion, including $428.1 of investment solutions designed by Rockland Trust that are administered and executed through its agreement with LPL Financial ("LPL"), compared to $7.0 billion and $418.2 million, respectively, at December 31, 2024.

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

Included in these same amounts as of September 30, 2024 and December 31, 2023 are assets under administration of $501.6 million and $449.8 million, respectively, related to Bright Rock.

Included in these same amounts as of March 31, 2025 and December 31, 2024 were assets under administration of $477.7 million and $491.5 million, respectively, related to Bright Rock.

The administration of trust and fiduciary accounts is monitored by the Trust Committee of the Bank’s Board of Directors.

The Trust Committee has delegated administrative responsibilities to three committees, one for investments, one for administration, and one for operations, all of which are comprised of Investment Management Group officers who meet no less than quarterly.

The Bank has an agreement with LPL and its affiliates and their insurance subsidiary, LPL Insurance Associates, Inc., to offer the sale of mutual fund shares, unit investment trust shares, general securities, fixed and variable annuities and life

Registered representatives who are both employed by the Bank and licensed and contracted with LPL are onsite to offer these products to the Bank’s customer base.

These same agents are also approved and appointed with various other Broker General Agents for the purposes of processing insurance solutions for clients.

Retail investments and insurance revenue was $1.4 million and $1.6 million for the three months ended September 30, 2024 and 2023, respectively, and $3.6 million and $4.7 million for the nine months ended September 30, 2024 and 2023, respectively.

Retail investments and insurance revenue was $1.2 million and $861,000 for the three months ended March 31, 2025 and 2024, respectively.

RESULTS OF OPERATIONS

The following table provides a summary of results of operations for the three and nine months ended September 30, 2024 and 2023:

The following table provides a summary of results of operations for the three months ended March 31, 2025 and 2024:

Table 10 - Summary of Results of Operations

Three Months Ended September 30 Nine Months Ended September 30

2024 2023 2024 2023

Three Months Ended March 31

(Dollars in thousands, except per share data)

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Net Interest Income The amount of net interest income is affected by changes in interest rates and by the volume, mix, and interest rate sensitivity of interest-earning assets and interest-bearing liabilities.

On a fully tax equivalent basis (“FTE”), net interest income for the third quarter of 2024 was $142.9 million, representing a decrease of $8.1 million, or 5.4%, when compared to the third quarter of 2023.

For the nine months ended September 30, 2024, the net interest income on a FTE basis was $420.6 million, representing a decrease of $44.2 million, or 9.5%, when compared to the nine months ended September 30, 2023.

These 2024 decreases in net interest income were primarily attributable to rising deposit costs, resulting in a net interest margin of 3.29% and 3.26% for the three and nine months ended September 30, 2024, respectively, representing decreases of 18 basis points and 34 basis points, respectively, compared to the same prior year periods.

The following tables present the Company’s average balances, net interest income, interest rate spread, and net interest margin for the three and nine months ended September 30, 2024 and 2023.

On a fully tax equivalent basis (“FTE”), net interest income for the first quarter of 2025 was $146.6 million, representing an increase of $8.0 million, or 5.8%, when compared to the first quarter of 2024.

The 2025 increase in net interest income was primarily attributable to higher yields on interest-earnings assets and decreased funding costs, resulting in a net interest margin of 3.42% for the three months ended March 31, 2025, representing an increase of 19 basis points compared to the same prior year period.

The following tables present the Company’s average balances, net interest income, interest rate spread, and net interest margin for the three months ended March 31, 2025 and 2024.

Nontaxable income from loans and securities is presented on a FTE basis by adjusting tax-exempt income upward by an amount equivalent to the prevailing income tax rate that would have been paid if the income had been fully taxable.

Table 11 - Average Balance, Interest Earned/Paid & Average Yields Quarter-to-Date

Three Months Ended September 30

Three Months Ended March 31

Balance Interest

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Cost of total funding liabilities 1.67 % 1.77 %

(1) The total amount of adjustment to interest income and yield on a FTE basis was $1.2 million for each of the three months ended September 30, 2024 and 2023.

