UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-39610

___________________________

Eastern Bankshares, Inc.

(Exact name of the registrant as specified in its charter)

___________________________


Massachusetts						84-4199750
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification Number)

265 Franklin Street, Boston, Massachusetts						02110
(Address of principal executive offices)						(Zip Code)

(800) 327-8376

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock	EBC	Nasdaq Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. ☐☒ Yes ☒☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☐☒

Accelerated filer

☐

Non-accelerated filer

☒☐

Smaller reporting company

☐

(Do not check if a smaller reporting company)

Emerging Growth Company

☒☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Yes ☒☐ No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

~~186,758,154~~176,678,504 shares of the Registrant’s common stock, par value $0.01 per share, were ~~issued and~~ outstanding as of November ~~9, 2021.~~2, 2022.

Table of Contents

Index


		PAGE
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Consolidated Balance Sheets	4
	Unaudited Consolidated Statements of Income	5
	Unaudited Consolidated Statements of Comprehensive Income	6
	Unaudited Consolidated Statements of Changes in Shareholders’ Equity	7
	Unaudited Consolidated Statements of Cash Flows	9
	Notes to Unaudited Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5566

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	95106

Item 4.	Controls and Procedures	95106

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	95107

Item 1A.	Risk Factors	95107

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	95107

Item 3.	Defaults Upon Senior Securities	95108

Item 4.	Mine Safety Disclosures	95108

Item 5.	Other Information	96108

Item 6.	Exhibits	97109

EXHIBIT INDEX		97109

SIGNATURES		98110

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements

EASTERN BANKSHARES, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS


		September 30, 2021		December 31, 2020
		(In thousands, except share data)
(In thousands, except per share data)						(In thousands, except per share data)	September 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Cash and due from banks	Cash and due from banks	$	78,805	$	116,591	Cash and due from banks	$	102,776	$	144,634
Short-term investments	Short-term investments	1,172,956		1,937,479		Short-term investments	55,661		1,087,158
Cash and cash equivalents	Cash and cash equivalents	1,251,761		2,054,070		Cash and cash equivalents	158,437		1,231,792
Available for sale securities		5,689,312		3,183,861
Securities:						Securities:
Available for sale (amortized cost $8,029,283 and $8,587,179, respectively)						Available for sale (amortized cost $8,029,283 and $8,587,179, respectively)	6,844,615		8,511,224
Held to maturity (fair value $431,477 and $0, respectively)						Held to maturity (fair value $431,477 and $0, respectively)	481,963		—
Total securities						Total securities	7,326,578		8,511,224
Loans held for sale	Loans held for sale	1,757		1,140		Loans held for sale	951		1,206
Loans:	Loans:					Loans:
Commercial and industrial	Commercial and industrial	1,652,447		1,995,016		Commercial and industrial	3,023,729		2,960,527
Commercial real estate	Commercial real estate	3,825,186		3,573,630		Commercial real estate	4,985,654		4,522,513
Commercial construction	Commercial construction	243,146		305,708		Commercial construction	314,193		222,328
Business banking	Business banking	1,225,538		1,339,164		Business banking	1,096,436		1,334,694
Residential real estate	Residential real estate	1,491,269		1,370,957		Residential real estate	2,118,852		1,926,810
Consumer home equity	Consumer home equity	848,570		868,270		Consumer home equity	1,168,476		1,100,153
Other consumer	Other consumer	218,406		277,780		Other consumer	196,614		214,485
Total loans	Total loans	9,504,562		9,730,525		Total loans	12,903,954		12,281,510
Less: allowance for loan losses		(103,398)		(113,031)
Less: unamortized premiums, net of unearned discounts and deferred fees		(23,104)		(23,536)
Allowance for loan losses						Allowance for loan losses	(131,663)		(97,787)
Unamortized premiums, net of unearned discounts and deferred fees						Unamortized premiums, net of unearned discounts and deferred fees	(19,349)		(26,442)
Net loans	Net loans	9,378,060		9,593,958		Net loans	12,752,942		12,157,281
Federal Home Loan Bank stock, at cost	Federal Home Loan Bank stock, at cost	10,601		8,805		Federal Home Loan Bank stock, at cost	18,714		10,904
Premises and equipment	Premises and equipment	44,048		49,398		Premises and equipment	63,261		80,984
Bank-owned life insurance	Bank-owned life insurance	79,259		78,561		Bank-owned life insurance	159,838		157,091
Goodwill and other intangibles, net	Goodwill and other intangibles, net	379,772		376,534		Goodwill and other intangibles, net	662,222		649,703
Deferred income taxes, net	Deferred income taxes, net	34,135		13,229		Deferred income taxes, net	342,550		76,535
Prepaid expenses	Prepaid expenses	148,180		148,680		Prepaid expenses	180,742		179,330
Other assets	Other assets	444,338		455,954		Other assets	376,698		456,078
Total assets	Total assets	$	17,461,223	$	15,964,190	Total assets	$	22,042,933	$	23,512,128
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Deposits:	Deposits:					Deposits:
Demand	Demand	$	5,484,126	$	4,910,794	Demand	$	6,582,122	$	7,020,864
Interest checking accounts	Interest checking accounts	2,693,276		2,380,497		Interest checking accounts	5,047,018		4,478,566
Savings accounts	Savings accounts	1,444,928		1,256,736		Savings accounts	1,990,188		2,077,495
Money market investment	Money market investment	3,802,319		3,348,898		Money market investment	4,757,477		5,525,005
Certificates of deposit	Certificates of deposit	225,315		258,859		Certificates of deposit	356,576		526,381
Total deposits	Total deposits	13,649,964		12,155,784		Total deposits	18,733,381		19,628,311
Borrowed funds:	Borrowed funds:					Borrowed funds:
Federal Home Loan Bank advances	Federal Home Loan Bank advances	14,172		14,624		Federal Home Loan Bank advances	384,215		14,020
Escrow deposits of borrowers	Escrow deposits of borrowers	15,900		13,425		Escrow deposits of borrowers	21,853		20,258
Interest rate swap collateral funds						Interest rate swap collateral funds	16,650		—
Total borrowed funds	Total borrowed funds	30,072		28,049		Total borrowed funds	422,718		34,278
Other liabilities	Other liabilities	351,895		352,305		Other liabilities	470,671		443,187
Total liabilities	Total liabilities	14,031,931		12,536,138		Total liabilities	19,626,770		20,105,776
Commitments and contingencies (see footnote 10)		0		0
Commitments and contingencies (see footnote 12)						Commitments and contingencies (see footnote 12)
Shareholders’ equity	Shareholders’ equity					Shareholders’ equity
Common shares, $0.01 par value, 1,000,000,000 shares authorized, 186,758,154 shares issued and outstanding at both September 30, 2021 and December 31, 2020		1,868		1,868
Common shares, $0.01 par value, 1,000,000,000 shares authorized, 177,772,553 and 186,305,332 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively						Common shares, $0.01 par value, 1,000,000,000 shares authorized, 177,772,553 and 186,305,332 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	1,778		1,863
Additional paid in capital	Additional paid in capital	1,857,165		1,854,068		Additional paid in capital	1,676,396		1,835,241
Unallocated common shares held by the Employee Stock Ownership Plan	Unallocated common shares held by the Employee Stock Ownership Plan	(143,966)		(147,725)		Unallocated common shares held by the Employee Stock Ownership Plan	(138,950)		(142,709)
Retained earnings	Retained earnings	1,747,300		1,665,607		Retained earnings	1,855,757		1,768,653
Accumulated other comprehensive income, net of tax	Accumulated other comprehensive income, net of tax	(33,075)		54,234		Accumulated other comprehensive income, net of tax	(978,818)		(56,696)
Total shareholders’ equity	Total shareholders’ equity	3,429,292		3,428,052		Total shareholders’ equity	2,416,163		3,406,352
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	17,461,223	$	15,964,190	Total liabilities and shareholders’ equity	$	22,042,933	$	23,512,128

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

Table of Contents

EASTERN BANKSHARES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands, except per share data)									(In thousands, except per share data)
Interest and dividend income:	Interest and dividend income:									Interest and dividend income:
Interest and fees on loans	Interest and fees on loans	$	86,735	$	90,704	$	266,310	$	278,385	Interest and fees on loans	$	124,992	$	86,735	$	333,595	$	266,310
Taxable interest and dividends on available for sale securities		14,314		7,554		36,977		23,332
Non-taxable interest and dividends on available for sale securities		1,848		1,883		5,561		5,709
Taxable interest and dividends on securities										Taxable interest and dividends on securities	29,280		14,314		88,277		36,977
Non-taxable interest and dividends on securities										Non-taxable interest and dividends on securities	1,917		1,848		5,585		5,561
Interest on federal funds sold and other short-term investments	Interest on federal funds sold and other short-term investments	571		372		1,434		1,173		Interest on federal funds sold and other short-term investments	1,638		571		2,726		1,434
Interest and dividends on trading securities		—		—		—		6
Total interest and dividend income	Total interest and dividend income	103,468		100,513		310,282		308,605		Total interest and dividend income	157,827		103,468		430,183		310,282
Interest expense:	Interest expense:									Interest expense:
Interest on deposits	Interest on deposits	736		1,727		2,769		10,245		Interest on deposits	4,781		736		11,164		2,769
Interest on borrowings	Interest on borrowings	41		44		123		717		Interest on borrowings	867		41		959		123
Total interest expense	Total interest expense	777		1,771		2,892		10,962		Total interest expense	5,648		777		12,123		2,892
Net interest income	Net interest income	102,691		98,742		307,390		297,643		Net interest income	152,179		102,691		418,060		307,390
(Release of) provision for allowance for loan losses		(1,488)		700		(5,368)		37,900
Provision for (release of) allowance for loan losses										Provision for (release of) allowance for loan losses	6,480		(1,488)		7,045		(5,368)
Net interest income after provision for loan losses	Net interest income after provision for loan losses	104,179		98,042		312,758		259,743		Net interest income after provision for loan losses	145,699		104,179		411,015		312,758
Noninterest income:	Noninterest income:									Noninterest income:
Insurance commissions	Insurance commissions	21,956		21,884		73,767		72,058		Insurance commissions	23,788		21,956		77,183		73,767
Service charges on deposit accounts	Service charges on deposit accounts	5,935		5,052		17,010		15,514		Service charges on deposit accounts	6,708		5,935		23,558		17,010
Trust and investment advisory fees	Trust and investment advisory fees	6,310		5,311		18,047		15,600		Trust and investment advisory fees	5,832		6,310		17,967		18,047
Debit card processing fees	Debit card processing fees	3,030		2,721		8,949		7,528		Debit card processing fees	3,249		3,030		9,417		8,949
Interest rate swap income (losses)		881		1,319		5,122		(3,919)
Interest rate swap income										Interest rate swap income	1,562		881		6,087		5,122
(Losses) income from investments held in rabbi trusts	(Losses) income from investments held in rabbi trusts	(289)		3,800		5,773		4,802		(Losses) income from investments held in rabbi trusts	(2,248)		(289)		(13,997)		5,773
Losses on trading securities, net		—		—		—		(3)
Gains on sales of mortgage loans held for sale, net	Gains on sales of mortgage loans held for sale, net	717		2,219		3,044		3,732		Gains on sales of mortgage loans held for sale, net	22		717		240		3,044
Gains on sales of securities available for sale, net		1		—		1,166		285
(Losses) gains on sales of securities available for sale, net										(Losses) gains on sales of securities available for sale, net	(198)		1		(2,474)		1,166
Other	Other	4,668		5,403		11,276		13,138		Other	4,638		4,668		13,664		11,276
Total noninterest income	Total noninterest income	43,209		47,709		144,154		128,735		Total noninterest income	43,353		43,209		131,645		144,154
Noninterest expense:	Noninterest expense:									Noninterest expense:
Salaries and employee benefits	Salaries and employee benefits	66,238		66,593		199,554		191,517		Salaries and employee benefits	78,060		66,238		220,582		199,554
Office occupancy and equipment	Office occupancy and equipment	7,960		8,294		24,271		25,598		Office occupancy and equipment	9,703		7,960		31,205		24,271
Data processing	Data processing	12,191		11,721		37,892		33,905		Data processing	13,294		12,191		42,959		37,892
Professional services	Professional services	4,024		5,510		14,611		13,595		Professional services	5,826		4,024		14,561		14,611
Charitable contributions		—		—		—		3,984
Marketing		1,598		1,943		6,786		6,056
Marketing expenses										Marketing expenses	2,219		1,598		6,444		6,786
Loan expenses	Loan expenses	1,586		1,554		5,287		4,702		Loan expenses	1,152		1,586		3,444		5,287
FDIC insurance	FDIC insurance	1,056		938		2,989		2,788		FDIC insurance	1,578		1,056		4,710		2,989
Amortization of intangible assets	Amortization of intangible assets	629		699		1,786		2,102		Amortization of intangible assets	1,033		629		2,767		1,786
Other	Other	3,688		12,565		7,178		21,507		Other	3,975		3,688		10,173		7,178
Total noninterest expense	Total noninterest expense	98,970		109,817		300,354		305,754		Total noninterest expense	116,840		98,970		336,845		300,354
Income before income tax expense	Income before income tax expense	48,418		35,934		156,558		82,724		Income before income tax expense	72,212		48,418		205,815		156,558
Income tax expense	Income tax expense	11,312		7,429		36,980		15,924		Income tax expense	17,435		11,312		48,350		36,980
Net income	Net income	$	37,106	$	28,505	$	119,578	$	66,800	Net income	$	54,777	$	37,106	$	157,465	$	119,578
Basic earnings per share	Basic earnings per share	$	0.22	$	—	$	0.69	$	—	Basic earnings per share	$	0.33	$	0.22	$	0.94	$	0.69
Diluted earnings per share	Diluted earnings per share	$	0.22	$	—	$	0.69	$	—	Diluted earnings per share	$	0.33	$	0.22	$	0.94	$	0.69

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

Table of Contents

EASTERN BANKSHARES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands)									(In thousands)
Net income	Net income	$	37,106	$	28,505	$	119,578	$	66,800	Net income	$	54,777	$	37,106	$	157,465	$	119,578
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income, net of tax:										Other comprehensive (loss) income, net of tax:
Net change in fair value of securities available for sale	Net change in fair value of securities available for sale	(21,610)		(4,321)		(71,086)		22,158		Net change in fair value of securities available for sale	(261,469)		(21,610)		(860,269)		(71,086)
Net change in fair value of cash flow hedges	Net change in fair value of cash flow hedges	(5,644)		(6,144)		(17,501)		20,286		Net change in fair value of cash flow hedges	(56,062)		(5,644)		(61,482)		(17,501)
Net change in other comprehensive income for defined benefit postretirement plans	Net change in other comprehensive income for defined benefit postretirement plans	426		1,702		1,278		5,106		Net change in other comprehensive income for defined benefit postretirement plans	(124)		426		(371)		1,278
Total other comprehensive (loss) income	Total other comprehensive (loss) income	(26,828)		(8,763)		(87,309)		47,550		Total other comprehensive (loss) income	(317,655)		(26,828)		(922,122)		(87,309)
Total comprehensive income		$	10,278	$	19,742	$	32,269	$	114,350
Total comprehensive (loss) income										Total comprehensive (loss) income	$	(262,878)	$	10,278	$	(764,657)	$	32,269

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

Table of Contents

EASTERN BANKSHARES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended September 30, ~~2021~~2022 and ~~2020~~2021

Shares of Common Stock Outstanding Common Stock Additional Paid in Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Unallocated Common Stock Held by ESOP Total
(In thousands, except share data)
Balance at June 30, 2020 — $ — $ — $ 1,681,164 $ 12,466 $ — $ 1,693,630
Net income — — — 28,505 — — 28,505
Other comprehensive income, net of tax — — — — (8,763) — (8,763)
Balance at September 30, 2020 — $ — $ — $ 1,709,669 $ 3,703 $ — $ 1,713,372
Balance at June 30, 2021 186,758,154 $ 1,868 $ 1,856,241 $ 1,723,979 $ (6,247) $ (145,219) $ 3,430,622
Dividends to common shareholders (1) — — — (13,785) — — (13,785)
Net income — — — 37,106 — — 37,106
Other comprehensive income, net of tax — — — — (26,828) — (26,828)
ESOP shares committed to be released — — 924 — — 1,253 2,177
Balance at September 30, 2021 186,758,154 $ 1,868 $ 1,857,165 $ 1,747,300 $ (33,075) $ (143,966) $ 3,429,292

~~(1)The Company declared and paid a quarterly cash dividend of $0.08 per share of common stock during the three months ended September 30, 2021.~~


	Shares of Common Stock Outstanding	Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Unallocated Common Stock Held by ESOP		Total
	(In thousands, except share data)
Balance at June 30, 2021	186,758,154	$	1,868	$	1,856,241	$	1,723,979	$	(6,247)	$	(145,219)	$	3,430,622
Dividends to common shareholders	—	—		—		(13,785)		—		—		(13,785)
Net income	—	—		—		37,106		—		—		37,106
Other comprehensive income, net of tax	—	—		—		—		(26,828)		—		(26,828)
ESOP shares committed to be released	—	—		924		—		—		1,253		2,177
Balance at September 30, 2021	186,758,154	$	1,868	$	1,857,165	$	1,747,300	$	(33,075)	$	(143,966)	$	3,429,292

Balance at June 30, 2022	179,253,801	$	1,793	$	1,700,495	$	1,817,474	$	(661,163)	$	(140,203)	$	2,718,396
Dividends to common shareholders	—	—		—		(16,494)		—		—		(16,494)
Repurchased common stock	(1,481,248)	(15)		(28,935)		—		—		—		(28,950)
Share-based compensation	—	—		3,561		—		—		—		3,561
Net income	—	—		—		54,777		—		—		54,777
Other comprehensive income, net of tax	—	—		—		—		(317,655)		—		(317,655)
ESOP shares committed to be released	—	—		1,275		—		—		1,253		2,528
Balance at September 30, 2022	177,772,553	$	1,778	$	1,676,396	$	1,855,757	$	(978,818)	$	(138,950)	$	2,416,163

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

EASTERN BANKSHARES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021


		Shares of Common Stock Outstanding	Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Unallocated Common Stock Held by ESOP		Total			Shares of Common Stock Outstanding	Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Unallocated Common Stock Held by ESOP		Total
		(In thousands, except share data)														(In thousands, except share data)
Balance at December 31, 2019		—	$	—	$	—	$	1,644,000	$	(43,847)	$	—	$	1,600,153
Cumulative effect accounting adjustment (1)		—	—		—		(1,131)		—		—		(1,131)
Balance at December 31, 2020															Balance at December 31, 2020	186,758,154	$	1,868	$	1,854,068	$	1,665,607	$	54,234	$	(147,725)	$	3,428,052
Dividends to common shareholders															Dividends to common shareholders	—	—		—		(37,885)		—		—		(37,885)
Net income	Net income	—	—		—		66,800		—		—		66,800		Net income	—	—		—		119,578		—		—		119,578
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—	—		—		—		47,550		—		47,550		Other comprehensive income, net of tax	—	—		—		—		(87,309)		—		(87,309)
Balance at September 30, 2020		—	$	—	$	—	$	1,709,669	$	3,703	$	—	$	1,713,372
ESOP shares committed to be released															ESOP shares committed to be released	—	—		3,097		—		—		3,759		6,856
Balance at September 30, 2021															Balance at September 30, 2021	186,758,154	$	1,868	$	1,857,165	$	1,747,300	$	(33,075)	$	(143,966)	$	3,429,292

Balance at December 31, 2020		186,758,154	$	1,868	$	1,854,068	$	1,665,607	$	54,234	$	(147,725)	$	3,428,052
Dividends to common shareholders (2)		—	—		—		(37,885)		—		—		(37,885)
Balance at December 31, 2021															Balance at December 31, 2021	186,305,332	$	1,863	$	1,835,241	$	1,768,653	$	(56,696)	$	(142,709)	$	3,406,352
Cumulative effect of accounting adjustment (1)															Cumulative effect of accounting adjustment (1)	—	—		—		(20,098)		—		—		(20,098)
Dividends to common shareholders															Dividends to common shareholders	—	—		—		(50,263)		—		—		(50,263)
Repurchased common stock															Repurchased common stock	(8,564,338)	(86)		(170,685)		—		—		—		(170,771)
Issuance of restricted stock awards															Issuance of restricted stock awards	31,559	1		(1)		—		—		—		—
Share-based compensation															Share-based compensation	—	—		8,092		—		—		—		8,092
Net income	Net income	—	—		—		119,578		—		—		119,578		Net income	—	—		—		157,465		—		—		157,465
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—	—		—		—		(87,309)		—		(87,309)		Other comprehensive loss, net of tax	—	—		—		—		(922,122)		—		(922,122)
ESOP shares committed to be released	ESOP shares committed to be released	—	—		3,097		—		—		3,759		6,856		ESOP shares committed to be released	—	—		3,749		—		—		3,759		7,508
Balance at September 30, 2021		186,758,154	$	1,868	$	1,857,165	$	1,747,300	$	(33,075)	$	(143,966)	$	3,429,292
Balance at September 30, 2022															Balance at September 30, 2022	177,772,553	$	1,778	$	1,676,396	$	1,855,757	$	(978,818)	$	(138,950)	$	2,416,163

(1)Represents gross transition adjustment amount of $28.0 million, net of taxes of $7.9 million, to reflect the cumulative impact on retained earnings pursuant to the Company’s ~~(as defined herein)~~ adoption of Accounting Standards Update ~~2016-02~~2016-13. Refer to Note 4, “Loans and Allowance for Credit Losses” ~~Leases. The transition adjustment~~within the Notes to the ~~opening balance of retained earnings~~Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on ~~January 1, 2020 amounted to $1.1 million, net of tax, related to an incremental accrued rent adjustment calculated as a result of electing the hindsight practical expedient.~~

~~(2)~~The Company declared and paid quarterly cash dividends of $0.06, $0.08 and $0.08 per share of common stock during the three months ended March 31, 2021, June 30, 2021 and September 30, 2021, respectively.Form 10-Q for additional discussion.

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

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EASTERN BANKSHARES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS


		Nine Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021

Operating activities	Operating activities					Operating activities
Net income	Net income	$	119,578	$	66,800	Net income	$	157,465	$	119,578
Adjustments to reconcile net income to net cash provided by operating activities	Adjustments to reconcile net income to net cash provided by operating activities					Adjustments to reconcile net income to net cash provided by operating activities
(Release of) provision for loan losses		(5,368)		37,900
Provision for (release of) allowance for loan losses						Provision for (release of) allowance for loan losses	7,045		(5,368)
Depreciation and amortization	Depreciation and amortization	9,932		12,246		Depreciation and amortization	11,021		9,932
Accretion of deferred loan fees and premiums, net	Accretion of deferred loan fees and premiums, net	(19,126)		(5,582)		Accretion of deferred loan fees and premiums, net	(3,499)		(19,126)
Deferred income tax expense (benefit)		5,606		(7,511)
Deferred income tax expense						Deferred income tax expense	12,929		5,606
Amortization of investment security premiums and discounts	Amortization of investment security premiums and discounts	11,084		3,057		Amortization of investment security premiums and discounts	15,251		11,084
Right-of-use asset amortization	Right-of-use asset amortization	9,172		9,086		Right-of-use asset amortization	9,822		9,172
Share-based compensation						Share-based compensation	8,092		—
Increase in cash surrender value of bank-owned life insurance	Increase in cash surrender value of bank-owned life insurance	(1,598)		(1,685)		Increase in cash surrender value of bank-owned life insurance	(2,747)		(1,598)
Gain on sale of securities available for sale, net		(1,166)		(285)
Loss (gain) on sale of securities available for sale, net						Loss (gain) on sale of securities available for sale, net	2,474		(1,166)
Net (gain) loss on sale of premises and equipment						Net (gain) loss on sale of premises and equipment	(1,423)		259
Amortization of gains from terminated interest rate swaps	Amortization of gains from terminated interest rate swaps	(24,344)		(7,409)		Amortization of gains from terminated interest rate swaps	(9,653)		(24,344)
Employee Stock Ownership Plan expense	Employee Stock Ownership Plan expense	6,856		—		Employee Stock Ownership Plan expense	7,508		6,856
Other	Other	(755)		(672)		Other	1,266		(1,014)
Change in:	Change in:					Change in:
Trading securities		—		961
Loans held for sale	Loans held for sale	(610)		(4,644)		Loans held for sale	245		(610)
Prepaid pension expense	Prepaid pension expense	2,515		(26,391)		Prepaid pension expense	(8,599)		2,515
Other assets	Other assets	34,227		(122,883)		Other assets	70,088		34,227
Other liabilities	Other liabilities	(18,904)		61,326		Other liabilities	(50,781)		(18,904)
Net cash provided by operating activities	Net cash provided by operating activities	127,099		14,314		Net cash provided by operating activities	226,504		127,099
Investing activities	Investing activities					Investing activities
Proceeds from sales of securities available for sale	Proceeds from sales of securities available for sale	23,237		9,097		Proceeds from sales of securities available for sale	400,543		23,237
Proceeds from maturities and principal paydowns of securities available for sale	Proceeds from maturities and principal paydowns of securities available for sale	573,135		289,151		Proceeds from maturities and principal paydowns of securities available for sale	880,145		573,135
Purchases of securities available for sale	Purchases of securities available for sale	(3,202,995)		(971,990)		Purchases of securities available for sale	(740,770)		(3,202,995)
Proceeds from maturities and principal paydowns of securities held to maturity						Proceeds from maturities and principal paydowns of securities held to maturity	11,968		—
Purchases of securities held to maturity						Purchases of securities held to maturity	(493,678)		—
Proceeds from sale of Federal Home Loan Bank stock	Proceeds from sale of Federal Home Loan Bank stock	—		749		Proceeds from sale of Federal Home Loan Bank stock	16,214		—
Purchases of Federal Home Loan Bank stock	Purchases of Federal Home Loan Bank stock	(1,796)		(527)		Purchases of Federal Home Loan Bank stock	(24,024)		(1,796)
Contributions to low income housing tax credit investments	Contributions to low income housing tax credit investments	(10,168)		(9,614)		Contributions to low income housing tax credit investments	(14,967)		(10,168)
Contributions to other equity investments	Contributions to other equity investments	(2,294)		(1,631)		Contributions to other equity investments	(450)		(2,294)
Distributions from other equity investments	Distributions from other equity investments	258		54		Distributions from other equity investments	762		258
Net decrease (increase) in outstanding loans		240,354		(929,237)
Net (increase) decrease in outstanding loans, excluding loan purchases						Net (increase) decrease in outstanding loans, excluding loan purchases	(546,296)		240,354
Purchases of loans						Purchases of loans	(79,880)		—
Proceeds from life insurance policies						Proceeds from life insurance policies	20,446		—
Acquisitions, net of cash and cash equivalents acquired	Acquisitions, net of cash and cash equivalents acquired	(4,354)		—		Acquisitions, net of cash and cash equivalents acquired	(13,400)		(4,354)
Purchased banking premises and equipment, net	Purchased banking premises and equipment, net	(3,791)		(3,386)		Purchased banking premises and equipment, net	(6,381)		(3,791)
Proceeds from sale of premises held for sale	Proceeds from sale of premises held for sale	736		—		Proceeds from sale of premises held for sale	17,313		736
Proceeds from sale of other real estate owned	Proceeds from sale of other real estate owned	125		546		Proceeds from sale of other real estate owned	—		125
Net cash used in investing activities	Net cash used in investing activities	(2,387,553)		(1,616,788)		Net cash used in investing activities	(572,455)		(2,387,553)
Financing activities	Financing activities					Financing activities
Net increase in demand, savings, interest checking, and money market investment deposit accounts		1,527,724		3,830,588
Net (decrease) increase in demand, savings, interest checking, and money market investment deposit accounts						Net (decrease) increase in demand, savings, interest checking, and money market investment deposit accounts	(725,125)		1,527,724
Net decrease in time deposits	Net decrease in time deposits	(33,544)		(49,395)		Net decrease in time deposits	(169,805)		(33,544)
Net increase (decrease) in borrowed funds		2,023		(205,958)
Net increase in borrowed funds						Net increase in borrowed funds	388,440		2,023
Contingent consideration paid	Contingent consideration paid	(173)		(165)		Contingent consideration paid	(384)		(173)
Payment of deferred offering costs		—		(7,114)
Payments for repurchases of common stock						Payments for repurchases of common stock	(170,771)		—
Dividends declared and paid to common shareholders	Dividends declared and paid to common shareholders	(37,885)		—		Dividends declared and paid to common shareholders	(49,759)		(37,885)
Net cash provided by financing activities		1,458,145		3,567,956
Net (decrease) increase in cash, cash equivalents, and restricted cash		(802,309)		1,965,482
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(727,404)		1,458,145
Net decrease in cash, cash equivalents, and restricted cash						Net decrease in cash, cash equivalents, and restricted cash	(1,073,355)		(802,309)
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	2,054,070		362,602		Cash, cash equivalents, and restricted cash at beginning of period	1,231,792		2,054,070
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	1,251,761	$	2,328,084	Cash, cash equivalents, and restricted cash at end of period	$	158,437	$	1,251,761


Supplemental disclosure of cash flow information	Supplemental disclosure of cash flow information					Supplemental disclosure of cash flow information
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest paid	Interest paid	$	2,943	$	12,546	Interest paid	$	12,036	$	2,943
Income taxes	Income taxes	42,432		35,126		Income taxes	24,540		42,432
Non-cash activities	Non-cash activities					Non-cash activities
Net increase in capital commitments relating to low income housing tax credit projects	Net increase in capital commitments relating to low income housing tax credit projects	$	28,291	$	25,816	Net increase in capital commitments relating to low income housing tax credit projects	$	30,378	$	28,291
Initial recognition of operating lease right-of-use assets upon adoption of Accounting Standards Update 2016-02		—		92,948
Initial recognition of operating lease liabilities upon adoption of Accounting Standards Update 2016-02		—		96,426
Net decrease in operating lease right-of-use assets and operating lease liabilities relating to lease remeasurements (see footnote 6 in the Notes to the Unaudited Consolidated Financial Statements)						Net decrease in operating lease right-of-use assets and operating lease liabilities relating to lease remeasurements (see footnote 6 in the Notes to the Unaudited Consolidated Financial Statements)	14,082		—

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

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EASTERN BANKSHARES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Corporate Structure and Nature of Operations; Basis of Presentation

Corporate Structure and Nature of Operations

Eastern Bankshares, Inc., a Massachusetts corporation (the “Company”), is a bank holding company. Through its wholly-owned subsidiaries, Eastern Bank (the “Bank”) and Eastern Insurance Group LLC (“Eastern Insurance Group”), the Company provides a variety of banking services, trust and investment services, and insurance services, through its full-service bank branches and insurance offices, located primarily in ~~Eastern~~eastern Massachusetts, southern and coastal New Hampshire and Rhode Island. Eastern Insurance Group LLC is a wholly-owned subsidiary of the Bank.

The activities of the Company are subject to the regulatory supervision of the Board of Governors of the Federal Reserve System (“Federal Reserve”). The activities of the Bank are subject to the regulatory supervision of the Massachusetts Commissioner of Banks, the Federal Deposit Insurance Corporation (“FDIC”) and the Consumer Financial Protection Bureau. The Company and the activities of the Bank and ~~Eastern Insurance Group~~its subsidiaries are also subject to various Massachusetts, New Hampshire and Rhode Island business, banking and ~~banking~~insurance regulations.

Basis of Presentation

The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) as set forth by the Financial Accounting Standards Board (“FASB”) and its Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) as well as the rules and interpretive releases of the U.S. Securities and Exchange Commission (“SEC”) under the authority of federal securities laws.

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and entities in which it holds a controlling financial interest through being the primary beneficiary or through holding a majority of the voting interest. All intercompany accounts and transactions have been eliminated in consolidation.

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

The accompanying consolidated balance sheet as of September 30, ~~2021,~~2022, the consolidated statements of income and comprehensive income and of changes in shareholders’ equity for the three and nine months ended September 30, 2022 and 2021 and ~~2020 and statement~~statements of cash flows for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 are unaudited. The consolidated balance sheet as of December 31, ~~2020~~2021 was derived from the audited consolidated financial statements as of that date. The interim consolidated financial statements and the accompanying notes should be read in conjunction with the annual consolidated financial statements and the accompanying notes contained within the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 (“~~2020~~2021 Form 10-K”), as filed with the SEC. In the opinion of management, the Company’s consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The results for the three and nine months ended September 30, ~~2021~~2022 are not necessarily indicative of results to be expected for the year ending December 31, ~~2021,~~2022, any other interim periods, or any future year or period.

2. Summary of Significant Accounting Policies

The following describes the Company’s use of estimates as well as relevant accounting pronouncements that were recently issued but not yet adopted as of September 30, ~~2021~~2022 and those that were adopted during the nine months ended September 30, ~~2021.~~2022. For a full discussion of significant accounting policies, refer to the ~~notes~~Notes to the Consolidated Financial Statements included within the Company’s ~~2020~~2021 Form 10-K.

Use of Estimates

In preparing the Consolidated Financial Statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheets and income and expenses for the periods reported. Actual results could differ from those estimates based on changing conditions, including economic conditions and future events. Material estimates that are particularly susceptible to change relate to the determination of the allowance for ~~loan~~credit losses, valuation and fair value measurements, ~~other-than-temporary impairment on investment securities,~~ the liabilities for benefit obligations (particularly pensions), the provision for income taxes and impairment of goodwill and other intangibles.

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Recent Accounting Pronouncements

The Company qualifies as an emerging growth company under the Jumpstart Our Business Act of 2012 (“JOBS Act”) and has elected to defer the adoption of new or revised accounting standards until the nonpublic company effective dates.

Relevant standards that were recently issued but not yet adopted as of September 30, ~~2021:~~2022:

In ~~March 2020,~~October 2021, the FASB issued ASU ~~2020-4,~~2021-08, ~~Reference Rate Reform~~Business Combinations (Topic ~~848)~~805): ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU ~~2020-04”~~2021-08”). This update ~~addresses optional expedients~~modifies how an acquiring entity measures contract assets and ~~exceptions~~contract liabilities of an acquiree in a business combination in accordance with Topic 606. The amendments in this update require the acquiring entity in a business combination to account for ~~applying GAAP to certain~~revenue contracts ~~hedging relationships,~~as if they had originated the contract and ~~other transactions affected by reference rate reform if certain criteria are met. The new guidance applies only to~~assess how the acquiree accounted for the contract under Topic 606. ASU 2021-08 improves comparability of recognition and measurement of revenue contracts ~~hedging relationships,~~with customers both before and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided byafter a business combination. For public business entities, the amendments doin this update are effective for fiscal years beginning after December 15, 2022. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023. The amendments in this update should be applied prospectively to business combinations occurring on or after the effective date of the amendments with early adoption permitted. The Company expects the adoption of this standard will not ~~apply~~have a material impact on its consolidated financial statements.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments–Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). The amendments in this update eliminate the accounting guidance on troubled debt restructurings (“TDRs”) for creditors in ASC 310-40 and amends the guidance on vintage disclosures, referenced in ASC 326-20-50, to ~~contract~~require disclosure of current-period gross write-offs by year of origination. This update supersedes the existing accounting guidance for TDRs in ASC 310-40 in its entirety and requires entities to evaluate all receivable modifications under existing accounting guidance in ASC 310-20 to determine whether a modification made to a borrower results in a new loan or a continuation of an existing loan. In addition to the elimination of TDR accounting guidance, entities that adopt this update will no longer consider renewals, modifications and ~~hedging relationships existing as~~extensions that result from reasonably expected TDRs in their calculation of ~~December 31, 2022, that~~the allowance for credit losses. Further, if an entity employs a discounted cash flow method to calculate the allowance for credit losses, it will be required to use a post-modification-derived effective interest rate as part of its calculation. The update also requires new disclosures for receivables for which there has ~~elected certain optional expedients for and that are retained through the end of the hedging relationship.~~been a modification in their contractual cash flows resulting from borrowers experiencing financial difficulties. For public ~~and nonpublic~~business entities, the ~~guidance is~~amendments in this update are effective ~~as of March 12, 2020 through December 31, 2022 and does not apply to contract modifications made~~for fiscal years beginning after December ~~31, 2022.~~15, 2022, including interim periods within those fiscal years. Entities may elect to apply the updated guidance on TDR recognition and measurement by using a modified retrospective transition method. The amendments on TDR disclosures and vintage disclosures should be adopted prospectively. The Company ~~will adopt~~expects the adoption of this standard will not have a material impact on its consolidated financial statements.

Relevant standards that were adopted during the ~~nonpublic company effective date and is currently in the process of reviewing its contracts and existing processes in order to assess the risks and potential impact of the transition away from LIBOR.~~nine months ended September 30, 2022:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses on Financial Instruments and relevant amendments (Topic 326) (“ASU 2016-13”). This update was created to replace the ~~current~~then-current GAAP method of calculating credit losses. Specifically, the standard ~~replaces~~replaced the ~~existing~~previous incurred loss impairment guidance by requiring immediate recognition of expected credit losses. For financial assets carried at amortized cost that are held at the reporting date (including trade and other receivables, loans and commitments, held-to-maturity debt securities and other financial assets), credit losses are measured based on historical experience, current conditions and reasonable supportable forecasts. The standard also amends ~~existing~~previous impairment guidance for available for sale securities, in which credit losses ~~will be~~are recorded as an allowance versus a write-down of the amortized cost basis of the security. It ~~will~~ also ~~allow~~allows for a reversal of impairment loss when the credit of the issuer improves. The guidance requires a cumulative effect of the initial application to be recognized in retained earnings at the date of initial application.

In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses (“ASU 2018-19”). The amendments in ASU 2018-19 were intended to clarify that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses. This update requires entities to include expected recoveries of the amortized cost basis previously written off or expected to be written off in the valuation account for purchased financial assets with credit deterioration. In addition, the amendments in this update clarify and improve various aspects of the guidance for ASU 2016-13. ~~For public entities~~

On January 1, 2022, the Company adopted ASUs 2016-13, 2018-19 and 2019-11 (codified in ASC 326, “Financial Instruments-Credit Losses”), which replaced the incurred loss methodology (codified in ASC 450, “Contingencies,” ASC 310, “Receivables” and ASC 320, “Debt Securities”) with an expected loss methodology that ~~meet~~is referred to as current expected credit losses methodology (“CECL methodology”). The Company adopted ASU 2016-13 using the ~~definition~~modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures by means of ~~an SEC filer (excluding smaller reporting entities)~~a cumulative-effect adjustment to the ~~guidance is effective~~opening retained earnings balance on the Company’s consolidated balance sheet as of the Company’s date of adoption of January 1, 2022. Accordingly, results for ~~annual~~ reporting periods beginning after December 15, 2019. Early adoption is permitted for all entities as of the fiscal years beginning after December 15, 2018. For all other entities, the guidance is effective for annual reporting periods beginning after December 15, 2022, including interim periods within those fiscal years.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic in the United States. to provide economic relief measures including the option to defer adoption of ASU 2016-13 to the earlier of the ending of the national emergency declaration related to the COVID-19 crisis or December 31, 2020. On December 27, 2020, the Consolidated Appropriations Act (the “Appropriations Act”) was enacted to fund the federal government through their fiscal year, extend certain expiring tax provisions and provide additional emergency relief to individuals and businesses related to the COVID-19 pandemic in the United States. Included within the provisions of the Appropriations Act is an extension of the adoption date for ASU 2016-13 from December 31, 2020 to the earlier of January 1, 2022 or 60 days after the date on which the COVID-19 national emergency terminates.

To address the impact of ASU 2016-13, the Company has formed a committee, which members include the Chief Credit Officer, the Chief Financial Officer, and Chief Information Officer, to assist in identifying, implementing, and evaluating the impact of the required changes to loan loss estimation models and processes. The Company has concluded on segmentation, methodologies and other assumptions used for modeling and is currently working with third parties in validation efforts, model methodology documentation, project management and governance implementation. The Company is currently assessing the impact of the new standard on its consolidated financial statements and will adopt the standard effective January 1, 2022. Additionally, the Company is focused on the expected impact of its pending acquisition of Century Bancorp, Inc. (“Century”) on the adoption process.

~~In August 2018, the FASB issued ASU 2018-14,~~ ~~Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20) Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans~~ ~~(“ASU 2018-14”). This update modifies the disclosure requirements for employers that sponsor defined benefit pension and/or other~~

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~~postretirement benefit plans. The guidance eliminates requirements for certain disclosures that~~31, 2021 are ~~no longer considered cost beneficial and requires new ones that the FASB considers pertinent. For public companies,~~presented under ASU ~~2018-14 is effective for fiscal years ending after December 15, 2020. For nonpublic companies, ASU 2018-14 is effective for fiscal years ending after December 15, 2021. Early adoption is permitted.~~2016-13, while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company ~~will adopt this standard on~~recorded a net decrease to retained earnings of $20.1 million, net of deferred taxes of $7.9 million, as of January 1, 2022, for the ~~nonpublic company effective date.~~cumulative effect of adopting ASU 2016-13. The Company ~~expects~~adopted ASU 2016-13 using the ~~adoption~~prospective transition approach for purchased credit-deteriorated (“PCD”) financial assets that were previously classified as purchased credit-impaired (“PCI”) financial assets and accounted for under ASC 310-30. In accordance with ASU 2016-13, the Company did not reassess whether its assets previously classified as PCI assets met the criteria of ~~this standard~~PCD assets as of the date of adoption. Rather, loans previously determined to be PCI loans are considered to be PCD loans as of January 1, 2022. On January 1, 2022, the amortized cost basis of the PCD assets was adjusted to reflect the addition of the allowance for loan losses on PCD loans. The remaining noncredit discount will be accreted into the Company’s interest income at the then-effective interest rate as of January 1, 2022. The amount of the adjustment for PCD assets was not ~~have a~~ material ~~impact on its consolidated financial statements.~~to the Company.

In ~~October 2021,~~March 2020, the FASB issued ASU ~~2021-08,~~2020-4, ~~Business Combinations~~Reference Rate Reform (Topic ~~805)~~848): ~~Accounting for Contract Assets and Contract Liabilities from Contracts with Customers~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2021-08”). This update modifies how an acquiring entity measures contract assets and contract liabilities of an acquiree in a business combination in accordance with Topic 606. The amendments in this update require the acquiring entity in a business combination to account for revenue contracts as if they had originated the contract an assess how the acquiree accounted for the contract under Topic 606. ASU 2021-08 improves comparability of recognition and measurement of revenue contracts with customers both before and after a business combination. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2022. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023. The amendments in this update should be applied prospectively to business combinations occurring on or after the effective date of the amendments with early adoption permitted. The Company expects the adoption of this standard will not have a material impact on its consolidated financial statements.

~~Relevant standards that were adopted during the nine months ended September 30, 2021:~~

~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Intangibles–Goodwill and Other–Internal-use software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract~~ ~~(“ASU 2018-15”~~2020-04”). This update addresses ~~accounting~~optional expedients and exceptions for ~~fees paid by a customer for implementation, set-up~~applying GAAP to certain contracts, hedging relationships, and other ~~upfront costs incurred in a cloud computing arrangement that is hosted~~transactions affected by ~~the vendor (i.e., a service contract).~~reference rate reform if certain criteria are met. The new guidance ~~aligns treatment~~applies only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships that exist as of December 31, 2022, for ~~capitalization~~which an entity has elected certain optional expedients for and that are retained through the end of ~~implementation costs with guidance on internal-use software.~~the hedging relationship. For public ~~entities, the guidance is effective for annual reporting periods beginning after December 15, 2019. For~~and nonpublic entities, the guidance is effective ~~for annual reporting periods beginning~~as of March 12, 2020 through December 31, 2022 and does not apply to contract modifications made after December ~~15, 2020,~~31, 2022. The Company performed a review its contracts and ~~for all interim periods beginning after December 15, 2021. The adoption~~existing processes to assess the risks and potential impact of ~~this standard on January 1, 2021 did not have a~~the transition away from LIBOR and noted no material impact onto the Company’s consolidated financial ~~statements.~~statements as of September 30, 2022.

~~In January 2021, the FASB issued ASU 2021-01,~~ ~~Reference Rate Reform (Topic 848)~~ (“ASU 2021-01”) which expands the scope of guidance in ASC 848 so that companies can apply the optional expedients to derivative instruments affected by the clearing house changes. ASU 2021-01 also clarifies and updates several items in ASU 2020-04 as part of the FASB’s monitoring of global reference rate reform activities. ASU 2021-01 permits entities to elect certain optional expedients and exceptions to modifications of interest rate indexes used for computing when accounting derivative contracts and certain hedging relationships impacted by changes in interest rates used for discounting, margining, or contract price alignment. ASU 2021-01 clarifies other aspects of the guidance in ASC 848 and provides new guidance on how to address the effects of the cash compensation adjustment that is provided as part of the above change on certain aspects of hedge accounting. The guidance was effective upon issuance and allows for retrospective or prospective application with certain conditions. The Company did not elect retrospective application. Significant Accounting Policies

The adoption of ~~this update did not have a material impact on~~the ASUs 2016-13, 2018-19 and 2019-11 resulted in changes in the Company’s ~~consolidated financial statements.~~accounting policies and estimates as it relates to available for sale securities, held to maturity securities, loans receivable and off-balance sheet commitments to lend. The following describes the changes to the Company’s significant accounting policies from December 31, 2021, that resulted from the adoption of the ASUs described above:

~~3. Securities~~

Allowance for Credit Losses - Available for Sale Securities

ASU 2016-13 made targeted changes to ASC 320 to eliminate the concept of “other than temporary” from the impairment loss estimation model for available for sale (“AFS”) securities. A summary of the changes made by the Company to the existing impairment model (previously referred to as the “OTTI” model) as a result of adoption of ASU 2016-13 is as follows:

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

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

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

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

The Company’s AFS securities are carried at fair value. For AFS securities in an unrealized loss position, management will first evaluate whether there is intent to sell a security, 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 AFS 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 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 security is determined to be uncollectible, or when either of the aforementioned criteria surrounding intent or requirement to sell have been met. On January 1, 2022, the date on which the Company adopted ASU 2016-13, no allowance for credit losses was recorded for AFS securities.

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Refer to Note 3, “Securities” for additional information regarding the measurement of impairment losses on AFS securities.

Allowance for Credit Losses - Held to Maturity Securities

The ~~amortized cost, gross unrealized gains and~~Company measures expected credit losses ~~and fair value of available for sale~~on held to maturity (“HTM”) securities on a collective basis by major security type which, as of September 30, ~~2021~~2022, includes government-sponsored residential and commercial mortgage-backed securities. Securities in the Company’s held to maturity portfolio are guaranteed by either the U.S. federal government or other government sponsored agencies with a long history of no credit losses. As a result, management has determined that these securities have a zero loss expectation and therefore does not estimate an allowance for credit losses on these securities. The Company held no securities classified as held to maturity at December 31, ~~2020 were~~2021. Refer to Note 3, “Securities” for additional information regarding the measurement of credit losses on HTM securities.

Allowance for Loan Losses - Loans Held for Investment

Loans Individually Assessed for Impairment

ASU 2016-13 indicates that a loan should be measured for impairment individually if that loan shares no similar risk characteristics with other loans. For the Company, loans which have been identified as ~~follows:~~
As of September 30, 2021
Amortized
Cost Unrealized
Gains Unrealized
Losses Fair
Value
(In thousands)
Debt securities:
Government-sponsored residential mortgage-backed securities $ 4,097,006 $ 20,437 $ (44,075) $ 4,073,368
Government-sponsored commercial mortgage-backed securities 436,748 — (5,739) 431,009
U.S. Agency bonds 860,595 — (19,312) 841,283
U.S. Treasury securities 69,419 16 (253) 69,182
State and municipal bonds and obligations 258,121 16,349 — 274,470
$ 5,721,889 $ 36,802 $ (69,379) $ 5,689,312
those to be individually assessed for impairment under CECL include loans that do not share similar risk characteristics with other loans in the corresponding reserve segment. Characteristics of loans meeting this definition may include, but are not limited to:

As of December 31, 2020
Amortized
Cost Unrealized
Gains Unrealized
Losses Fair
Value
(In thousands)
Debt securities:
Government-sponsored residential mortgage-backed securities $ 2,106,658 $ 42,142 $ — $ 2,148,800
Government-sponsored commercial mortgage-backed securities 17,054 27 — 17,081
U.S. Agency bonds 670,468 113 (3,872) 666,709
U.S. Treasury securities 70,106 263 — 70,369
State and municipal bonds and obligations 260,898 20,004 — 280,902
$ 3,125,184 $ 62,549 $ (3,872) $ 3,183,861
•Loans previously restructured and determined to be TDR loans;

~~The amortized cost~~•Loans on non-accrual status; and ~~estimated~~

•Loans with a risk rating of 12 under the Company’s risk rating scale, substandard (well-defined weakness) or worse.

Collateral-Dependent Loans

Management considers a loan to be collateral-dependent when foreclosure of the underlying collateral is probable. In addition, in accordance with ASU 2016-13, the Company elected to apply the collateral-dependent practical expedient whereby the Company measures expected credit losses using the fair value of ~~available~~the collateral, less any estimated costs to sell, when foreclosure is not probable but repayment of the loan is expected to be provided substantially through the operation or sale of the collateral, and the borrower is experiencing financial difficulty.

Troubled Debt Restructured Loans

In cases where a borrower experiences financial difficulties and the Company makes certain concessionary modifications to contractual terms, the loan is classified as a TDR. Modifications may include adjustments to interest rates, extensions of maturity, consumer loans where the borrower’s obligations have been effectively discharged through Chapter 7 bankruptcy and the borrower has not reaffirmed the debt to the Company, and other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral. Prior to the Company’s adoption of ASU 2016-13, all TDR loans were subject to a specific review for ~~sale securities~~impairment loss each period beginning in the period in which the modification was executed. Subsequent to the adoption of ASU 2016-13, management identifies loans as TDR loans when it has a reasonable expectation that it will execute a TDR modification with a borrower. In addition, subsequent to adoption of ASU 2016-13, management estimates expected credit losses on a collective basis if a group of TDR loans share similar risk characteristics. If a TDR loan’s risk characteristics are not similar to those of any of the Company’s other TDR loans, expected credit losses on the TDR loan are measured individually. The impairment analysis discounts the present value of the anticipated cash flows by the loan’s contractual ~~maturities~~rate of interest in effect prior to the loan’s modification or the fair value of collateral if the loan is collateral dependent. The amount of credit loss, if any, is recorded as a specific loss allocation to each individual loan or as a loss allocation to the pool of ~~September 30, 2021~~loans, for those loans for which credit loss is measured on a collective basis, in the allowance for credit losses. Any commercial (commercial and ~~December 31, 2020 are shown below. Actual maturities may differ from contractual maturities because borrowers may have~~industrial, commercial real estate, commercial construction, and business banking loans) or residential loan that has been classified as a TDR and which subsequently defaults is reviewed to determine if the ~~right~~loan should be deemed collateral-dependent. In such an instance, any shortfall between the value of the collateral and the book value of the loan is determined by measuring the recorded investment in the loan against the fair value of the collateral less costs to ~~call or prepay obligations with or without prepayment penalties.~~sell.

The ~~scheduled contractual maturities of available~~Company’s policy is to retain any restructured loan, which is on non-accrual status prior to being modified, on non-accrual status for ~~sale securities as of~~approximately six months subsequent to being modified before the ~~dates indicated were as follows:~~

As of September 30, 2021
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
(In thousands)
Government-sponsored residential mortgage-backed securities $ — $ — $ 16,131 $ 17,151 $ 924,290 $ 923,300 $ 3,156,585 $ 3,132,917 $ 4,097,006 $ 4,073,368
Government-sponsored commercial mortgage-backed securities — — 71,814 71,256 364,934 359,753 — — 436,748 431,009
U.S. Agency bonds — — 243,920 240,554 616,675 600,729 — — 860,595 841,283
U.S. Treasury securities 20,029 20,045 49,390 49,137 — — — — 69,419 69,182
State and municipal bonds and obligations 485 486 31,324 32,381 72,039 75,293 154,273 166,310 258,121 274,470
Total $ 20,514 $ 20,531 $ 412,579 $ 410,479 $ 1,977,938 $ 1,959,075 $ 3,310,858 $ 3,299,227 $ 5,721,889 $ 5,689,312
Company considers its return to accrual status. If the restructured loan is on accrual status prior to being modified, the Company reviews it to determine if the modified loan should remain on accrual status.

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As of December 31, 2020
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
(In thousands)
Government-sponsored residential mortgage-backed securities $ — $ — $ 46,293 $ 48,925 $ 96,338 $ 100,278 $ 1,964,027 $ 1,999,597 $ 2,106,658 $ 2,148,800
Government-sponsored commercial mortgage-backed securities — — — — 17,054 17,081 — — 17,054 17,081
U.S. Agency bonds — — 99,772 99,834 570,696 566,875 — — 670,468 666,709
U.S. Treasury securities 50,023 50,251 20,083 20,118 — — — — 70,106 70,369
State and municipal bonds and obligations 406 408 20,511 21,431 74,980 79,635 165,001 179,428 260,898 280,902
Total $ 50,429 $ 50,659 $ 186,659 $ 190,308 $ 759,068 $ 763,869 $ 2,129,028 $ 2,179,025 $ 3,125,184 $ 3,183,861
Purchased Credit-Deteriorated Loans

~~Gross realized~~As described above, the Company applied the prospective transition approach with respect to PCD assets upon adoption of ASU 2016-13. Under this approach, loans previously determined to be PCI loans are considered to be PCD loans as of January 1, 2022. PCD loans are acquired individual loans (or acquired groups of loans with similar risk characteristics) that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by the Company’s assessment. A PCD loan is recorded at its purchase price plus the allowance for loan losses expected at the time of acquisition, or “gross up” of the amortized cost basis, if any. Changes in the current estimate of the allowance for loan losses subsequent to acquisition from the estimated allowance previously recorded are recognized in the income statement as provision for credit losses or reversal of provision for credit losses in subsequent periods as they arise. A purchased loan that does not qualify as a PCD asset is accounted for similar to the Company’s method of accounting for originated assets, whereby an allowance for loan losses is recognized with a corresponding increase to the income statement provision for loan losses. Evidence that purchased loans, measured at amortized cost, have more-than-insignificant deterioration in credit quality since origination and, therefore meet the PCD definition, may include past-due status, non-accrual status, risk rating and other standard indicators (i.e., TDRs, charge-offs, bankruptcy).

Allowance for Credit Losses

Through December 31, 2021, the allowance for loan losses represented management’s best estimate of incurred probable losses in the Company’s loan portfolios based upon management’s assessment of various factors, including the risk characteristics of its loan portfolio, current economic conditions, and trends in loan delinquencies and charge-offs. The Company’s methodology for determining the qualitative component through December 31, 2021 included an assessment of factors affecting the determination of incurred losses in the loan portfolio. Such factors included trends in economic conditions, loan growth, credit underwriting policy exceptions, regulatory and audit findings, and peer comparisons, among others. Upon adoption of ASU 2016-13, effective January 1, 2022, the Company changed its reserve methodology to estimate expected credit losses over the contractual life of loans and leases.

The allowance for credit losses, or ACL, is established to provide for the Company’s current estimate of expected lifetime credit losses on loans measured at amortized cost and unfunded lending commitments at the balance sheet date and is established through a provision for credit losses charged to net income. Credit losses are charged directly to the ACL. Subsequent recoveries, if any, are credited to the ACL. Commercial and residential loans are charged-off in the period in which they are deemed uncollectible. Delinquent loans in these product types are subject to ongoing review and analysis to determine if a charge-off in the current period is appropriate. For consumer finance loans, policies and procedures exist that require charge-off consideration upon a certain triggering event depending on the product type. Charge-off triggers include: 120 days delinquent for automobile, home equity, and other consumer loans with the exception of cash reserve loans for which the trigger is 150 days delinquent; death of the borrower; or Chapter 7 bankruptcy. In addition to those events, the charge-off determination includes other loan quality indicators, such as collateral position and adequacy or the presence of other repayment sources.

The ACL is evaluated on a regular basis by management. Management uses a methodology to systematically estimate the amount of expected lifetime losses in the portfolio. Expected lifetime losses are estimated on a collective basis for loans sharing similar risk characteristics and are determined 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. For commercial and industrial, commercial real estate, commercial construction and business banking portfolios, the quantitative model uses a loan rating system which is comprised of management’s determination of a financial asset’s probability of default (“PD”), loss given default (“LGD”) and exposure at default (“EAD”), which are derived from historical loss experience and other factors. For residential real estate, consumer home equity and other consumer portfolios, the Company’s quantitative model uses historical loss experience.

The quantitative 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 loss average. Management has determined that a reasonable and supportable forecast period of eight quarters, and a straight-line reversion period of four quarters, are appropriate forecast periods for purposes of estimating expected credit losses. As described above, quantitative model results are adjusted for risk factors not considered within the model but which are relevant in estimating the expected credit losses within the loan portfolio. The qualitative risk factors impacting the expected risk of loss within the loan portfolio include the following:

•Lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices;

•Nature and volume of the portfolio;

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•Volume and severity of past-due, non-accrual and classified loans;

•The value of the underlying collateral for loans that are not collateral dependent;

•Concentrations of credit risk;

•Model and data limitations; and

•Other external factors, such as changes in legal, regulatory or competitive environments.

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. For loans that are individually evaluated, the Company uses either a discounted cash flow (“DCF”) approach or, for loans deemed to be collateral dependent or when foreclosure is probable, a fair value of collateral approach.

Accrued interest receivable amounts are excluded from balances of loans held at amortized cost and are included within other assets on the consolidated balance sheet. 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 non-accrual loans, accrued interest receivable is typically written off when loans reach 90 days past due and are placed on non-accrual status.

In the ordinary course of business, the Company enters into commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable. The credit risk associated with these commitments is evaluated in a manner similar to the reserving method for loans receivable previously described. The reserve for unfunded lending commitments is included in other liabilities in the balance sheet.

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

Refer to Note 4, “Loans and Allowance for Credit Losses” for additional information regarding the Company’s measurement of credit losses on loans receivable and off-balance sheet commitments to lend as of September 30, 2022. For comparative allowance for loan loss information for which ASC 450, “Contingencies” and ASC 310, “Receivables” were applied (i.e., prior to the Company’s adoption of the CECL methodology previously described), refer to Note 5, “Loans and Allowance for Loan Losses.”

3. Securities

Available for Sale Securities

The amortized cost, gross unrealized gains ~~from sales~~and losses, and fair value of ~~available~~AFS securities as of September 30, 2022 and December 31, 2021 were as follows:


	As of September 30, 2022
	Amortized Cost		Unrealized Gains		Unrealized Losses		Allowance for Credit Losses		Fair Value
	(In thousands)
Debt securities:
Government-sponsored residential mortgage-backed securities	$	4,995,267	$	—	$	(786,178)	$	—	$	4,209,089
Government-sponsored commercial mortgage-backed securities	1,603,046		—		(205,819)		—		1,397,227
U.S. Agency bonds	1,100,565		—		(158,968)		—		941,597
U.S. Treasury securities	99,267		—		(6,807)		—		92,460
State and municipal bonds and obligations	229,539		58		(26,933)		—		202,664
Other debt securities	1,599		—		(21)		—		1,578
	$	8,029,283	$	58	$	(1,184,726)	$	—	$	6,844,615

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	As of December 31, 2021
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
	(In thousands)
Debt securities:
Government-sponsored residential mortgage-backed securities	$	5,577,292	$	17,918	$	(70,502)	$	5,524,708
Government-sponsored commercial mortgage-backed securities	1,420,748		760		(12,640)		1,408,868
U.S. Agency bonds	1,202,377		1,067		(28,430)		1,175,014
U.S. Treasury securities	89,434		5		(834)		88,605
State and municipal bonds and obligations	263,910		16,460		(41)		280,329
Small business administration pooled securities	31,821		282		—		32,103
Other debt securities	1,597		—		—		1,597
	$	8,587,179	$	36,492	$	(112,447)	$	8,511,224

The Company did not record a provision for ~~sale~~credit losses on any AFS securities ~~during~~for the three months ended September 30, 2021 were less than $100 thousand. There were no gross realized gains from sales of available for sale securities during the three months ended September 30, 2020. Gross realized gains from sales of available for sale securities during theand nine months ended September 30, ~~2021 and 2020 were $1.2~~2022. Accrued interest receivable on AFS securities totaled $13.6 million and ~~$0.3~~$14.3 million ~~respectively.~~as of September 30, 2022 and December 31, 2021, respectively, and is included within other assets on the consolidated balance sheets. The Company ~~had no significant gross realized losses from sales~~did not record any write-offs of accrued interest income on AFS securities ~~available for sale~~ during ~~both~~ the three and nine months ended September 30, ~~2021 and 2020. There was no other-than-temporary impairment (“OTTI”) recorded during~~2022. No securities held by the ~~nine months ended~~Company were delinquent on contractual payments as of September 30, ~~2021~~2022, nor were any securities placed on non-accrual status for the period then ended.

The following table summarizes gross realized gains and ~~2020.~~losses from sales of AFS securities for the periods indicated:

~~Management prepares~~


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In thousands)
Gross realized gains from sales of AFS securities	$	725	$	1	$	1,770	$	1,166
Gross realized losses from sales of AFS securities	923		—		4,244		—
Net (losses) gains from sales of AFS securities	$	(198)	$	1	$	(2,474)	$	1,166

Prior to the Company’s adoption of ASU 2016-13, management prepared an estimate of the Company’s expected cash flows for AFS investment securities ~~available for sale~~ that potentially may be deemed to have been an OTTI. This estimate ~~begins~~began with the contractual cash flows of the ~~security. This amount is~~security which was then reduced by an estimate of probable credit losses associated with the security. When estimating the extent of probable losses on the securities, management ~~considers~~considered the credit quality and the ability to pay of the underlying issuers. Indicators of diminished credit quality of the issuers ~~include~~included defaults, interest deferrals, or “payments in kind.” Management also ~~considers~~considered those factors listed in the “Investments – Debt and Equity Securities” topic of the FASB ASC when estimating the ultimate realizability of the cash flows for each individual security.

The resulting estimate of expected cash flows after considering credit iswas then subject to a present value computation using a discount rate equal to the current yield used to accrete the beneficial interest or the effective interest rate implicit in the security at the date of acquisition. If the present value of the estimated expected cash flows iswas less than the current amortized cost basis, an OTTI iswas considered to have occurred and the security iswas written down to the fair value indicated by the cash flow analysis. As part of the analysis, management ~~considers~~considered whether it ~~intends~~intended to sell the security or whether it iswas more than likely that it would be required to sell the security before the expected recovery of its amortized cost basis.

There was no OTTI recorded during the three and nine months ended September 30, 2021.

Information pertaining to ~~available for sale~~AFS securities with gross unrealized losses as of September 30, ~~2021 and December 31, 2020,~~2022, for which the Company ~~has~~did not ~~deemed~~recognize a provision for credit losses under CECL, and as of December 31, 2021, for which the Company did not deem to be OTTI under its prior methodology, aggregated by investment category and length of time that individual securities ~~have~~had been in a continuous loss position, follows:

1517

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		As of September 30, 2021														As of September 30, 2022
			Less than 12 Months				12 Months or Longer				Total						Less than 12 Months				12 Months or Longer				Total
		# of Holdings	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value			# of Holdings	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
		(Dollars in thousands)														(Dollars in thousands)
Government-sponsored residential mortgage-backed securities	Government-sponsored residential mortgage-backed securities	30	$	44,075	$	3,443,757	$	—	$	—	$	44,075	$	3,443,757	Government-sponsored residential mortgage-backed securities	322	$	278,329	$	1,541,349	$	507,849	$	2,667,740	$	786,178	$	4,209,089
Government-sponsored commercial mortgage-backed securities	Government-sponsored commercial mortgage-backed securities	17	5,739		431,009		—		—		5,739		431,009		Government-sponsored commercial mortgage-backed securities	200	145,210		1,050,544		60,609		346,683		205,819		1,397,227
U.S. Agency bonds	U.S. Agency bonds	13	10,010		529,855		9,302		311,428		19,312		841,283		U.S. Agency bonds	37	29,820		210,070		129,148		731,527		158,968		941,597
U.S. Treasury securities	U.S. Treasury securities	1	253		49,137		—		—		253		49,137		U.S. Treasury securities	5	5,399		44,127		1,408		48,333		6,807		92,460
State and municipal bonds and obligations															State and municipal bonds and obligations	283	26,933		200,184		—		—		26,933		200,184
Other debt securities															Other debt securities	3	21		1,578		—		—		21		1,578
		61	$	60,077	$	4,453,758	$	9,302	$	311,428	$	69,379	$	4,765,186		850	$	485,712	$	3,047,852	$	699,014	$	3,794,283	$	1,184,726	$	6,842,135

As of December 31, 2020
Less than 12 Months 12 Months or Longer Total
# of
Holdings Gross
Unrealized
Losses Fair
Value Gross
Unrealized
Losses Fair
Value Gross
Unrealized
Losses Fair
Value
(Dollars in thousands)
U.S. Agency bonds 6 $ 3,872 $ 416,824 $ — $ — $ 3,872 $ 416,824
6 $ 3,872 $ 416,824 $ — $ — $ 3,872 $ 416,824


	As of December 31, 2021
		Less than 12 Months				12 Months or Longer				Total
	# of Holdings	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
	(Dollars in thousands)
Government-sponsored residential mortgage-backed securities	264	$	70,502	$	4,615,457	$	—	$	—	$	70,502	$	4,615,457
Government-sponsored commercial mortgage-backed securities	165	12,218		1,102,444		422		15,682		12,640		1,118,126
U.S. Agency bonds	27	2,169		191,222		26,261		794,353		28,430		985,575
U.S. Treasury securities	3	834		78,588		—		—		834		78,588
State and municipal bonds and obligations	11	41		5,436		—		—		41		5,436
	470	$	85,764	$	5,993,147	$	26,683	$	810,035	$	112,447	$	6,803,182

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 expected recovery of its amortized cost basis. As a result, the Company ~~does~~did not recognize an ACL on these investments as of September 30, 2022. As it relates to AFS securities with gross unrealized losses as of December 31, 2021, the Company did not consider these investments ~~with gross unrealized losses~~ to be ~~OTTI.~~OTTI under its prior methodology. 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, and volatility of earnings.

As a result of the Company’s review of these qualitative and quantitative factors, the causes of the impairments listed in the tables above by category are as follows as of September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:

•Government-sponsored residential mortgage-backed securities – The securities with unrealized losses in this portfolio have contractual terms that generally do not permit the issuer to settle the security 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.

•Government-sponsored commercial mortgage-backed securities – The securities with unrealized losses in this portfolio have contractual terms that generally do not permit the issuer to settle the security at a price less than the current par value of the investment. The decline in market value of these securities is attributable to

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changes in interest rates and not credit quality. Additionally, these securities are implicitly guaranteed by the U.S. government or one of its agencies.

•U.S. Agency bonds – The securities with unrealized losses in this portfolio have contractual terms that generally do not permit the issuer to settle the security 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.

•U.S. Treasury securities – The ~~security~~securities with unrealized losses in this portfolio ~~has~~have contractual terms that generally do not permit the issuer to settle the security at a price less than the current par value of the investment. The decline in market value of ~~this security~~these securities is attributable to changes in interest rates and not credit quality. Additionally, ~~this security is~~these securities are implicitly guaranteed by the U.S. government or one of its agencies.

•State and municipal bonds and obligations – The securities with unrealized losses in this portfolio have contractual terms that generally do not permit the issuer to settle the security 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.

•Other debt securities – This securities portfolio consists of three foreign debt securities which are performing in accordance with the terms of the respective contractual agreements. The decline in market value of these securities is attributable to changes in interest rates and not credit quality.

Held to Maturity Securities

The amortized cost, gross unrealized gains and losses, and fair value of HTM securities as of September 30, 2022 were as follows:


	As of September 30, 2022
	Amortized Cost		Unrealized Gains		Unrealized Losses		Allowance for Credit Losses		Fair Value
	(In thousands)
Debt securities:
Government-sponsored residential mortgage-backed securities	$	281,253	$	—	$	(30,972)	$	—	$	250,281
Government-sponsored commercial mortgage-backed securities	200,710		—		(19,514)		—		181,196
	$	481,963	$	—	$	(50,486)	$	—	$	431,477

The Company held no HTM securities as of December 31, 2021.

The Company did not record a provision for estimated credit losses on any HTM securities for the three and nine months ended September 30, 2022. The accrued interest receivable on HTM securities totaled $1.0 million as of September 30, 2022 and is included within other assets on the consolidated balance sheets. The Company did not record any write-offs of accrued interest receivable on HTM securities during the three and nine months ended September 30, 2022. No securities held by the Company were delinquent on contractual payments as of September 30, 2022, nor were any securities placed on non-accrual status for the period then ended.

Available for Sale and Held to Maturity Securities Contractual Maturity

The amortized cost and estimated fair value of AFS securities by contractual maturities as of September 30, 2022 and December 31, 2021 and amortized cost and estimated fair value of HTM securities by contractual maturities as of

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September 30, 2022 are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without prepayment penalties.

The scheduled contractual maturities of AFS and HTM securities as of the dates indicated were as follows:


	As of September 30, 2022
	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
	(In thousands)
AFS securities
Government-sponsored residential mortgage-backed securities	$	—	$	—	$	17,984	$	17,288	$	760,135	$	677,552	$	4,217,148	$	3,514,249	$	4,995,267	$	4,209,089
Government-sponsored commercial mortgage-backed securities	—		—		185,582		168,760		664,204		575,694		753,260		652,773		1,603,046		1,397,227
U.S. Agency bonds	—		—		727,838		631,834		372,727		309,763		—		—		1,100,565		941,597
U.S. Treasury securities	—		—		99,267		92,460		—		—		—		—		99,267		92,460
State and municipal bonds and obligations	80		80		27,379		25,738		54,859		50,773		147,221		126,073		229,539		202,664
Other debt securities	1,599		1,578		—		—		—		—		—		—		1,599		1,578
Total available for sale securities	1,679		1,658		1,058,050		936,080		1,851,925		1,613,782		5,117,629		4,293,095		8,029,283		6,844,615
HTM securities
Government-sponsored residential mortgage-backed securities	—		—		—		—		—		—		281,253		250,281		281,253		250,281
Government-sponsored commercial mortgage-backed securities	—		—		—		—		200,710		181,196		—		—		200,710		181,196
Total held to maturity securities	—		—		—		—		200,710		181,196		281,253		250,281		481,963		431,477
Total	$	1,679	$	1,658	$	1,058,050	$	936,080	$	2,052,635	$	1,794,978	$	5,398,882	$	4,543,376	$	8,511,246	$	7,276,092

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	As of December 31, 2021
	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
	(In thousands)
AFS securities
Government-sponsored residential mortgage-backed securities	$	—	$	—	$	24,935	$	25,962	$	899,169	$	892,029	$	4,653,188	$	4,606,717	$	5,577,292	$	5,524,708
Government-sponsored commercial mortgage-backed securities	—		—		139,095		137,755		387,177		378,414		894,476		892,699		1,420,748		1,408,868
U.S. Agency bonds	5,508		5,515		531,821		520,935		665,048		648,564		—		—		1,202,377		1,175,014
U.S. Treasury securities	40,010		40,001		49,424		48,604		—		—		—		—		89,434		88,605
State and municipal bonds and obligations	6,137		6,116		33,692		34,704		72,226		75,416		151,855		164,093		263,910		280,329
Small Business Administration pooled securities	—		—		4,062		4,092		—		—		27,759		28,011		31,821		32,103
Other debt securities	300		300		1,297		1,297		—		—		—		—		1,597		1,597
Total	$	51,955	$	51,932	$	784,326	$	773,349	$	2,023,620	$	1,994,423	$	5,727,278	$	5,691,520	$	8,587,179	$	8,511,224

Securities Pledged as Collateral

As of September 30, 2022 and December 31, 2021, securities with a carrying value of $438.8 million and $2.2 billion, respectively, were pledged to secure public deposits and for other purposes required by law. As of September 30, 2022 and December 31, 2021, deposits with associated pledged collateral included cash accounts from the Company’s wealth management division (“Eastern Wealth Management”) and municipal deposit accounts. At September 30, 2022 and December 31, 2021, the carrying value of securities pledged as collateral with respect to municipal deposit accounts acquired from Century Bancorp, Inc. (“Century”) was approximately $422.3 million and $2.1 billion, respectively. During the first and second quarter of 2022, the Company eliminated certain pledging arrangements acquired from Century which resulted in the decrease in securities pledged at September 30, 2022 compared to December 31, 2021.

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4. Loans and Allowance for ~~Loan~~Credit Losses

Loans

The following table provides a summary of the Company’s loan portfolio as of the dates indicated:


		At September 30,		At December 31,
		2021		2020			September 30, 2022		December 31, 2021
		(In thousands)					(In thousands)
Commercial and industrial	Commercial and industrial	$	1,652,447	$	1,995,016	Commercial and industrial	$	3,023,729	$	2,960,527
Commercial real estate	Commercial real estate	3,825,186		3,573,630		Commercial real estate	4,985,654		4,522,513
Commercial construction	Commercial construction	243,146		305,708		Commercial construction	314,193		222,328
Business banking	Business banking	1,225,538		1,339,164		Business banking	1,096,436		1,334,694
Residential real estate	Residential real estate	1,491,269		1,370,957		Residential real estate	2,118,852		1,926,810
Consumer home equity	Consumer home equity	848,570		868,270		Consumer home equity	1,168,476		1,100,153
Other consumer (1)		218,406		277,780
Other consumer (2)						Other consumer (2)	196,614		214,485
Gross loans before unamortized premiums, unearned discounts and deferred fees	Gross loans before unamortized premiums, unearned discounts and deferred fees	9,504,562		9,730,525		Gross loans before unamortized premiums, unearned discounts and deferred fees	12,903,954		12,281,510
Allowance for loan losses		(103,398)		(113,031)
Allowance for loan losses (1)						Allowance for loan losses (1)	(131,663)		(97,787)
Unamortized premiums, net of unearned discounts and deferred fees	Unamortized premiums, net of unearned discounts and deferred fees	(23,104)		(23,536)		Unamortized premiums, net of unearned discounts and deferred fees	(19,349)		(26,442)
Loans after the allowance for loan losses, unamortized premiums, unearned discounts and deferred fees	Loans after the allowance for loan losses, unamortized premiums, unearned discounts and deferred fees	$	9,378,060	$	9,593,958	Loans after the allowance for loan losses, unamortized premiums, unearned discounts and deferred fees	$	12,752,942	$	12,157,281

(1)The Company adopted ASU 2016-13 on January 1, 2022 with a modified retrospective approach. Accordingly, at September 30, 2022 the allowance for loan losses was determined in accordance with ASC 326, “Financial Instruments-Credit Losses” and ASC 310, “Receivables,” as amended. At December 31, 2021 the allowance for loan losses was determined in accordance with ASC 450, “Contingencies” and ASC 310, “Receivables.”

(2)Automobile loans are included in the other consumer portfolio ~~above~~ and amounted to ~~$67.1~~$24.0 million and ~~$126.7~~$53.3 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

There are no other loan categories that exceed 10% of total loans not already reflected in the preceding table.

The Company’s lending activities are conducted principally in the New England area with the exception of its Shared National Credit Program (“SNC Program”) portfolio. The Company participates in the SNC Program in an effort to improve its industry and geographical diversification. The SNC Program portfolio is included in the Company’s commercial and industrial ~~commercial real estate and commercial construction portfolios.~~portfolio. The SNC Program portfolio is defined as loan syndications with exposure over $100 million and with three or more lenders participating.

Most loans originated by the Company are either collateralized by real estate or other assets or guaranteed by federal and local governmental authorities. The ability and willingness of the single-family residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of overall economic activity within the borrowers’ geographic areas and real estate values. The ability and willingness of commercial real estate, commercial and industrial, and construction loan borrowers to honor their repayment commitments is generally dependent on the health of the real estate economy in the borrowers’ geographic areas and the general economy.

Loans Pledged as Collateral

The carrying value of loans pledged to secure advances from the Federal Home Loan Bank (“FHLB”) of Boston (“FHLBB”) were ~~$2.4~~$3.3 billion and $2.6 billion at ~~both~~ September 30, ~~2021~~2022 and December 31, ~~2020.~~2021, respectively. The balance of funds borrowed from the FHLBB were ~~$14.2~~$384.2 million and ~~$14.6~~$14.0 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

The carrying value of loans pledged to secure advances from the Federal Reserve Bank (“FRB”) were ~~$761.8 million~~$1.1 billion and ~~$884.1~~$784.0 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. There were no funds borrowed from the FRB outstanding at September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

Serviced Loans

At September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, mortgage loans partially or wholly-owned by others and serviced by the Company amounted to approximately ~~$12.0~~$85.7 million and ~~$13.5~~$95.8 million, respectively.

~~Allowance for Loan Losses~~

1722

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Purchased Loans

The Company began purchasing jumbo mortgage loans during the three months ended September 30, 2022. Loans purchased were subject to the same underwriting criteria as those loans originated directly by the Company. During the three and nine months ended September 30, 2022, the Company purchased $79.9 million of residential real estate loans.

Allowance for Loan Losses

The allowance for loan losses is established to provide for ~~probable~~management’s estimate of expected lifetime credit losses ~~incurred in the Company’s loan portfolio~~on loans measured at amortized cost at the balance sheet date and is established through a provision for loan losses charged to net income. Charge-offs, net of recoveries, are charged directly to the ~~allowance.~~allowance for loan losses. Commercial and residential loans are charged-off in the period in which they are deemed uncollectible. Delinquent loans in these product types are subject to ongoing review and analysis to determine if a charge-off in the current period is appropriate. For consumer loans, policies and procedures exist that require charge-off consideration upon a certain triggering event depending on the product type.