(2) Includes average nonaccruing loans.

(3) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(4) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

Table 12 - Average Balance, Interest Earned/Paid & Average Yields Year-to-Date

Nine Months Ended September 30

Balance Interest

(Dollars in thousands)

Interest-earning assets

Interest-earning deposits with banks, federal funds sold, and short-term investments $ 76,199 $ 2,515 4.41 % $ 144,558 $ 4,882 4.52 %

Securities - trading 4,627 — — % 4,377 — — %

Securities - taxable investments 2,807,287 42,287 2.01 % 3,062,745 45,707 2.00 %

Securities - nontaxable investments (1) 191 5 3.50 % 191 5 3.50 %

Total securities $ 2,812,105 $ 42,292 2.01 % $ 3,067,313 $ 45,712 1.99 %

Loans held for sale 11,651 530 6.08 % 3,180 133 5.59 %

Commercial and industrial (1) 1,576,580 84,746 7.18 % 1,662,459 86,762 6.98 %

Commercial real estate (1) 8,131,317 314,260 5.16 % 7,800,173 276,255 4.74 %

Commercial construction 808,570 44,650 7.38 % 1,061,847 50,508 6.36 %

Small business 264,283 13,022 6.58 % 231,299 10,472 6.05 %

Total commercial 10,780,750 456,678 5.66 % 10,755,778 423,997 5.27 %

Residential real estate 2,429,963 79,472 4.37 % 2,163,130 63,498 3.92 %

Home equity 1,109,245 56,642 6.82 % 1,092,304 51,951 6.36 %

Total consumer real estate 3,539,208 136,114 5.14 % 3,255,434 115,449 4.74 %

Other consumer 32,350 1,867 7.71 % 30,885 1,751 7.58 %

Total loans $ 14,352,308 $ 594,659 5.53 % $ 14,042,097 $ 541,197 5.15 %

Total interest-earning assets $ 17,252,263 $ 639,996 4.96 % $ 17,257,148 $ 591,924 4.59 %

Cash and due from banks 179,414 181,380

Federal Home Loan Bank stock 39,576 32,615

Other assets 1,841,696 1,843,564

Total assets $ 19,312,949 $ 19,314,707

Interest-bearing liabilities

Savings and interest checking accounts $ 5,165,252 $ 49,163 1.27 % $ 5,545,951 $ 28,758 0.69 %

Money market 2,917,693 52,386 2.40 % 3,079,942 36,433 1.58 %

Time deposits 2,539,915 81,225 4.27 % 1,596,889 30,106 2.52 %

Total interest-bearing deposits $ 10,622,860 $ 182,774 2.30 % $ 10,222,782 $ 95,297 1.25 %

Federal Home Loan Bank borrowings $ 920,781 $ 32,652 4.74 % $ 747,640 $ 26,788 4.79 %

Junior subordinated debentures 62,859 3,431 7.29 % 62,856 3,195 6.80 %

Subordinated debentures 13,501 508 5.03 % 49,921 1,852 4.96 %

Total borrowings $ 997,141 $ 36,591 4.90 % $ 860,417 $ 31,835 4.95 %

Total interest-bearing liabilities $ 11,620,001 $ 219,365 2.52 % $ 11,083,199 $ 127,132 1.53 %

Noninterest bearing demand deposits 4,414,392 4,990,869

Other liabilities 354,038 363,989

Total liabilities $ 16,388,431 $ 16,438,057

Stockholders' equity 2,924,518 2,876,650

Total liabilities and stockholders' equity $ 19,312,949 $ 19,314,707

Net interest income (1) $ 420,631 $ 464,792

Interest rate spread (3) 2.44 % 3.06 %

Net interest margin (4) 3.26 % 3.60 %

Supplemental information

Total deposit, including demand deposits $ 15,037,252 $ 182,774 $ 15,213,651 $ 95,297

Cost of total deposits 1.62 % 0.84 %

Total funding liabilities, including demand deposits $ 16,034,393 $ 219,365 $ 16,074,068 $ 127,132

Cost of total funding liabilities 1.83 % 1.06 %

(1) The total amount of adjustment to present interest income and yield on a FTE basis was $3.6 million and $3.4 million for the nine months ended September 30, 2024 and 2023, respectively.