The following tables summarize the changes in the allowance for loan losses by loan category for the periods indicated:


		For the Three Months Ended September 30, 2021																			For the Three Months Ended September 30, 2022
		Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Other		Total			Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Total
		(In thousands)																			(In thousands)
Allowance for loan losses:	Allowance for loan losses:																			Allowance for loan losses:
Beginning balance	Beginning balance	$	22,596	$	52,759	$	3,446	$	12,705	$	6,478	$	3,588	$	3,626	$	439	$	105,637	Beginning balance	$	25,852	$	47,555	$	5,474	$	16,699	$	21,663	$	5,662	$	2,626	$	125,531
Charge-offs	Charge-offs	—		(8)		—		(867)		—		—		(742)		—		(1,617)		Charge-offs	(11)		—		—		(369)		—		—		(603)		(983)
Recoveries	Recoveries	40		—		—		469		88		63		206		—		866		Recoveries	126		3		—		286		56		6		158		635
(Release of) provision		(2,007)		1,435		(44)		(929)		(136)		(16)		297		(88)		(1,488)
Provision (release)																				Provision (release)	874		3,545		507		(354)		1,288		174		446		6,480
Ending balance(2)	Ending balance(2)	$	20,629	$	54,186	$	3,402	$	11,378	$	6,430	$	3,635	$	3,387	$	351	$	103,398	Ending balance(2)	$	26,841	$	51,103	$	5,981	$	16,262	$	23,007	$	5,842	$	2,627	$	131,663


		For the Three Months Ended September 30, 2020																			For the Nine Months Ended September 30, 2022
		Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Other		Total			Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Other		Total
		(In thousands)																			(In thousands)
Allowance for loan losses:	Allowance for loan losses:																			Allowance for loan losses:
Beginning balance	Beginning balance	$	33,229	$	54,228	$	4,816	$	9,805	$	6,569	$	3,875	$	3,762	$	352	$	116,636	Beginning balance	$	18,018	$	52,373	$	2,585	$	10,983	$	6,556	$	3,722	$	3,308	$	242	$	97,787
Cumulative effect of change in accounting principle (1)																				Cumulative effect of change in accounting principle (1)	11,533		(6,655)		1,485		6,160		13,489		1,857		(541)		(242)		27,086
Charge-offs	Charge-offs	(140)		—		—		(1,179)		—		(22)		(1,077)		—		(2,418)		Charge-offs	(13)		—		—		(1,922)		—		—		(1,754)		—		(3,689)
Recoveries	Recoveries	306		4		—		91		43		31		39		—		514		Recoveries	1,074		53		—		1,678		80		16		533		—		3,434
Provision (release of)		(3,281)		1,350		(540)		2,711		(261)		(76)		834		(37)		700
Ending balance		$	30,114	$	55,582	$	4,276	$	11,428	$	6,351	$	3,808	$	3,558	$	315	$	115,432
Provision (release)																				Provision (release)	(3,771)		5,332		1,911		(637)		2,882		247		1,081		—		7,045
Ending balance (2)																				Ending balance (2)	$	26,841	$	51,103	$	5,981	$	16,262	$	23,007	$	5,842	$	2,627	$	—	$	131,663

For the Nine Months Ended September 30, 2021
Commercial
and
Industrial Commercial
Real Estate Commercial
Construction Business
Banking Residential
Real Estate Consumer
Home Equity Other
Consumer Other Total
(In thousands)
Allowance for loan losses:
Beginning balance $ 26,617 $ 54,569 $ 4,553 $ 13,152 $ 6,435 $ 3,744 $ 3,467 $ 494 $ 113,031
Charge-offs (550) (242) — (4,089) — — (1,381) — (6,262)
Recoveries 62 4 — 1,125 115 137 554 — 1,997
(Release of) provision (5,500) (145) (1,151) 1,190 (120) (246) 747 (143) (5,368)
Ending balance $ 20,629 $ 54,186 $ 3,402 $ 11,378 $ 6,430 $ 3,635 $ 3,387 $ 351 $ 103,398
(1)Represents the adjustment needed to reflect the cumulative day one impact pursuant to the Company’s adoption of ASU 2016-13 (i.e., cumulative effect adjustment related to the adoption of ASU 2016-13 as of January 1, 2022). The adjustment represents a $27.1 million increase to the allowance attributable to the change in accounting methodology for estimating the allowance for loan losses resulting from the Company’s adoption of the standard. The adjustment also includes the adjustment needed to reflect the day one reclassification of the Company’s PCI loan balances to PCD and the associated gross-up of $0.1 million, pursuant to the Company’s adoption of ASU 2016-13.

(2)The balance of accrued interest receivable excluded from amortized cost and the calculation of the allowance for loan losses amounted to $35.9 million at September 30, 2022.

Reserve for Unfunded Commitments

1823

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For the Nine Months Ended September 30, 2020
Commercial
and
Industrial Commercial
Real Estate Commercial
Construction Business
Banking Residential
Real Estate Consumer
Home Equity Other
Consumer Other Total
(In thousands)
Allowance for loan losses:
Beginning balance $ 20,919 $ 34,730 $ 3,424 $ 8,260 $ 6,380 $ 4,027 $ 4,173 $ 384 $ 82,297
Charge-offs (167) (24) — (3,714) — (495) (1,625) — (6,025)
Recoveries 686 10 — 245 116 53 150 — 1,260
Provision (release of) 8,676 20,866 852 6,637 (145) 223 860 (69) 37,900
Ending balance $ 30,114 $ 55,582 $ 4,276 $ 11,428 $ 6,351 $ 3,808 $ 3,558 $ 315 $ 115,432

~~The following tables bifurcate~~Management evaluates the ~~amount~~need for a reserve on unfunded lending commitments in a manner consistent with loans held for investment. Upon adoption of ~~loans and~~ASU 2016-13 on January 1, 2022, the ~~allowance allocated~~Company recorded a transition adjustment related to ~~each loan category based on~~ the ~~type~~reserve for unfunded lending commitments of ~~impairment analysis~~$1.0 million, resulting in a total reserve for unfunded lending commitments of $11.1 million as of January 1, 2022. As of September 30, 2022, the ~~dates indicated:~~Company’s reserve for unfunded lending commitments was $11.4 million which is recorded within other liabilities.

As of September 30, 2021
Commercial
and
Industrial Commercial
Real Estate Commercial
Construction Business
Banking Residential
Real Estate Consumer
Home Equity Other
Consumer Other Total
(In thousands)
Allowance for loan losses ending balance:
Individually evaluated for impairment $ 4,287 $ — $ — $ 669 $ 1,462 $ 256 $ 200 $ — $ 6,874
Acquired with deteriorated credit quality — — — — 293 — — — 293
Collectively evaluated for impairment 16,342 54,186 3,402 10,709 4,675 3,379 3,187 351 96,231
Total allowance for loan losses by group $ 20,629 $ 54,186 $ 3,402 $ 11,378 $ 6,430 $ 3,635 $ 3,387 $ 351 $ 103,398
Loans ending balance:
Individually evaluated for impairment $ 21,580 $ 3,793 $ — $ 15,141 $ 23,494 $ 4,023 $ 222 $ — $ 68,253
Acquired with deteriorated credit quality 1,546 — — — 2,880 — — — 4,426
Collectively evaluated for impairment 1,629,321 3,821,393 243,146 1,210,397 1,464,895 844,547 218,184 — 9,431,883
Total loans by group $ 1,652,447 $ 3,825,186 $ 243,146 $ 1,225,538 $ 1,491,269 $ 848,570 $ 218,406 $ — $ 9,504,562

~~Table of Contents~~

As of December 31, 2020
Commercial
and
Industrial Commercial
Real Estate Commercial
Construction Business
Banking Residential
Real Estate Consumer
Home Equity Other
Consumer Other Total
(In thousands)
Allowance for loan losses ending balance:
Individually evaluated for impairment $ 4,555 $ 210 $ — $ 1,435 $ 1,565 $ 289 $ — $ — $ 8,054
Acquired with deteriorated credit quality 1,283 822 — — 327 — — — 2,432
Collectively evaluated for impairment 20,779 53,537 4,553 11,717 4,543 3,455 3,467 494 102,545
Total allowance for loan losses by group $ 26,617 $ 54,569 $ 4,553 $ 13,152 $ 6,435 $ 3,744 $ 3,467 $ 494 $ 113,031
Loans ending balance:
Individually evaluated for impairment $ 17,343 $ 4,435 $ — $ 21,901 $ 27,056 $ 4,845 $ 29 $ — $ 75,609
Acquired with deteriorated credit quality 3,432 2,749 — — 3,116 — — — 9,297
Collectively evaluated for impairment 1,974,241 3,566,446 305,708 1,317,263 1,340,785 863,425 277,751 — 9,645,619
Total loans by group $ 1,995,016 $ 3,573,630 $ 305,708 $ 1,339,164 $ 1,370,957 $ 868,270 $ 277,780 $ — $ 9,730,525
Portfolio Segmentation

Management uses a methodology to systematically estimate the amount of ~~loss incurred~~expected losses in each segment of loans in the Company’s portfolio. Commercial and industrial business banking, investment commercial real estate, and commercial and industrial ~~commercial construction and business banking~~ loans are evaluated ~~using a loan rating system,~~based upon loan-level risk characteristics, historical losses and other factors which form the basis for estimating ~~incurred~~expected losses. ~~Portfolios of more homogeneous populations of loans,~~Other portfolios, including owner occupied commercial real estate, which includes commercial and industrial and business banking owner occupied commercial real estate, commercial construction, residential mortgages, home equity and consumer loans, are analyzed as groups taking into account delinquency ratios, and the Company’s and peer banks’ historical loss ~~experience and charge-offs.~~experience. For the ~~purpose~~purposes of estimating the allowance for loan losses, management segregates the loan portfolio into ~~the categories noted in the above tables. Each of these~~ loan categories ~~possesses unique~~that share similar risk characteristics such as the purpose of the loan, repayment source, and collateral. These characteristics are considered when determining the appropriate level of the allowance for each category. Some examples of these risk characteristics unique to each loan category include:

Commercial Lending

Commercial and industrial: The primary risk associated with commercial and industrial loans is the ability of borrowers to achieve business results consistent with those projected at origination. Collateral frequently consists of a first lien position on business assets including, but not limited to, accounts receivable, inventory, ~~airplanes~~aircraft and equipment. The primary repayment source is operating cash flow and, secondarily, the liquidation of assets. ~~The~~Under its lending guidelines, the Company ~~often obtains~~generally requires a corporate or personal ~~guarantees~~guarantee from individuals ~~holding~~that hold material ownership in the borrowing ~~entity.~~entity when the loan-to-value of a commercial and industrial loan is in excess of a specified threshold.

Commercial real estate: Collateral values are established by independent third-party appraisals and evaluations. Primary repayment sources include operating income generated by the real estate, permanent debt refinancing, sale of the real estate and, secondarily, liquidation of the collateral. ~~The~~Under its lending guidelines, the Company ~~often obtains~~generally requires a corporate or personal ~~guarantees~~guarantee from individuals ~~holding~~that hold material ownership in the borrowing ~~entity.~~entity when the loan-to-value of a commercial real estate loan is in excess of a specified threshold.

Commercial construction: These loans are generally considered to present a higher degree of risk than other real estate loans and may be affected by a variety of factors, such as adverse changes in interest rates and the borrower’s ability to control costs and adhere to time schedules. Construction loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with the completed project. Construction loan repayment is substantially dependent on the ability of the borrower to complete the project and obtain permanent financing.

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Business banking: These loans are typically secured by all business assets or commercial real estate. Business banking originations include traditionally underwritten loans as well as partially automated scored loans. Business banking scored loans are determined by utilizing the Company’s proprietary decision matrix that has a number of quantitative factors including, but not limited to, a guarantor’s credit score, industry risk, and time in business. The Company also engages in Small Business Association (“SBA”) lending, both in the business banking and commercial banking divisions. The SBA guarantees reduce the Company’s loss due to default and are considered a credit enhancement to the loan structure.

Residential Lending

~~Residential real estate~~: These loans are made to borrowers who demonstrate the ability to repay principal and interest on a monthly basis. Underwriting considerations include, among others, income sources and their reliability, willingness to repay as evidenced by credit repayment history, financial resources (including cash reserves) and the value of the collateral. The Company maintains policy standards for minimum credit score and cash reserves and maximum ~~loan to value~~loan-to-value consistent with a “prime” portfolio. Collateral consists of mortgage liens on 1-4 family residential dwellings. The policy standards applied to loans originated by the Company are the same as those applied to purchased loans. The Company does not originate or purchase sub-prime or other high-risk loans. Residential loans are originated either for sale to investors or retained in the Company’s loan portfolio.

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Decisions about whether to sell or retain residential loans are made based on the interest rate characteristics, pricing for loans in the secondary mortgage market, competitive factors and the Company’s capital needs.

Consumer Lending

Consumer home equity: Home equity lines of credit are granted for ten years with monthly interest-only repayment requirements. Full principal repayment is required at the end of the ten-year draw period. Home equity loans are term loans that require the monthly payment of principal and interest such that the loan will be fully amortized at maturity. Underwriting considerations are materially consistent with those utilized in residential real estate. Collateral consists of a senior or subordinate lien on owner-occupied residential property.

Other consumer: The Company’s policy and underwriting in this category, which is comprised primarily of home improvement, automobile and ~~automobile~~aircraft loans, include the following factors, among others: income sources and reliability, credit histories, term of repayment, and collateral value, as applicable. These are typically granted on an unsecured basis, with the exception of ~~airplane~~aircraft and automobile loans.

Credit Quality

Commercial Lending Credit Quality

The credit quality of the Company’s commercial loan portfolio is actively monitored and supported by a comprehensive credit approval process and all large dollar transactions are sent for approval to a committee of seasoned business line and credit professionals. The Company maintains an independent credit risk review function that reports directly to the Risk Management Committee of the Board of Directors. Credits that demonstrate significant deterioration in credit quality are transferred to a specialized group of experienced officers for individual attention.

The Company monitors credit quality indicators and utilizes portfolio scorecards to assess the risk of its commercial portfolio. Specifically, the Company utilizes a 15-point credit risk-rating system to manage risk and identify potential problem loans.

~~Prior to December 31, 2020, the Company utilized a 12-point credit risk-rating~~ Under this point system, to manage risk and identify potential problem loans. In the fourth quarter of 2020, the Company realigned its credit risk-rating system, transitioning to a 15-point credit risk-rating system. The Company believes that the expansion from the prior 12-point scale provides more refinement in the pass grade categories; new pass grades are 0-10. There are no changes to non-pass categories, which continue to align with regulatory guidelines and are found in ratings: special mention (11), substandard (12), doubtful (13) and loss (14). The Company believes that increasing granularity of the risk rating system allows for more robust portfolio management and increased precision and effectiveness of credit risk identification.

~~Under both point systems,~~ risk-rating assignments are based upon a number of quantitative and qualitative factors that are under continual review. Factors include cash flow, collateral coverage, liquidity, leverage, position within the industry, internal controls and management, financial reporting, and other considerations. Commercial loan risk ratings are (re)evaluated for each loan at least once-per-year. The risk-rating categories under the ~~new 15-point~~ credit risk-rating system are defined as follows:

0 Risk Rating - Unrated

Certain segments of the portfolios are not rated. These segments include ~~airplane~~aircraft loans, business banking scored loan products, and other commercial loans managed by exception. Loans within this unrated loan segment are monitored by delinquency status; and for lines of credit greater than $100,000 in exposure, an annual review is ~~conducted.~~conducted which includes the review of the business score and loan and deposit account performance. The Company supplements performance data with current business credit scores for the business banking portfolio on a quarterly basis. Unrated commercial and business banking loans are generally restricted to commercial exposure of less than $1$1.5 million. Loans

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included in this category ~~have qualification requirements that include a risk rating of 10~~generally are not required to provide regular financial reporting or ~~better at the time of recommendation for unrated status, acceptable management of deposit accounts, and no known negative changes in management, operations or financial performance.~~regular covenant monitoring.

For purposes of estimating the allowance for loan losses, unrated loans are considered in the same manner as pass rated loans.

1-10 Risk Rating – Pass

Loans with a risk rating of 1-10 are classified as “Pass” and are comprised of loans that range from “substantially risk free” which indicates borrowers of unquestioned credit standing, well-established national companies with a very strong financial condition, and loans fully secured by policy conforming cash levels, through “low pass” which indicates acceptable rated loans that may be experiencing weak cash flow, impending lease rollover or minor liquidity concerns.

11 Risk Rating – Special Mention (Potential Weakness)

Loans to borrowers in this category exhibit potential weaknesses or downward trends deserving management’s close attention. While potentially weak, no loss of principal or interest is envisioned. Included in this category are borrowers who are performing as agreed, are weak when compared to industry standards, may be experiencing an interim loss and may be in declining industries. An element of asset quality, financial flexibility or management is below average. The Company does

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not consider borrowers within this category as new business prospects. Borrowers rated special mention may find it difficult to obtain alternative financing from traditional bank sources.

12 Risk Rating – Substandard (Well-Defined Weakness)

Loans with a risk-rating of 12 exhibit well-defined weaknesses that, if not corrected, may jeopardize the orderly liquidation of the debt. A loan is classified as substandard if it is inadequately protected by the repayment capacity of the obligor or by the collateral pledged. Specifically, repayment under market rates and terms, or by the requirements under the existing loan documents, is in jeopardy, but no loss of principal or interest is envisioned. There is a possibility that a partial loss of principal and/or interest will occur in the future if the deficiencies are not corrected. Loss potential, while existing in the aggregate portfolio of substandard assets, does not have to exist in individual assets classified as substandard. Non-accrual is possible, but not mandatory, in this class.

13 Risk Rating – Doubtful (Loss Probable)

Loans classified as doubtful have comparable weaknesses as found in the loans classified as substandard, with the added provision that such weaknesses make collection of the debt in full (based on currently existing facts, conditions and values) highly questionable and improbable. Serious problems exist such that a partial loss of principal is likely. The probability of loss exists, ~~however,~~but because of ~~reasonable~~reasonably specific pending factors that may work to strengthen the credit, estimated losses are deferred until a more exact status can be determined. Specific reserves will be the amount identified after specific review. Non-accrual is mandatory in this class.

14 Risk Rating – Loss

Loans to borrowers in this category are deemed incapable of repayment. Loans to such borrowers are considered uncollectible and of such little value that continuance as active assets of the Company is not warranted. This classification does not mean that the loans have no recovery or salvage value, but rather, it is not practical or desirable to defer writing off these assets even though partial recovery may occur in the future. Loans in this category have a recorded investment of $0 at the time of the downgrade.

The credit quality of the commercial loan portfolio is actively monitored and supported by a comprehensive credit approval process; and all large dollar transactions are sent for approval to a committee of seasoned business line and credit professionals. Risk ratings are periodically reviewed and the Company maintains an independent credit risk review function that reports directly to the Risk Management Committee of the Board of Directors. Credits that demonstrate significant deterioration in credit quality are transferred to a specialized group of experienced officers for individual attention.

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~~The following tables detail the internal risk-rating categories for the Company’s commercial and industrial, commercial real estate, commercial construction and business banking portfolios:~~

As of September 30, 2021
Category Commercial and
Industrial Commercial
Real Estate Commercial
Construction Business
Banking Total
(In thousands)
Unrated $ 278,093 $ 4,196 $ 138 $ 763,573 $ 1,046,000
Pass 1,302,413 3,524,607 224,770 389,812 5,441,602
Special mention 13,959 124,618 9,611 54,592 202,780
Substandard 41,459 171,765 8,627 16,478 238,329
Doubtful 16,523 — — 1,083 17,606
Loss — — — — —
Total $ 1,652,447 $ 3,825,186 $ 243,146 $ 1,225,538 $ 6,946,317

As of December 31, 2020
Category Commercial and
Industrial Commercial
Real Estate Commercial
Construction Business
Banking Total
(In thousands)
Unrated $ 655,346 $ 6,585 $ — $ 918,921 $ 1,580,852
Pass 1,199,522 3,256,697 280,792 336,657 5,073,668
Special mention 78,117 134,562 10,330 57,092 280,101
Substandard 47,525 173,308 14,586 24,788 260,207
Doubtful 14,506 2,478 — 1,706 18,690
Loss — — — — —
Total $ 1,995,016 $ 3,573,630 $ 305,708 $ 1,339,164 $ 7,213,518

Paycheck Protection Program (“PPP”) loans are included within the unrated category of the commercial and industrial and business banking portfolios in the tables above. Commercial and industrial PPP loans and business banking PPP loans amounted to $215.7 million and $318.3 million, respectively, at September 30, 2021 and $568.8 million and $457.4 million respectively, at December 31, 2020. The Company does not have an allowance for loan losses for PPP loans as they are 100% guaranteed by the SBA.

Residential and Consumer Lending Credit Quality

For the Company’s residential and consumer portfolios, the quality of the loan is best indicated by the repayment performance of an individual borrower. Updated appraisals, broker opinions of value and other collateral valuation methods are employed in the residential and consumer portfolios, typically for credits that are deteriorating. Delinquency status is determined using payment performance, while accrual status may be determined using a combination of payment performance, expected borrower viability and collateral value. Delinquent consumer loans are handled by a team of seasoned collection specialists.

~~Asset Quality~~

~~In response to~~The following table details the ~~novel coronavirus (“COVID-19”) pandemic,~~amortized cost balances of the ~~Company has granted~~Company’s loan ~~modifications to allow deferral of payments for borrowers negatively impacted~~portfolios, presented by ~~the COVID-19 pandemic. Modifications granted to customers allowed for full payment deferrals (principal~~credit quality indicator and ~~interest) or deferral of only principal payments. The balance of loans which underwent a modification and have not yet resumed payment~~origination year as of September 30, 2021 and December 31, 2020 was $110.6 million and $332.7 million, respectively. The Company defines a modified loan to have resumed payment if it is one month past the modification end date and not more than 30 days past due. These modifications with active deferrals met the criteria of either Section 4013 of the CARES Act or the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) and therefore are not deemed troubled debt restructurings, referred to as TDRs (as defined below). Additionally, loans that are performing in accordance with the2022:


	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term Loans (1)		Total
	(In thousands)
Commercial and industrial
Pass	$	602,715	$	467,826	$	439,013	$	225,164	$	115,237	$	647,820	$	463,873	$	3,407	$	2,965,055
Special Mention	—		—		—		185		3,667		12		900		—		4,764
Substandard	304		13,387		2,963		47		2,688		7,948		390		346		28,073
Doubtful	—		3,912		—		—		—		37		3,331		—		7,280
Loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	603,019		485,125		441,976		225,396		121,592		655,817		468,494		3,753		3,005,172

Commercial real estate
Pass	1,179,141		835,810		592,293		620,120		463,910		1,092,428		45,902		4,231		4,833,835
Special Mention	—		—		16,144		703		35,360		9,986		—		—		62,193
Substandard	3,520		50		2,683		19,877		15,837		36,532		8,000		—		86,499
Doubtful	—		—		—		—		—		—		—		—		—

2326

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~~contractual terms of~~


Loss	—		—		—		—		—		—		—		—		—
Total commercial real estate	1,182,661		835,860		611,120		640,700		515,107		1,138,946		53,902		4,231		4,982,527

Commercial construction
Pass	71,700		169,318		24,920		32,909		—		—		11,524		—		310,371
Special Mention	—		—		2,101		—		—		—		—		—		2,101
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial construction	71,700		169,318		27,021		32,909		—		—		11,524		—		312,472

Business banking
Pass	139,053		224,855		175,102		130,091		62,448		246,849		78,458		3,908		1,060,764
Special Mention	—		—		4,704		4,139		3,820		5,729		1,070		—		19,462
Substandard	—		2,160		1,679		4,072		769		10,418		652		770		20,520
Doubtful	—		—		—		191		—		82		—		—		273
Loss	—		—		—		—		—		—		—		—		—
Total business banking	139,053		227,015		181,485		138,493		67,037		263,078		80,180		4,678		1,101,019

Residential real estate
Current and accruing	378,210		711,207		389,001		104,011		70,055		455,291		—		—		2,107,775
30-89 days past due and accruing	723		2,671		707		1,574		1,281		7,453		—		—		14,409
Loans 90 days or more past due and still accruing	—		—		—		—		—		—		—		—		—
Non-accrual	—		—		202		293		1,016		7,002		—		—		8,513
Total residential real estate	378,933		713,878		389,910		105,878		72,352		469,746		—		—		2,130,697

Consumer home equity
Current and accruing	74,271		11,284		6,113		5,145		22,589		78,717		956,474		6,378		1,160,971
30-89 days past due and accruing	—		—		—		83		101		646		5,110		—		5,940
Loans 90 days or more past due and still accruing	—		—		—		—		—		—		—		—		—
Non-accrual	—		—		—		—		382		1,148		3,390		160		5,080
Total consumer home equity	74,271		11,284		6,113		5,228		23,072		80,511		964,974		6,538		1,171,991

Other consumer
Current and accruing	42,452		34,736		19,085		20,170		23,645		20,694		18,490		10		179,282
30-89 days past due and accruing	77		114		94		59		354		220		52		—		970
Loans 90 days or more past due and still accruing	—		—		—		—		—		—		—		—		—
Non-accrual	41		25		56		74		80		107		92		—		475
Total other consumer	42,570		34,875		19,235		20,303		24,079		21,021		18,634		10		180,727

Total	$	2,492,207	$	2,477,355	$	1,676,860	$	1,168,907	$	823,239	$	2,629,119	$	1,597,708	$	19,210	$	12,884,605

(1)The amounts presented represent the ~~modification are not reflected as being past due and therefore are not impacting non-accrual or delinquency totals~~amortized cost as of September 30, ~~2021~~2022 of revolving loans that were converted to term loans during the nine months ended September 30, 2022.

Paycheck Protection Program (“PPP”) loans are included within the unrated category of the commercial and industrial and business banking portfolios in the table above. Commercial and industrial PPP loans and business banking PPP loans amounted to $5.3 million and $17.8 million, respectively, at September 30, 2022 and $112.8 million and $218.6 million respectively, at December 31, ~~2020.~~2021 on a recorded investment basis. The Company ~~continued to accrue interest on these COVID-19 modified~~does not have an allowance for loan losses for PPP loans ~~and evaluated~~as they are 100% guaranteed by the ~~deferred interest for collectability as~~SBA.

Asset Quality

Table of ~~September 30, 2021 and December 31, 2020.~~Contents

The Appropriations Act, which was enacted on December 27, 2020, extends certain provisions related to the COVID-19 pandemic in the United States (which were due to expire) and provides additional emergency relief to individuals and businesses. Included within the provisions of the Appropriations Act is the extension of Section 4013 of the CARES Act to January 1, 2022. As such, the Company intends to apply the TDR relief granted pursuant to such section to any qualifying loan modifications executed during the allowable time period.

The Company manages its loan portfolio with careful monitoring. As a general rule, loans more than 90 days past due with respect to principal and interest are classified as non-accrual loans. Exceptions may be made if management believes that collateral held by the Company is clearly sufficient and in full satisfaction of both principal and interest, or the loan is accounted for as a purchased credit impaired (“PCI”) loan. In addition, as permitted by banking regulations, certain consumer loans past due 90 days or more may continue to accrue interest. The Company may also use discretion regarding other loans over 90 days delinquent if the loan is well secured and in the process of collection. Non-accrual loans and loans that are more than 90 days past due but still accruing interest are considered non-performing loans.

Non-accrual loans may be returned to an accrual status when principal and interest payments are no longer delinquent, and the risk characteristics of the loan have improved to the extent that there no longer exists a concern as to the collectability of principal and interest. Loans are considered past due based upon the number of days delinquent according to their contractual terms.

A loan is expected to remain on non-accrual status until it becomes current with respect to principal and interest, the loan is liquidated, or the loan is determined to be uncollectible and is charged-off against the allowance for loan losses.

The following ~~is a summary pertaining to the breakdown of the Company’s non-accrual loans:~~

As of September 30, As of December 31,
2021 2020
(In thousands)
Commercial and industrial $ 17,640 $ 11,714
Commercial real estate 272 915
Business banking 11,254 17,430
Residential real estate 7,185 6,815
Consumer home equity 3,491 3,602
Other consumer 771 529
Total non-accrual loans $ 40,613 $ 41,005

~~The following~~ tables show the age analysis of past due loans as of the dates indicated:


	As of September 30, 2022
	30-59 Days Past Due		60-89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans
	(In thousands)
Commercial and industrial	$	—	$	304	$	1,994	$	2,298	$	3,002,874	$	3,005,172
Commercial real estate	—		—		—		—		4,982,527		4,982,527
Commercial construction	—		—		—		—		312,472		312,472
Business banking	5,591		1,188		3,609		10,388		1,090,631		1,101,019
Residential real estate	12,572		1,905		6,588		21,065		2,109,632		2,130,697
Consumer home equity	4,560		1,752		4,485		10,797		1,161,194		1,171,991
Other consumer	720		286		439		1,445		179,282		180,727
Total	$	23,443	$	5,435	$	17,115	$	45,993	$	12,838,612	$	12,884,605


	As of December 31, 2021
	30-59 Days Past Due		60-89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans
	(In thousands)
Commercial and industrial	$	45	$	31	$	1,672	$	1,748	$	2,958,779	$	2,960,527
Commercial real estate	25,931		—		1,196		27,127		4,495,386		4,522,513
Commercial construction	—		—		—		—		222,328		222,328
Business banking	5,043		1,793		4,640		11,476		1,323,218		1,334,694
Residential real estate	17,523		3,511		5,543		26,577		1,900,233		1,926,810
Consumer home equity	3,774		1,510		4,571		9,855		1,090,298		1,100,153
Other consumer	1,194		548		889		2,631		211,854		214,485
Total (1)	$	53,510	$	7,393	$	18,511	$	79,414	$	12,202,096	$	12,281,510

(1)The amounts presented in the table above represent the recorded investment balance of loans as of December 31, 2021.

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As of September 30, 2021
30-59
Days Past
Due 60-89
Days Past
Due 90 or More
Days Past
Due Total Past
Due Current Total
Loans Recorded
Investment
> 90 Days Past Due
and Accruing
(In thousands)
Commercial and industrial $ 529 $ 2,068 $ 2,043 $ 4,640 $ 1,647,807 $ 1,652,447 $ —
Commercial real estate — — 1,171 1,171 3,824,015 3,825,186 1,171
Commercial construction — — — — 243,146 243,146 —
Business banking 3,351 634 5,497 9,482 1,216,056 1,225,538 —
Residential real estate 9,014 2,426 5,515 16,955 1,474,314 1,491,269 278
Consumer home equity 2,319 415 3,111 5,845 842,725 848,570 9
Other consumer 1,107 362 771 2,240 216,166 218,406 —
Total $ 16,320 $ 5,905 $ 18,108 $ 40,333 $ 9,464,229 $ 9,504,562 $ 1,458
The following table presents information regarding non-accrual loans as of the dates indicated:


		As of December 31, 2020															As of September 30, 2022								As of December 31, 2021
		30-59 Days Past Due		60-89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment >90 Days Past Due and Accruing			Non-Accrual Loans With ACL		Non-Accrual Loans Without ACL (3)		Total Non-Accrual Loans		Amortized Cost of Loans >90 DPD and Still Accruing (2)		Total Non-Accrual Loans (1)		Recorded Investment >90 DPD and Still Accruing
		(In thousands)															(In thousands)
Commercial and industrial	Commercial and industrial	$	4	$	268	$	1,924	$	2,196	$	1,992,820	$	1,995,016	$	848	Commercial and industrial	$	3,363	$	8,910	$	12,273	$	—	$	12,400	$	—
Commercial real estate	Commercial real estate	—		556		1,545		2,101		3,571,529		3,573,630		1,111		Commercial real estate	—		—		—		—		—		1,196
Commercial construction	Commercial construction	—		—		—		—		305,708		305,708		—		Commercial construction	—		—		—		—		—		—
Business banking	Business banking	5,279		3,311		10,196		18,786		1,320,378		1,339,164		—		Business banking	6,934		679		7,613		—		8,230		—
Residential real estate	Residential real estate	9,184		2,517		4,904		16,605		1,354,352		1,370,957		279		Residential real estate	8,513		—		8,513		—		6,681		769
Consumer home equity	Consumer home equity	1,806		364		3,035		5,205		863,065		868,270		9		Consumer home equity	5,080		—		5,080		—		4,732		25
Other consumer	Other consumer	1,978		234		517		2,729		275,051		277,780		—		Other consumer	461		14		475		—		950		—
Total		$	18,251	$	7,250	$	22,121	$	47,622	$	9,682,903	$	9,730,525	$	2,247
Total non-accrual loans																Total non-accrual loans	$	24,351	$	9,603	$	33,954	$	—	$	32,993	$	1,990

(1)The amounts presented represent the recorded investment balance of loans as of December 31, 2021.

(2)“DPD” indicated in the table above refers to “days past due.”

(3)The loans on non-accrual status and without an ACL as of September 30, 2022, were primarily comprised of collateral dependent loans for which the fair value of the underlying loan collateral exceeded the loan carrying value.

The amount of interest income recognized on non-accrual loans during the three and nine months ended September 30, 2022 was not significant.

It is the Company’s policy to reverse any accrued interest when a loan is put on non-accrual status and, generally, to record any payments received from a borrower related to a loan on non-accrual status as a reduction of the amortized cost basis of the loan. Accrued interest reversed against interest income for the three and nine months ended September 30, 2022 was insignificant.

For collateral values for residential mortgage and home equity loans, the Company relies primarily upon third-party valuation information from certified appraisers and values are generally based upon recent appraisals of the underlying collateral, brokers’ opinions based upon recent sales of comparable properties, or estimated auction or liquidation values less estimated costs to sell. As of both September 30, 2022 and December 31, 2021, the Company had collateral-dependent residential mortgage and home equity loans totaling $0.6 million.

For collateral-dependent commercial loans, the amount of the allowance for loan losses is individually assessed based upon the fair value of the collateral. Various types of collateral are used, including real estate, inventory, equipment, accounts receivable, securities and cash, among others. For commercial real estate loans, the Company relies primarily upon third-party valuation information from certified appraisers and values are generally based upon recent appraisals of the underlying collateral, brokers’ opinions based upon recent sales of comparable properties, estimated equipment auction or liquidation values, income capitalization, or a combination of income capitalization and comparable sales. As of September 30, 2022 and December 31, 2021, the Company had collateral-dependent commercial loans totaling $12.8 million and $13.1 million, respectively.

Appraisals for all loan types are obtained at the time of loan origination as part of the loan approval process and are updated at the time of a loan modification and/or refinance and as considered necessary by management for impairment review purposes. In addition, appraisals are updated as required by regulatory pronouncements.

As of both September 30, 2022 and December 31, 2021, the Company had no residential real estate held in other real estate owned (“OREO”). As of both September 30, 2022 and December 31, 2021, there were no mortgage loans collateralized by residential real estate property for which formal foreclosure proceedings were in-process.

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In the normal course of business, the Company may become aware of possible credit problems in which borrowers exhibit potential for the inability to comply with the contractual terms of their loans, but which currently do not yet meet the criteria for classification as non-performing loans (which consist of non-accrual loans and loans that are more than 90 days past due but still accruing interest). Based upon the Company’s past experiences, some of ~~these~~the loans with potential weaknesses will ultimately be restructured or placed in non-accrual status. As of both September 30, ~~2021~~2022 and December 31, ~~2020, we are~~2021, management is unable to reasonably estimate the amount of these loans that will be restructured or placed on non-accrual status.

Troubled Debt Restructurings (“TDR”)

InAs described previously in Note 2, “Summary of Significant Accounting Policies,” in cases where a borrower experiences financial difficulty and the Company makes certain concessionary modifications to contractual terms, the loan is classified as a ~~troubled debt restructured loan.~~TDR. The ~~objective is to aid in the resolution of non-performing~~process through which management identifies loans ~~by modifying the contractual obligation to avoid the possibility of foreclosure.~~

~~All~~as TDR loans, ~~are considered impaired~~the methodology employed to record any loan losses, and the calculation of any shortfall on collateral dependent loans, is also described within Note 2, “Summary of Significant Accounting Policies".

In response to the novel coronavirus (“COVID-19”) pandemic, the Company has granted loan modifications to allow deferral of payments for borrowers negatively impacted by the COVID-19 pandemic. Modifications granted to customers allowed for full payment deferrals (principal and interest) or deferral of only principal payments. The balance of loans which underwent a modification and have not yet resumed payment as of September 30, 2022 and December 31, 2021 was $17.7 million and $106.7 million, respectively. The Company defines a modified loan to have resumed payment if it is one month past the modification end date and not more than 30 days past due. These modifications with active deferrals met the criteria of either Section 4013 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) or the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) at the time of such modification, and therefore are ~~subject~~not deemed troubled debt restructurings, referred to ~~a specific review~~as TDRs. Additionally, loans that are performing in accordance with the contractual terms of the modification are not reflected as being past due and therefore are not impacting non-accrual or delinquency totals as of September 30, 2022 and December 31, 2021. The Company continued to accrue interest on these COVID-19 modified loans and evaluated the deferred interest for ~~impairment loss.~~ collectability as of September 30, 2022 and December 31, 2021.

The ~~amount of impairment loss, if any, is recorded as a specific loss allocation~~Consolidated Appropriations Act, which was enacted on December 27, 2020, extended certain provisions related to ~~each individual loan~~the COVID-19 pandemic in the ~~allowance for loan losses. Commercial loans~~United States (which were due to expire) and ~~residential~~provided additional emergency relief to individuals and businesses. Included within the provisions of the Consolidated Appropriations Act was the extension to January 1, 2022 of Section 4013 of the CARES Act, which provided relief from a requirement to evaluate loans that ~~have been classified as TDRs and which subsequently default are reviewed~~had received a COVID-19 modification to determine if the loans required TDR treatment, provided certain criteria were met. As such, the Company applied the TDR relief granted pursuant to such section to any qualifying loan ~~should be deemed collateral dependent. In such an instance, any shortfall between~~modification executed during the ~~value of the collateral and the book value of the loan is determined by measuring the recorded investment in the loan against the fair value of the collateral less costs to sell.~~allowable time period.

The Company’s policy is to have any TDR ~~loans~~loan which ~~are~~is on non-accrual status prior to being modified remain on non-accrual status for approximately six months subsequent to being modified before management considers its return to

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accrual status. If the TDR loan is on accrual status prior to being modified, it is reviewed to determine if the modified loan should remain on accrual status.

TDR loan information as of December 31, 2021 and the period then ended was prepared in accordance with GAAP effective for the Company as of December 31, 2021, or prior to the Company's adoption of ASU 2016-13.

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The following tables show the TDR loans on accrual and non-accrual status as of the dates indicated:


		As of September 30, 2021										As of September 30, 2022
		TDRs on Accrual Status			TDRs on Non-Accrual Status			Total TDRs				TDRs on Accrual Status			TDRs on Non-Accrual Status			Total TDRs
		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans			Number of Loans	Balance of Loans		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans
		(Dollars in thousands)										(Dollars in thousands)
Commercial and industrial	Commercial and industrial	1	$	3,940	6	$	10,944	7	$	14,884	Commercial and industrial	2	$	7,087	10	$	10,248	12	$	17,335
Commercial real estate	Commercial real estate	1	3,520		—	—		1	3,520		Commercial real estate	1	3,520		—	—		1	3,520
Business banking	Business banking	5	3,888		5	1,262		10	5,150		Business banking	7	3,729		20	998		27	4,727
Residential real estate	Residential real estate	127	20,092		26	3,135		153	23,227		Residential real estate	117	18,268		26	3,340		143	21,608
Consumer home equity	Consumer home equity	73	3,280		16	744		89	4,024		Consumer home equity	55	3,671		16	855		71	4,526
Other consumer	Other consumer	2	3		1	18		3	21		Other consumer	—	—		1	14		1	14
Total	Total	209	$	34,723	54	$	16,103	263	$	50,826	Total	182	$	36,275	73	$	15,455	255	$	51,730


		As of December 31, 2020										As of December 31, 2021
		TDRs on Accrual Status			TDRs on Non-Accrual Status			Total TDRs				TDRs on Accrual Status			TDRs on Non-Accrual Status			Total TDRs
		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans			Number of Loans	Balance of Loans		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans
		(Dollars in thousands)										(Dollars in thousands)
Commercial and industrial	Commercial and industrial	1	$	5,628	7	$	6,819	8	$	12,447	Commercial and industrial	1	$	3,745	6	$	9,983	7	$	13,728
Commercial real estate	Commercial real estate	1	3,521		1	480		2	4,001		Commercial real estate	1	3,520		—	—		1	3,520
Business banking	Business banking	6	4,471		6	722		12	5,193		Business banking	5	3,830		3	383		8	4,213
Residential real estate	Residential real estate	146	23,416		27	3,273		173	26,689		Residential real estate	121	19,119		27	3,015		148	22,134
Consumer home equity	Consumer home equity	91	4,030		12	815		103	4,845		Consumer home equity	67	3,104		16	818		83	3,922
Other consumer	Other consumer	3	29		—	—		3	29		Other consumer	2	18		—	—		2	18
Total(1)	Total(1)	248	$	41,095	53	$	12,109	301	$	53,204	Total(1)	197	$	33,336	52	$	14,199	249	$	47,535

(1)The amounts presented in the table above represent the recorded investment balance of loans as of December 31, 2021.

The amount of ~~specific reserve~~allowance for loan losses associated with the ~~TDRs~~TDR loans was ~~$3.1~~$1.8 million and ~~$3.5~~$3.4 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. ~~There were additional commitments to lend of $0.5 million to borrowers who have been a party to a TDR as of September 30, 2021.~~ There were no additional commitments to lend to borrowers who have been party to a TDR as of both September 30, 2022 and December 31, ~~2020.~~2021.