(1) The total amount of adjustment to interest income and yield on a FTE basis was $1.1 million and $1.2 million for the three months ended March 31, 2025 and 2024, respectively.

(2) Includes average nonaccruing loans.

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Table 12 - Volume Rate Analysis

Three Months Ended September 30 Nine Months Ended September 30

2024 Compared To 2023 2024 Compared To 2023

Volume Total Change Change

Three Months Ended March 31

2025 Compared To 2024

Volume Total Change

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(1) Reflects income determined on a FTE basis.

See footnote (1) to Tables 11 and 12 in this Report for the related adjustments.

See footnote (1) to Table 11 in this Report for the related adjustments.

(2) Loans include portfolio loans and nonaccrual loans;

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

The Company recorded a provision for credit loss of $19.5 million and $28.8 million for the three and nine months ended September 30, 2024, respectively, as compared to a provision for credit loss of $5.5 million and $17.8 million for the three and nine months ended September 30, 2023.

The 2024 increase is primarily attributable to specific reserve allocations on commercial loans and, to a lesser extent, net loan growth over the first nine months of 2024.

The Company’s allowance for credit losses, as a percentage of total loans, was 1.14% at September 30, 2024, 1.00% at December 31, 2023, and 0.99% at September 30, 2023.

The Company recorded a provision for credit loss of $15.0 million for the three months ended March 31, 2025, as compared to $5.0 million for the three months ended March 31, 2024.

The first quarter 2025 increase was driven by elevated charge-off activity and additional specific reserves.

The Company’s allowance for credit losses, as a percentage of total loans, was 0.99% at March 31, 2025, 1.17% at December 31, 2024, and 1.03% at March 31, 2024.

Refer to Note 4, “Loans, Allowance for Credit Losses and Credit Quality” within the Notes to Consolidated Financial Statements included in Part I.

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Three Months Ended

September 30 Change

March 31 Change

2025 2024 Amount %

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Total $ 32,539 $ 29,943 $ 2,596 8.67 %

Nine Months Ended

September 30 Change

2024 2023 Amount %

(Dollars in thousands)

Deposit account fees $ 19,339 $ 17,360 $ 1,979 11.40 %

Interchange and ATM fees 14,175 13,470 705 5.23 %

Investment management 31,961 30,373 1,588 5.23 %

Mortgage banking income 3,088 1,717 1,371 79.85 %

Increase in cash surrender value of life insurance policies 5,934 5,777 157 2.72 %

Gain on life insurance benefits 263 2,111 (1,848) (87.54) %

Loan level derivative income 1,678 2,525 (847) (33.54) %

Other noninterest income 19,384 19,209 175 0.91 %

Total $ 95,822 $ 92,542 $ 3,280 3.54 %

The primary reasons for the variances in the noninterest income categories shown in the preceding table include:

• Deposit account fees were higher for the three and nine months ended September 30, 2024 as compared to the same prior year periods primarily to increased overdraft and cash management fees.

• Interchange and ATM fees were higher for the three and nine months ended September 30, 2024 as compared to the same prior year periods due primarily to higher transaction volumes.

• Investment management and advisory income increased, driven primarily by higher levels of assets under administration, which increased by $1.0 billion, or 17.0%, to $7.2 billion at September 30, 2024 as compared to $6.1 billion at September 30, 2023.

This increase was partially offset by lower insurance commission income recognized in 2024 as compared to the same 2023 periods.

• Mortgage banking income increased for the three and nine months ended September 30, 2024 as compared to the same prior year periods due primarily to a greater portion of new originations being sold in the secondary market versus being retained in the Company's portfolio during 2024 as compared to the same 2023 periods.

• The Company received minimal proceeds on life insurance policies during the nine months ended September 30, 2024 as compared to $2.1 million for the nine months ended September 30, 2023.

• Loan level derivative income increased during the three months ended September 30, 2024 and decreased for the nine months ended September 30, 2024 in comparison to the same prior year periods, reflecting fluctuations in customer demand fueled by changes in the macroeconomic environment.

• Other noninterest income for the three months ended September 30, 2024 was lower than the same prior year period, primarily attributable to outsized commercial loan fees recorded during the third quarter of 2023, as well as decreased discounted purchases of Massachusetts historical tax credits, partially offset by unrealized gains on equity securities.

Other noninterest income for the nine months ended September 30, 2024 was slightly higher than the same prior year period, primarily attributable to increased FHLB dividend income, realized gains on sales of equity securities, and commercial loan fees, partially offset by decreased discounted purchases of Massachusetts historical tax credits made during the first nine months of 2024.

Noninterest Expense The following table sets forth information regarding non-interest expense for the periods shown:

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

• Deposit account fees were higher for the first quarter of 2025, driven by increases in overdraft and cash management fees.

• Investment management and advisory income increased for the first quarter of 2025, driven by higher assets under administration, which increased by $294.9 million, or 4.3%, to $7.1 billion at March 31, 2025, as compared to $6.8 billion at March 31, 2024, as well as higher insurance and retail commission income recognized in the first quarter of 2025.

• Loan level derivative income increased for the first quarter of 2025, driven by fluctuations in customer demand fueled by changes in the macroeconomic environment.

• Other noninterest income was lower for the first quarter of 2025, primarily attributable to decreases in gains on equity securities and FHLB dividend income.

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

Table 14 - Noninterest Expense

Three Months Ended

September 30 Change

2024 2023 Amount %

(Dollars in thousands)

Salaries and employee benefits $ 60,108 $ 54,797 $ 5,311 9.69 %

Occupancy and equipment expenses 12,734 12,321 413 3.35 %

Data processing & facilities management 2,510 2,404 106 4.41 %

Software and subscriptions 4,736 3,324 1,412 42.48 %

FDIC assessment 2,628 2,727 (99) (3.63) %

Consulting expense 1,429 2,753 (1,324) (48.09) %

Debit card expense 614 2,319 (1,705) (73.52) %

Amortization of intangible assets 1,460 1,712 (252) (14.72) %

Other noninterest expenses 14,224 15,425 (1,201) (7.79) %

Total $ 100,443 $ 97,782 $ 2,661 2.72 %

Nine Months Ended

September 30 Change

March 31 Change

2025 2024 Amount %

5 unchanged sentences

FDIC assessment 2,988 2,982 6 0.20 %

Consulting expense 4,854 6,765 (1,911) (28.25) %

Debit card expense 1,935 2,478 (543) (21.91) %

Amortization of intangible assets 1,344 1,563 (219) (14.01) %

Merger and acquisition expenses 1,155 — 1,155 100.00%

Other noninterest expenses 14,997 15,646 (649) (4.15) %

Total $ 105,878 $ 99,887 $ 5,991 6.00 %

The primary reasons for the variances in the noninterest expense categories shown in the preceding table include:

• Salaries and employee benefits increased for the three and nine months ended September 30, 2024, primarily attributable to increases in general salaries, incentive programs, medical plan insurance, and payroll taxes.

The 2024 third quarter increase also reflected the impact of an outsized interest rate-driven valuation fluctuation related to the Company’s split-dollar bank-owned life insurance policies.

These increases were partially offset by decreased commissions expense for the three and nine months ended September 30, 2024 as compared to the same prior year periods.

• Occupancy and equipment expenses increased for the three months ended September 30, 2024 as compared to the same prior year period due primarily to higher utilities costs and depreciation expense.

Occupancy and equipment expenses were also higher for the nine months ended September 30, 2024 compared to the same prior year period, driven primarily by one-time lease exit costs associated with acquired leased locations as well as increased depreciation expense and cleaning costs, partially offset by decreased utilities costs.