The following tables show the modifications which occurred during the periods and the change in the recorded investment subsequent to the modifications occurring:


		For the Three Months Ended September 30, 2021					For the Nine Months Ended September 30, 2021						For the Three Months Ended September 30, 2022					For the Nine Months Ended September 30, 2022
		Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment (1)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment (1)			Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment (1)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment (1)
		(Dollars in thousands)											(Dollars in thousands)
Commercial and industrial												Commercial and industrial	3	$	2,997	$	2,997	4	$	5,415	$	5,415
Business banking	Business banking	—	$	—	$	—	1	$	462	$	462	Business banking	9	284		284		20	854		862
Residential real estate	Residential real estate	—	—		—		1	295		295		Residential real estate	5	1,170		1,170		8	1,899		1,899
Consumer home equity	Consumer home equity	2	200		200		2	200		200		Consumer home equity	4	1,236		1,236		6	1,468		1,468
Total	Total	2	$	200	$	200	4	$	957	$	957	Total	21	$	5,687	$	5,687	38	$	9,636	$	9,644

(1)The post-modification balances represent the balance of the loan on the date of modification. These amounts may show an increase when modification includes capitalization of interest.

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		For the Three Months Ended September 30, 2020					For the Nine Months Ended September 30, 2020						For the Three Months Ended September 30, 2021					For the Nine Months Ended September 30, 2021
		Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment (1)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment (1)			Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment (1)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment (1)
		(Dollars in thousands)											(Dollars in thousands)
Commercial and industrial		—	$	—	$	—	1	$	140	$	140
Commercial real estate		—	—		—		2	632		632
Business banking	Business banking	—	—		—		3	1,040		1,040		Business banking	—	$	—	$	—	1	$	462	$	462
Residential real estate	Residential real estate	—	—		—		3	399		399		Residential real estate	—	—		—		1	295		295
Consumer home equity	Consumer home equity	—	—		—		12	527		531		Consumer home equity	2	200		200		2	200		200
Other consumer		3	35		35		4	58		58
Total	Total	3	$	35	$	35	25	$	2,796	$	2,800	Total	2	$	200	$	200	4	$	957	$	957

(1)The post-modification balances represent the balance of the loan on the date of modification. These amounts may show an increase when modification includes capitalization of interest.

At September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the outstanding recorded investment of loans that were new TDR loans during the nine months ended September 30, ~~2021~~2022 and the year ended December 31, ~~2020~~2021 was ~~$1.0~~$9.2 million and ~~$3.9~~$0.8 million, respectively. The difference between such balances reported on an amortized cost basis and recorded investment basis at both September 30, 2022 and December 31, 2021 was not significant.

The following table shows the Company’s post-modification balance of TDRs listed by type of modification during the periods indicated:


		For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands)									(In thousands)
Extended maturity										Extended maturity	$	—	$	200	$	997	$	200
Adjusted interest rate and extended maturity										Adjusted interest rate and extended maturity	123		—		535		—
Interest only/principal deferred	Interest only/principal deferred	$	—	$	—	$	—	$	1,305	Interest only/principal deferred	—		—		130		—
Extended maturity		200		—		200		35
Covenant modification										Covenant modification	—		—		2,418		—
Court-ordered concession										Court-ordered concession	—		—		—		295
Principal and interest deferred										Principal and interest deferred	2,343		—		2,343		462
Extended maturity and interest only/principal deferred	Extended maturity and interest only/principal deferred	—		—		—		427		Extended maturity and interest only/principal deferred	2,997		—		2,997		—
Court-ordered concession		—		35		295		1,033
Other	Other	—		—		462		—		Other	224		—		224		—
Total	Total	$	200	$	35	$	957	$	2,800	Total	$	5,687	$	200	$	9,644	$	957

The following table shows the number of loans and the recorded investment amount of those loans, as of the respective date, that have been modified during the prior 12 months which have subsequently defaulted during the periods indicated. The Company considers a loan to have defaulted when it reaches 90 days past due or is transferred to non-accrual:


		For the Three Months Ended September 30,						For the Nine Months Ended September 30,							For the Three Months Ended September 30,						For the Nine Months Ended September 30,
		2021			2020			2021			2020				2022			2021			2022			2021
		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment			Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
		(Dollars in thousands)													(Dollars in thousands)
Troubled debt restructurings that subsequently defaulted (1):	Troubled debt restructurings that subsequently defaulted (1):													Troubled debt restructurings that subsequently defaulted (1):
Business banking	Business banking	—	$	—	—	$	—	1	$	404	—	$	—	Business banking	—	$	—	—	$	—	—	$	—	1	$	404
Consumer home equity	Consumer home equity	—	—		1	40		1	56		1	40		Consumer home equity	—	—		—	—		—	—		1	56
Total	Total	—	$	—	1	$	40	2	$	460	1	$	40	Total	—	$	—	—	$	—	—	$	—	2	$	460

(1)This table does not reflect any TDRs which were fully charged off, paid off, or otherwise settled during the period.

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During both the three ~~and nine~~ months ended September 30, 2022 and 2021, no amounts were charged-off on TDRs modified in the prior 12 months. During the ~~three and~~ nine months ended September 30, ~~2020, there~~2022 no amounts were ~~$0.2 million and $0.6 million in charge-offs~~charged-off on TDRs modified in the prior 12 months.

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Loan Participations

The Company occasionally purchases commercial loan participations, or participates in syndications through the SNC Program. These participations meet the same underwriting, credit and portfolio management standards as the Company’s other loans and are applied against the same criteria to determine the allowance for loan losses as other loans.

The following table summarizes the Company’s loan participations:


	As of and for the Nine Months Ended September 30, 2022						As of and for the Year Ended December 31, 2021
	Balance (1)		Non-performing Loan Rate (%)		Gross Charge-offs		Balance (1)		Non-performing Loan Rate (%)		Gross Charge-offs
	(Dollars in thousands)
Commercial and industrial	$	878,861	0.82	%	$	—	$	732,425	1.36	%	$	—
Commercial real estate	406,089		0.00	%	—		362,898		0.00	%	—
Commercial construction	76,913		0.00	%	—		37,081		0.00	%	—
Business banking	56		0.00	%	3		98		0.00	%	—
Total loan participations	$	1,361,919	0.53	%	$	3	$	1,132,502	0.88	%	$	—

(1)The balance of loan participations as of September 30, 2022 represents the amortized cost basis and the balance as of December 31, 2021 represents the recorded investment balance. The difference between amortized cost basis and recorded investment basis as of September 30, 2022 is not material.

5. Loans and Allowance for Loan Losses

Allowance for Loan Losses

As disclosed in Note 2, “Summary of Significant Accounting Policies,” the Company adopted ASU 2016-13 effective January 1, 2022. As required by GAAP, the Company has included comparative prior period disclosures of its allowance for loan losses which were prepared in accordance with ASC 450, “Contingencies” and ASC 310, “Receivables” (i.e., prior to the Company’s adoption of ASU 2016-13). Refer to the Company’s 2021 Form 10-K for significant accounting policies related to the Company’s allowance for loan losses as of December 31, 2021. A discussion of the Company’s calculation of its allowance for loan losses for such prior periods follows.

The allowance for loan losses was established to provide for probable losses incurred in the Company’s loan portfolio at the balance sheet date and was established through a provision for loan losses charged to net income. Charge-offs, net of recoveries, were charged directly to the allowance. Commercial and residential loans were charged-off in the period in which they are deemed uncollectible. Delinquent loans in these product types were subject to ongoing review and analysis to determine if a charge-off in the current period was appropriate. For consumer loans, policies and procedures existed that required charge-off consideration upon a certain triggering event depending on the product type.

Management used a methodology to systematically estimate the amount of loss incurred in the portfolio. Commercial real estate, commercial and industrial, commercial construction and business banking loans were evaluated using a loan rating system, historical losses and other factors which formed the basis for estimating incurred losses. Portfolios of more homogeneous populations of loans, including residential mortgages and consumer loans, were analyzed as groups taking into account delinquency ratios, historical loss experience and charge-offs. For the purpose of estimating the allowance for loan losses, management segregated the loan portfolio into the categories noted in the credit quality tables presented in the “Credit Quality” section below. Each of these loan categories possesses unique risk characteristics such as the purpose of the loan, repayment source, and collateral. These characteristics were considered when determining the appropriate level of the allowance for each category. The Company’s historical approach to loan portfolio segmentation by risk characteristics and monitoring of credit quality for commercial loans under previous accounting guidance was consistent with that applied under the newly adopted CECL standard. See Note 4, “Loans and Allowance for Credit Losses” for further discussion regarding the Company’s policies for loan segmentation and credit monitoring.

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The following tables summarize the changes in the allowance for loan losses by loan category for the three and nine months ended September 30, 2021:


	For the Three Months Ended September 30, 2021
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Other		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	22,596	$	52,759	$	3,446	$	12,705	$	6,478	$	3,588	$	3,626	$	439	$	105,637
Charge-offs	—		(8)		—		(867)		—		—		(742)		—		(1,617)
Recoveries	40		—		—		469		88		63		206		—		866
(Release of) Provision	(2,007)		1,435		(44)		(929)		(136)		(16)		297		(88)		(1,488)
Ending balance	$	20,629	$	54,186	$	3,402	$	11,378	$	6,430	$	3,635	$	3,387	$	351	$	103,398


	For the Nine Months Ended September 30, 2021
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Other		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	26,617	$	54,569	$	4,553	$	13,152	$	6,435	$	3,744	$	3,467	$	494	$	113,031
Charge-offs	(550)		(242)		—		(4,089)		—		—		(1,381)		—		(6,262)
Recoveries	62		4		—		1,125		115		137		554		—		1,997
(Release of) Provision	(5,500)		(145)		(1,151)		1,190		(120)		(246)		747		(143)		(5,368)
Ending balance	$	20,629	$	54,186	$	3,402	$	11,378	$	6,430	$	3,635	$	3,387	$	351	$	103,398

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The following tables bifurcate the amount of loans and the allowance for loan losses allocated to each loan category based on the type of impairment analysis as of December 31, 2021:


	As of December 31, 2021
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Other		Total
	(In thousands)
Allowance for loan losses ending balance:
Individually evaluated for impairment	$	1,540	$	—	$	—	$	450	$	1,549	$	270	$	161	$	—	$	3,970
Acquired with deteriorated credit quality	5		298		—		—		243		—		—		—		546
Collectively evaluated for impairment	16,473		52,075		2,585		10,533		4,764		3,452		3,147		242		93,271
Total allowance for loan losses by group	$	18,018	$	52,373	$	2,585	$	10,983	$	6,556	$	3,722	$	3,308	$	242	$	97,787
Loans ending balance:
Individually evaluated for impairment	$	16,145	$	3,520	$	—	$	12,060	$	22,378	$	3,922	$	179	$	—	$	58,204
Acquired with deteriorated credit quality	19,028		47,553		—		—		3,058		—		—		—		69,639
Collectively evaluated for impairment	2,925,354		4,471,440		222,328		1,322,634		1,901,374		1,096,231		214,306		—		12,153,667
Total loans by group	$	2,960,527	$	4,522,513	$	222,328	$	1,334,694	$	1,926,810	$	1,100,153	$	214,485	$	—	$	12,281,510

Credit Quality

The following tables detail the internal risk-rating categories for the Company’s commercial and industrial, commercial real estate, commercial construction and business banking portfolios:


	As of December 31, 2021
Category	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Total
	(In thousands)
Unrated	$	171,537	$	4,378	$	—	$	696,629	$	872,544
Pass	2,656,873		4,199,803		213,744		569,956		7,640,376
Special mention	70,141		104,517		1,889		50,085		226,632
Substandard	50,339		213,815		6,695		17,814		288,663
Doubtful	11,637		—		—		210		11,847
Loss	—		—		—		—		—
Total	$	2,960,527	$	4,522,513	$	222,328	$	1,334,694	$	9,040,062

PPP loans are included within the unrated category of the commercial and industrial and business banking portfolios in the table above. Commercial and industrial PPP loans and business banking PPP loans amounted to $112.8 million and $218.6 million, respectively, at December 31, 2021. The Company does not have an allowance for loan losses for PPP loans as they are 100% guaranteed by the SBA.

~~Impaired Loans~~

Impaired loans consist of all loans for which management has determined it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreements. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.Loan Participations

The Company ~~measures impairment of loans using a discounted cash flow method,~~occasionally purchases commercial loan participations, or participates in syndications through the ~~loan’s observable market price, or~~SNC Program. These participations meet the ~~fair value of~~same underwriting, credit and portfolio management standards as the ~~collateral if the loan is collateral dependent. The Company has defined the population of impaired loans to include certain non-accrual loans, TDR~~Company’s other loans and ~~residential and home equity loans that have been partially charged off.~~are applied against the same criteria to determine the allowance for loan losses as other loans.

The following table summarizes the Company’s ~~impaired loans~~loan participations:


	As of and for the Nine Months Ended September 30, 2022						As of and for the Year Ended December 31, 2021
	Balance (1)		Non-performing Loan Rate (%)		Gross Charge-offs		Balance (1)		Non-performing Loan Rate (%)		Gross Charge-offs
	(Dollars in thousands)
Commercial and industrial	$	878,861	0.82	%	$	—	$	732,425	1.36	%	$	—
Commercial real estate	406,089		0.00	%	—		362,898		0.00	%	—
Commercial construction	76,913		0.00	%	—		37,081		0.00	%	—
Business banking	56		0.00	%	3		98		0.00	%	—
Total loan participations	$	1,361,919	0.53	%	$	3	$	1,132,502	0.88	%	$	—

5. Loans and Allowance for Loan Losses

Allowance for Loan Losses

As of September 30, 2021 As of December 31, 2020
Recorded
Investment Unpaid
Principal
Balance Related
Allowance Recorded
Investment Unpaid
Principal
Balance Related
Allowance
(In thousands)
With no related allowance recorded:
Commercial and industrial $ 13,807 $ 15,188 $ — $ 9,182 $ 11,212 $ —
Commercial real estate 3,793 3,832 — 3,955 3,974 —
Business banking 3,557 4,564 — 5,250 7,659 —
Residential real estate 11,352 12,727 — 14,730 17,010 —
Consumer home equity 1,895 1,895 — 2,571 2,571 —
Other consumer 22 22 — 29 29 —
Sub-total 34,426 38,228 — 35,717 42,455 —
With an allowance recorded:
Commercial and industrial 7,773 8,350 4,287 8,161 8,432 4,555
Commercial real estate — — — 480 497 210
Business banking 11,584 15,978 669 16,651 21,146 1,435
Residential real estate 12,142 12,142 1,462 12,326 12,326 1,565
Consumer home equity 2,128 2,128 256 2,274 2,274 289
Other consumer 200 200 200 — — —
Sub-total 33,827 38,798 6,874 39,892 44,675 8,054
Total $ 68,253 $ 77,026 $ 6,874 $ 75,609 $ 87,130 $ 8,054
loan, repayment source, and collateral. These characteristics were considered when determining the appropriate level of the allowance for each category. The Company’s historical approach to loan portfolio segmentation by risk characteristics and monitoring of credit quality for commercial loans under previous accounting guidance was consistent with that applied under the newly adopted CECL standard. See Note 4, “Loans and Allowance for Credit Losses” for further discussion regarding the Company’s policies for loan segmentation and credit monitoring.

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~~The following tables display information regarding interest income recognized on impaired loans, by portfolio, for the periods indicated:~~
For the Three Months Ended September 30, 2021 For the Nine Months Ended September 30, 2021
Average
Recorded
Investment Total
Interest
Recognized Average
Recorded
Investment Total
Interest
Recognized
(In thousands)
With no related allowance recorded:
Commercial and industrial $ 12,517 $ 39 $ 11,405 $ 131
Commercial real estate 3,909 45 4,047 133
Business banking 3,988 25 4,586 75
Residential real estate 11,561 113 12,349 344
Consumer home equity 1,877 13 1,988 47
Other consumer 22 — 24 —
Sub-total 33,874 235 34,399 730
With an allowance recorded:
Commercial and industrial 7,808 — 7,849 —
Commercial real estate — — 271 —
Business banking 12,642 14 14,560 43
Residential real estate 12,290 127 13,093 387
Consumer home equity 2,108 15 2,232 53
Other consumer 67 — 22 —
Sub-total 34,915 156 38,027 483
Total $ 68,789 $ 391 $ 72,426 $ 1,213

For the Three Months Ended September 30, 2020 For the Nine Months Ended September 30, 2020
Average
Recorded
Investment Total
Interest
Recognized Average
Recorded
Investment Total
Interest
Recognized
(In thousands)
With no related allowance recorded:
Commercial and industrial $ 9,273 $ 48 $ 14,152 $ 167
Commercial real estate 4,408 45 5,433 134
Commercial construction 280 — 125 —
Business banking 3,298 30 2,659 66
Residential real estate 13,513 129 13,141 399
Consumer home equity 3,034 21 3,287 61
Other consumer 53 1 33 1
Sub-total 33,859 274 38,830 828
With an allowance recorded:
Commercial and industrial 6,229 — 8,168 —
Commercial real estate 1,017 — 625 —
Business banking 17,452 15 13,063 44
Residential real estate 14,165 144 13,708 446
Consumer home equity 2,417 23 2,692 69
Sub-total 41,280 182 38,256 559
Total $ 75,139 $ 456 $ 77,086 $ 1,387

~~Purchased Credit Impaired Loans~~

2933

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The following ~~table displays~~tables summarize the ~~outstanding~~changes in the allowance for loan losses by loan category for the three and ~~carrying amounts~~nine months ended September 30, 2021:


	For the Three Months Ended September 30, 2021
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Other		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	22,596	$	52,759	$	3,446	$	12,705	$	6,478	$	3,588	$	3,626	$	439	$	105,637
Charge-offs	—		(8)		—		(867)		—		—		(742)		—		(1,617)
Recoveries	40		—		—		469		88		63		206		—		866
(Release of) Provision	(2,007)		1,435		(44)		(929)		(136)		(16)		297		(88)		(1,488)
Ending balance	$	20,629	$	54,186	$	3,402	$	11,378	$	6,430	$	3,635	$	3,387	$	351	$	103,398


	For the Nine Months Ended September 30, 2021
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Other		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	26,617	$	54,569	$	4,553	$	13,152	$	6,435	$	3,744	$	3,467	$	494	$	113,031
Charge-offs	(550)		(242)		—		(4,089)		—		—		(1,381)		—		(6,262)
Recoveries	62		4		—		1,125		115		137		554		—		1,997
(Release of) Provision	(5,500)		(145)		(1,151)		1,190		(120)		(246)		747		(143)		(5,368)
Ending balance	$	20,629	$	54,186	$	3,402	$	11,378	$	6,430	$	3,635	$	3,387	$	351	$	103,398

Table of ~~PCI~~Contents

The following tables bifurcate the amount of loans and the allowance for loan losses allocated to each loan category based on the type of impairment analysis as of ~~the dates indicated:~~December 31, 2021:

September 30, December 31,
2021 2020
(In thousands)
Outstanding balance $ 4,484 $ 9,982
Carrying amount 4,426 9,297


	As of December 31, 2021
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Other		Total
	(In thousands)
Allowance for loan losses ending balance:
Individually evaluated for impairment	$	1,540	$	—	$	—	$	450	$	1,549	$	270	$	161	$	—	$	3,970
Acquired with deteriorated credit quality	5		298		—		—		243		—		—		—		546
Collectively evaluated for impairment	16,473		52,075		2,585		10,533		4,764		3,452		3,147		242		93,271
Total allowance for loan losses by group	$	18,018	$	52,373	$	2,585	$	10,983	$	6,556	$	3,722	$	3,308	$	242	$	97,787
Loans ending balance:
Individually evaluated for impairment	$	16,145	$	3,520	$	—	$	12,060	$	22,378	$	3,922	$	179	$	—	$	58,204
Acquired with deteriorated credit quality	19,028		47,553		—		—		3,058		—		—		—		69,639
Collectively evaluated for impairment	2,925,354		4,471,440		222,328		1,322,634		1,901,374		1,096,231		214,306		—		12,153,667
Total loans by group	$	2,960,527	$	4,522,513	$	222,328	$	1,334,694	$	1,926,810	$	1,100,153	$	214,485	$	—	$	12,281,510

Credit Quality

The ~~excess of cash flows expected to be collected over~~following tables detail the ~~carrying amount~~internal risk-rating categories for the Company’s commercial and industrial, commercial real estate, commercial construction and business banking portfolios:


	As of December 31, 2021
Category	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Total
	(In thousands)
Unrated	$	171,537	$	4,378	$	—	$	696,629	$	872,544
Pass	2,656,873		4,199,803		213,744		569,956		7,640,376
Special mention	70,141		104,517		1,889		50,085		226,632
Substandard	50,339		213,815		6,695		17,814		288,663
Doubtful	11,637		—		—		210		11,847
Loss	—		—		—		—		—
Total	$	2,960,527	$	4,522,513	$	222,328	$	1,334,694	$	9,040,062

PPP loans are included within the unrated category of the ~~loans, referred to as the “accretable yield,” is accreted into interest income over the life of the loans using the effective yield method. The following table summarizes activity~~commercial and industrial and business banking portfolios in the ~~accretable yield for the PCI loan portfolio:~~

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2021 2020 2021 2020
(In thousands)
Balance at beginning of period $ 2,981 $ 2,994 $ 2,495 $ 3,923
Accretion (245) (298) (877) (1,058)
Other change in expected cash flows (1,161) (44) (1,370) (209)
Reclassification from (to) non-accretable difference for loans with improved (deteriorated) cash flows — — 1,327 (4)
Balance at end of period $ 1,575 $ 2,652 $ 1,575 $ 2,652

table above. Commercial and industrial PPP loans and business banking PPP loans amounted to $112.8 million and $218.6 million, respectively, at December 31, 2021. The estimate of cash flows expected to be collected is regularly re-assessed subsequent to acquisition. A decrease in expected cash flows in subsequent periods may indicate that the loan is impaired which would require the establishment ofCompany does not have an allowance for loan losses ~~by a charge to the provision~~ for ~~loan losses. An increase in expected cash flows in subsequent periods serves, first, to reduce any previously established allowance for loan losses~~PPP loans as they are 100% guaranteed by the increase in the present value of cash flows expected to be collected, and results in a recalculation of the amount of accretable yield for the loan. The adjustment of accretable yield due to an increase in expected cash flows is accounted for as a change in estimate. The additional cash flows expected to be collected are reclassified from the non-accretable difference to the accretable yield, and the amount of periodic accretion is adjusted accordingly over the remaining life of the loans.SBA.

Loan Participations

The following table summarizes the Company’s loan participations:


		As of and for the Nine Months Ended September 30, 2021								As of and for the Year Ended December 31, 2020									As of and for the Nine Months Ended September 30, 2022						As of and for the Year Ended December 31, 2021
		Balance		Non-performing Loan Rate (%)		Impaired (%)		Gross Charge-offs		Balance		Non-performing Loan Rate (%)		Impaired (%)		Gross Charge-offs			Balance (1)		Non-performing Loan Rate (%)		Gross Charge-offs		Balance (1)		Non-performing Loan Rate (%)		Gross Charge-offs
		(Dollars in thousands)																	(Dollars in thousands)
Commercial and industrial	Commercial and industrial	$	632,229	1.73	%	1.73	%	$	—	$	598,873	1.11	%	1.11	%	$	—	Commercial and industrial	$	878,861	0.82	%	$	—	$	732,425	1.36	%	$	—
Commercial real estate	Commercial real estate	385,782		0.00	%	0.00	%	—		306,202		0.00	%	0.00	%	—		Commercial real estate	406,089		0.00	%	—		362,898		0.00	%	—
Commercial construction	Commercial construction	72,374		0.00	%	0.00	%	—		119,600		0.00	%	0.00	%	—		Commercial construction	76,913		0.00	%	—		37,081		0.00	%	—
Business banking	Business banking	104		0.00	%	0.00	%	—		34		0.00	%	0.00	%	15		Business banking	56		0.00	%	3		98		0.00	%	—
Total loan participations	Total loan participations	$	1,090,489	1.00	%	1.00	%	$	—	$	1,024,709	0.65	%	0.65	%	$	15	Total loan participations	$	1,361,919	0.53	%	$	3	$	1,132,502	0.88	%	$	—

5. Loans and Allowance for Loan Losses

Allowance for Loan Losses

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The following tables summarize the changes in the allowance for loan losses by loan category for the three and nine months ended September 30, 2021:


	For the Three Months Ended September 30, 2021
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Other		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	22,596	$	52,759	$	3,446	$	12,705	$	6,478	$	3,588	$	3,626	$	439	$	105,637
Charge-offs	—		(8)		—		(867)		—		—		(742)		—		(1,617)
Recoveries	40		—		—		469		88		63		206		—		866
(Release of) Provision	(2,007)		1,435		(44)		(929)		(136)		(16)		297		(88)		(1,488)
Ending balance	$	20,629	$	54,186	$	3,402	$	11,378	$	6,430	$	3,635	$	3,387	$	351	$	103,398


	For the Nine Months Ended September 30, 2021
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Other		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	26,617	$	54,569	$	4,553	$	13,152	$	6,435	$	3,744	$	3,467	$	494	$	113,031
Charge-offs	(550)		(242)		—		(4,089)		—		—		(1,381)		—		(6,262)
Recoveries	62		4		—		1,125		115		137		554		—		1,997
(Release of) Provision	(5,500)		(145)		(1,151)		1,190		(120)		(246)		747		(143)		(5,368)
Ending balance	$	20,629	$	54,186	$	3,402	$	11,378	$	6,430	$	3,635	$	3,387	$	351	$	103,398

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The following tables bifurcate the amount of loans and the allowance for loan losses allocated to each loan category based on the type of impairment analysis as of December 31, 2021:


	As of December 31, 2021
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Other		Total
	(In thousands)
Allowance for loan losses ending balance:
Individually evaluated for impairment	$	1,540	$	—	$	—	$	450	$	1,549	$	270	$	161	$	—	$	3,970
Acquired with deteriorated credit quality	5		298		—		—		243		—		—		—		546
Collectively evaluated for impairment	16,473		52,075		2,585		10,533		4,764		3,452		3,147		242		93,271
Total allowance for loan losses by group	$	18,018	$	52,373	$	2,585	$	10,983	$	6,556	$	3,722	$	3,308	$	242	$	97,787
Loans ending balance:
Individually evaluated for impairment	$	16,145	$	3,520	$	—	$	12,060	$	22,378	$	3,922	$	179	$	—	$	58,204
Acquired with deteriorated credit quality	19,028		47,553		—		—		3,058		—		—		—		69,639
Collectively evaluated for impairment	2,925,354		4,471,440		222,328		1,322,634		1,901,374		1,096,231		214,306		—		12,153,667
Total loans by group	$	2,960,527	$	4,522,513	$	222,328	$	1,334,694	$	1,926,810	$	1,100,153	$	214,485	$	—	$	12,281,510

Credit Quality

The following tables detail the internal risk-rating categories for the Company’s commercial and industrial, commercial real estate, commercial construction and business banking portfolios:


	As of December 31, 2021
Category	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Total
	(In thousands)
Unrated	$	171,537	$	4,378	$	—	$	696,629	$	872,544
Pass	2,656,873		4,199,803		213,744		569,956		7,640,376
Special mention	70,141		104,517		1,889		50,085		226,632
Substandard	50,339		213,815		6,695		17,814		288,663
Doubtful	11,637		—		—		210		11,847
Loss	—		—		—		—		—
Total	$	2,960,527	$	4,522,513	$	222,328	$	1,334,694	$	9,040,062

Impaired Loans

Under previous accounting guidance, impaired loans consisted of all loans for which management had determined it was probable that the Company would be unable to collect all amounts due according to the contractual terms of the loan

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agreements. Factors considered by management in determining impairment included payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.

The Company measured impairment of loans using a discounted cash flow method, the loan’s observable market price, or the fair value of the collateral if the loan was collateral dependent. The Company defined the population of impaired loans to include certain non-accrual loans, TDR loans, and residential and home equity loans that had been partially charged off.

The following table summarizes the Company’s impaired loans by loan portfolio as of December 31, 2021:


	As of December 31, 2021
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
With no related allowance recorded:
Commercial and industrial	$	12,309	$	13,212	$	—
Commercial real estate	3,520		3,520		—
Business banking	4,199		5,069		—
Residential real estate	11,217		12,587		—
Consumer home equity	1,924		1,924		—
Other consumer	18		18		—
Sub-total	33,187		36,330		—
With an allowance recorded:
Commercial and industrial	3,836		4,226		1,540
Business banking	7,861		11,240		450
Residential real estate	11,161		11,161		1,549
Consumer home equity	1,998		1,998		270
Other consumer	161		161		161
Sub-total	25,017		28,786		3,970
Total	$	58,204	$	65,116	$	3,970

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The following table displays information regarding interest income recognized on impaired loans, by portfolio, for the three and nine months ended September 30, 2021:


	For the Three Months Ended September 30, 2021				For the Nine Months Ended September 30, 2021
	Average Recorded Investment		Total Interest Recognized		Average Recorded Investment		Total Interest Recognized
	(In thousands)
With no related allowance recorded:
Commercial and industrial	$	12,517	$	39	$	11,405	$	131
Commercial real estate	3,909		45		4,047		133
Business banking	3,988		25		4,586		75
Residential real estate	11,561		113		12,349		344
Consumer home equity	1,877		13		1,988		47
Other consumer	22		—		24		—
Sub-total	33,874		235		34,399		730
With an allowance recorded:
Commercial and industrial	7,808		—		7,849		—
Commercial real estate	—		—		271		—
Business banking	12,642		14		14,560		43
Residential real estate	12,290		127		13,093		387
Consumer home equity	2,108		15		2,232		53
Other consumer	67		—		22		—
Sub-total	34,915		156		38,027		483
Total	$	68,789	$	391	$	72,426	$	1,213

Purchased Credit Impaired Loans

The following table displays the outstanding and carrying amounts of PCI loans as of December 31, 2021:


	As of December 31, 2021
	(In thousands)
Outstanding balance	$	78,074
Carrying amount	69,639

Under previous accounting guidance, the excess of cash flows expected to be collected over the carrying amount of the loans, referred to as the “accretable yield,” was accreted into interest income over the life of the loans using the effective yield method. The following table summarizes activity in the accretable yield for the PCI loan portfolio:


	For the Three Months Ended September 30, 2021		For the Nine Months Ended September 30, 2021
	(In thousands)
Balance at beginning of period	$	2,981	$	2,495
Accretion	(245)		(877)
Other change in expected cash flows	(1,161)		(1,370)
Reclassification from non-accretable difference for loans with improved cash flows	—		1,327
Balance at end of period	$	1,575	$	1,575

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The estimate of cash flows expected to be collected was regularly re-assessed subsequent to acquisition. A decrease in expected cash flows in subsequent periods may have indicated that the loan was impaired which would require the establishment of an allowance for loan losses by a charge to the provision for loan losses. An increase in expected cash flows in subsequent periods served, first, to reduce any previously established allowance for loan losses by the increase in the present value of cash flows expected to be collected, and resulted in a recalculation of the amount of accretable yield for the loan. The adjustment of accretable yield due to an increase in expected cash flows was accounted for as a change in estimate. The additional cash flows expected to be collected were reclassified from the non-accretable difference to the accretable yield, and the amount of periodic accretion was adjusted accordingly over the remaining life of the loans.

5.6. Leases

The Company leases certain office space and equipment under various non-cancelable operating leases. These leases have original terms ranging from 1 year to 25 years. Operating lease liabilities and right-of-use (“ROU”) assets are recognized at the lease commencement date based upon the present value of the future minimum lease payments over the lease

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term. Operating lease liabilities are recorded within other liabilities and ROU assets are recorded within other assets in the Company’s consolidated balance ~~sheet.~~sheets.

As of the dates indicated, the Company had the following related to operating leases:


		As of September 30, 2021		As of December 31, 2020			As of September 30, 2022		As of December 31, 2021
		(In thousands)					(In thousands)
Right-of-use assets	Right-of-use assets	$	75,196	$	81,596	Right-of-use assets	$	60,247	$	83,821
Lease liabilities	Lease liabilities	79,187		85,330		Lease liabilities	64,265		89,296

Finance leases are not material. Finance lease liabilities are recorded within other liabilities and finance ROU assets are recorded within other assets in the Company’s consolidated balance sheets.

The following tables are a summary of the Company’s components of net lease cost for the periods indicated:


							Three Months Ended September 30,				Nine Months Ended September 30,
		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021			2022		2021		2022		2021
		(In thousands)					(In thousands)
Operating lease cost	Operating lease cost	$	3,478	$	10,560	Operating lease cost	$	3,620	$	3,478	$	10,999	$	10,560
Finance lease cost	Finance lease cost	50		116		Finance lease cost	90		50		270		116
Variable lease cost	Variable lease cost	617		1,564		Variable lease cost	606		617		2,036		1,564
Total lease cost	Total lease cost	$	4,145	$	12,240	Total lease cost	$	4,316	$	4,145	$	13,305	$	12,240

Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020
(In thousands)
Operating lease cost $ 3,596 $ 10,810
Finance lease cost 24 43
Variable lease cost 509 1,479
Total lease cost $ 4,129 $ 12,332

During the three and nine months ended September 30, 2022, the Company made $3.8 million and $13.3 million, respectively, in cash payments for operating and finance lease payments. During the three and nine months ended September 30, 2021, the Company made $3.5 million and $10.6 million, respectively, in cash payments for operating and finance lease payments. ~~During the three and nine months ended September 30, 2020 the Company made $3.6 million and $10.6 million, respectively, in cash payments for operating and finance lease payments.~~

Supplemental balance sheet information related to operating leases are as follows:


		As of September 30, 2021		As of December 31, 2020			As of September 30, 2022		As of December 31, 2021
Weighted-average remaining lease term (in years)	Weighted-average remaining lease term (in years)	7.96		8.50		Weighted-average remaining lease term (in years)	7.17		7.83
Weighted-average discount rate	Weighted-average discount rate	2.62	%	2.65	%	Weighted-average discount rate	2.58	%	2.52	%

During the three months ended September 30, 2022, management determined not to exercise a future lease term extension option related to one lease, which had previously been included in its determination of future lease payments, and to terminate another lease. Accordingly, the Company remeasured the present value of the future lease payments related to such

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leases which resulted in a reduction of the lease liabilities and a corresponding reduction of the lease ROU assets of $14.1 million.

The following table sets forth the undiscounted cash flows of base rent related to operating leases outstanding as of September 30, 2022 with payments scheduled over the next five years and thereafter, including a reconciliation to the operating lease liability recognized in other liabilities in the Company’s consolidated balance sheets:


	As of September 30, 2022
Year	(In thousands)
Remainder of 2022	$	3,715
2023	14,255
2024	11,446
2025	9,350
2026	7,868
Thereafter	24,086
Total minimum lease payments	70,720
Less: amount representing interest	6,455
Present value of future minimum lease payments	$	64,265

6.7. Goodwill and Other Intangibles

The following tables set forth the carrying amount of goodwill and other intangible assets, net of accumulated amortization, by reporting unit atas of the dates indicated below:

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		As of September 30, 2021							As of September 30, 2022
		Banking Business		Insurance Agency Business		Net Carrying Amount			Banking Business		Insurance Agency Business		Net Carrying Amount
		(In thousands)							(In thousands)
Balances not subject to amortization	Balances not subject to amortization							Balances not subject to amortization
Goodwill	Goodwill	$	298,611	$	73,861	$	372,472	Goodwill	$	557,635	$	82,587	$	640,222
Balances subject to amortization	Balances subject to amortization							Balances subject to amortization
Insurance agency (1)	Insurance agency (1)	—		7,234		7,234		Insurance agency (1)	—		11,327		11,327
Core deposit intangible	Core deposit intangible	66		—		66		Core deposit intangible	10,673		—		10,673
Total other intangible assets	Total other intangible assets	66		7,234		7,300		Total other intangible assets	10,673		11,327		22,000
Total goodwill and other intangible assets	Total goodwill and other intangible assets	$	298,677	$	81,095	$	379,772	Total goodwill and other intangible assets	$	568,308	$	93,914	$	662,222

(1)Insurance agency intangible assets include customer list, non-compete agreement and supplier relationship intangible assets.


		As of December 31, 2020							As of December 31, 2021
		Banking Business		Insurance Agency Business		Net Carrying Amount			Banking Business		Insurance Agency Business		Net Carrying Amount
		(In thousands)							(In thousands)
Balances not subject to amortization	Balances not subject to amortization							Balances not subject to amortization
Goodwill	Goodwill	$	298,611	$	70,866	$	369,477	Goodwill	$	557,635	$	73,861	$	631,496
Balances subject to amortization	Balances subject to amortization							Balances subject to amortization
Insurance agency (1)	Insurance agency (1)	—		6,899		6,899		Insurance agency (1)	—		6,635		6,635
Core deposit intangible	Core deposit intangible	158		—		158		Core deposit intangible	11,572		—		11,572
Total other intangible assets	Total other intangible assets	158		6,899		7,057		Total other intangible assets	11,572		6,635		18,207
Total goodwill and other intangible assets	Total goodwill and other intangible assets	$	298,769	$	77,765	$	376,534	Total goodwill and other intangible assets	$	569,207	$	80,496	$	649,703

(1)Insurance agency intangible assets include customer list, non-compete agreement and supplier relationship intangible assets.

~~The Company acquired 2 insurance agencies during~~

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During the nine months ended September 30, ~~2021.~~2022, the Company completed acquisitions of two insurance agencies for cash consideration of $5.2 million and $8.2 million, respectively, for aggregate total consideration of $13.4 million. Both acquisitions were categorized as business combinations and were accounted for using the acquisition method. The following table summarizes the aggregate ~~purchase price and goodwill recorded as a result~~estimated fair value of the ~~acquisitions were not material.~~assets acquired and liabilities assumed for these acquisitions:


	For the Nine Months Ended September 30, 2022
	(In thousands)
Assets acquired:
Customer list intangible	$	6,120
Non-compete intangible	440
Other	40
Total assets acquired	6,600
Consideration:
Total cash paid	(13,400)
Contingent consideration	(1,926)
Other liabilities assumed	—
Total fair value of consideration	(15,326)
Goodwill	$	8,726

The Company quantitatively assesses goodwill for impairment at the reporting unit level on an annual basis or sooner if an event occurs or circumstances change which might indicate that the fair value of a reporting unit is below its carrying amount. The Company has identified and assigned goodwill to 2two reporting units - the banking business and insurance agency business. The quantitative assessments for both the banking business and insurance agency business were most recently performed as of September 30, ~~2021.~~2022. The assessment for the banking business included a market capitalization analysis, as well as a comparison of the banking business’ book value to the implied fair value using a pricing multiple of the Company’s tangible book value. The assessment for the insurance agency business included a price-to-earnings analysis, as well as an ~~EBITDA~~earnings before interest, taxes, depreciation, and amortization (“EBITDA”) multiplier valuation based upon recent and observed agency mergers and acquisitions. The Company considered the economic conditions for the period, including the potential impact of the COVID-19 pandemic, as it pertains to the goodwill above and determined that there was no indication of impairment related to goodwill as of September 30, ~~2021~~2022 or December 31, ~~2020.~~2021.

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. The Company also considered the impact of the COVID-19 pandemic as it pertains to these intangible assets and determined that there was no indication of impairment related to other intangible assets as of September 30, ~~2021~~2022 or December 31, ~~2020.~~2021.

3240

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7.8. Earnings Per Share (“EPS”)

Basic EPS represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares (such as stock options) were exercised or converted into additional common shares that would then share in the earnings of the ~~entity.~~Company. Diluted EPS is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding for the period, plus the effect of potential dilutive common share equivalents computed using the treasury stock method. There were no securities that had a dilutive effect during the three and nine months ended September 30, ~~2021, and therefore the weighted-average common shares outstanding used to calculate both basic and diluted EPS are the same.~~2021. Shares held by the Employee Stock Ownership Plan (“ESOP”) that have not been allocated to employees in accordance with the terms of the ESOP, referred to as “unallocated ESOP shares,” are not deemed outstanding for earnings per share calculations. ~~Earnings per share data is not applicable for the three and nine months ended September 30, 2020 as the Company had no shares outstanding.~~


	For the Three Months Ended September 30, 2022		For the Nine Months Ended September 30, 2022
	(Dollars in thousands, except per share data)
Net income applicable to common shares	$	54,777	$	157,465

Average number of common shares outstanding	177,677,074		180,764,479
Less: Average unallocated ESOP shares	(13,958,112)		(14,082,257)
Average number of common shares outstanding used to calculate basic earnings per common share	163,718,962		166,682,222
Common stock equivalents	310,687		185,421
Average number of common shares outstanding used to calculate diluted earnings per common share	164,029,649		166,867,643
Earnings per common share
Basic	$	0.33	$	0.94
Diluted	$	0.33	$	0.94

For the Three Months Ended September 30, 2021 For the Nine Months Ended September 30, 2021
(Dollars in thousands, except per share data)
Net income applicable to common shares $ 37,106 $ 119,578
Average number of common shares outstanding 186,758,154 186,758,154
Less: Average unallocated ESOP shares (14,459,539) (14,583,685)
Average number of common shares outstanding used to calculate basic earnings per common share 172,298,615 172,174,469
Common stock equivalents — —
Average number of common shares outstanding used to calculate diluted earnings per common share 172,298,615 172,174,469
Earnings per common share
Basic and diluted $ 0.22 $ 0.69

~~All unallocated ESOP shares have been excluded from the calculation of basic and diluted EPS.~~


	For the Three Months Ended September 30, 2021		For the Nine Months Ended September 30, 2021
	(Dollars in thousands, except per share data)
Net income applicable to common shares	$	37,106	$	119,578

Average number of common shares outstanding	186,758,154		186,758,154
Less: Average unallocated ESOP shares	(14,459,539)		(14,583,685)
Average number of common shares outstanding used to calculate basic earnings per common share	172,298,615		172,174,469
Common stock equivalents	—		—
Average number of common shares outstanding used to calculate diluted earnings per common share	172,298,615		172,174,469
Earnings per common share
Basic	$	0.22	$	0.69
Diluted	$	0.22	$	0.69

8.9. Low Income Housing Tax Credits and Other Tax Credit Investments

The Community Reinvestment Act (“CRA”) encourages banks to meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate income. The Company has primarily invested in separate Low Income Housing Tax Credits (“LIHTC”) projects, also referred to as qualified affordable housing projects, which provide the Company with tax credits and operating loss tax benefits over a period of approximately 15 years. The return on these investments is generally generated through tax credits and tax losses. In addition to LIHTC projects, the Company invests in new markets tax credit projects that qualify for CRA credits and eligible projects that qualify for renewable energy and historic tax credits.

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had ~~$85.5~~$108.5 million and ~~$59.8~~$83.8 million, respectively, in tax credit investments that were included in other assets in the consolidated balance sheets.

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When permissible, the Company accounts for its investments in LIHTC projects using the proportional amortization method, under which it amortizes the initial cost of the investment in proportion to the amount of the tax credits and other tax benefits received and recognizes that amortization as a component of income tax expense. The net investment in the housing projects is included in other assets. The Company will continue to use the proportional amortization method on any new qualifying LIHTC investments.

~~Table of Contents~~

The following table presents the Company’s investments in low income housing projects accounted for using the proportional amortization method for the periods indicated:


		As of September 30, 2021		As of December 31, 2020			As of September 30, 2022		As of December 31, 2021
		(In thousands)					(In thousands)
Current recorded investment included in other assets	Current recorded investment included in other assets	$	82,533	$	58,504	Current recorded investment included in other assets	$	105,797	$	81,035
Commitments to fund qualified affordable housing projects included in recorded investment noted above	Commitments to fund qualified affordable housing projects included in recorded investment noted above	49,611		31,487		Commitments to fund qualified affordable housing projects included in recorded investment noted above	63,809		48,399

The following table presents additional information related to the ~~Company's~~Company’s investments in LIHTC projects for the ~~period~~periods indicated:


		For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands)									(In thousands)
Tax credits and benefits recognized	Tax credits and benefits recognized	$	1,730	$	1,539	$	4,717	$	4,597	Tax credits and benefits recognized	$	2,333	$	1,730	$	6,988	$	4,717
Amortization expense included in income tax expense	Amortization expense included in income tax expense	1,496		1,263		4,255		3,715		Amortization expense included in income tax expense	1,886		1,496		5,616		4,255

The Company accounts for certain other investments in renewable energy projects using the equity method of accounting. These investments in renewable energy projects are included in other assets on the consolidated balance ~~sheet~~sheets and totaled ~~$3.0~~$2.7 million and ~~$1.2~~$2.8 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. There were no outstanding commitments related to these investments as of both September 30, ~~2021. There was $1.7 million in outstanding commitments related to these investments as of~~2022 and December 31, ~~2020.~~2021.

~~During the three months ended September 30, 2020, in reviewing its tax credit equity investments for impairment,~~

10. Shareholders’ Equity

Share Repurchases

On November 12, 2021, the Company ~~identified an immaterial correction~~announced receipt of a notice of non-objection from the Board of Governors of the Federal Reserve System to its previously announced share repurchase program which was approved by the ~~investment balances primarily related~~Company’s Board of Directors on October 1, 2021. The program authorized the purchase of up to ~~prior periods. Accordingly,~~9,337,900 shares, or 5% of the Company’s then-outstanding shares of common stock over a 12-month period. The program was limited to $225.0 million through November 30, 2022. The Company completed the repurchase of the total number of shares authorized through this program during the three months ended September 30, ~~2020,~~2022.

On September 7, 2022, the Company ~~wrote off $7.6 million~~announced receipt of a notice of non-objection from the Federal Reserve for a new share repurchase program. The program, which authorizes the purchase of up to 8,900,000 shares, or 5% of the ~~tax credit equity investment balances as~~Company’s then-outstanding shares of common stock over a ~~component~~12-month period, is limited to $200.0 million through August 31, 2023.

Repurchases are made at management’s discretion from time to time at prices management considers to be attractive and in the best interests of ~~noninterest expense~~both the Company and ~~other assets~~its shareholders, subject to ~~reflect~~ the ~~remaining benefits from these investments. Management evaluated~~availability of shares, general market conditions, the ~~correction~~trading price of the shares, alternative uses for capital, and the Company’s financial performance. Repurchases may be suspended, terminated or modified by the Company at any time for any reason.

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Information regarding the shares repurchased under the plans is presented in ~~relation to~~the following table:


Period	Total Number of Shares Repurchased	Average Price Paid per Share		Total Number of Shares Repurchased as Part of the Share Repurchase Programs at the end of Each Respective Period	Maximum Number of Shares That May Yet Be Purchased Under the Share Repurchase Programs at the end of Each Respective Period
January 1, 2022 – January 31, 2022	987,526	$	21.02	2,123,404	7,214,496
February 1, 2022 – February 28, 2022	1,109,697	21.08		3,233,101	6,104,799
March 1, 2022 – March 31, 2022	769,398	21.31		4,002,499	5,335,401
April 1, 2022 – April 30, 2022	1,194,185	20.19		5,196,684	4,141,216
May 1, 2022 – May 31, 2022	1,880,381	18.93		7,077,065	2,260,835
June 1, 2022 – June 30, 2022	1,141,903	18.78		8,218,968	1,118,932
July 1, 2022 – July 31, 2022	909,785	19.02		9,128,753	209,147
August 1, 2022 - August 31, 2022	—	—		9,128,753	209,147
September 1, 2022 – September 30, 2022	571,463	20.33		9,700,216	8,537,684

The Company repurchased no shares of its common stock during the three and nine months ended September 30, ~~2020, as well as~~2021.

Dividends

Information regarding dividends declared and paid is presented in the preceding periods in which it originated and believes this correction is immaterial to both the consolidated quarterly and previous annual financial statements. During the three and nine months ended September 30, 2021, the Company performed a similar review and, accordingly, recorded an impairment and (recovery of) impairment as a result of management’s review of its tax credit equity investments for impairment of $1.1 million and $(0.3) million, respectively.following table:


	Dividends Declared per Share		Dividends Declared		Dividends Paid
	(In millions, except per share data)
Three Months Ended March 31, 2022	$	0.10	$	17.1	$	16.9
Three Months Ended June 30, 2022	0.10		16.7		16.5
Three Months Ended September 30, 2022	0.10		16.5		16.3

Three Months Ended March 31, 2021	$	0.06	$	10.3	$	10.3
Three Months Ended June 30, 2021	0.08		13.8		13.8
Three Months Ended September 30, 2021	0.08		13.8		13.8

9.11. Employee Benefits

~~Conversion of Defined Benefit Pension Plan and Benefit Equalization Plan to Cash Balance Plan Design~~

Effective November 1, 2020, the Qualified Defined Benefit Pension Plan (“Defined Benefit Plan”) and the Non-Qualified Benefit Equalization Plan (“BEP”) sponsored by the Company were amended to convert the plans from a traditional final average earnings plan design to a cash balance plan design. Benefits earned under the final average earnings plan design were frozen at October 31, 2020. Starting November 1, 2020, future benefits are earned under the cash balance plan design. Under the cash balance plan design, hypothetical account balances are established for each participant and pension benefits are generally stated as the lump sum amount in that hypothetical account. Contribution credits equal to a percentage of a participant’s annual compensation (if the participant works at least 1,000 hours during the year) and interest credits equal to the greater of the 30-Year Treasury rate for September preceding the current plan year or 3.5% are added to a participant’s account each year. For employees hired prior to November 1, 2020, annual contribution credits generally increase as the participant remains employed with the Company. Employees hired on and after November 1, 2020 receive annual contribution credits equal to 5% of annual compensation, with no future increases. Notwithstanding the preceding sentence, since a cash balance plan is a defined benefit plan, the annual retirement benefit payable at normal retirement (age 65) is an annuity, which is the actuarial equivalent of the participant’s account balance under the cash balance plan design, plus their frozen benefit under the final average earnings plan design. However, under the Defined Benefit Plan, participants may elect, with the consent of their spouses if they are married, to have the benefits distributed as a lump sum rather than an annuity. The lump sum is equal to the sum of the actuarial equivalent of their frozen benefit under the final average earnings plan design, plus their cash balance account. Under the BEP, benefits are generally only payable as a lump sum, which is equal to the sum of the actuarial equivalent of their frozen benefit under the final average earnings plan design, plus their cash balance account.

Pension Plans

~~Table of Contents~~

The Company provides pension benefits for its employees through membership in the Savings Banks Employees’ Retirement Association. The plan through which benefits are provided is a noncontributory, qualified defined benefit ~~plan.~~plan and is referred to as the Defined Benefit Plan. The Company’s annual contribution to the Defined Benefit Plan is based upon standards established by the Pension Protection Act. The contribution is based on an actuarial method intended to provide not only for benefits attributable to service to date, but also for those expected to be earned in the future. The Defined Benefit Plan has a plan year end of October 31.

The Company has an unfunded Defined Benefit Supplemental Executive Retirement Plan (“DB SERP”) that provides certain retired ~~and currently employed~~ officers with defined pension benefits in excess of qualified plan limits imposed by U.S. federal tax law. The DB SERP has a plan year end of December 31.

In addition, the Company has an unfunded Benefit Equalization Plan ~~the aforementioned BEP,~~(“BEP”) to provide retirement benefits to certain employees whose retirement benefits under the qualified pension plan are limited per the Internal Revenue Code. The BEP has a plan year end of October 31.

The Company also has an unfunded Outside Directors’ Retainer Continuance Plan (“ODRCP”) that provides pension benefits to outside directors who retire from service. The ODRCP has a plan year end of December 31. Effective December 31, 2020, the Company closed the ODRCP to new participants and froze benefit accruals for active participants.

Components of Net Periodic Benefit Cost

The components of net pension expense for the plans for the periods indicated are as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(In thousands)
Components of net periodic benefit cost:
Service cost $ 7,896 $ 6,231 $ 23,690 $ 18,694
Interest cost 1,269 2,617 3,805 7,849
Expected return on plan assets (8,141) (7,427) (24,424) (22,277)
Past service cost (2,945) 7 (8,835) 19
Recognized net actuarial loss 3,537 2,361 10,612 7,082
Net periodic benefit cost $ 1,616 $ 3,789 $ 4,848 $ 11,367

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In thousands)
Components of net periodic benefit cost:
Service cost	$	8,094	$	7,896	$	24,278	$	23,690
Interest cost	2,429		1,269		7,289		3,805
Expected return on plan assets	(9,280)		(8,141)		(27,842)		(24,424)
Prior service credit	(2,971)		(2,945)		(8,911)		(8,835)
Recognized net actuarial loss	2,799		3,537		8,395		10,612
Net periodic benefit cost	$	1,071	$	1,616	$	3,209	$	4,848

Service costs for the Defined Benefit Plan ~~the BEP,~~ and the ~~DB SERP~~BEP are recognized within salaries and employee benefits in the ~~statement~~consolidated statements of income. ~~Service~~There were no service costs ~~for~~associated with the DB SERP or ODRCP ~~are recognized within professional services in~~during the ~~statement of income.~~three and nine months ended September 30, 2022 and September 30, 2021. The remaining components of net periodic benefit cost are recognized in other noninterest expense in the ~~statement~~consolidated statements of income. The Company’s non-service cost expenses for the Defined Benefit Plan and the BEP decreased by $3.8 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 and decreased by $11.5 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. This was primarily due to the conversion of the Company's Defined Benefit Plan and BEP from a traditional final average earnings plan design to a cash balance plan design.

In accordance with the Pension Protection Act, the Company was not required to make any contributions to the Defined Benefit Plan for the plan year beginning November 1, ~~2020, and did~~2021. However, the Company made a discretionary contribution to the Defined Benefit Plan of $7.2 million during the nine months ended September 30, 2022. In accordance with the Pension Protection Act, the Company was not required to make any contributions to the Defined Benefit Plan for the plan year beginning November 1, 2020. Accordingly, during the three and nine months ended September 30, ~~2021. During the three months ended September 30, 2020,~~2021, there were no contributions made to the Defined Benefit Plan. ~~During the nine months ended September 30, 2020, the Company made contributions to the Defined Benefit Plan of $32.5 million.~~

Rabbi Trust Variable Interest ~~Entity~~Entities

The Company established a rabbi ~~trust~~trusts to meet its obligations under certain executive non-qualified retirement benefits and deferred compensation plans and to mitigate the expense volatility of the aforementioned retirement plans. The rabbi ~~trust is~~trusts are considered a variable interest ~~entity~~entities (“VIE”) as the equity investment at risk is insufficient to permit the ~~trust~~trusts to finance ~~its~~their activities without additional subordinated financial support from the Company. The Company is considered the primary beneficiary of the rabbi ~~trust~~trusts as it has the power to direct the activities of the rabbi ~~trust~~trusts that significantly affect the rabbi ~~trust’s~~trusts’ economic performance and it has the obligation to absorb losses of the rabbi ~~trust~~trusts that could potentially be significant to the rabbi ~~trust~~trusts by virtue of its contingent call options on the rabbi ~~trust’s~~trusts’ assets in the event of the Company’s bankruptcy. As the primary beneficiary of ~~this VIE,~~these VIEs, the Company consolidates the rabbi trust investments. In general, the rabbi trust investments and any earnings received thereon are accumulated, reinvested and used exclusively for trust purposes. These

~~Table of Contents~~

rabbi trust investments consist primarily of cash and cash equivalents, U.S. government agency obligations, equity securities, mutual funds and other exchange-traded funds, and are recorded at fair value in other assets in the Company's consolidated balance ~~sheet.~~sheets. Changes in fair value are recorded in noninterest income in the Company's consolidated statements of income. At September 30, ~~2021~~2022 and December 31, ~~2020~~2021 the amount of rabbi trust investments at fair value were ~~$98.2~~$71.7 million and ~~$91.7~~$104.4 million, respectively.

~~Investments in rabbi trust accounts are recorded at fair value within the Company's consolidated balance sheets with changes in fair value recorded through noninterest income.~~ The following table presents the book value, mark-to-market, and fair value of assets held in rabbi trust accounts by asset type:


		As of September 30, 2021						As of December 31, 2020							As of September 30, 2022						As of December 31, 2021
		Book Value		Mark-to-Market		Fair Value		Book Value		Mark-to-Market		Fair Value			Book Value		Mark-to-Market		Fair Value		Book Value		Mark-to-Market		Fair Value
Asset Type	Asset Type	(In thousands)												Asset Type	(In thousands)
Cash and cash equivalents	Cash and cash equivalents	$	4,476	$	—	$	4,476	$	5,157	$	—	$	5,157	Cash and cash equivalents	$	5,427	$	—	$	5,427	$	4,494	$	—	$	4,494
Equities(1)	Equities(1)	65,670		19,880		85,550		59,235		19,492		78,727		Equities(1)	59,424		(132)		59,292		67,401		24,295		91,696
Fixed income	Fixed income	7,976		172		8,148		7,441		358		7,799		Fixed income	7,810		(879)		6,931		8,126		56		8,182
Total assets	Total assets	$	78,122	$	20,052	$	98,174	$	71,833	$	19,850	$	91,683	Total assets	$	72,661	$	(1,011)	$	71,650	$	80,021	$	24,351	$	104,372

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(1)Equities include mutual funds and other exchange-traded funds.

Share-Based Compensation Plan

On November 29, 2021, the shareholders of the Company approved the Eastern Bankshares, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan provides for the issuance of up to 26,146,141 shares of common stock pursuant to grants of restricted stock, restricted stock units (“RSUs”), non-qualified stock options and incentive stock options, any or all of which can be granted with performance-based vesting conditions. Under the 2021 Plan, 7,470,326 shares may be issued as restricted stock or RSUs, including those issued as performance shares and performance share units (“PSUs”), and 18,675,815 shares may be issued upon the exercise of stock options. These shares may be awarded from the Company’s authorized but unissued shares. However, the 2021 Plan permits the grant of additional awards of restricted stock or RSUs above the aforementioned limit, provided that, for each additional share of restricted stock or RSU awarded in excess of such limit, the pool of shares available to be issued upon the exercise of stock options will be reduced by three shares. Pursuant to the terms of the 2021 Plan, each of the Company’s non-employee directors were automatically granted awards of restricted stock on November 30, 2021. Such restricted stock awards vest pro-rata on an annual basis over a five-year period. The maximum term for stock options is ten years.

On March 1, 2022, the Company granted to all of the Company’s executive officers and certain other employees a total of 978,364 RSUs, which vest pro-rata on an annual basis over a period of three or five years, and a total of 533,676 PSUs, for which vesting is contingent upon the Compensation Committee of the Board of Director’s certification, after the conclusion of a three-year period, that the Company has attained a threshold level of certain performance criteria over such period. On May 17, 2022, the Company granted a total of 31,559 shares of restricted stock to the Company’s non-employee directors which vest after approximately one year from the date of grant. As of September 30, 2022 and December 31, 2021, there were 5,243,671 shares and 6,787,270 shares that remained available for issuance as restricted stock or RSU awards, respectively, and 18,675,815 shares that remain available for issuance upon the exercise of stock options at both dates. As of both September 30, 2022 and December 31, 2021, no stock options had been awarded under the 2021 Plan.

The following table summarizes the Company’s restricted stock award activity for the nine months ended September 30, 2022:


	Number of Shares	Weighted-Average Grant Price Per Share
Non-vested restricted stock as of December 31, 2021	683,056	$	20.13
Granted	31,559	19.17
Non-vested restricted stock as of September 30, 2022	714,615	$	20.09

The following table summarizes the Company’s restricted stock unit activity for the nine months ended September 30, 2022:


	Number of Shares	Weighted-Average Grant Price Per Share
Non-vested restricted stock units as of December 31, 2021	—	$	—
Granted	978,364	21.08
Forfeited	(6,039)	21.08
Non-vested restricted stock units as of September 30, 2022	972,325	$	21.08

The following table summarizes the Company’s performance stock unit activity for the nine months ended September 30, 2022:


	Number of Shares	Weighted-Average Grant Price Per Share
Non-vested performance stock units as of December 31, 2021	—	$	—
Granted	533,676	21.12
Non-vested performance stock units as of September 30, 2022	533,676	$	21.12

As of both September 30, 2022 and December 31, 2021, no awards had vested.

For the three months ended September 30, 2022, share-based compensation expense under the 2021 Plan and the related tax benefit totaled $3.6 million and $1.0 million, respectively. For the nine months ended September 30, 2022, share-

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based compensation expense under the 2021 Plan and the related tax benefit totaled $8.1 million and $2.3 million, respectively. No share-based compensation expense was incurred for the three and nine months ended September 30, 2021 as the Company began granting awards in November 2021.

As of September 30, 2022 and December 31, 2021, there was $40.8 million and $13.5 million, respectively, of total unrecognized compensation expense related to unvested restricted stock awards, restricted stock units and performance stock units granted and issued under the 2021 Plan, as applicable. As of September 30, 2022, this cost is expected to be recognized over a weighted average remaining period of approximately 3.6 years. As of December 31, 2021, this cost was expected to be recognized over a weighted average remaining period of approximately 4.9 years.

~~10.~~12. Commitments and Contingencies

Financial Instruments with Off-Balance Sheet Risk

In order to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates, the Company is party to financial instruments with off-balance sheet risk in the normal course of business. These financial instruments include commitments to extend credit, standby letters of credit, and forward commitments to sell loans, all of which involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in each particular class of financial instruments.

Substantially all of the Company’s commitments to extend credit, which normally have fixed expiration dates or termination clauses, are contingent upon customers maintaining specific credit standards at the time of loan funding. Standby letters of credit are conditional commitments issued by the Company 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 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. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. For forward loan sale commitments, the contract or notional amount does not represent exposure to credit loss. The Company does not sell loans with recourse.

The following table summarizes the above financial instruments as of the dates indicated:


		As of September 30, 2021		As of December 31, 2020			As of September 30, 2022		As of December 31, 2021
		(In thousands)					(In thousands)
Commitments to extend credit	Commitments to extend credit	$	4,387,306	$	3,818,952	Commitments to extend credit	$	5,605,713	$	5,175,521
Standby letters of credit	Standby letters of credit	58,734		60,221		Standby letters of credit	66,467		65,602
Forward commitments to sell loans	Forward commitments to sell loans	49,105		41,160		Forward commitments to sell loans	8,139		24,440

Other Contingencies

The Company has been named a defendant in various legal proceedings arising in the normal course of business. Set out below are descriptions of significant legal matters involving the Company and its subsidiaries. In the opinion of management, based on the advice of legal counsel, the ultimate resolution of these proceedings will not have a material effect on the Company’s consolidated financial statements.

In the second quarter of 2021, the Company entered into a preliminary settlement of 2two purported class action matters concerning overdraft and nonsufficient funds fees. The matters were filed in the Massachusetts Superior Court in November 2019 and April 2021, respectively, and were consolidated into one matter for final settlement purposes. The matters were settled during the first quarter of 2022 and the total settlement expense, including related costs, was $3.3 million. The Company incurred no costs in 2022 related to these matters as the total settlement expense had been accrued in 2021 when management determined the loss contingency to be both probable and estimable. The Company’s regulators conducted inquiries and reviewed data related to one of these class action matters and, in February 2022, made an additional request for data and notified management that they may require additional restitution for certain matters associated with the nonsufficient funds fees matter. Based on this discussion, management believed that a loss contingency for this restitution was probable but was not able to determine a reasonable estimate for the loss. However, later during the first quarter of 2022, the Company was informed by its regulators that no additional remediation on this issue would be required. As a result, as of September 30, 2022, management no longer believes that a loss contingency for restitution associated with this issue is probable.

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November 2019 and April 2021, respectively, and are expected to be consolidated into one matter for final settlement purposes. As of September 30, 2021, the Company estimated the settlement expense, including related costs, to be $3.3 million.

As a member of the Federal Reserve System, the Bank is required to maintain certain reserves of vault cash and/or deposits with the Federal Reserve Bank of Boston (the “FRBB”). However, in response to the COVID-19 pandemic, the Federal Reserve temporarily eliminated reserve requirements and therefore there was no minimum reserve requirement as of either September 30, ~~2021~~2022 or December 31, ~~2020.~~2021.

~~11.~~13. Derivative Financial Instruments

The Company uses derivative financial instruments to manage its interest rate risk resulting from the differences in the amount, timing, and duration of known or expected cash receipts and known or expected cash payments. Additionally, the Company enters into interest rate derivatives and foreign exchange contracts to accommodate the business requirements of its customers (“customer-related positions”) and risk participation agreements entered into as financial guarantees of performance on customer-related interest rate swap derivatives. The Company also enters into residential mortgage loan commitments to fund mortgage loans at specified rates and times in the future and enters into forward sale commitments to sell such residential mortgage loans at specified prices and times in the future, both of which are considered derivative instruments. 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 the instrument qualifies as a hedge for accounting purposes, and further, by the type of hedging relationship.

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 plus any initial margin collateral posted. The Company seeks to minimize counterparty credit risk through credit approvals, limits, monitoring procedures, and obtaining collateral, where appropriate. As such, management believes the risk of incurring credit losses on derivative contracts with those counterparties is remote. The Company’s discounting methodology and interest calculation of cash margin uses the Secured Overnight Financing Rate, or SOFR, for U.S. dollar cleared interest rate swaps.

Interest Rate Positions

An interest rate swap 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. The Company ~~may enter~~has entered into interest rate swaps in which it pays floating and receives fixed interest in order to manage its interest rate risk exposure to the variability in interest cash flows on certain floating-rate ~~commercial~~ loans. Such interest rate swaps include those which effectively convert the floating rate one-month LIBOR, SOFR or overnight indexed swap rate, or prime rate interest payments received on the loans to a fixed rate and consequently reduce the Company’s exposure to variability in short-term interest rates. For interest rate swaps that are accounted for as cash flow hedges, changes in fair value are included in other comprehensive income and reclassified into net income in the same period or periods during which the hedged forecasted transaction affects net income. AsThe following table reflects the Company’s derivative positions as of September 30, ~~2021 and December 31, 2020, the Company does not have any active~~2022 for interest rate swaps which qualify as cash flow hedges for accounting ~~purposes.~~purposes:

~~Due~~


				Weighted Average Rate
	Notional Amount		Weighted Average Maturity	Current Rate Paid		Receive Fixed Swap Rate		Fair Value (1)
	(In thousands)		(In Years)					(In thousands)
Interest rate swaps on loans	$	2,400,000	4.82	2.62	%	3.02	%	$	(3,201)
Total	$	2,400,000						$	(3,201)

(1)The fair value included a net accrued interest receivable balance of $0.2 million as of September 30, 2022. In addition, the fair value includes netting adjustments which represent the amounts recorded to convert derivative assets and liabilities cleared through the ~~phase-out, and eventual discontinuation, of the LIBOR, central clearinghouses have begun~~CME from a gross basis to ~~transition to alternative rates for valuation purposes.~~ a net basis in accordance with applicable accounting guidance.

As of ~~October 16, 2020,~~December 31, 2021, the Company ~~changed its valuation methodology to reflect changes made by the Chicago Mercantile Exchange (“CME”), through~~did not have any active interest rate swaps which qualified as cash flow hedges for accounting purposes.

The maximum amount of time over which the Company ~~clears derivative~~is currently hedging its exposure to the variability in future cash flows of forecasted transactions related to the receipt of variable interest on existing financial instruments that are eligible for clearing. The changes from the CME changed the discounting methodology and interest calculation of cash margin from overnight index swap to secured overnight financing rate (also known as SOFR) for U.S. dollar cleared interest rate swaps. is 5 years.

The Company ~~believes that its improvements to its valuation methodology~~expects approximately $27.6 million will ~~result in valuations for cleared~~be reclassified into interest ~~rate swaps that better reflect prices obtainable in the markets in which the Company transacts. The changes in valuation methodology were applied prospectively~~income, as a ~~change in accounting estimate and are immaterial~~reduction of such income, from other comprehensive income related to the Company’s ~~financial statements.~~active cash flow hedges in the next 12 months as of

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September 30, 2022. The reclassification is due to anticipated net payments on the swaps based upon the forward curve as of September 30, 2022.

The Company discontinues cash flow hedge accounting if it is probable the forecasted hedged transactions will not occur in the initially identified time period. At such time, the associated gains and losses deferred in accumulated other comprehensive income (“AOCI”) are reclassified immediately into earnings and any subsequent changes in the fair value of such derivatives are recognized directly in earnings.

The following table presents the pre-tax impact of terminated cash flow hedges on ~~accumulated other comprehensive income (“AOCI”)~~AOCI for the three and nine months ended September 30, ~~2021~~2022 and September 30, ~~2020:~~2021:

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		For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands)									(In thousands)
Unrealized gains on terminated hedges included in AOCI – beginning of respective period	Unrealized gains on terminated hedges included in AOCI – beginning of respective period	$	24,980	$	30,579	$	41,473	$	—	Unrealized gains on terminated hedges included in AOCI – beginning of respective period	$	1,850	$	24,980	$	10,239	$	41,473
Unrealized gains on terminated hedges arising during the period	Unrealized gains on terminated hedges arising during the period	—		26,410		—		57,362		Unrealized gains on terminated hedges arising during the period	—		—		—		—
Reclassification adjustments for amortization of unrealized (gains) into net income		(7,851)		(7,036)		(24,344)		(7,409)
Unrealized gains on terminated hedges included in AOCI – September 30		$	17,129	$	49,953	$	17,129	$	49,953
Reclassification adjustments for amortization of unrealized gains into net income										Reclassification adjustments for amortization of unrealized gains into net income	(1,263)		(7,851)		(9,652)		(24,344)
Unrealized gains on terminated hedges included in AOCI – end of respective period										Unrealized gains on terminated hedges included in AOCI – end of respective period	$	587	$	17,129	$	587	$	17,129

The balance of terminated cash flow hedges in AOCI will be amortized into earnings through January 2023. The Company expects ~~approximately $16.5~~the remaining $0.6 million to be reclassified into interest income from other comprehensive income related to the Company’s terminated cash flow hedges in the next 12 months as of September 30, ~~2021.~~2022.

Customer-Related Positions

Interest rate swaps offered to commercial customers do not qualify as hedges for accounting purposes. These swaps allow the Company to retain variable rate commercial loans while allowing the commercial customer to synthetically fix the loan rate by entering into a variable-to-fixed rate interest rate swap. The Company believes that its exposure to commercial customer derivatives is limited to nonperformance by either the customer or the dealer because these contracts are simultaneously matched at inception with an offsetting transaction.

Risk participation agreements are entered into as financial guarantees of performance on interest rate swap derivatives. The purchased (asset) or sold (liability) guarantee allow the Company to participate-out (fee paid) or participate-in (fee received) the risk associated with certain derivative positions executed with the borrower by the lead bank in a customer-related interest rate swap derivative.

Foreign exchange contracts consist of those offered to commercial customers and those entered into to hedge the Company’s foreign currency risk associated with a foreign-currency loan. Neither qualifies as a hedge for accounting purposes. These commercial customer derivatives are offset with matching derivatives with correspondent-bank counterparties in order to minimize foreign exchange rate risk to the Company. Exposure with respect to these derivatives is largely limited to nonperformance by either the customer or the other counterparty. Neither the Company nor the correspondent-bank counterparty are required to post collateral but each has established foreign-currency transaction limits to manage the exposure risk. The Company requires its customers to post collateral to minimize risk exposure.

The following tables present the Company’s customer-related derivative positions as of the dates indicated below for those derivatives not designated as hedging.

September 30, 2021
Number of Positions Total Notional
(Dollars in thousands)
Interest rate swaps 510 $ 3,169,358
Risk participation agreements 66 263,847
Foreign exchange contracts:
Matched commercial customer book 52 6,516
Foreign currency loan 4 9,977

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		December 31, 2020				September 30, 2022
		Number of Positions	Total Notional			Number of Positions	Total Notional
		(Dollars in thousands)				(Dollars in thousands)
Interest rate swaps	Interest rate swaps	576	$	3,652,385	Interest rate swaps	400	$	2,549,355
Risk participation agreements	Risk participation agreements	70	287,732		Risk participation agreements	60	252,553
Foreign exchange contracts:	Foreign exchange contracts:				Foreign exchange contracts:
Matched commercial customer book	Matched commercial customer book	40	4,242		Matched commercial customer book	72	12,016
Foreign currency loan	Foreign currency loan	3	10,798		Foreign currency loan	4	12,030


	December 31, 2021
	Number of Positions	Total Notional
	(Dollars in thousands)
Interest rate swaps	494	$	3,009,150
Risk participation agreements	64	238,772
Foreign exchange contracts:
Matched commercial customer book	72	7,922
Foreign currency loan	6	10,830

The level of interest rate swaps, risk participation agreements and foreign currency exchange contracts at the end of each period noted above was commensurate with the activity throughout those periods.

The table below presents the fair value of the Company’s derivative financial instruments, as well as their classification on the consolidated balance ~~sheet~~sheets for the periods indicated. There were no derivatives designated as hedging instruments at ~~September 30, 2021 or~~ December 31, ~~2020.~~2021.


		Asset Derivatives					Liability Derivatives						Asset Derivatives					Liability Derivatives
		Balance Sheet Location	Fair Value at September 30, 2021		Fair Value at December 31, 2020		Balance Sheet Location	Fair Value at September 30, 2021		Fair Value at December 31, 2020			Balance Sheet Location	Fair Value at September 30, 2022		Fair Value at December 31, 2021		Balance Sheet Location	Fair Value at September 30, 2022		Fair Value at December 31, 2021
		(In thousands)											(In thousands)
Derivatives designated as hedging instruments												Derivatives designated as hedging instruments
Interest rate swaps												Interest rate swaps	Other assets	$	5	$	—	Other liabilities	$	3,206	$	—
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments											Derivatives not designated as hedging instruments
Customer-related positions:	Customer-related positions:											Customer-related positions:
Interest rate swaps	Interest rate swaps	Other assets	$	80,102	$	141,822	Other liabilities	$	25,274	$	42,600	Interest rate swaps	Other assets	$	23,818	$	64,338	Other liabilities	$	82,404	$	17,880
Risk participation agreements	Risk participation agreements	Other assets	347		722		Other liabilities	594		1,230		Risk participation agreements	Other assets	55		315		Other liabilities	134		580
Foreign currency exchange contracts - matched customer book	Foreign currency exchange contracts - matched customer book	Other assets	44		90		Other liabilities	31		77		Foreign currency exchange contracts - matched customer book	Other assets	428		61		Other liabilities	414		46
Foreign currency exchange contracts - foreign currency loan	Foreign currency exchange contracts - foreign currency loan	Other assets	120		9		Other liabilities	—		69		Foreign currency exchange contracts - foreign currency loan	Other assets	54		—		Other liabilities	132		87
														$	24,355	$	64,714		$	83,084	$	18,593
Total	Total		$	80,613	$	142,643		$	25,899	$	43,976	Total		$	24,360	$	64,714		$	86,290	$	18,593

The table below presents the net effect of the Company’s derivative financial instruments on the consolidated income statements as well as the effect of the Company’s derivative financial instruments included in other comprehensive income (“OCI”) as follows:

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		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands)									(In thousands)
Derivatives designated as hedges:	Derivatives designated as hedges:									Derivatives designated as hedges:
(Loss) gain in OCI on derivatives		$	—	$	(142)	$	—	$	46,869
Loss in OCI on derivatives										Loss in OCI on derivatives	$	(72,667)	$	—	$	(71,182)	$	—
Gain reclassified from OCI into interest income (effective portion)	Gain reclassified from OCI into interest income (effective portion)	$	7,851	$	8,405	$	24,344	$	18,651	Gain reclassified from OCI into interest income (effective portion)	$	3,755	$	7,851	$	12,797	$	24,344
Gain recognized in income on derivatives (ineffective portion and amount excluded from effectiveness test)	Gain recognized in income on derivatives (ineffective portion and amount excluded from effectiveness test)									Gain recognized in income on derivatives (ineffective portion and amount excluded from effectiveness test)
Interest income	Interest income	—		—		—		—		Interest income	—		—		—		—
Other income	Other income	—		—		—		—		Other income	—		—		—		—
Total	Total	$	—	$	—	$	—	$	—	Total	$	—	$	—	$	—	$	—
Derivatives not designated as hedges:	Derivatives not designated as hedges:									Derivatives not designated as hedges:
Customer-related positions:	Customer-related positions:									Customer-related positions:
Gain (loss) recognized in interest rate swap income		$	832	$	904	$	4,596	$	(6,063)
(Loss) gain recognized in interest rate swap income for risk participation agreements		(4)		11		260		(370)
Gain (loss) recognized in other income for foreign currency exchange contracts:
Gain recognized in interest rate swap income										Gain recognized in interest rate swap income	$	1,035	$	832	$	4,760	$	4,596
Gain (loss) recognized in interest rate swap income for risk participation agreements										Gain (loss) recognized in interest rate swap income for risk participation agreements	38		(4)		186		260
Gain recognized in other income for foreign currency exchange contracts:										Gain recognized in other income for foreign currency exchange contracts:
Matched commercial customer book	Matched commercial customer book	8		(86)		—		(17)		Matched commercial customer book	(1)		8		(1)		—
Foreign currency loan	Foreign currency loan	72		149		181		179		Foreign currency loan	(136)		72		9		181
Total gain (loss) for derivatives not designated as hedges		$	908	$	978	$	5,037	$	(6,271)
Total gain for derivatives not designated as hedges										Total gain for derivatives not designated as hedges	$	936	$	908	$	4,954	$	5,037

The Company has agreements with its customer-related interest rate swap derivative counterparties that contain a provision whereby if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.

The Company also has agreements with certain of its customer-related interest rate swap derivative correspondent-bank counterparties that contain a provision whereby if the Company fails to maintain its status as a well-capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

The Company’s exposure related to its customer-related interest rate swap derivatives consists of exposure on cleared derivative transactions and exposure on non-cleared derivative transactions.

Cleared derivative transactions are with the Chicago Mercantile Exchange, or CME, and exposure is settled to market daily, with additional credit exposure related to initial-margin collateral pledged to CME at trade execution. At September 30, 2022 and December 31, 2021, the Company had no exposure to CME for settled variation margin in excess of the customer-related ~~interest rate swap termination values. At December 31, 2020, the Company’s exposure to CME for settled variation margin in excess of the customer-related~~and non-customer-related interest rate swap termination values ~~was less than $0.1 million.~~of $0.6 million and $0.4 million, respectively. In addition, at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had posted initial-margin collateral in the form of a U.S. Treasury ~~note~~notes amounting to ~~$49.4~~$83.7 million and ~~$60.4~~$48.9 million, respectively, to CME for these derivatives. The U.S. Treasury ~~note was~~notes were considered a restricted ~~asset~~assets and ~~was~~were included in available for sale securities within the ~~Company's~~Company’s consolidated balance sheets.

At September 30, ~~2021 and~~2022, there were no customer-related interest rate swap derivatives with credit-risk contingent features in a net liability position. At December 31, ~~2020~~2021 the fair value of all customer-related interest rate swap derivatives with credit-risk related contingent features that were in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, totaled ~~$21.7 million and $42.6 million, respectively.~~$13.7 million. The Company has minimum collateral posting thresholds with its customer-related interest rate swap derivative correspondent-bank counterparties to the extent that the Company has a liability position with the correspondent-bank counterparties. At September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had posted collateral in the form of cash amounting to ~~$27.8~~$2.0 million and ~~$49.2~~$21.3 million, respectively, which was considered to be a restricted asset and was included in other short-term investments within the Company's consolidated balance sheets. If the Company had breached any of these provisions at September 30, ~~2021~~2022 or December 31, ~~2020,~~2021, it would have been required to settle its ~~obligations under the agreements at the termination value. In~~

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obligations under the agreements at the termination value. In addition, the Company had cross-default provisions with its commercial customer loan agreements which provide cross-collateralization with the customer loan collateral.

Mortgage Banking Derivatives

~~12.~~The Company enters into residential mortgage loan commitments in connection with its consumer mortgage banking activities to fund mortgage loans at specified rates and times in the future. In addition, the Company enters into forward sale commitments to sell such residential mortgage loans at specified prices and times in the future. These commitments are short-term in nature and generally expire in 30 to 60 days. The residential mortgage loan commitments that relate to the origination of mortgage loans that will be held for sale and the related forward sale commitments are considered derivative instruments under ASC Topic 815, “Derivatives and Hedging” and are reported at fair value. Changes in fair value are reported in earnings and included in other non-interest income on the consolidated statements of income. As of September 30, 2022 and December 31, 2021, the Company had an outstanding notional balance of residential mortgage loan origination commitments of $9.4 million and $31.9 million, respectively and forward sale commitments of $8.1 million and $24.4 million, respectively. During both the three months ended September 30, 2022 and September 30, 2021, the Company recorded net losses related to the change in fair value of commitments to originate and sell mortgage loans of less than $0.1 million. During the nine months ended September 30, 2022 and September 30, 2021, the Company recorded net losses related to the change in fair value of commitments to originate and sell mortgage loans of $0.2 million and $0.5 million, respectively. The aggregate fair value of the Company’s mortgage banking derivative asset and liability as of September 30, 2022 was $0.1 million and less than $0.1 million, respectively. The aggregate fair value of the Company’s mortgage banking derivative asset and liability as of December 31, 2021 was $0.3 million and $0.1 million, respectively. Mortgage banking derivative assets and liabilities are included in other assets and other liabilities, respectively, on the consolidated balance sheets. Residential mortgages sold are generally sold with servicing rights released. Mortgage banking derivatives do not qualify as hedges for accounting purposes.

14. Balance Sheet Offsetting

Certain financial instruments, including derivatives, may be eligible for offset in the consolidated balance sheets and/or subject to master netting arrangements or similar agreements. The Company’s derivative transactions with upstream financial institution counterparties are generally executed under International Swaps and Derivative Association master agreements which include “right of set-off” provisions. In such cases there is generally a legally enforceable right to offset recognized amounts. However, the Company does not offset fair value amounts recognized for derivative instruments. The Company nets 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. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, it was determined that no additional collateral would have to be posted to immediately settle these instruments.

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The following tables present the Company’s asset and liability positions that were eligible for offset and the potential effect of netting arrangements on its consolidated balance sheet, as of the dates indicated:


		As of September 30, 2021																					As of September 30, 2022
		Gross Amounts Recognized		Gross Amounts Offset in the Consolidated Balance Sheet				Net Amounts Presented in the Consolidated Balance Sheet				Gross Amounts Not Offset in the Consolidated Balance Sheet								Net Amount			Gross Amounts Recognized					Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts Presented in the Consolidated Balance Sheet			Gross Amounts Not Offset in the Consolidated Balance Sheet				Net Amount
Description	Description									Financial Instruments				Collateral Pledged (Received)				Description								Financial Instruments						Collateral Pledged/ (Received)
		(In thousands)																								(In thousands)
Derivative Assets	Derivative Assets																					Derivative Assets
Interest rate swaps																						Interest rate swaps	$	5				$	—	$	5		$	—	$	—	$	5
Customer-related positions:	Customer-related positions:																					Customer-related positions:
Interest rate swaps	Interest rate swaps	$	80,102			$	—			$	80,102			$	859			$	—					$	79,243		Interest rate swaps	23,818		—			23,818		14		(16,650)		7,154
Risk participation agreements	Risk participation agreements	347		—				347				—				—				347		Risk participation agreements	55					—		55			—		—		55
Foreign currency exchange contracts – matched customer book	Foreign currency exchange contracts – matched customer book	44		—				44				—				—				44		Foreign currency exchange contracts – matched customer book	428					—		428			—		—		428
Foreign currency exchange contracts – foreign currency loan	Foreign currency exchange contracts – foreign currency loan	120		—				120				—				—				120		Foreign currency exchange contracts – foreign currency loan	54					—		54			—		—		54
		$	80,613	$	—			$	80,613			$	859			$	—			$	79,754		$	24,360				$	—	$	24,360		$	14	$	(16,650)	$	7,696
Derivative Liabilities	Derivative Liabilities																					Derivative Liabilities
Interest rate swaps																						Interest rate swaps	$	3,206				$	—	$	3,206		$	—	$	3,206	$	—
Customer-related positions:	Customer-related positions:																					Customer-related positions:
Interest rate swaps	Interest rate swaps	$	25,274	$	—			$	25,274			$	859			$	24,415			$	—	Interest rate swaps	82,404					—		82,404			14		2,000		80,390
Risk participation agreements	Risk participation agreements	594		—				594				—				—				594		Risk participation agreements	134					—		134			—		—		134
Foreign currency exchange contracts – matched customer book	Foreign currency exchange contracts – matched customer book	31		—				31				—				—				31		Foreign currency exchange contracts – matched customer book	414					—		414			—		—		414
Foreign currency exchange contracts – foreign currency loan	Foreign currency exchange contracts – foreign currency loan	—		—				—				—				—				—		Foreign currency exchange contracts – foreign currency loan	132					—		132			—		—		132
		$	25,899	$	—			$	25,899			$	859			$	24,415			$	625		$	86,290				$	—	$	86,290		$	14	$	5,206	$	81,070

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		As of December 31, 2020																					As of December 31, 2021
		Gross Amounts Recognized		Gross Amounts Offset in the Consolidated Balance Sheet				Net Amounts Presented in the Consolidated Balance Sheet				Gross Amounts Not Offset in the Consolidated Balance Sheet								Net Amount			Gross Amounts Recognized					Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts Presented in the Consolidated Balance Sheet			Gross Amounts Not Offset in the Consolidated Balance Sheet				Net Amount
Description	Description									Financial Instruments				Collateral Pledged (Received)				Description								Financial Instruments						Collateral Pledged/ (Received)
		(In thousands)																								(In thousands)
Derivative Assets	Derivative Assets																					Derivative Assets
Customer-related positions:	Customer-related positions:																					Customer-related positions:
Interest rate swaps	Interest rate swaps	$	141,822			$	—			$	141,822			$	48			$	—					$	141,774		Interest rate swaps	$	64,338	$	—		$	64,338	$	1,440	$	—	$	62,898
Risk participation agreements	Risk participation agreements	722		—				722				—				—				722		Risk participation agreements	315					—		315			—		—		315
Foreign currency exchange contracts – matched customer book	Foreign currency exchange contracts – matched customer book	90		—				90				—				(1)				89		Foreign currency exchange contracts – matched customer book	61					—		61			—		—		61
Foreign currency exchange contracts – foreign currency loan	Foreign currency exchange contracts – foreign currency loan	9		—				9				—				—				9		Foreign currency exchange contracts – foreign currency loan	—					—		—			—		—		—
		$	142,643	$	—			$	142,643			$	48			$	(1)			$	142,594		$	64,714				$	—	$	64,714		$	1,440	$	—	$	63,274
Derivative Liabilities	Derivative Liabilities																					Derivative Liabilities
Customer-related positions:	Customer-related positions:																					Customer-related positions:
Interest rate swaps	Interest rate swaps	$	42,600	$	—			$	42,600			$	48			$	42,552			$	—	Interest rate swaps	$	17,880				$	—	$	17,880		$	1,440	$	16,440	$	—
Risk participation agreements	Risk participation agreements	1,230		—				1,230				—				—				1,230		Risk participation agreements	580					—		580			—		—		580
Foreign currency exchange contracts – matched customer book	Foreign currency exchange contracts – matched customer book	77		—				77				—				—				77		Foreign currency exchange contracts – matched customer book	46					—		46			—		—		46
Foreign currency exchange contracts – foreign currency loan	Foreign currency exchange contracts – foreign currency loan	69		—				69				—				—				69		Foreign currency exchange contracts – foreign currency loan	87					—		87			—		—		87
		$	43,976	$	—			$	43,976			$	48			$	42,552			$	1,376		$	18,593				$	—	$	18,593		$	1,440	$	16,440	$	713

~~13.~~15. Fair Value of Assets and Liabilities

The Company uses fair value measurements to record adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

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 Company’s own assumptions are set to reflect those that the Company believes market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including during periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified from Level 1 to Level 2 or from Level 2 to Level 3.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no active market exists for a portion of the Company’s financial instruments, fair value estimates are based on judgements regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgement, and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

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The following methods and assumptions were used by the Company in estimating fair value disclosures:

Cash and Cash Equivalents

For these financial instruments, which have original maturities of 90 days or less, their carrying amounts reported in the consolidated balance sheets approximate fair value.

~~Available for Sale~~ Securities

~~Available for sale securities recorded at fair value~~Securities consisted of U.S. Treasury securities, U.S. Agency bonds (including SBA pooled securities), U.S. government-sponsored residential and commercial mortgage-backed securities, ~~U.S. Agency bonds, and~~ state and municipal ~~bonds.~~bonds, and other debt securities. AFS securities are recorded at fair value.

The Company’s U.S. Treasury securities are traded on active markets and therefore these securities were classified as Level 1.

The fair value of U.S. Agency bonds, including SBA pooled securities, are evaluated using relevant trade data, benchmark quotes and spreads obtained from publicly available trade data, and generated on a price, yield or spread basis as determined by the observed market data. Therefore, these securities were categorized as Level 2 given the use of observable inputs.

The fair value of U.S. government-sponsored residential and commercial mortgage-backed securities were estimated using either a matrix or benchmarks. The inputs used include benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. Therefore, these securities were categorized as Level 2 given the use of observable inputs.

The fair value of state and municipal bonds were estimated ~~by a third-party pricing vendor~~ using a valuation matrix with inputs including observable bond interest rate tables, recent transactions, and yield relationships. Therefore, these securities were categorized as Level 2 given the use of observable inputs.

The fair value of other debt securities were estimated using a valuation matrix with inputs including observable bond interest rate tables, recent transactions, and yield relationships. Therefore, these securities were categorized as Level 2 given the use of observable inputs.

Fair value was based on the value of one unit without regard to any premium or discount that may result from concentrations of ownership of a financial instrument, possible tax ramifications, or estimated transaction costs. The estimated fair value of the Company’s securities, ~~available for sale,~~ by type, is disclosed in ~~the Securities footnote.~~Note 3, “Securities.”

Loans Held for Sale

The fair value of loans held for sale, whose carrying amounts approximate fair value, was estimated using the anticipated market price based upon pricing indications provided by investor banks. These assets were classified as Level 2 given the use of observable inputs.

Loans

The fair value of commercial construction, commercial and industrial lines of credit, and certain other consumer loans was estimated by discounting the contractual cash flows using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

For commercial, commercial real estate, residential real estate, automobile, and consumer home equity loans, fair value was estimated by discounting contractual cash flows adjusted for prepayment estimates using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

The fair value of PPP loans, which are fully guaranteed by the SBA, approximates the carrying amount.

Loans that are deemed to be impaired were recorded at the fair value of the underlying collateral, if the loan is collateral-dependent, or at a carrying value based upon expected cash flows discounted using the loan’s effective interest rate.

Loans are classified as Level 3 since the valuation methodology utilizes significant unobservable inputs. Loans that are deemed to be collateral-dependent, as described in Note 2, “Summary of Significant Accounting Policies” were recorded at the fair value of the underlying collateral.

FHLB Stock

The fair value of FHLB stock approximates the carrying amount based on the redemption provisions of the FHLB. These assets were classified as Level 2.

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Rabbi Trust Investments

Rabbi trust investments consisted primarily of cash and cash equivalents, U.S. government agency obligations, equity securities, mutual funds and other exchange-traded funds, and were recorded at fair value and included in other assets. The purpose of these rabbi trust investments is to fund certain executive non-qualified retirement benefits and deferred compensation.

The fair value of other U.S. government agency obligations was estimated using either a matrix or benchmarks. The inputs used include benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. These securities were categorized as Level 2 given the use of observable inputs. The equity securities, mutual funds and other exchange-traded funds were valued based on quoted prices from the market. The equities, mutual funds and exchange-traded funds traded in an active market were categorized as Level 1 as they were valued based upon quoted prices from the market. Mutual funds at net asset value amounted to ~~$55.1~~$36.5 million at September 30, ~~2021~~2022 and ~~$53.9~~$58.1 million at December 31, ~~2020.~~2021. There were no redemption restrictions on these mutual funds at the end of any period presented.

Bank-Owned Life Insurance

The fair value of bank-owned life insurance was based upon quotations received from bank-owned life insurance dealers. These assets were classified as Level 2 given the use of observable inputs.

Deposits

The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings and interest checking accounts, and money market accounts, was equal to their carrying amount. The fair value of time deposits was based on the discounted value of contractual cash flows using current market interest rates. Deposits were classified as Level 2 given the use of observable market inputs.

The fair value estimates of deposits do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the wholesale market (core deposit intangibles).

FHLB Advances

The fair value of FHLB advances was based on the discounted value of contractual cash flows. The discount rates used are representative of approximate rates currently offered on instruments with similar remaining maturities. FHLB advances were classified as Level 2.

Escrow Deposits of Borrowers

The fair value of escrow deposits of borrowers, which have no stated maturity, approximates the carrying amount. Escrow deposits of borrowers were classified as Level 2.

Interest Rate Swap Collateral Funds

The fair value of interest rate swap collateral funds approximates the carrying amount. Interest rate swap collateral funds were classified as Level 2.

Interest Rate Swaps

The fair value of interest rate swaps was determined using discounted cash flow analysis on the expected cash flows of the interest rate swaps. This analysis reflects the contractual terms of the interest rate swaps, including the period of maturity, and uses observable market-based inputs, including interest rate curves and implied volatility. In addition, for customer-related interest rate swaps, the analysis reflects a credit valuation adjustment to reflect the Company’s own non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements. The majority of inputs used to value ~~its~~the Company’s interest rate swaps fall within Level 2 of the fair value hierarchy, but the credit valuation adjustments associated with the interest rate swaps utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the impact of the Level 3 inputs on the overall valuation of the interest rate swaps was deemed insignificant to the overall valuation. As a result, the interest rate swaps were categorized as Level 2 within the fair value hierarchy.

~~Risk Participations~~

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Risk Participations

The fair value of risk participations was determined based upon the total expected exposure of the derivative which considers the present value of cash flows discounted using market-based inputs and were therefore categorized as Level 2 within the fair value hierarchy. The fair value also included a credit valuation adjustment which evaluates the credit risk of its counterparties by considering factors such as the likelihood of default by the counterparties, its net exposures, the remaining contractual life, as well as the amount of collateral securing the position. The change in value of derivative assets and liabilities attributable to credit risk was not significant during the reported periods.

Foreign Currency Forward Contracts

The fair values of foreign currency forward contracts were based upon the remaining expiration period of the contracts and bid quotations received from foreign exchange contract dealers and were categorized as Level 2 within the fair value hierarchy.

Mortgage Derivatives

The fair value of mortgage derivatives is determined based upon current market prices for similar assets in the secondary market and, therefore are classified as Level 2 within the fair value hierarchy.

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Fair Value of Assets and Liabilities Measured on a Recurring Basis

The following tables present the balances of assets and liabilities measured at fair value on a recurring basis as of September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


				Fair Value Measurements at Reporting Date Using																Fair Value Measurements at Reporting Date Using
		Balance as of September 30, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)			Balance as of September 30, 2022					Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description	Description									Description
		(In thousands)																(In thousands)
Assets	Assets													Assets
Securities available for sale	Securities available for sale													Securities available for sale
Government-sponsored residential mortgage-backed securities	Government-sponsored residential mortgage-backed securities	$	4,073,368			$	—			$	4,073,368					$	—		Government-sponsored residential mortgage-backed securities	$	4,209,089	$	—	$	4,209,089	$	—
Government-sponsored commercial mortgage-backed securities	Government-sponsored commercial mortgage-backed securities	431,009		—				431,009				—		Government-sponsored commercial mortgage-backed securities	1,397,227					—		1,397,227		—
U.S. Agency bonds	U.S. Agency bonds	841,283		—				841,283				—		U.S. Agency bonds	941,597					—		941,597		—
U.S. Treasury securities	U.S. Treasury securities	69,182		69,182				—				—		U.S. Treasury securities	92,460					92,460		—		—
State and municipal bonds and obligations	State and municipal bonds and obligations	274,470		—				274,470				—		State and municipal bonds and obligations	202,664					—		202,664		—
Other debt securities														Other debt securities	1,578					—		1,578		—
Rabbi trust investments	Rabbi trust investments	98,174		90,026				8,148				—		Rabbi trust investments	71,650					64,719		6,931		—
Loans held for sale	Loans held for sale	1,757		—				1,757				—		Loans held for sale	951					—		951		—
Interest rate swap contracts	Interest rate swap contracts													Interest rate swap contracts
Cash flow hedges - interest rate positions														Cash flow hedges - interest rate positions	5					—		5		—
Customer-related positions	Customer-related positions	80,102		—				80,102				—		Customer-related positions	23,818					—		23,818		—
Risk participation agreements	Risk participation agreements	347		—				347				—		Risk participation agreements	55					—		55		—
Foreign currency forward contracts	Foreign currency forward contracts													Foreign currency forward contracts
Matched customer book	Matched customer book	44		—				44				—		Matched customer book	428					—		428		—
Foreign currency loan	Foreign currency loan	120		—				120				—		Foreign currency loan	54					—		54		—
Mortgage derivatives														Mortgage derivatives	112					—		112		—
Total	Total	$	5,869,856	$	159,208			$	5,710,648			$	—	Total	$	6,941,688				$	157,179	$	6,784,509	$	—
Liabilities	Liabilities													Liabilities
Interest rate swap contracts	Interest rate swap contracts													Interest rate swap contracts
Cash flow hedges - interest rate positions														Cash flow hedges - interest rate positions	$	3,206				$	—	$	3,206	$	—
Customer-related positions	Customer-related positions	$	25,274	$	—			$	25,274			$	—	Customer-related positions	82,404					—		82,404		—
Risk participation agreements	Risk participation agreements	594		—				594				—		Risk participation agreements	134					—		134		—
Foreign currency forward contracts	Foreign currency forward contracts													Foreign currency forward contracts
Matched customer book	Matched customer book	31		—				31				—		Matched customer book	414					—		414		—
Foreign currency loan	Foreign currency loan	—		—				—				—		Foreign currency loan	132					—		132		—
Mortgage derivatives														Mortgage derivatives	98					—		98		—
Total	Total	$	25,899	$	—			$	25,899			$	—	Total	$	86,388				$	—	$	86,388	$	—

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				Fair Value Measurements at Reporting Date Using									Fair Value Measurements at Reporting Date Using
Description	Description	Balance as of December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Description	Balance as of December 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(In thousands)									(In thousands)
Assets	Assets									Assets
Securities available for sale	Securities available for sale									Securities available for sale
Government-sponsored residential mortgage-backed securities	Government-sponsored residential mortgage-backed securities	$	2,148,800	$	—	$	2,148,800	$	—	Government-sponsored residential mortgage-backed securities	$	5,524,708	$	—	$	5,524,708	$	—
Government-sponsored commercial mortgage-backed securities	Government-sponsored commercial mortgage-backed securities	17,081		—		17,081		—		Government-sponsored commercial mortgage-backed securities	1,408,868		—		1,408,868		—
U.S. Agency bonds	U.S. Agency bonds	666,709		—		666,709		—		U.S. Agency bonds	1,175,014		—		1,175,014		—
U.S. Treasury securities	U.S. Treasury securities	70,369		70,369		—		—		U.S. Treasury securities	88,605		88,605		—		—
State and municipal bonds and obligations	State and municipal bonds and obligations	280,902		—		280,902		—		State and municipal bonds and obligations	280,329		—		280,329		—
Small Business Administration pooled securities										Small Business Administration pooled securities	32,103		—		32,103		—
Other debt securities										Other debt securities	1,597		—		1,597		—
Rabbi trust investments	Rabbi trust investments	91,683		83,884		7,799		—		Rabbi trust investments	104,372		96,190		8,182		—
Loans held for sale	Loans held for sale	1,140		—		1,140		—		Loans held for sale	1,206		—		1,206		—
Interest rate swap contracts	Interest rate swap contracts									Interest rate swap contracts
Customer-related positions	Customer-related positions	141,822		—		141,822		—		Customer-related positions	64,338		—		64,338		—
Risk participation agreements	Risk participation agreements	722		—		722		—		Risk participation agreements	315		—		315		—
Foreign currency forward contracts	Foreign currency forward contracts									Foreign currency forward contracts
Matched customer book	Matched customer book	90		—		90		—		Matched customer book	61		—		61		—
Foreign currency loan		9		—		9		—
Mortgage derivatives										Mortgage derivatives	256		—		256		—
Total	Total	$	3,419,327	$	154,253	$	3,265,074	$	—	Total	$	8,681,772	$	184,795	$	8,496,977	$	—
Liabilities	Liabilities									Liabilities
Interest rate swap contracts	Interest rate swap contracts									Interest rate swap contracts
Customer-related positions	Customer-related positions	$	42,600	$	—	$	42,600	$	—	Customer-related positions	$	17,880	$	—	$	17,880	$	—
Risk participation agreements	Risk participation agreements	1,230		—		1,230		—		Risk participation agreements	580		—		580		—
Foreign currency forward contracts	Foreign currency forward contracts									Foreign currency forward contracts
Matched customer book	Matched customer book	77		—		77		—		Matched customer book	46		—		46		—
Foreign currency loan	Foreign currency loan	69		—		69		—		Foreign currency loan	87		—		87		—
Mortgage derivatives										Mortgage derivatives	16		—		16		—
Total	Total	$	43,976	$	—	$	43,976	$	—	Total	$	18,609	$	—	$	18,609	$	—

There were no transfers to or from Level 1, 2 and 3 during the nine months ended September 30, ~~2021~~2022 and ~~year~~twelve months ended December 31, ~~2020.~~2021.

The Company held no assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of September 30, ~~2021~~2022 or December 31, ~~2020.~~2021.

Fair Value of Assets and Liabilities Measured on a Nonrecurring Basis

The Company may also be required, from time to time, to measure certain other assets on a nonrecurring basis in accordance with generally accepted accounting principles. The following tables summarize the fair value of assets and liabilities measured at fair value on a nonrecurring basis, as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

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				Fair Value Measurements at Reporting Date Using									Fair Value Measurements at Reporting Date Using
Description	Description	Balance as of September 30, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Description	Balance as of September 30, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(In thousands)									(In thousands)
Assets	Assets									Assets
Collateral-dependent impaired loans whose fair value is based upon appraisals		$	15,484	$	—	$	—	$	15,484
Individually assessed collateral-dependent loans whose fair value is based upon appraisals										Individually assessed collateral-dependent loans whose fair value is based upon appraisals	$	13,194	$	—	$	—	$	13,194


				Fair Value Measurements at Reporting Date Using								Fair Value Measurements at Reporting Date Using
Description	Description	Balance as of December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)	Description	Balance as of December 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(In thousands)								(In thousands)
Assets	Assets								Assets
Collateral-dependent impaired loans whose fair value is based upon appraisals	Collateral-dependent impaired loans whose fair value is based upon appraisals	$	11,036	$	—	$	—	11,036	Collateral-dependent impaired loans whose fair value is based upon appraisals	$	12,068	$	—	$	—	12,068

For the valuation of the collateral-dependent ~~impaired~~ loans, the Company relies primarily on third-party valuation information from certified appraisers and values are generally based upon recent appraisals of the underlying collateral, brokers’ opinions based upon recent sales of comparable properties, estimated equipment auction or liquidation values, income capitalization, or a combination of income capitalization and comparable sales. Depending on the type of underlying collateral, valuations may be adjusted by management for qualitative factors such as economic factors and estimated liquidation expenses. The range of these possible adjustments may vary. Refer to Note 2, “Summary of Significant Accounting Policies” and Note 4,“Loans and Allowance for Credit Losses” for further discussion regarding the Company’s adoption of ASU 2016-13 and the effect of that adoption on the management’s process for estimating the allowance for loan losses.

~~Impaired loans in~~Loans for which a reserve was established based upon expected cash flows discounted at the loan’s effective interest rate are not deemed to be measured at fair value.

Disclosures about Fair Value of Financial Instruments

The estimated fair values and related carrying amounts for assets and liabilities for which fair value is only disclosed are shown below as of the dates indicated:

Fair Value Measurements at Reporting Date Using
Description Carrying Value as of September 30, 2021 Fair Value as of September 30, 2021 Quoted Prices
in Active
Markets for
Identical Assets
(Level 1) Significant
Other
Observable
Inputs (Level 2) Significant
Unobservable
Inputs (Level 3)
(In thousands)
Assets
Loans, net of allowance for loan losses $ 9,378,060 $ 9,512,887 $ — $ — $ 9,512,887
FHLB stock 10,601 10,601 — 10,601 —
Bank-owned life insurance 79,259 79,259 — 79,259 —
Liabilities
Deposits $ 13,649,964 $ 13,649,818 $ — $ 13,649,818 $ —
FHLB advances 14,172 13,728 — 13,728 —
Escrow deposits from borrowers 15,900 15,900 — 15,900 —

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						Fair Value Measurements at Reporting Date Using											Fair Value Measurements at Reporting Date Using
Description	Description	Carrying Value as of December 31, 2020		Fair Value as of December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Description	Carrying Value as of September 30, 2022		Fair Value as of September 30, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(In thousands)											(In thousands)
Assets	Assets											Assets
Held to maturity securities:												Held to maturity securities:
Government-sponsored residential mortgage-backed securities												Government-sponsored residential mortgage-backed securities	$	281,253	$	250,281	$	—	$	250,281	$	—
Government-sponsored commercial mortgage-backed securities												Government-sponsored commercial mortgage-backed securities	200,710		181,196		—		181,196		—
Loans, net of allowance for loan losses	Loans, net of allowance for loan losses	$	9,593,958	$	9,779,195	$	—	$	—	$	9,779,195	Loans, net of allowance for loan losses	12,752,942		12,378,276		—		—		12,378,276
FHLB stock	FHLB stock	8,805		8,805		—		8,805		—		FHLB stock	18,714		18,714		—		18,714		—
Bank-owned life insurance	Bank-owned life insurance	78,561		78,561		—		78,561		—		Bank-owned life insurance	159,838		159,838		—		159,838		—
Liabilities	Liabilities											Liabilities
Deposits	Deposits	$	12,155,784	$	12,155,843	$	—	$	12,155,843	$	—	Deposits	$	18,733,381	$	18,723,364	$	—	$	18,723,364	$	—
FHLB advances	FHLB advances	14,624		14,434		—		14,434		—		FHLB advances	384,215		382,779		—		382,779		—
Escrow deposits from borrowers		13,425		13,425		—		13,425		—
Escrow deposits of borrowers												Escrow deposits of borrowers	21,853		21,853		—		21,853		—
Interest rate swap collateral funds												Interest rate swap collateral funds	16,650		16,650		—		16,650		—


					Fair Value Measurements at Reporting Date Using
Description	Carrying Value as of December 31, 2021		Fair Value as of December 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets
Loans, net of allowance for loan losses	$	12,157,281	$	12,282,323	$	—	$	—	$	12,282,323
FHLB stock	10,904		10,904		—		10,904		—
Bank-owned life insurance	157,091		157,091		—		157,091		—
Liabilities
Deposits	$	19,628,311	$	19,626,376	$	—	$	19,626,376	$	—
FHLB advances	14,020		13,558		—		13,558		—
Escrow deposits of borrowers	20,258		20,258		—		20,258		—

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.

~~14.~~16. Revenue from Contracts with Customers

Revenue from contracts with customers within the scope of ASC 606, Revenue from Contracts with Customers (Topic 606) (“ASC 606”) is recognized when control of goods or services is transferred to the customer, in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods orand services. The Company considers the terms of the contract and all relevant facts and circumstances when applying this guidance. The Company measures revenue and timing of recognition by applying the following five steps:

1.Identify the contract(s) with the customers

2.Identify the performance obligations

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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 accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

Performance obligations

The Company’s performance obligations are generally satisfied either at a point in time or over time, as services are rendered. Unsatisfied performance obligations at the report date are not material to the Company’s consolidated financial statements.

~~Table of Contents~~

A portion of the Company's noninterest income is derived from contracts with customers within the scope of ASC 606. The Company has disaggregated such revenues by type of service, as presented in the table below. These categories reflect how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands)									(In thousands)
Insurance commissions	Insurance commissions	$	21,956	$	21,884	$	73,767	$	72,058	Insurance commissions	$	23,788	$	21,956	$	77,183	$	73,767
Service charges on deposit accounts	Service charges on deposit accounts	5,935		5,052		17,010		15,514		Service charges on deposit accounts	6,708		5,935		23,558		17,010
Trust and investment advisory fees	Trust and investment advisory fees	6,310		5,311		18,047		15,600		Trust and investment advisory fees	5,832		6,310		17,967		18,047
Debit card processing fees	Debit card processing fees	3,030		2,721		8,949		7,528		Debit card processing fees	3,249		3,030		9,417		8,949
Other noninterest income	Other noninterest income	2,318		1,689		6,233		5,226		Other noninterest income	2,735		2,318		8,102		6,233
Total noninterest income in-scope of ASC 606	Total noninterest income in-scope of ASC 606	39,549		36,657		124,006		115,926		Total noninterest income in-scope of ASC 606	42,312		39,549		136,227		124,006
Total noninterest income out-of-scope of ASC 606	Total noninterest income out-of-scope of ASC 606	3,660		11,052		20,148		12,809		Total noninterest income out-of-scope of ASC 606	1,041		3,660		(4,582)		20,148
Total noninterest income	Total noninterest income	$	43,209	$	47,709	$	144,154	$	128,735	Total noninterest income	$	43,353	$	43,209	$	131,645	$	144,154

Additional information related to each of the revenue streams is further noted below.

Insurance Commissions

The Company acts as an agent in offering property, casualty, and life and health insurance to both commercial and consumer customers though Eastern Insurance Group. The Company earns a fixed commission on the sales of these products and services. The Company may also earn bonus commissions based upon meeting certain volume thresholds. In general, the Company recognizes commission revenues when earned based upon the effective date of the policy. For certain insurance products, the Company may also earn and recognize annual residual commissions commensurate with annual premiums being paid.

The Company also earns profit-sharing, or contingency revenues from the insurers with whom the Company places business. These profit-sharing revenues are performance bonuses from the insurers based upon certain performance metrics such as floors on written premiums, loss rates, and growth rates. Because the Company’s expectation of the ultimate profit-sharing revenue amounts to be earned can vary from period to period, the Company does not recognize this revenue until it has concluded that, based on all the facts and information available, it is probable that a significant revenue reversal will not occur in future periods.

Insurance commissions earned but not yet received amounted to ~~$14.0~~$14.4 million as of September 30, ~~2021,~~2022, and ~~$15.8~~$15.6 million as of December 31, ~~2020,~~2021, and were included in other assets.

Deposit Service Charges

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.

Table of Contents

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. The Company ~~may charge~~charges monthly fixed service fees associated with the customer having access to the deposit account as well as separate fixed fees associated with and at the time specific transactions are entered into by the customer. As such, the Company considers that its performance obligations are fulfilled when customers are provided deposit account access or when the requested deposit transaction is completed.

~~Table of Contents~~

Cash management services are a subset of the deposit service charges revenue stream. These services include automated clearing house, or ACH, transaction processing, positive pay, lockbox, and remote deposit services. These services are also governed by separate agreements entered into by the customer. The fee arrangement for these services is structured as a fixed fee per transaction which may be offset by earnings credits. An earnings credit is a discount that a customer receives based upon the investable balance in the applicable covered deposit account(s) for a given month. Earnings credits are only good for the given month. That is, if cash management fees for a given month are less than the month’s earnings credit, the remainder of the credit does not carry over to the following month. Cash management fees are recognized as revenue in the month that the services are provided. Cash management fees earned but not yet received amounted to ~~$0.9~~$2.1 million and ~~$1.0~~$1.8 million as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 and were included in other assets.

Trust and Investment Advisory Fees

The Company offers investment management and trust services to individuals, institutions, small businesses and charitable ~~institutions.~~institutions through its Eastern Wealth Management division. 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 customer’s request.

The asset management and/or custody fees are primarily based upon a percentage of the monthly valuation of the principal assets in the customer’s account. Customers are also charged a base fee which is prorated over a ~~12-month~~twelve-month period. Fees for additional or special services are generally fixed in nature and are charged as services are rendered. All revenue is recognized in correlation to the monthly management fee determinations or as transactional services are provided.

Debit Card Processing Fees

The Company provides debit cards to its customers which are authorized and settled through various card payment networks, and in exchange, the Company earns revenue as determined by each payment network’s interchange program. Regardless of the network that is utilized to authorize and settle the payment, the merchant that provides the product or service to the debit card holder is ultimately responsible for the interchange payment to the Company. Debit card processing fees are recognized as card transactions are settled within each network. Debit card processing fees earned but not yet received amounted to $0.3 million as of both September 30, ~~2021~~2022 and December 31, ~~2020~~2021 and were included in other assets.

Other Noninterest Income

The Company earns various types of other noninterest income that have been aggregated into one general revenue stream in the table noted above. ~~Noninterest~~Other noninterest income includes, but is not limited to, the following types of revenue with customers: safe deposit rent, ATM surcharge fees and customer checkbook fees. Individually, these sources of noninterest income are immaterial.

5162

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~~15.~~17. Other Comprehensive Income

The following tables present a reconciliation of the changes in the components of other comprehensive (loss) income for the dates indicated including the amount of income tax (expense) benefit allocated to each component of other comprehensive (loss) income:


		Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021							Three Months Ended September 30, 2022						Nine Months Ended September 30, 2022
		Pre Tax Amount		Tax Benefit (Expense)		After Tax Amount		Pre Tax Amount		Tax Benefit (Expense)		After Tax Amount			Pre Tax Amount		Tax Benefit (Expense)		After Tax Amount		Pre Tax Amount		Tax Benefit (Expense)		After Tax Amount
		(In thousands)													(In thousands)
Unrealized losses on securities available for sale:	Unrealized losses on securities available for sale:													Unrealized losses on securities available for sale:
Change in fair value of securities available for sale	Change in fair value of securities available for sale	$	(27,741)	$	6,132	$	(21,609)	$	(90,088)	$	19,911	$	(70,177)	Change in fair value of securities available for sale	$	(337,762)	$	76,107	$	(261,655)	$	(1,111,187)	$	249,158	$	(862,029)
Less: reclassification adjustment for gains included in net income		1		—		1		1,166		(257)		909
Less: reclassification adjustment for losses included in net income														Less: reclassification adjustment for losses included in net income	(198)		12		(186)		(2,474)		714		(1,760)
Net change in fair value of securities available for sale	Net change in fair value of securities available for sale	(27,742)		6,132		(21,610)		(91,254)		20,168		(71,086)		Net change in fair value of securities available for sale	(337,564)		76,095		(261,469)		(1,108,713)		248,444		(860,269)
Unrealized gains (losses) on cash flow hedges:
Unrealized losses on cash flow hedges:														Unrealized losses on cash flow hedges:
Change in fair value of cash flow hedges	Change in fair value of cash flow hedges	—		—		—		—		—		—		Change in fair value of cash flow hedges	(72,667)		19,304		(53,363)		(71,182)		18,899		(52,283)
Less: net cash flow hedge gains reclassified into interest income(1)	Less: net cash flow hedge gains reclassified into interest income(1)	7,851		(2,207)		5,644		24,344		(6,843)		17,501		Less: net cash flow hedge gains reclassified into interest income(1)	3,755		(1,056)		2,699		12,797		(3,598)		9,199
Net change in fair value of cash flow hedges	Net change in fair value of cash flow hedges	(7,851)		2,207		(5,644)		(24,344)		6,843		(17,501)		Net change in fair value of cash flow hedges	(76,422)		20,360		(56,062)		(83,979)		22,497		(61,482)
Defined benefit pension plans:	Defined benefit pension plans:													Defined benefit pension plans:
Change in actuarial net loss	Change in actuarial net loss	—		—		—		—		—		—		Change in actuarial net loss	—		—		—		—		—		—
Less: amortization of actuarial net loss	Less: amortization of actuarial net loss	(3,537)		994		(2,543)		(10,612)		2,983		(7,629)		Less: amortization of actuarial net loss	(2,799)		787		(2,012)		(8,395)		2,360		(6,035)
Less: accretion of prior service cost		2,945		(828)		2,117		8,835		(2,484)		6,351
Less: accretion of prior service credit														Less: accretion of prior service credit	2,971		(835)		2,136		8,911		(2,505)		6,406
Net change in other comprehensive income for defined benefit postretirement plans	Net change in other comprehensive income for defined benefit postretirement plans	592		(166)		426		1,777		(499)		1,278		Net change in other comprehensive income for defined benefit postretirement plans	(172)		48		(124)		(516)		145		(371)
Total other comprehensive loss	Total other comprehensive loss	$	(35,001)	$	8,173	$	(26,828)	$	(113,821)	$	26,512	$	(87,309)	Total other comprehensive loss	$	(414,158)	$	96,503	$	(317,655)	$	(1,193,208)	$	271,086	$	(922,122)

(1)Includes amortization of realized gains on terminated cash flow hedges for the three and nine months ended September 30, 2022. The total realized gain of $41.2 million, net of tax, will be recognized in earnings through January 2023. The balance of this gain had amortized to $0.4 million, net of tax, at September 30, 2022.

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	Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021
	Pre Tax Amount		Tax Benefit (Expense)		After Tax Amount		Pre Tax Amount		Tax Benefit (Expense)		After Tax Amount
	(In thousands)
Unrealized losses on securities available for sale:
Change in fair value of securities available for sale	$	(27,741)	$	6,132	$	(21,609)	$	(90,088)	$	19,911	$	(70,177)
Less: reclassification adjustment for gains included in net income	1		—		1		1,166		(257)		909
Net change in fair value of securities available for sale	(27,742)		6,132		(21,610)		(91,254)		20,168		(71,086)
Unrealized gains on cash flow hedges:
Change in fair value of cash flow hedges	—		—		—		—		—		—
Less: net cash flow hedge gains reclassified into interest income(1)	7,851		(2,207)		5,644		24,344		(6,843)		17,501
Net change in fair value of cash flow hedges	(7,851)		2,207		(5,644)		(24,344)		6,843		(17,501)
Defined benefit pension plans:
Change in actuarial net loss	—		—		—		—		—		—
Less: amortization of actuarial net loss	(3,537)		994		(2,543)		(10,612)		2,983		(7,629)
Less: accretion of prior service credit	2,945		(828)		2,117		8,835		(2,484)		6,351
Net change in other comprehensive income for defined benefit postretirement plans	592		(166)		426		1,777		(499)		1,278
Total other comprehensive (loss)	$	(35,001)	$	8,173	$	(26,828)	$	(113,821)	$	26,512	$	(87,309)

(1)Represents amortization of realized gains on terminated cash flow hedges for the three and nine months ended September 30, 2021. The ~~total~~original realized gain of $41.2 million, net of tax, will be recognized in earnings through January 2023. The balance of this gain had amortized to $12.3 million, net of tax, at September 30, 2021.

~~Table of Contents~~

Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020
Pre Tax
Amount Tax
Benefit (Expense) After Tax
Amount Pre Tax
Amount Tax
(Expense)
Benefit After Tax
Amount
(In thousands)
Unrealized (losses) gains on securities available for sale:
Change in fair value of securities available for sale $ (5,563) $ 1,242 $ (4,321) $ 28,750 $ (6,370) $ 22,380
Less: reclassification adjustment for gains included in net income — — — 285 (63) 222
Net change in fair value of securities available for sale (5,563) 1,242 (4,321) 28,465 (6,307) 22,158
Unrealized (losses) gains on cash flow hedges:
Change in fair value of cash flow hedges (142) 40 (102) 46,869 (13,175) 33,694
Less: net cash flow hedge gains reclassified into interest income(1)
8,405 (2,363) 6,042 18,651 (5,243) 13,408
Net change in fair value of cash flow hedges (8,547) 2,403 (6,144) 28,218 (7,932) 20,286
Defined benefit pension plans:
Change in actuarial net loss — — — — — —
Less: amortization of actuarial net loss (2,361) 664 (1,697) (7,082) 1,990 (5,092)
Less: amortization of prior service cost (7) 2 (5) (19) 5 (14)
Net change in other comprehensive income for defined benefit postretirement plans 2,368 (666) 1,702 7,101 (1,995) 5,106
Total other comprehensive (loss) income $ (11,742) $ 2,979 $ (8,763) $ 63,784 $ (16,234) $ 47,550

~~(1)~~Includes amortization of $5.1 million and $5.3 million of the remaining balance of realized but unrecognized gains, net of tax, on terminated cash flow hedges for the three and nine months ended September 30, 2020, respectively. The original realized gain of $41.2 million, net of tax, will be recognized in earnings through January 2023. The balance of this gain had amortized to $35.9 million, net of tax, at September 30, 2020.

The following table illustrates the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax:

Unrealized
Gains and
(Losses) on
Available for
Sale Securities Unrealized
Gains and
(Losses) on
Cash Flow
Hedges Defined Benefit
Pension Plans Total
(In thousands)
Beginning Balance: January 1, 2021 $ 45,672 $ 29,815 $ (21,253) $ 54,234
Other comprehensive loss before reclassifications (70,177) — — (70,177)
Less: Amounts reclassified from accumulated other comprehensive income 909 17,501 (1,278) 17,132
Net current-period other comprehensive (loss) income (71,086) (17,501) 1,278 (87,309)
Ending Balance: September 30, 2021 $ (25,414) $ 12,314 $ (19,975) $ (33,075)
Beginning Balance: January 1, 2020 $ 21,798 $ 15,624 $ (81,269) $ (43,847)
Other comprehensive income before reclassifications 22,380 33,694 — 56,074
Less: Amounts reclassified from accumulated other comprehensive income (loss) 222 13,408 (5,106) 8,524
Net current-period other comprehensive income 22,158 20,286 5,106 47,550
Ending Balance: September 30, 2020 $ 43,956 $ 35,910 $ (76,163) $ 3,703


	Unrealized Gains and (Losses) on Available for Sale Securities		Unrealized Gains and (Losses) on Cash Flow Hedges		Defined Benefit Pension Plans		Total
	(In thousands)
Beginning Balance: January 1, 2022	$	(58,586)	$	7,361	$	(5,471)	$	(56,696)
Other comprehensive loss before reclassifications	(862,029)		(52,283)		—		(914,312)
Less: Amounts reclassified from accumulated other comprehensive loss	(1,760)		9,199		371		7,810
Net current-period other comprehensive loss	(860,269)		(61,482)		(371)		(922,122)
Ending Balance: September 30, 2022	$	(918,855)	$	(54,121)	$	(5,842)	$	(978,818)
Beginning Balance: January 1, 2021	$	45,672	$	29,815	$	(21,253)	$	54,234
Other comprehensive loss before reclassifications	(70,177)		—		—		(70,177)
Less: Amounts reclassified from accumulated other comprehensive loss	909		17,501		(1,278)		17,132
Net current-period other comprehensive (loss) income	(71,086)		(17,501)		1,278		(87,309)
Ending Balance: September 30, 2021	$	(25,414)	$	12,314	$	(19,975)	$	(33,075)

18. Segment Reporting

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~~16. Segment Reporting~~

The Company’s primary reportable segment is its banking business, which offers a range of commercial, retail, wealth management and banking services and consists primarily of attracting deposits from the general public and investing those deposits, together with borrowings and funds generated from operations, to originate loans in a variety of sectors and to invest in securities. Revenue from the banking business reportable segment consists primarily of interest earned on loans and investment securities. In addition to its banking business reportable segment, the Company has an insurance agency business reportable segment, which consists of insurance-related activities, acting as an independent agent in offering commercial, personal and employee benefits insurance products to individual and commercial clients. Revenue from the insurance agency business consists primarily of commissions on sales of insurance products and services.

Results of operations and selected financial information by segment and reconciliation to the consolidated financial statements as of and for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, and for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, was as follows:


		As of and for the three months ended September 30,																	As of and for the three months ended September 30,
		2021								2020									2022								2021
		Banking Business		Insurance Agency Business		Other / Eliminations		Total		Banking Business		Insurance Agency Business		Other / Eliminations		Total			Banking Business		Insurance Agency Business		Other / Eliminations		Total		Banking Business		Insurance Agency Business		Other / Eliminations		Total
		(In thousands)																	(In thousands)
Net interest income	Net interest income	$	102,691	$	—	$	—	$	102,691	$	98,742	$	—	$	—	$	98,742	Net interest income	$	152,179	$	—	$	—	$	152,179	$	102,691	$	—	$	—	$	102,691
(Release of) provision for loan losses		(1,488)		—		—		(1,488)		700		—		—		700
Provision for (release of) allowance for loan losses																		Provision for (release of) allowance for loan losses	6,480		—		—		6,480		(1,488)		—		—		(1,488)
Net interest income after provision for loan losses	Net interest income after provision for loan losses	104,179		—		—		104,179		98,042		—		—		98,042		Net interest income after provision for loan losses	145,699		—		—		145,699		104,179		—		—		104,179
Noninterest income	Noninterest income	20,783		22,508		(82)		43,209		25,288		22,571		(150)		47,709		Noninterest income	19,777		23,714		(138)		43,353		20,783		22,508		(82)		43,209
Noninterest expense	Noninterest expense	80,474		19,538		(1,042)		98,970		91,509		19,506		(1,198)		109,817		Noninterest expense	96,749		21,197		(1,106)		116,840		80,474		19,538		(1,042)		98,970
Income before provision for income taxes		44,488		2,970		960		48,418		31,821		3,065		1,048		35,934
Income tax provision		10,471		841		—		11,312		6,561		868		—		7,429
Income before income tax expense																		Income before income tax expense	68,727		2,517		968		72,212		44,488		2,970		960		48,418
Income tax expense																		Income tax expense	16,717		718		—		17,435		10,471		841		—		11,312
Net income	Net income	$	34,017	$	2,129	$	960	$	37,106	$	25,260	$	2,197	$	1,048	$	28,505	Net income	$	52,010	$	1,799	$	968	$	54,777	$	34,017	$	2,129	$	960	$	37,106
Total assets	Total assets	$	17,324,816	$	207,996	$	(71,589)	$	17,461,223	$	15,332,420	$	202,319	$	(74,145)	$	15,460,594	Total assets	$	21,894,550	$	221,941	$	(73,558)	$	22,042,933	$	17,324,816	$	207,996	$	(71,589)	$	17,461,223
Total liabilities	Total liabilities	$	14,051,100	$	52,420	$	(71,589)	$	14,031,931	$	13,761,414	$	59,953	$	(74,145)	$	13,747,222	Total liabilities	$	19,644,824	$	55,504	$	(73,558)	$	19,626,770	$	14,051,100	$	52,420	$	(71,589)	$	14,031,931


		For the nine months ended September 30,																	For the nine months ended September 30,
		2021								2020									2022								2021
		Banking Business		Insurance Agency Business		Other / Eliminations		Total		Banking Business		Insurance Agency Business		Other / Eliminations		Total			Banking Business		Insurance Agency Business		Other / Eliminations		Total		Banking Business		Insurance Agency Business		Other / Eliminations		Total
		(In thousands)																	(In thousands)
Net interest income	Net interest income	$	307,390	$	—	$	—	$	307,390	$	297,643	$	—	$	—	$	297,643	Net interest income	$	418,060	$	—	$	—	$	418,060	$	307,390	$	—	$	—	$	307,390
(Release of) provision for loan losses		(5,368)		—		—		(5,368)		37,900		—		—		37,900
Provision for (release of) allowance for loan losses																		Provision for (release of) allowance for loan losses	7,045		—		—		7,045		(5,368)		—		—		(5,368)
Net interest income after provision for loan losses	Net interest income after provision for loan losses	312,758		—		—		312,758		259,743		—		—		259,743		Net interest income after provision for loan losses	411,015		—		—		411,015		312,758		—		—		312,758
Noninterest income	Noninterest income	69,308		74,959		(113)		144,154		55,935		72,979		(179)		128,735		Noninterest income	55,919		76,054		(328)		131,645		69,308		74,959		(113)		144,154
Noninterest expense	Noninterest expense	243,549		59,844		(3,039)		300,354		251,688		57,231		(3,165)		305,754		Noninterest expense	279,823		60,186		(3,164)		336,845		243,549		59,844		(3,039)		300,354
Income before provision for income taxes		138,517		15,115		2,926		156,558		63,990		15,748		2,986		82,724
Income tax provision		32,728		4,252		—		36,980		11,468		4,456		—		15,924
Income before income tax expense																		Income before income tax expense	187,111		15,868		2,836		205,815		138,517		15,115		2,926		156,558
Income tax expense																		Income tax expense	43,870		4,480		—		48,350		32,728		4,252		—		36,980
Net income	Net income	$	105,789	$	10,863	$	2,926	$	119,578	$	52,522	$	11,292	$	2,986	$	66,800	Net income	$	143,241	$	11,388	$	2,836	$	157,465	$	105,789	$	10,863	$	2,926	$	119,578

~~17.~~19. Subsequent Events

~~Equity Incentive~~Subsequent to September 30, 2022, management determined it was probable that the lump sum payments from the Defined Benefit Plan

~~On October 1, 2021, our Board~~ for the year ending December 31, 2022 would exceed the sum of ~~Directors approved~~ the ~~Eastern Bankshares Inc. 2021 Equity Incentive Plan~~service cost and interest cost components (the ~~“2021 Equity Plan”~~“threshold”) of the Defined Benefit Plan’s net periodic pension cost. ASC 715-20, “Compensation-Retirement Benefits - Defined Benefit Plans,” requires that upon determining it is probable that such threshold will be met, management shall immediately recognize in earnings a pro rata portion of the aggregate unamortized gain or loss (e.g., “non-cash settlement charge”). ~~The 2021 Equity Plan will become effective~~As of the date of this Quarterly Report on ~~November 29, 2021 if shareholders approve~~Form 10-Q, management estimates the ~~2021 Equity Plan at the special meeting~~amount of ~~shareholders~~such non-cash settlement charge to be ~~held on that date.~~a loss within the range of $10.0 million to $15.0 million. The ~~2021 Equity Plan provides for~~actual amount of the ~~grant of restricted stock, restricted stock units, non-qualified stock options, and incentive stock options, any or all of which can be~~non-cash settlement charge

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~~granted with performance-based vesting conditions. Incentive stock options may only~~cannot be ~~granted to employees~~determined as of the Company’s subsidiaries and affiliates. No awards have been made under the 2021 Equity Plan. However, initial awards to our non-employee directors are set forth in the 2021 Equity Plan and will be self-executing on the day following the approval of the Plan by shareholders, if such approval is received. The estimated aggregate amount of the initial grants to non-employee directors is approximately $13.75 million which is comprised of an individual grant amount to each non-employee director that is not to exceed $1.25 million. These amounts are based upon the fair market value of the Company’s common stock on October 1, 2021. The actual value of the awards, and the number of shares underlying such awards, is not determinable as their value will depend upon the fair market value of the Company’s common stock on the date of this report as the ~~grant.~~

~~Share Repurchases~~

~~On October 28, 2021,~~actual amount is dependent upon various factors, including final lump sum benefit amounts paid for the ~~Company announced that its Board of Directors has approved a stock repurchase program pursuant to which the Company may purchase up to 9,337,900 shares, or 5%~~year ending December 31, 2022 and an actuarial remeasurement of the Company’s outstanding shares of common stock over a 12-month period. The authorization is contingent upon the non-objection from the Federal Reserve. The Company’s request for non-objection is pending. The Company is unable to predict whether the Federal Reserve will permit the Company to implement the proposed repurchase program in whole or part, whether the Federal Reserve will impose one or more related conditions on the Company, or the timing of such non-objection, if granted. If non-objection is granted by the Federal Reserve, repurchases will be made at management’s discretion from time to time at prices management considers to be attractive and in the best interests of both the Company and its shareholders, subject to the availability of shares, general market conditions, the trading price of the shares, alternative uses for capital, and the Company’s financial performance. Repurchases may be suspended, terminated or modified by the Company at any time for any reason.Defined Benefit Plan.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section is intended to assist in the understanding of the financial performance of the Company and its subsidiaries through a discussion of our financial condition at September 30, ~~2021,~~2022, and our results of operations for the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021. This section should be read in conjunction with the unaudited interim condensed consolidated financial statements and notes thereto of the Company appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q and the Company’s ~~2020~~2021 Form 10-K.

Forward-Looking Statements

When we use the terms “we,” “us,” “our,” and the “Company,” we mean Eastern Bankshares, Inc., a Massachusetts corporation, and its consolidated subsidiaries, taken as a whole, unless the context otherwise indicates.

Certain statements contained in this Quarterly Report on Form 10-Q that are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements, which are based on certain current assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions.

Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among others, factors:

•the negative impacts and disruptions of the COVID-19 pandemic and measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations;

•the length and extent of the economic contraction as a result of the COVID-19 pandemic; continued deterioration in employment levels and other general business and economic conditions on a national basis and in the local markets in which the Company operates;

•changes in customer behavior;

•changes in regional, national or international macroeconomic conditions, including especially changes in inflation or interest rates in the United States;

•the possibility that future credit losses, loan defaults and charge-off rates are higher than expected due to changes in economic assumptions or adverse economic developments;

•turbulence in the capital and debt markets;

•~~changes in the rate of inflation of prices of goods and services in our market and nationally and changes in expectations regarding future inflation rates;~~

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•~~changes in interest rates;~~

•decreases in the value of securities and other assets;

•decreases in deposit levels necessitating increased borrowing to fund loans and investments;

•competitive pressures from other financial institutions;

•operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics;

•changes in ~~regulation;~~regulation and associated increases in compliance costs, as well as enforcement and litigation risk;

•reputational risks relating to the Company’s participation in the PPP and other pandemic-related legislative and regulatory initiatives and programs;

•changes in accounting standards and practices;

•the risk that goodwill and intangibles recorded in our financial statements will become impaired;

•risks related to the implementation of acquisitions, dispositions, and restructurings, including the risk that acquisitions may not produce results at levels or within time frames originally anticipated;

•the risk that we may not be successful in the implementation of our business strategy;

•changes in assumptions used in making such forward-looking statements; and

•other risks and uncertainties detailed in Part I, Item 1A of our ~~2020~~2021 Form 10-K, as updated by Part II, Item 1A “Risk Factors” of the Quarterly Report on Form 10-Q for the three months ended March 31, ~~2021~~2022 (“Q1 Form 10-

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Q”), as updated by Part II, Item 1A “Risk Factors” of the Quarterly Report on Form 10-Q for the period ended June 30, 2022 (“Q2 Form 10-Q”), as updated by Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, and as may be further updated in our filings with the SEC from time to time.

Forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results could differ from these estimates. Our significant accounting policies are discussed in detail in our ~~2020~~2021 Form ~~10-K.~~10-K, as updated by the notes to our unaudited interim condensed consolidated financial statements accompanying this Quarterly Report on Form 10-Q. Effective January 1, 2022, we adopted ASU 2016-13, or CECL, the accounting policy for which is described in Note 2, “Summary of Significant Accounting Policies,”Note 3, “Securities,” and Note 4, “Loans and Allowance for Credit Losses” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q. There have been no other material changes in critical accounting policies during the three and nine months ended September 30, ~~2021.~~

~~Selected Financial Data~~

The selected consolidated financial and other data of the Company set forth below should be read in conjunction with more detailed information, including the Consolidated Financial Statements and related notes, appearing elsewhere in this Quarterly Report on Form 10-Q.

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As of September 30, 2021 As of December 31, 2020
(Dollars in thousands, except per share data)
Selected Financial Position Data:
Total assets $ 17,461,223 $ 15,964,190
Cash and cash equivalents 1,251,761 2,054,070
Securities available for sale 5,689,312 3,183,861
Loans, net of allowance for loan losses and unamortized premiums, net of unearned discounts and deferred fees 9,378,060 9,593,958
FHLB stock, at cost 10,601 8,805
Goodwill and other intangibles, net 379,772 376,534
Total liabilities 14,031,931 12,536,138
Total deposits 13,649,964 12,155,784
Total borrowings 30,072 28,049
Total shareholders’ equity 3,429,292 3,428,052
Non-performing loans 42,071 43,252
Non-performing assets 42,071 43,252
Per Share Data:
Book value $ 18.36 $ 18.36
Tangible book value (1)
$ 16.33 $ 16.34
Capital Ratios:
Average equity to average assets 20.32 % 14.72 %
Total capital to risk weighted assets 28.33 % 29.61 %
Tier 1 capital to risk weighted assets 27.33 % 28.46 %
Common equity tier 1 capital to risk weighted assets 27.33 % 28.46 %
Tier 1 capital to average assets 18.18 % 19.53 %
Asset Quality Ratios:
Allowance for loan losses as a percentage of total loans 1.09 % 1.16 %
Allowance for loan losses as a percentage of non-performing loans 245.77 % 261.33 %
Non-performing loans as a percentage of total loans 0.44 % 0.45 %
Non-performing loans as a percentage of total assets 0.24 % 0.27 %
Total non-performing assets as a percentage of total assets 0.24 % 0.27 %

~~(1)Represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” in this Part I, Item 2.~~

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Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(Dollars in thousands, except per share data)
Selected Operating Data:
Interest and dividend income $ 103,468 $ 100,513 $ 310,282 $ 308,605
Interest expense 777 1,771 2,892 10,962
Net interest income 102,691 98,742 307,390 297,643
(Release of) provision for loan losses (1,488) 700 (5,368) 37,900
Net interest income after provision for loan losses 104,179 98,042 312,758 259,743
Noninterest income 43,209 47,709 144,154 128,735
Noninterest expense 98,970 109,817 300,354 305,754
Income before income taxes 48,418 35,934 156,558 82,724
Provision for income taxes 11,312 7,429 36,980 15,924
Net income $ 37,106 $ 28,505 $ 119,578 $ 66,800
Per Share Data:
Basic earnings per share $ 0.22 $ — $ 0.69 $ —
Diluted earnings per share $ 0.22 $ — $ 0.69 $ —
Performance Ratios:
Return on average assets (1) (6)
0.84 % 0.80 % 0.95 % 0.68 %
Return on average equity (2) (6)
4.27 % 6.65 % 4.67 % 5.34 %
Interest rate spread (FTE) (3) (6)
2.51 % 3.00 % 2.62 % 3.24 %
Net interest margin (FTE) (4) (6)
2.53 % 3.04 % 2.64 % 3.33 %
Noninterest expenses to average assets (6)
2.25 % 3.07 % 2.38 % 3.10 %
Efficiency ratio (5)
67.83 % 74.99 % 66.52 % 71.71 %
Average interest-earning assets to average interest-bearing liabilities 199.77 % 183.68 % 202.85 % 176.64 %

~~(1)Represents net income divided by average total assets.~~

~~(2)Represents net income divided by average equity.~~

~~(3)Represents the difference between average yield on average interest-earning assets and the average cost of interest-bearing liabilities for the periods on a fully tax-equivalent (“FTE”) basis.~~

~~(4)Represents net interest income as a percentage of average interest-earning assets adjusted on a FTE basis.~~

~~(5)Represents noninterest expenses divided by the sum of net interest income and noninterest income.~~

~~(6)Ratios have been annualized.~~2022.

Overview

We are a bank holding company, and our principal subsidiary, Eastern Bank, is a Massachusetts-chartered bank that has served the banking needs of our customers since 1818. Our business philosophy is to operate as a diversified financial services enterprise providing a broad array of banking and other financial services primarily to retail, commercial and small business customers. We had total assets of ~~$17.5~~$22.0 billion and ~~$16.0~~$23.5 billion at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. We are subject to comprehensive regulation and examination by the Massachusetts Commissioner of Banks, the FDIC, the Federal Reserve Board and the Consumer Financial Protection Bureau.

We manage our business under two business segments: our banking business, which contributed ~~$123.5~~$172.0 million, or ~~84.6%~~87.9%, of our total income (pre-provision net interest and dividend income and noninterest income) for the three months ended September 30, ~~2021~~2022 and ~~$376.7~~$474.0 million, or ~~83.4%~~86.2%, of our total income for the nine months ended September 30, ~~2021,~~2022, and our insurance agency business, which contributed ~~$22.5~~$23.7 million, or ~~15.4%~~12.1%, of our total income for the three months ended September 30, ~~2021~~2022 and ~~$75.0~~$76.1 million, or ~~16.6%~~13.8%, of our total income for the nine months ended September 30, ~~2021.~~2022. Our banking business consists of a full range of banking, lending (commercial, residential and consumer), savings and small business offerings, including our wealth management and trust operations that we conduct through our Eastern Wealth

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Management division. Our insurance agency business consists of insurance-related activities, acting as an independent agent in offering commercial, personal and employee benefits insurance products to individual and commercial clients.

Net income for the three and nine months ended September 30, ~~2021~~2022 computed in accordance with GAAP was ~~$37.1~~$54.8 million and ~~$119.6~~$157.5 million, respectively, as compared to ~~$28.5~~$37.1 million and $66.8 million for the three and nine months ended September 30, 2020, respectively, representing an increase of 30.2% and 79.0%, respectively. This increase was largely driven by a decrease in the provision for the allowance for loan losses of $2.2 million and $43.3$119.6 million for the three and nine months ended September 30, 2021, ~~compared to the three~~respectively, representing increases of 47.6% and nine months ended September 30, 2020, respectively, which is attributable to greater prior period provisions that resulted from the impact of the COVID-19 pandemic on the Bank’s borrowers during such periods, and current period releases of provisions for loans losses of $1.5 million and $5.4 million for the three and nine months ended September 30, 2021,31.7%, respectively. These ~~items are discussed further~~increases were primarily due to an increase in average interest earning assets, which was primarily the result of our 2021 acquisition of Century. Refer to the “Results of Operations” section ~~below.~~below for additional discussion. Net income for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 included items that our management considers non-core, which management excludes for purposes of assessing our operating net income, a non-GAAP financial measure. Operating net income for the three and nine months ended September 30, ~~2021~~2022 was ~~$37.4~~$55.7 million and ~~$121.0~~$163.4 million, respectively, compared to operating net income for the three and nine months ended September 30, ~~2020~~2021 of ~~$32.3~~$37.4 million and ~~$70.5~~$121.0 million, respectively, representing ~~a respective increase~~increases of ~~15.7%~~49.1% and ~~increase of 71.6%.~~35.0%, respectively. These increases were largely driven by the aforementioned change in ~~the provision for the allowance for loan losses.~~average interest-earning assets. See “Non-GAAP Financial Measures” below for a reconciliation of operating net income to GAAP net income.

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The following chart shows our basic earnings per share on a GAAP and operating basis over the past five quarters (refer to the “Non-GAAP Financial Measures” section below for a reconciliation of GAAP earnings to operating earnings):

Earnings per share increased from $0.22 for the three months ended September 30, 2021 to $0.33 for the three months ended September 30, 2022, a 55.4% increase. Earnings per share increased from $0.69 for the nine months ended September 30, 2021 to $0.94 for the nine months ended September 30, 2022, a 36.0% increase. These increases were due to increases in net interest income and decreases in the average number of common shares outstanding during each such period. The decreases in the average number of common shares outstanding are attributable to share repurchases in connection with our previously announced share repurchase program.

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The following chart shows our efficiency ratio on a GAAP and operating basis over the past five quarters (refer to the “Non-GAAP Financial Measures” section below for additional information on the determination of each measure):

The GAAP efficiency and non-GAAP operating efficiency ratios for both the three and nine months ended September 30, 2022 decreased compared to the ratios for the three and nine months ended September 30, 2021. The decrease in the efficiency ratios for such periods was primarily attributable to increased net interest income, which resulted in a margin of increase in total revenue that exceeded the rate at which noninterest expense increased for the same periods. Refer to the “Results of Operations” section below for additional discussion of the changes in net interest income, noninterest income and noninterest expense.

Banking Business

Our banking business offers a range of commercial, retail, wealth management and banking services, and consists primarily of attracting deposits from the general public, including municipalities, and investing those deposits, together with borrowings and funds generated from operations, to originate loans in a variety of sectors and to invest in securities. The financial condition and results of operations of our banking business depend primarily on (i) attracting and retaining low cost, stable deposits, (ii) using those deposits to originate and acquire loans and earn net interest income and (iii) operating expenses incurred.

Lending Activities

We use funds obtained from deposits, as well as funds obtained from the FHLBB advances and federal funds, primarily to originate loans and to invest in securities. Our lending focuses on the following categories of loans:

Commercial Lending

•Commercial and industrial: Loans in this category consist of revolving and term loans extended to businesses and corporate enterprises for the purpose of financing working capital, facilitating equipment purchases and facilitating acquisitions. As of both September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had total commercial and industrial loans of ~~$1.7 billion and $2.0~~$3.0 billion, representing ~~17.4%~~23.5% and ~~20.6%~~24.2%, respectively, of our total loans. The primary risk associated with commercial and industrial loans is the ability of borrowers to achieve business results consistent with those projected at origination. Our primary focus for commercial and industrial loans is middle-market companies located in the markets we serve. In addition, we participate in the syndicated loan

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market and the SNC Program. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, our SNC Program portfolio totaled ~~$399.0~~$578.5 million and ~~$425.1~~$480.9 million, or ~~24.1%~~19.1% and ~~21.3%~~16.2%, respectively, of our commercial and industrial portfolio, and ~~42.0%~~34.4% and ~~46.4%~~40.3%, respectively, of our SNC Program portfolio were loans to borrowers headquartered in our primary lending market. Our commercial and industrial portfolio also includes our Asset Based Lending Portfolio (“ABL Portfolio”). , a portion of our PPP loans, and industrial revenue bonds (“IRBs”), the balances of which are detailed below:

◦As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, our ABL Portfolio totaled ~~$184.7~~$230.4 million and ~~$134.5~~$224.8 million, or ~~11.2%~~7.6% and ~~6.7%~~7.6%, respectively, of our commercial and industrial portfolio. ~~Our commercial and industrial portfolio also includes a portion of our PPP loans.~~

◦As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the amount of PPP loans included in our commercial and industrial portfolio was ~~$215.7~~$5.3 million and ~~$568.8~~$112.8 million, respectively.

◦As of both September 30, 2022 and December 31, 2021, our commercial and industrial IRB portfolio, which is comprised of municipal bonds issued to finance major capital projects, totaled $1.0 billion.

•Commercial real estate: Loans in this category include mortgage loans on commercial real estate, both investment and owner occupied. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had total commercial real estate loans of ~~$3.8~~$5.0 billion and ~~$3.6~~$4.5 billion, representing ~~40.3%~~38.7% and ~~36.8%~~36.9%, respectively, of our total loans. As of both September 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, owner occupied loans totaled ~~$729.0 million~~$1.0 billion, representing 20.2% and ~~$694.6 million, representing 19.1% and 19.4%~~21.2%, respectively, of our commercial real estate loans. In connection with our adoption of ASU 2016-13, we revised our methodology for determining owner occupied commercial real estate loans in order to conform with our corresponding pools for CECL reserve modeling purposes, and our totals as of September 30, 2022 reflect such revision. Accordingly, the amount of our owner occupied commercial real estate loans as of December 31, 2021 was also revised from the amount disclosed in our 2021 Form 10-K to accommodate comparability. Collateral values are established by independent third-party appraisals and evaluations. The primary repayment sources

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include operating income generated by the real estate, permanent debt refinancing and/or the sale of the real estate. Our commercial real estate loan portfolio also included IRB loans of $591.6 million and $629.6 million as of September 30, 2022 and December 31, 2021, respectively.

•Commercial construction: Loans in this category include construction project financing and are comprised of commercial real estate, business banking and residential loans for the purpose of constructing and developing real estate. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had total commercial construction loans of ~~$243.1~~$314.2 million and ~~$305.7~~$222.3 million, representing ~~2.6%~~2.4% and ~~3.1%~~1.8%, respectively, of our total loans.

•Business banking: Loans in this category are comprised of loans to small businesses with exposures of under $1 million and small investment real estate projects with exposures of under $3 million. These loans are separate and distinct from our commercial and industrial and commercial real estate portfolios described above due to the size of the loans. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had total business banking loans of ~~$1.2~~$1.1 billion and $1.3 billion, respectively, representing ~~12.9%~~8.5% and ~~13.8%~~10.9% of our total loans for each period end, respectively. In this category, commercial and industrial loans and commercial real estate loans totaled ~~$501.9~~$222.3 million and ~~$723.6~~$874.1 million, respectively, as of September 30, ~~2021,~~2022, and ~~$675.1~~$440.6 million and ~~$664.1~~$894.1 million, respectively, as of December 31, ~~2020.~~ 2021.

Business banking originations include traditionally underwritten loans as well as partially automated scored loans. Our proprietary decision matrix, which includes a number of quantitative factors including, but not limited to, a guarantor’s credit score, industry risk, and time in business, is used to determine whether to make business banking loans. We also engage in SBA lending. SBA guarantees reduce our risk of loss when default occurs and are considered a credit enhancement to the loan structure.

Our business banking portfolio also includes a portion of our PPP loans which are included in the aforementioned commercial and industrial business banking total. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the amount of PPP loans included in our business banking portfolio was ~~$318.3~~$17.8 million and ~~$457.4~~$218.6 million, respectively.

Residential Lending

•Residential real estate: Loans in this category consist of mortgage loans on residential real estate. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had total residential loans of ~~$1.5~~$2.1 billion and ~~$1.4~~$1.9 billion,

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respectively, representing ~~15.7%~~16.4% and ~~14.1%~~15.7%, respectively, of our total loans. Underwriting considerations include, among others, income sources and their reliability, willingness to repay as evidenced by credit repayment history, financial resources including cash reserves and the value of the collateral. We maintain policy standards for minimum credit scores and cash reserves and maximum loan to value consistent with a “prime” portfolio. Collateral consists of mortgage liens on residential dwellings. We do not originate or purchase sub-prime or other high-risk loans. Residential loans are originated either for sale to investors or to retain in our loan portfolio. Decisions about whether to sell or retain residential loans are made based on the interest rate characteristics, pricing for loans in the secondary mortgage market, competitive factors and our capital needs. During the three and nine months ended September 30, 2022, residential real estate mortgage originations were $119.8 million and $397.5 million, respectively, of which $8.1 million and $53.2 million, respectively, were sold on the secondary markets. Comparatively, during the three and nine months ended September 30, 2021, residential real estate mortgage originations were $232.1 million and $743.5 million, respectively, of which $67.8 million and $171.1 million, respectively, were sold on the secondary markets. ~~Comparatively,~~In addition, during the three and nine months ended September 30, ~~2020,~~2022, the Company purchased $79.9 million of residential real estate mortgage originations were $198.9 million and $582.8 million, respectively, of which $102.5 million and $307.0 million, respectively, were sold on the secondary markets. We generally do not continue to service residential loans ~~that we sell in the secondary market.~~originated by a third party.

Consumer Lending

•Consumer home equity: Loans in this category consist of home equity lines of credit and home equity loans. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had total consumer home equity loans of ~~$848.6 million~~$1.2 billion and ~~$868.3 million,~~$1.1 billion, representing ~~8.9%~~9.1% and ~~8.9%~~9.0%, respectively, of our total loans. Home equity lines of credit are granted for ten years with monthly interest-only repayment requirements. Full principal repayment is required at the end of the ten-year draw period. Home equity lines of credit can be converted to term loans that are fully amortized. Underwriting considerations are materially consistent with those utilized in the residential real estate category. Collateral consists of a senior or subordinate lien on owner-occupied residential property.

•Other consumer: Loans in this category consist of unsecured personal lines of credit, overdraft protection, automobile and aircraft loans, home improvement loans and other personal loans. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had total other consumer loans of ~~$218.4~~$196.6 million and ~~$277.8~~$214.5 million, representing ~~2.3%~~1.5% and ~~2.9%~~1.8%, respectively, of our total loans. Our policy and underwriting in this category

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include the following factors, among others: income sources and reliability, credit histories, term of repayment and collateral value, as applicable. ~~Included in this category are $67.1 million and $126.7 million of automobile loans, respectively, at September 30, 2021 and December 31, 2020.~~

Other Banking Products and Services

In addition to our lending activities, which are the core part of our banking business, we offer other banking products and services primarily related to (i) other commercial banking products, (ii) other consumer deposit products and (iii) wealth management services.

Other Commercial Banking Products

•We offer a variety of deposit, treasury management, electronic banking, interest rate protection and foreign exchange products to our customers. In addition, we offer cash management services to our corporate and municipal clients. Deposit products include checking products, both interest-bearing and noninterest-bearing, as well as money market deposits, savings deposits and certificates of deposits. Our treasury management products include a variety of cash management and payment products. Our interest rate protection and foreign exchange products include interest rate swaps and currency related transactions. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, our total commercial deposits were ~~$5.2~~$7.3 billion and ~~$4.4~~$8.1 billion, respectively. During the three and nine months ended September 30, ~~2021~~2022 our commercial noninterest income was ~~$4.1~~$7.4 million and ~~$12.4~~$19.0 million, respectively, compared to ~~$4.6~~$4.1 million and ~~$13.0~~$12.4 million for the three and nine months ended September 30, ~~2020,~~2021, respectively.

Other Consumer Deposit Products

•We offer a wide variety of deposit products and services to our consumer customers. We service these customers through our 8698 branches located in eastern Massachusetts and New Hampshire, through our call center in our facility in Lynn, MA and through our online and mobile banking applications.

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Wealth Management Services

•Through our Eastern Wealth Management division, we provide a wide range of trust services, including (i) managing customer investments, (ii) serving as custodian for customer assets, and (iii) providing other fiduciary services, including serving as the trustee and personal representative of estates. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we held ~~$3.1~~$2.7 billion and ~~$2.9~~$3.4 billion, respectively, of assets in a fiduciary, custodial or agency capacity for customers, which are not our assets and therefore not included on the consolidated balance sheets included in this Quarterly Report on Form 10-Q. For the three and nine months ended September 30, ~~2021,~~2022, we had noninterest income of ~~$6.3~~$5.8 million and $18.0 million, respectively, from providing these services compared to ~~$5.3~~$6.3 million and ~~$15.6~~$18.0 million ~~respectively,~~ for the three and nine months ended September 30, ~~2020.~~2021, respectively.

Insurance Agency Business

Our insurance agency business consists of insurance-related activities such as acting as an independent agent in offering commercial, personal and employee benefits insurance products to individual and commercial clients through our wholly-owned agency, Eastern Insurance Group. Our insurance products include commercial property and liability, workers compensation, life, accident and health and automobile insurance. We also offer a wide range of employee benefits products and services, including professional advice related to health care cost management, employee engagement and executive services. As an agency business, we do not assume any underwriting or insurance risk. The commissions we earn on the sale of these insurance products and services is the most significant portion of our noninterest income, representing ~~$22.0~~$23.8 million and ~~$73.8~~$77.2 million, respectively, or ~~50.8%~~54.9% and ~~51.2%~~58.6%, respectively of our noninterest income during the three and nine months ended September 30, ~~2021.~~2022. Comparatively, ~~such income represented $21.9 million and $72.1 million, or 45.9% and 56.0%, respectively, of our noninterest income~~ during the three and nine months ended September 30, ~~2020.~~2021, such income represented $22.0 million and $73.8 million, respectively, or 50.8% and 51.2%, respectively, of our noninterest income. Our insurance business operates through 2421 non-branch offices located primarily in eastern Massachusetts and had ~~406~~401 full-time equivalent employees as of September 30, ~~2021.~~2022.

Acquisitions

~~Proposed Acquisition~~

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On April 7, 2021, we entered into a definitive merger agreement with Century Bancorp, Inc. (“Century”) under which we will acquire Century for $641.9 million in cash (the “Merger Agreement”). Century is the stock holding company of Century Bank and Trust Company, a Massachusetts-chartered stock bank headquartered in Medford, Massachusetts with $7.3 billion in assets, $6.4 billion in deposits and 28 full-service branches in Massachusetts as of June 30, 2021. All material closing conditions have been satisfied. Century shareholders approved the transaction on July 7, 2021, and we announced on September 27, 2021 we received the necessary regulatory approvals to complete the proposed merger. We currently expect to complete the transaction in mid-November of 2021. For additional information about the Merger Agreement and the proposed transaction, please see our Current Report on Form 8-K filed with the SEC on April 8, 2021. See also “Risk Factors” included in Part II, Item 1A of the Q1 Form 10-Q.

On September 30, 2021, we executed a definitive Purchase and Sale Agreement (the “P&S Agreement”) that provides for Eastern Bank to sell real estate that currently is owned by Century and located at 400 Mystic Avenue, Medford, Massachusetts (the “400 Mystic Parcel”), where Century maintains its executive offices. The purchase price for the 400 Mystic Parcel is $20.5 million in cash payable at the closing of the sale which is expected to occur in the mid-fourth quarter of 2021 after we complete the proposed merger described above. The obligations of the Bank to complete the sale of the 400 Mystic Parcel are expressly contingent upon the completion of our merger with Century, and Eastern Bank’s resulting ownership of the 400 Mystic Parcel. For additional information, see the ~~“Contractual Obligations, Commitments and Contingencies,”~~ ~~section within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Current Report on Form 10-Q..~~

~~Other Acquisitions~~

During the nine months ended September 30, ~~2021, Eastern Insurance Group~~2022, we completed acquisitions of two insurance ~~agency acquisitions. The~~agencies for cash consideration of $5.2 million and $8.2 million, respectively, for aggregate ~~purchase price and goodwill recorded as a result~~total consideration of ~~the acquisitions were not material. There were no acquisitions during the three months ended September 30, 2021.~~

~~Outlook and Trends~~

~~CECL Adoption~~

We currently follow the incurred loss model for determining the provision for loan losses and will adopt the current expected credit losses accounting methodology, commonly referred to as the “CECL model” on January 1, 2022. To date, we have concluded on segmentation, methodologies and other assumptions used for modeling and are currently working with third parties in validation efforts, model methodology documentation, project management and governance implementation. Additionally, we are heavily focused on the impact of the acquisition of Century Bank on the process.$13.4 million. For further information regarding our acquisitions, refer toNote ~~2, “Summary of Significant Accounting Policies”~~7, “Goodwill and Other Intangibles” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q.

~~Equity Incentive Plan~~

~~On October 1, 2021,~~Outlook and Trends

Interest Rates

We believe that the increases in the federal funds rate that have occurred in 2022 and we anticipate will occur in early 2023 will improve our ~~Board~~net interest income for the quarter ending December 31, 2022 and into 2023 on a year over year basis, although there is greater uncertainty regarding the impact in 2023. Beginning in March 2022, the Federal Open Market Committee (the “FOMC”) voted to increase the federal funds rate multiple times from a range of ~~Directors approved the Eastern Bankshares Inc. 2021 Equity Incentive Plan (the “2021 Equity Plan”). The 2021 Equity Plan will become effective~~0.00% to 0.25% to a range of 3.75% to 4.00% on November ~~29, 2021 if shareholders approve~~2, 2022, when the ~~2021 Equity Plan~~FOMC stated that it “anticipates that ongoing increases in the target range [for the federal funds rate] will be appropriate.”

Inevitably, not all of our interest rate-sensitive assets and liabilities will re-price simultaneously and in equal volume in response to changes in the federal funds rate, and therefore the potential for interest rate exposure exists. Management believes that several factors will affect the actual impact of interest rate changes on our balance sheet and operating results, including, but not limited to, actual changes in interest rates or expectations of future changes, the degree of volatility in the securities markets, inflation rates or expectations of inflation, and the slope of the interest rate yield curve. We attempt to manage interest rate risk by identifying, quantifying, and, where appropriate, hedging our exposure. Approximately 36% of the outstanding principal balance of our loans as of September 30, 2022 was indexed to a market rate that is expected to reprice along with the federal funds rate. As rates have risen and the shape of the yield curve has changed during the first three quarters of 2022, a portion of these loans have been hedged using interest rate swaps to convert the floating rate interest receipts to a fixed rate. The notional amount of floating rate loans swapped totaled $2.4 billion on September 30, 2022, representing approximately 18.6% of the outstanding principal balance of our loans at ~~the special meeting of shareholders to be held on~~ that date. ~~The 2021 Equity Plan provides for~~For more detail regarding such hedging financial instruments, refer to Note 13, “Derivative Financial Instruments” within the grant of restricted stock, restricted stock units, non-qualified stock options, and incentive stock options, any or all of which can be granted with performance-based vesting conditions. Incentive stock options may only be grantedNotes to ~~employees of~~ the ~~Company’s subsidiaries and affiliates. No awards have been made under the 2021 Equity Plan. However, initial awards~~Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q. We anticipate that an increase in market interest rates, whether due to ~~our non-employee directors are set forth~~an increase in the ~~2021 Equity Plan and~~federal funds rate or otherwise, will be self-executing on the day following the approval of the Plan by shareholders. The estimated aggregate amount of the initial grants to non-employee directors is approximately $13.75 million which is comprised of an individual grant amount to each non-employee director that is not to exceed $1.25 million. These amounts are based upondecrease the fair ~~market~~ value of those interest rate swaps and consequently reduce the ~~Company’s common stock~~positive impact on ~~October 1, 2021. The actual value of the awards is not determinable as their value will depend upon the fair market value of the Company’s common stock on the date of the grant.~~

~~Share Repurchases~~

~~On October 28, 2021, we announced~~our net interest income that our Board of Directors has approved a stock repurchase program pursuant to which we may purchase up to 9,337,900 shares, or 5% of our outstanding shares of common stock over a 12-month period. The authorization is contingent upon the non-objection from the Federal Reserve. Our request for non-objection is pending. We are unable to predict whether the Federal Reserve will permit us to implement the proposed repurchase program in whole or part, whether the Federal Reserve will impose one or more related conditions on us, or the timing of such non-objection, if granted. If non-objection is granted by the Federal Reserve, repurchases will be made at management’s discretion from time to time at prices management considers to be attractive and in the best interests of both the Company and its shareholders, subject to the availability of shares, general market conditions, the trading price of the shares, alternative uses foran interest rate increase would otherwise

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~~capital,~~have. Refer to the section titled “Management of Market Risk” within this Item 2 for additional discussion including the estimated change to our net interest income under interest rate risk measurement methodologies that use a variety of hypothetical scenarios assuming immediate and ~~our financial performance. Repurchases~~parallel changes in interest rates that may ~~be suspended, terminated or modified by us at any time for any reason.~~not reflect the manner in which actual yields and costs respond to changes in market interest rates.

~~Century Acquisition~~Defined Benefit Plan

~~During~~We expect to recognize a non-cash settlement charge during the ~~three and nine months ended September 30, 2021, we incurred and recorded merger and acquisition costs~~quarter ending December 31, 2022 related to the ~~proposed Century acquisition~~required use of ~~$0.7~~settlement accounting for 2022 for our Defined Benefit Plan. As of the date of this Quarterly Report on Form 10-Q, management estimates the amount of such non-cash settlement charge to be a loss within the range of $10.0 million and ~~$4.8 million, respectively. The following table depicts Century-related merger and acquisition costs broken down by~~$15.0 million. For more information, refer to Note 19, “Subsequent Events” within the ~~line item on the consolidated statements of income for the periods indicated in which the costs are included:~~

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
(In thousands)
Salaries and employee benefits $ 3 $ 5
Office occupancy and equipment 86 86
Data processing 55 1,139
Professional services 546 3,524
Other 50 50
Total $ 740 $ 4,804

~~In addition~~Notes to the ~~Century-related costs, total merger and acquisition expenses disclosed~~Unaudited Consolidated Financial Statements included in ~~our non-GAAP financial measures include costs associated with the aforementioned insurance agency acquisitions completed during the year.~~

~~We anticipate incurring additional expenses related to the Century acquisition during the remainder of the year ending December 31, 2021.~~Part I, Item 1 in this Quarterly Report on Form 10-Q.

Paycheck Protection Program Loans

We are a participating lender in the SBA’s Paycheck Protection ~~Program.~~Program, or PPP. We concluded PPP loan originations in the second quarter of 2021 as the SBA announced in May 2021 that PPP funds were exhausted. The majority of our PPP borrowers are existing commercial and small business borrowers, non-profit customers, retail banking customers and clients of our Eastern Wealth Management division and Eastern Insurance Group.

•~~During the nine months ended~~ As of September 30, 2022 and December 31, 2021, ~~we originated approximately 6,600~~the remaining balance of our PPP loans ~~totaling $543.2 million. These loans have a maturity of five years. Fees received from the SBA~~was $23.1 million and ~~direct loan origination costs are being deferred over the five-year loan term. Through September 30, 2021, we had received $28.7~~$331.4 million, ~~in fees from the SBA and had deferred $4.0 million in direct loan origination costs related to 2021 originations.~~

•During the year ended December 31, 2020, we originated approximately 8,900 PPP loans totaling $1.2 billion. The majority of these loans have a maturity of two years. Fees received from the SBA and direct loan origination costs are being deferred over the loan term, which is generally two years. During the year ended December 31, 2020, we received $37.1 million in fees from the SBA and deferred $4.6 million in direct loan origination costs. During the nine months ended September 30, 2021, certain 2020 originations were modified and we received a nominal amount of additional fees from the SBA. We anticipate that the remaining 2020 originations will be forgiven during the year ending December 31, 2021.

•respectively. Net PPP loan fee accretion (fee accretion less cost amortization) for all PPP loans for the three and nine months ended September 30, 2022 was $0.5 million and $8.8 million, respectively. Net PPP loan fee accretion (fee accretion less cost amortization) for all PPP loans for the three and nine months ended September 30, 2021 was $5.9 million and $23.5 ~~million.~~

~~Table~~million, respectively. We expect to recognize the remaining net unearned fees of ~~Contents~~

~~The following table shows certain data related to PPP originations by period:~~

PPP Loans Originated During the Total
Nine Months Ended September 30, 2021 Year ended December 31, 2020
(Dollars in thousands)
Number of loans originated 6,628 8,902 15,530
Original balance of loans originated $ 543,212 $ 1,167,137 $ 1,710,349
Current balance of loans originated in respective periods 503,377 30,588 533,965
Total SBA fees received(1)
28,697 37,249 65,946
SBA fees recognized in interest income related to loans originated in respective periods(2)
5,927 36,934 42,861
Unaccreted SBA fees related to loans originated in respective periods 22,770 315 23,085

~~(1)Total SBA fees received on 2020 originations includes additional fees received from the SBA in 2021 for originations that were modified in 2021.~~

~~(2)Reflects life-to-date accretion.~~

~~The following table shows certain data related to our remaining PPP loans~~$0.4 million as of September 30, ~~2021:~~

Loan Size Loan Balance Number of Loans
(Dollars in thousands)
$0 to $50 thousand $ 76,961 4,454
$50 thousand to $150 thousand 88,864 1,020
$150 thousand to $1 million 231,104 697
$1 million to $2 million 71,600 50
$2 million to $5 million 51,363 22
Over $5 million 14,073 2
Total $ 533,965 6,245

2022 during the remainder of the year ended December 31, 2022 resulting in total recognized net fee accretion of $9.2 million for the year ending December 31, 2022 compared to $34.3 million recognized during the year ended December 31, 2021. Our net interest margin has been and is expected to continue to be adversely affected as a result of the decline in net fee accretion, which is associated with the decreased volume of PPP loan payoffs. The ~~following table shows~~impact to our net interest margin resulting from the ~~balance of our~~decline in net PPP loan fee accretion is estimated to be 0.25% on an annualized basis (change computed based upon average total loans ~~by industry as of September 30, 2021:~~

Industry Loan Balance Number of Loans
(Dollars in thousands)
Accommodation & food services $ 102,057 650
Construction 79,965 862
Health care & social assistance 61,254 536
Professional, scientific & technical services 61,096 899
Other services 48,299 913
Manufacturing 36,921 230
Retail trade 24,612 519
Administrative & support 23,506 329
Wholesale trade 22,102 151
Transportation & warehousing 18,684 380
Real estate, rental & leasing 16,503 248
All other 38,966 528
Total $ 533,965 6,245
for the year ended December 31, 2021).

Non-GAAP Financial Measures

We present certain non-GAAP financial measures, which management uses to evaluate our performance and which exclude the effects of certain transactions, non-cash items and GAAP adjustments that we believe are unrelated to our core business and are therefore not necessarily indicative of our current performance or financial position. Management

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believes excluding these items facilitates greater visibility for investors into our core businesses as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding GAAP financial measures.

There are items in our financial statements that impact our results but which we believe are unrelated to our core business. Accordingly, we present operating net income, noninterest income on an operating basis, noninterest expense on an operating basis, total operating revenue, operating earnings per share, operating net income to average tangible shareholders’ equity, tangible book value per share and the operating efficiency ratio, each of which excludes the impact of such items because we believe such exclusion can provide greater visibility into our core business and underlying trends. Such items that we do not consider to be core to our business include (i) income and expenses from investments held in rabbi trusts, (ii) gains and losses on sales of securities available for sale, net, (iii) gains and losses on the sale of other assets, (iv) rabbi trust employee benefits, (v) impairment charges on tax credit investments and associated tax credit benefits, (vi) expenses indirectly associated with our initial public offering (“IPO”), (vii) ~~other real estate owned (“OREO”)~~OREO gains and losses, (viii) merger and acquisition expenses, (ix) the stock donation to the Eastern Bank ~~Charitable~~ Foundation ~~(now known as the Eastern Bank Foundation, or the~~(the “Foundation”) in connection with our mutual-to-stock conversion and IPO, and (x) settlement of putative consumer class action litigation matters related to overdraft and non-sufficient funds fees, and associated settlement expenses. There were no expenses indirectly associated with our IPO or stock donations to the Foundation during the periods presented in this Quarterly Report on Form 10-Q.

We also present tangible shareholders’ equity, tangible assets, the ratio of tangible shareholders’ equity to tangible assets, average tangible shareholders’ equity, the ratios of net income and operating net income to average tangible shareholders’ equity and tangible book value per share, each of which excludes the impact of goodwill and other intangible assets, as we believe these financial measures provide investors with the ability to further assess our performance, identify trends in our core business and provide a comparison of our capital adequacy to other companies. We have included the tangible ratios because management believes that investors may find it useful to have access to the same analytical tools used by management to assess performance and identify trends.

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Our non-GAAP financial measures should not be considered as an alternative or substitute to GAAP net income, or as an indication of our cash flows from operating activities, a measure of our liquidity or an indication of funds available for our cash needs. An item which we consider to be non-core and exclude when computing these non-GAAP financial measures can be of substantial importance to our results for any particular period. In addition, our methodology for calculating non-GAAP financial measures may differ from the methodologies employed by other companies to calculate the same or similar performance measures and, accordingly, our reported non-GAAP financial measures may not be comparable to the same or similar performance measures reported by other companies.

The following table summarizes the impact of non-core items recorded for the time periods indicated below and reconciles them to the most directly comparable GAAP financial measure:

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		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(Dollars in thousands, except per share data)									(Dollars in thousands, except per share data)
Net income (GAAP)	Net income (GAAP)	$	37,106	$	28,505	$	119,578	$	66,800	Net income (GAAP)	$	54,777	$	37,106	$	157,465	$	119,578
Non-GAAP adjustments:	Non-GAAP adjustments:									Non-GAAP adjustments:
Add:	Add:									Add:
Noninterest income components:	Noninterest income components:									Noninterest income components:
Losses (income) from investments held in rabbi trusts	Losses (income) from investments held in rabbi trusts	289		(3,800)		(5,773)		(4,802)		Losses (income) from investments held in rabbi trusts	2,248		289		13,997		(5,773)
Gains on sales of securities available for sale, net		(1)		—		(1,166)		(285)
(Gains) losses on sales of other assets		(490)		71		(537)		69
Losses (gains) on sales of securities available for sale, net										Losses (gains) on sales of securities available for sale, net	198		(1)		2,474		(1,166)
Gains on sales of other assets										Gains on sales of other assets	(501)		(490)		(1,478)		(537)
Noninterest expense components:	Noninterest expense components:									Noninterest expense components:
Rabbi trust employee (income) benefit expense		(53)		1,445		2,996		1,951
Impairment charge (reversal) on tax credit investments		1,133		7,590		(286)		7,590
Indirect IPO costs (1)		—		549		—		1,199
Rabbi trust employee benefit (income) expense										Rabbi trust employee benefit (income) expense	(867)		(53)		(6,264)		2,996
Impairment reversal (charge) on tax credit investments										Impairment reversal (charge) on tax credit investments	—		1,133		—		(286)
Gain on sale of other real estate owned	Gain on sale of other real estate owned	(87)		(546)		(87)		(546)		Gain on sale of other real estate owned	—		(87)		—		(87)
Merger and acquisition expenses	Merger and acquisition expenses	740		—		4,808		—		Merger and acquisition expenses	271		740		305		4,808
Settlement and expenses for putative class action matters		—		—		3,325		—
Settlement and expenses for putative consumer class action matters										Settlement and expenses for putative consumer class action matters	—		—		—		3,325
Total impact of non-GAAP adjustments	Total impact of non-GAAP adjustments	1,531		5,309		3,280		5,176		Total impact of non-GAAP adjustments	1,349		1,531		9,034		3,280
Less net tax benefit associated with non-GAAP adjustment (2)		1,246		1,492		1,833		1,455
Less net tax benefit associated with non-GAAP adjustment (1)										Less net tax benefit associated with non-GAAP adjustment (1)	384		1,246		3,132		1,833
Non-GAAP adjustments, net of tax	Non-GAAP adjustments, net of tax	$	285	$	3,817	$	1,447	$	3,721	Non-GAAP adjustments, net of tax	$	965	$	285	$	5,902	$	1,447
Operating net income (non-GAAP)	Operating net income (non-GAAP)	$	37,391	$	32,322	$	121,025	$	70,521	Operating net income (non-GAAP)	$	55,742	$	37,391	$	163,367	$	121,025

Weighted average common shares outstanding during the period:	Weighted average common shares outstanding during the period:									Weighted average common shares outstanding during the period:
Basic	Basic	172,298,615		n.a		172,174,469		n.a		Basic	163,718,962		172,298,615		166,682,222		172,174,469
Diluted	Diluted	172,298,615		n.a		172,174,469		n.a		Diluted	164,029,649		172,298,615		166,867,643		172,174,469

Earnings per share, basic	Earnings per share, basic	$	0.22	n.a		$	0.69	n.a		Earnings per share, basic	$	0.33	$	0.22	$	0.94	$	0.69
Earnings per share, diluted	Earnings per share, diluted	$	0.22	n.a		$	0.69	n.a		Earnings per share, diluted	$	0.33	$	0.22	$	0.94	$	0.69

Operating earnings per share, basic (non-GAAP)	Operating earnings per share, basic (non-GAAP)	$	0.22	n.a		$	0.70	n.a		Operating earnings per share, basic (non-GAAP)	$	0.34	$	0.22	$	0.98	$	0.70
Operating earnings per share, diluted (non-GAAP)	Operating earnings per share, diluted (non-GAAP)	$	0.22	n.a		$	0.70	n.a		Operating earnings per share, diluted (non-GAAP)	$	0.34	$	0.22	$	0.98	$	0.70

(1)~~Reflects costs associated with the IPO that are indirectly related to the IPO and were not recorded as a reduction of capital.~~

~~(2)~~The net tax benefit associated with these items is determined by assessing whether each item is included or excluded from net taxable income and applying our combined statutory tax rate only to those items included in net taxable income. The net tax benefit amount for the nine months ended September 30, 2022 reflects the impact of the reversal of the remaining $0.7 million of a $12.0 million valuation allowance (“EBF Valuation Allowance”) established in 2020 associated with the 2020 stock donation to the Foundation. The reversal of the valuation allowance, which occurred during the second quarter of 2022, was considered appropriate based upon our determination of the realizability of such deductions for tax purposes at that time. The initial $11.3 million reversal of the EBF Valuation Allowance occurred in 2021.

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The following table summarizes the impact of non-core items with respect to our total revenue, noninterest income, noninterest expense, and the efficiency ratio, which reconciles to the most directly comparable respective GAAP financial measure, for the periods indicated:

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Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(Dollars in thousands)
Net interest income (GAAP) $ 102,691 $ 98,742 $ 307,390 $ 297,643
Add:
Tax-equivalent adjustment (non-GAAP) 1,316 1,352 3,882 4,118
Fully-taxable equivalent net interest income (non-GAAP) 104,007 100,094 311,272 301,761
Noninterest income (GAAP) 43,209 47,709 144,154 128,735
Less:
(Loss) income from investments held in rabbi trusts (289) 3,800 5,773 4,802
Gains on sales of securities available for sale, net 1 — 1,166 285
Gains (losses) on sales of other assets 490 (71) 537 (69)
Noninterest income on an operating basis (non-GAAP) 43,007 43,980 136,678 123,717
Noninterest expense (GAAP) $ 98,970 $ 109,817 $ 300,354 $ 305,754
Less:
Rabbi trust (income) benefit expense (53) 1,445 2,996 1,951
Impairment charge (reversal) on tax credit investments 1,133 7,590 (286) 7,590
Indirect IPO costs (1) — 549 — 1,199
Merger and acquisition expenses 740 — 4,808 —
Settlement and expenses for putative consumer class action matters — — 3,325 —
Plus:
Gain on sale of other real estate owned 87 546 87 546
Noninterest expense on an operating basis (non- GAAP) $ 97,237 $ 100,779 $ 289,598 $ 295,560
Total revenue (GAAP) $ 145,900 $ 146,451 $ 451,544 $ 426,378
Total operating revenue (non-GAAP) $ 147,014 $ 144,074 $ 447,950 $ 425,478
Ratios:
Efficiency ratio (GAAP) 67.83 % 74.99 % 66.52 % 71.71 %
Operating efficiency ratio (non-GAAP) 66.14 % 69.95 % 64.65 % 69.47 %

~~(1)Reflects costs associated with the IPO that are indirectly related to the IPO and were not recorded as a reduction of capital.~~


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
	(Dollars in thousands)
Net interest income (GAAP)	$	152,179		$	102,691		$	418,060		$	307,390
Add:
Tax-equivalent adjustment (non-GAAP)	3,672			1,316			8,956			3,882
Fully-taxable equivalent net interest income (non-GAAP)	155,851			104,007			427,016			311,272
Noninterest income (GAAP)	43,353			43,209			131,645			144,154
Less:
(Losses) income from investments held in rabbi trusts	(2,248)			(289)			(13,997)			5,773
(Losses) gains on sales of securities available for sale, net	(198)			1			(2,474)			1,166
Gains on sales of other assets	501			490			1,478			537
Noninterest income on an operating basis (non-GAAP)	45,298			43,007			146,638			136,678
Noninterest expense (GAAP)	$	116,840		$	98,970		$	336,845		$	300,354
Less:
Rabbi trust employee benefit (income) expense	(867)			(53)			(6,264)			2,996
Impairment reversal (charge) on tax credit investments	—			1,133			—			(286)
Merger and acquisition expenses	271			740			305			4,808
Settlement and expenses for putative consumer class action matters	—			—			—			3,325
Plus:
Gain on sale of other real estate owned	—			87			—			87
Noninterest expense on an operating basis (non- GAAP)	$	117,436		$	97,237		$	342,804		$	289,598
Total revenue (GAAP)	$	195,532		$	145,900		$	549,705		$	451,544
Total operating revenue (non-GAAP)	$	201,149		$	147,014		$	573,654		$	447,950
Ratios:
Efficiency ratio (GAAP)	59.75		%	67.83		%	61.28		%	66.52		%
Operating efficiency ratio (non-GAAP)	58.38		%	66.14		%	59.76		%	64.65		%

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The following table summarizes the calculation of our tangible shareholders’ equity, tangible assets, the ratio of tangible shareholders’ equity to tangible assets, and tangible book value per share, which reconciles to the most directly comparable respective GAAP measure, as of the dates indicated:


		As of September 30,			As of December 31,				As of September 30,			As of December 31,
		2021			2020				2022			2021
		(Dollars in thousands, except per share data)							(Dollars in thousands, except per share data)
Tangible shareholders’ equity:	Tangible shareholders’ equity:							Tangible shareholders’ equity:
Total shareholders’ equity (GAAP)	Total shareholders’ equity (GAAP)	$	3,429,292		$	3,428,052		Total shareholders’ equity (GAAP)	$	2,416,163		$	3,406,352
Less: Goodwill and other intangibles	Less: Goodwill and other intangibles	379,772			376,534			Less: Goodwill and other intangibles	662,222			649,703
Tangible shareholders’ equity (non-GAAP)	Tangible shareholders’ equity (non-GAAP)	3,049,520			3,051,518			Tangible shareholders’ equity (non-GAAP)	1,753,941			2,756,649
Tangible assets:	Tangible assets:							Tangible assets:
Total assets (GAAP)	Total assets (GAAP)	17,461,223			15,964,190			Total assets (GAAP)	22,042,933			23,512,128
Less: Goodwill and other intangibles	Less: Goodwill and other intangibles	379,772			376,534			Less: Goodwill and other intangibles	662,222			649,703
Tangible assets (Non-GAAP)		$	17,081,451		$	15,587,656
Tangible assets (non-GAAP)								Tangible assets (non-GAAP)	$	21,380,711		$	22,862,425
Shareholders’ equity to assets ratio (GAAP)	Shareholders’ equity to assets ratio (GAAP)	19.6		%	21.5		%	Shareholders’ equity to assets ratio (GAAP)	11.0		%	14.5		%
Tangible shareholders’ equity to tangible assets ratio (Non-GAAP)		17.9		%	19.6		%
Tangible shareholders’ equity to tangible assets ratio (non-GAAP)								Tangible shareholders’ equity to tangible assets ratio (non-GAAP)	8.2		%	12.1		%
Book value per share:	Book value per share:							Book value per share:
Common shares issued and outstanding	Common shares issued and outstanding	186,758,154			186,758,154			Common shares issued and outstanding	177,772,553			186,305,332
Book value per share (GAAP)	Book value per share (GAAP)	$	18.36		$	18.36		Book value per share (GAAP)	$	13.59		$	18.28
Tangible book value per share (non-GAAP)	Tangible book value per share (non-GAAP)	$	16.33		$	16.34		Tangible book value per share (non-GAAP)	$	9.87		$	14.80

The following table summarizes the calculation of our average tangible shareholders’ equity and ratio of net income and operating net income to average tangible shareholders’ equity (“operating return on average tangible shareholders’ equity”), which reconciles to the most directly comparable GAAP measure, for the periods indicated:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
	(Dollars in thousands)
Net income (GAAP)	$	54,777		$	37,106		$	157,465		$	119,578
Operating net income (non-GAAP) (1)	55,742			37,391			163,367			121,025
Average tangible shareholders’ equity:
Average total shareholders’ equity (GAAP)	$	2,776,691		$	3,450,679		$	2,970,159		$	3,425,023
Less: Average goodwill and other intangibles	656,684			380,185			653,567			378,536
Average tangible shareholders’ equity (non-GAAP)	2,120,007			3,070,494			2,316,592			3,046,487
Ratios:
Return on average total shareholders’ equity (GAAP) (2)	7.83		%	4.27		%	7.09		%	4.67		%
Return on average tangible shareholders’ equity (non-GAAP) (2)	10.25		%	4.79		%	9.09		%	5.25		%
Operating return on average tangible shareholders’ equity (non-GAAP) (2)	10.44		%	4.84		%	9.43		%	5.31		%

(1)Refer to the table above within this “Non-GAAP Financial Measures” section for a reconciliation of operating net income to net income.

(2)Presented on an annualized basis.

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Financial Position

Summary of Financial Position


		As of September 30, 2021		As of December 31, 2020		Change					As of September 30, 2022		As of December 31, 2021		Change
						Amount ($)		Percentage (%)							Amount ($)		Percentage (%)
		(Dollars in thousands)									(Dollars in thousands)
Cash and cash equivalents	Cash and cash equivalents	$	1,251,761	$	2,054,070	$	(802,309)	(39.1)	%	Cash and cash equivalents	$	158,437	$	1,231,792	$	(1,073,355)	(87.1)	%
Securities available for sale	Securities available for sale	5,689,312		3,183,861		2,505,451		78.7	%	Securities available for sale	6,844,615		8,511,224		(1,666,609)		(19.6)	%
Securities held to maturity										Securities held to maturity	481,963		—		481,963		100.0	%
Loans, net of allowance for loan losses	Loans, net of allowance for loan losses	9,378,060		9,593,958		(215,898)		(2.3)	%	Loans, net of allowance for loan losses	12,752,942		12,157,281		595,661		4.9	%
Federal Home Loan Bank Stock	Federal Home Loan Bank Stock	10,601		8,805		1,796		20.4	%	Federal Home Loan Bank Stock	18,714		10,904		7,810		71.6	%
Goodwill and other intangible assets	Goodwill and other intangible assets	379,772		376,534		3,238		0.9	%	Goodwill and other intangible assets	662,222		649,703		12,519		1.9	%
Deposits	Deposits	13,649,964		12,155,784		1,494,180		12.3	%	Deposits	18,733,381		19,628,311		(894,930)		(4.6)	%
Borrowed funds	Borrowed funds	30,072		28,049		2,023		7.2	%	Borrowed funds	422,718		34,278		388,440		1,133.2	%

Cash and cash equivalents

Total cash and cash equivalents decreased by ~~$0.8~~$1.1 billion, or ~~39.1%~~87.1%, to ~~$1.3 billion~~$158.4 million at September 30, ~~2021~~2022 from ~~$2.1~~$1.2 billion at December 31, ~~2020.~~2021. This decrease was primarily due to ~~available for sale security purchases~~a decrease in total customer deposits of $894.9 million, an increase in gross loans of $622.4 million, and share repurchases of $170.8 million during the nine months ended September 30, 2022. These items were partially offset by ~~an increase~~net cash inflows related to increased borrowed funds of $388.4 million and net cash inflows related to AFS and HTM securities of $58.2 million during the nine months ended September 30, 2022. For further discussion of the change in ~~total customer deposits.~~deposits, refer to the later “Deposits” section in this Item 2. For further discussion of the change in loans, refer to the later “Loans” section in this Item 2. For more information regarding the Company’s share repurchase programs, refer to Note 10, “Shareholders’ Equity” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q. For further discussion of the change in securities, refer to the later “Securities” section in this Item 2. For further discussion of the change in borrowed funds, refer to the later “Borrowed Funds” section in this Item 2.

Securities

Our current investment policy authorizes us to invest in various types of investment securities and liquid assets, including U.S. Treasury obligations, securities of government-sponsored enterprises, mortgage-backed securities, collateralized mortgage obligations, corporate notes, asset-backed securities and municipal securities. The Risk Management Committee of our Board of Directors is responsible for approving and overseeing our investment policy, which it reviews at least annually. This policy dictates that investment decisions be made based on the safety of the investment, liquidity requirements, potential returns and market risk considerations. We do not engage in any investment hedging activities or trading activities, nor do we purchase any high-risk investment products. We typically invest in the following types of securities:

U.S. government securities: At September 30, ~~2021 and December 31, 2020,~~2022 our U.S. government securities consisted of U.S. Agency bonds and U.S. Treasury securities. At December 31, 2021, our U.S. government securities consisted of U.S. Agency bonds, U.S. Treasury securities and Small Business Administration pooled securities. We maintain these investments, to the extent appropriate, for

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liquidity purposes, at zero risk weighting for capital purposes, and as collateral for interest rate derivative positions. U.S. Agency bonds include securities issued by Fannie Mae, Freddie Mac, the FHLB, and the Federal Farm Credit Bureau.

Mortgage-backed securities: We invest in residential and commercial mortgage-backed securities insured or guaranteed by Freddie Mac, Ginnie Mae or Fannie ~~Mae.~~Mae, including collateralized mortgage obligations. We have not purchased any privately-issued mortgage-backed securities. We invest in mortgage-backed securities to achieve a positive interest rate spread with minimal administrative expense, and to lower our credit risk as a result of the guarantees provided by Freddie Mac, Ginnie Mae or Fannie Mae.

Investments in residential mortgage-backed securities involve a risk that actual payments will be greater or less than the prepayment rate estimated at the time of purchase, which may require adjustments to the amortization of any premium or acceleration of any discount relating to such interests, thereby affecting the net yield on our securities. We periodically review current prepayment speeds to determine whether prepayment estimates require modification that could cause

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amortization or accretion adjustments. There is also reinvestment risk associated with the cash flows from such securities. In addition, the market value of such securities may be adversely affected by changes in interest rates.

State and municipal securities: We invest in fixed rate investment grade bonds issued primarily by municipalities in our local communities within Massachusetts and by the Commonwealth of Massachusetts. The market value of these securities may be affected by call options, long dated maturities, general market liquidity and credit factors.

The Risk Management Committee of our Board of Directors is responsible for approving and overseeing our investment policy, which it reviews at least annually. This policy dictates that investment decisions be made based on the safety of the investment, liquidity requirements, potential returns and market risk considerations.

~~The~~ following table shows the fair value of our securities by investment category as of the dates indicated:

Securities Portfolio Composition


		As of September 30, 2021		As of December 31, 2020			As of September 30, 2022		As of December 31, 2021
		(In thousands)					(In thousands)
Available for sale securities:
Available for sale securities, at fair value:						Available for sale securities, at fair value:
Government-sponsored residential mortgage-backed securities	Government-sponsored residential mortgage-backed securities	$	4,073,368	$	2,148,800	Government-sponsored residential mortgage-backed securities	$	4,209,089	$	5,524,708
Government-sponsored commercial mortgage-backed securities	Government-sponsored commercial mortgage-backed securities	431,009		17,081		Government-sponsored commercial mortgage-backed securities	1,397,227		1,408,868
U.S. Agency bonds	U.S. Agency bonds	841,283		666,709		U.S. Agency bonds	941,597		1,175,014
U.S. Treasury securities	U.S. Treasury securities	69,182		70,369		U.S. Treasury securities	92,460		88,605
State and municipal bonds and obligations	State and municipal bonds and obligations	274,470		280,902		State and municipal bonds and obligations	202,664		280,329
Small Business Administration pooled securities						Small Business Administration pooled securities	—		32,103
Other debt securities						Other debt securities	1,578		1,597
Total available for sale securities, at fair value						Total available for sale securities, at fair value	6,844,615		8,511,224
Held to maturity securities, at amortized cost:						Held to maturity securities, at amortized cost:
Government-sponsored residential mortgage-backed securities						Government-sponsored residential mortgage-backed securities	281,253		—
Government-sponsored commercial mortgage-backed securities						Government-sponsored commercial mortgage-backed securities	200,710		—
Total held to maturity securities, at amortized cost						Total held to maturity securities, at amortized cost	481,963		—
Total	Total	$	5,689,312	$	3,183,861	Total	$	7,326,578	$	8,511,224

Our securities portfolio has ~~increased year-to-date. Available for sale securities increased $2.5~~decreased $1.2 billion, or ~~78.7%~~13.9%, to ~~$5.7~~$7.3 billion at September 30, ~~2021~~2022 from ~~$3.2~~$8.5 billion at December 31, ~~2020.~~2021. This ~~increase is~~decrease was primarily due to ~~investment~~a decrease in the fair value of AFS securities, sales of AFS securities, and maturities and principal paydowns of our AFS and held to maturity (“HTM”) securities. Partially offsetting this activity were AFS and HTM security purchases during the nine months ended September 30, ~~2021.~~ 2022.

•At September 30, 2022, the unrealized loss on AFS securities was $1.2 billion compared to an unrealized loss of $0.1 billion at December 31, 2021, representing a $1.1 billion decrease in the fair value of such securities. The change from December 31, 2021 to September 30, 2022 is primarily driven by rising market rates of interest.

•AFS securities sales totaled $400.5 million during the nine months ended September 30, 2022. AFS and HTM security maturities and principal paydowns totaled $880.1 million and $12.0 million, respectively, during the nine months ended September 30, 2022.

•Partially offsetting the ~~increase~~decrease in the securities portfolio from December 31, ~~2020~~2021 to September 30, ~~2021 was~~2022 were purchases of AFS and HTM securities of $740.8 million and $493.7 million, respectively, during the ~~reduction in the unrealized gain on the securities. At~~nine months ended September 30, 2021 the unrealized loss was $32.6 million compared to an unrealized gain of $58.7 million at December 31, 2020, representing a $91.3 million decrease. The change from December 31, 2020 to September 30, 2021 is primarily driven by a steepening yield curve.2022.

We did not have trading ~~or held-to-maturity~~ investments at September 30, ~~2021~~2022 or December 31, ~~2020.~~2021.

A portion of our securities portfolio continues to be tax-exempt. Investments in federally tax-exempt securities totaled ~~$274.5~~$202.4 million at September 30, ~~2021~~2022 compared to ~~$280.9~~$279.8 million at December 31, ~~2020.~~2021.

Our ~~available for sale~~AFS securities are carried at fair value and are categorized within the fair value hierarchy based on the observability of model inputs. Securities which require inputs that are both significant to the fair value measurement and

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unobservable are classified as Level 3 within the fair value hierarchy. As of both September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had no securities categorized as Level 3 within the fair value hierarchy.

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Maturities of our securities portfolio are based on the final contractual payment dates, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur.

The following tables show contractual maturities of our ~~available for sale~~AFS and HTM securities and weighted average yields at and for the ~~periods~~period ended September 30, ~~2021~~2022 and contractual maturities of our AFS securities and weighted average yields at and for the period ended December 31, ~~2020.~~2021. Weighted average yields in the ~~table~~tables below have been calculated based on the amortized cost of the security:

Securities Portfolio, Amounts Maturing


		Securities Maturing as of September 30, 2021
		Within One Year			After One Year But Within Five Years			After Five Years But Within Ten Years			After Ten Years			Total				Securities Maturing as of September 30, 2022 (1)
		(In thousands)																Within One Year		After One Year But Within Five Years		After Five Years But Within Ten Years		After Ten Years		Total
Available for sale securities:	Available for sale securities:																Available for sale securities:
Government-sponsored residential mortgage-backed securities	Government-sponsored residential mortgage-backed securities	$	—		$	17,151		$	923,300		$	3,132,917		$	4,073,368		Government-sponsored residential mortgage-backed securities	—	%	2.59	%	0.97	%	1.51	%	1.44	%
Government-sponsored commercial mortgage-backed securities	Government-sponsored commercial mortgage-backed securities	—			71,256			359,753			—			431,009			Government-sponsored commercial mortgage-backed securities	—		1.31		1.45		1.94		1.66
U.S. Agency bonds	U.S. Agency bonds	—			240,554			600,729			—			841,283			U.S. Agency bonds	—		0.77		0.93		—		0.82
U.S. Treasury securities	U.S. Treasury securities	20,045			49,137			—			—			69,182			U.S. Treasury securities	—		1.97		—		—		1.97
State and municipal bonds and obligations	State and municipal bonds and obligations	486			32,381			75,293			166,310			274,470			State and municipal bonds and obligations	—		2.34		3.22		4.05		3.64
Other debt securities																	Other debt securities	0.87		—		—		—		0.87
Total available for sale securities																	Total available for sale securities	0.83		1.05		1.20		1.65		1.47
Held to maturity securities:																	Held to maturity securities:
Government-sponsored residential mortgage-backed securities																	Government-sponsored residential mortgage-backed securities	—		—		—		2.87		2.87
Government-sponsored commercial mortgage-backed securities																	Government-sponsored commercial mortgage-backed securities	—		—		2.23		—		2.23
Total held to maturity securities																	Total held to maturity securities	—		—		2.23		2.87		2.60
Total	Total	$	20,531		$	410,479		$	1,959,075		$	3,299,227		$	5,689,312		Total	0.83	%	1.05	%	1.30	%	1.71	%	1.53	%
Weighted-average yield		0.51		%	0.82		%	1.01		%	1.40		%	1.22		%


		Securities Maturing as of December 31, 2020
		Within One Year			After One Year But Within Five Years			After Five Years But Within Ten Years			After Ten Years			Total				Securities Maturing as of December 31, 2021 (1)
		(In thousands)																Within One Year		After One Year But Within Five Years		After Five Years But Within Ten Years		After Ten Years		Total
Available for sale securities:	Available for sale securities:																Available for sale securities:
Government-sponsored residential mortgage-backed securities	Government-sponsored residential mortgage-backed securities	$	—		$	48,925		$	100,278		$	1,999,597		$	2,148,800		Government-sponsored residential mortgage-backed securities	—	%	2.64	%	1.01	%	1.44	%	1.38	%
Government-sponsored commercial mortgage-backed securities	Government-sponsored commercial mortgage-backed securities	—			—			17,081			—			17,081			Government-sponsored commercial mortgage-backed securities	—		1.14		1.20		1.95		1.67
U.S. Agency bonds	U.S. Agency bonds	—			99,834			566,875			—			666,709			U.S. Agency bonds	1.11		0.73		1.00		—		0.88
U.S. Treasury securities	U.S. Treasury securities	50,251			20,118			—			—			70,369			U.S. Treasury securities	0.15		0.78		—		—		0.50
State and municipal bonds and obligations		408			21,431			79,635			179,428			280,902
Total		$	50,659		$	190,308		$	763,869		$	2,179,025		$	3,183,861
Weighted-average yield		2.05		%	1.34		%	1.15		%	1.50		%	1.41		%
State and municipal bonds and obligations (2)																	State and municipal bonds and obligations (2)	(1.24)		2.46		3.17		4.04		3.48
Small Business Administration pooled securities																	Small Business Administration pooled securities	—		1.72		—		1.93		1.90
Other debt securities																	Other debt securities	1.01		0.84		—		—		0.87
Total available for sale securities																	Total available for sale securities	0.10	%	0.95	%	1.12	%	1.60	%	1.42	%

(1)Investment security weighted-average yields were calculated on a level-yield basis by weighting the tax equivalent yield for each security type by the book value of each maturity.

(2)The negative yield indicated in the “Within One Year” category is the result of premium amortization that is in excess of earned income.

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The yield on tax-exempt obligations of states and political subdivisions has been adjusted to a FTE basis by adjusting tax-exempt income upward by an amount equivalent to the prevailing federal income taxes that would have been paid if the income had been fully taxable.

Net unrealized (losses) gains on available for sale securities as of September 30, 2021 and December 31, 2020 totaled $(32.6) million and $58.7 million, respectively. The change from December 31, 2020 to September 30, 2021 is primarily driven by a steepening yield curve.

Loans

We consider our loan portfolio to be relatively diversified by borrower and industry. Our gross loans ~~decreased $226.0~~increased $622.4 million, or ~~2.3%~~5.1%, to ~~$9.5~~$12.9 billion at September 30, ~~2021~~2022 from ~~$9.7~~$12.3 billion at December 31, ~~2020.~~2021. The ~~decrease~~increase as of

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September 30, ~~2021~~2022 was primarily due to increases in our commercial real estate, retail, and commercial construction portfolio balances, partially offset by a decrease in our ~~PPP loan balances within the C&I and~~ business banking ~~portfolios,~~portfolio, as further noted below.

•~~The $342.6~~Our commercial real estate portfolio increased by $463.1 million ~~decrease in our commercial and industrial portfolio~~from December 31, 2021 to September 30, 2022 which was primarily ~~a result~~attributable to an increase of ~~a decrease of $353.1~~$436.6 million in commercial ~~and industrial PPP~~real estate investment loan balances. Such loans represent loans secured by commercial real estate that are non-owner-occupied. The increase in such loan balances was primarily due to management’s active focus on originating loans collateralized by industrial/warehouse and multi-family property types, which are included in the commercial real estate investment loan category, due to management’s stable outlook as it relates to the credit performance of such loans.

•Our retail portfolio increased by $242.5 million, which was attributable to increases of $192.0 million and $68.3 million in residential and consumer home equity loan balances, respectively, during the nine months ended September 30, ~~2021.~~2022. The increase in residential real estate loan balances was, in part, due to reduced volume of loan sales, which was precipitated by rising market rates of interest, and led to us retaining a larger number of residential real estate mortgage loan originations. In addition, during the nine months ended September 30, 2022 we purchased $79.9 million in residential real estate loans from a third party. Consumer home equity loan balances increased primarily due to additional customer draws on home equity lines of credit during the period attributable to normal customer activity.

•~~The $113.6~~Our commercial construction portfolio increased by $91.9 million ~~decrease~~which was primarily attributable to increases of $32.0 million and $20.2 million in our industrial/warehouse and multi-family collateral type loan balances, respectively, during the nine months ended September 