• Software and subscriptions costs increased for both the three and nine months ended September 30, 2024 driven by the Company’s continued investment in its technology infrastructure.

• FDIC assessment was relatively flat for the third quarter of 2024 as compared to the same prior year quarter, and increased for the nine months ended September 30, 2024 compared to the same prior year period due primarily to an increase in the estimated FDIC special assessment recognized by the Company during the first quarter of 2024.

• Debit card expense decreased for the three and nine months ended September 30, 2024, due primarily to a one-time credit of $1.1 million recognized during the third quarter of 2024 as well as reduced processing costs.

• Consulting expense decreased for the three and nine months ended September 30, 2024, due primarily to the timing of strategic initiatives.

• Other noninterest expense was lower for both the three and nine months ended September 30, 2024 compared to the same prior year periods.

The 2024 third quarter decrease was driven primarily by decreased unrealized losses on equity securities, lower card issuance costs, recruitment expenses and other miscellaneous costs, partially offset by increased software and subscriptions, internet banking expenses and telecommunications costs.

The 2024 year-to-date decrease was driven primarily by lower recruitment expenses, reduced gains on sale of fixed assets, decreased legal costs, partially offset by increases in software and subscriptions, internet banking, and telecommunications costs.

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

• Salaries and employee benefits were higher for the first quarter of 2025, attributable to increases in general salaries, equity compensation, commissions, incentive programs, medical plan insurance, and payroll taxes.

• Occupancy and equipment were higher for the first quarter of 2025, driven by increases in snow removal and utilities costs, partially offset by a reduction in one-time lease exit costs recognized during the first quarter of 2024.

• Software and subscriptions costs increased for the three months ended March 31, 2025 driven by the Company’s cont inued investment in its technology infrastructure.

• Debit car d expense decreased for the first quarter of 2025, driven primarily by a change in fee structure with a third party provider that became effective in the second half of 2024.

• The Company incurred merger and acquisition expenses of $1.2 million in the first quarter of 2025 related to the Company’s pending acquisition of Enterprise.

No such costs were recognized during the first quarter of 2024.

• Other noninterest expense was lower for the first quarter of 2025, driven by decreases in other debit card losses of $1.1 million, reductions in card issuance costs of $404,000, and decreased consultant fees of $331,000, as well as decreases in various other miscellaneous costs.

These decreases were partially offset by increases in advertising costs, contract labor, and recruitment costs.

Income Taxes The tax effect of all income and expense transactions is recognized by the Company in each year’s consolidated statements of income, regardless of the year in which the transactions are reported for income tax purposes.

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Table 15 - Tax Provision and Applicable Tax Rates

Three Months Ended Nine Months Ended

September 30 September 30

2024 2023 2024 2023

Three Months Ended

(Dollars in thousands)

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Blended statutory tax rate 27.37 % 27.91 %

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

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

The Company's effective tax rate for the first quarter of 2025 is lower as compared to the year ago period primarily due to lower pre-tax income, a decrease in the statutory state tax rate, as well as increased tax benefits from low income housing tax credits.

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

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

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The investments are accounted for using the proportional amortization method and will be amortized over various periods through 2042, which represents the period that the tax credits and other tax benefits will be utilized.

The total committed investment in these partnerships is $258.3 million, of which $192.5 million had been funded as of September 30, 2024.

The total committed investment in these partnerships is $285.3 million, of which $218.7 million had been funded as of March 31, 2025.

It is expected that the limited partnership investments will generate a net tax benefit of approximately $5.4 million for the fiscal year 2025 and a total of $46.6 million over the remaining life of the investments from the combination of the tax credits and operating losses.

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

The second line of defense monitors and

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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The Company’s primary measure of short-term liquidity is the Total Basic Surplus/Deficit as a percentage of assets.

This ratio, which is an analysis of the relationship between liquid assets plus available FHLB funding, less short-term liabilities relative to total assets, was within policy limits at September 30, 2024.

The Total Basic Surplus/Deficit measure is affected primarily by changes in deposits, securities and short-term investments, loans, and borrowings.

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The Company prioritizes core deposits as a primary funding source and continues to maintain a variety of available liquidity sources, including FHLB advances, and Federal Reserve borrowing capacity.

These funding sources serve as a contingent source of liquidity and, when profitable lending and investment opportunities exist, the Company may access them

to provide the liquidity needed to grow the balance sheet.

These funding sources serve as a contingent source of liquidity and, when profitable lending and investment opportunities exist, the Company may access them to provide the liquidity needed to grow the balance sheet.

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

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

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

The Company may also have the ability to raise additional funds through the issuance of equity or unsecured debt privately or publicly and has done so in the past.

The Company may also have the ability to raise additional funds through the issuance of equity or unsecured debt privately or publicly, as demonstrated by the $300.0 million subordinated debt issuance completed by the Company during the first quarter of 2025.

Additionally, the Company is able to enter into repurchase agreements or acquire brokered deposits at its discretion.

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Table 16 - Liquidity Sources

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Outstanding Additional

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Subordinated debt (3) 296,507 — — —

Reciprocal deposits (3) 1,036,580 — 959,068 —

Brokered deposits (3) 51,661 — 61,236 —

$ 911,535 $ 6,408,718 $ 762,610 $ 6,242,483

(1) Loans and securities with a carrying value of $3.9 billion at each of September 30, 2024 and December 31, 2023, were pledged to the FHLB of Boston.

(2) Loans and securities with a carrying value of $5.0 billion at September 30, 2024, and loans with a carrying value of $4.6 billion at December 31, 2023, were pledged to the Federal Reserve Bank of Boston at each respective period.

(1) Loans and securities with a carrying value of $3.8 billion at each of March 31, 2025 and December 31, 2024 were pledged to the FHLB of Boston.

(2) Loans and securities with a carrying value of $5.0 billion and $4.9 billion at March 31, 2025 and December 31, 2024, respectively, were pledged to the Federal Reserve Bank of Boston.

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

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

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

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

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

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

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

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

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+200 over 12 months 1.7 % (0.4) %

Alternative scenarios

Steep down 200 basis point scenario (1.3) % 1.3 %

The results depicted in the table above are dependent on material assumptions, such as prepayment rates, decay rates, pricing decisions on loans and deposits, and other factors, which management believes are reasonable.

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

The most significant market factors affecting the Company’s net interest income during the three months ended September 30, 2024 were the shape of the U.S.

The most significant market factors affecting the Company’s net interest income during the year ended March 31, 2025 were the shape of the U.S.

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

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An interest rate swap is an agreement in which 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 from the other party.

Interest rate caps and floors are agreements where one party agrees to pay a floating rate of interest on a notional principal amount for a predetermined period to a second party if certain market interest rate thresholds are realized.

Interest rate caps and floors are agreements where one party agrees to pay a

floating rate of interest on a notional principal amount for a predetermined period to a second party if certain market interest rate thresholds are realized.

While interest is paid or received in swap, cap, and floors agreements, the notional principal amount is not exchanged.

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Contractual Obligations, Commitments, Contingencies, and Off-Balance Sheet Financial Information

Off-Balance Sheet Arrangements There were no material changes in off-balance sheet arrangements during the three months ended September 30, 2024.

Off-Balance Sheet Arrangements There were no material changes in off-balance sheet arrangements during the three months ended March 31, 2025.

See Note 7, “Derivative and Hedging Activities” and Note 11, “Commitments and Contingencies” within the Notes to Consolidated Financial Statements included in Part I.

Item 1 of this Report for more information relating to the Company's other off-balance sheet financial instruments.

Contractual Obligations, Commitments, and Contingencies There were no material changes in contractual obligations, commitments, or contingencies during the three months ended September 30, 2024.

Contractual Obligations, Commitments, and Contingencies There were no material changes in contractual obligations, commitments, or contingencies during the three months ended March 31, 2025.

Quantitative and Qualitative Disclosures About Market Risk

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis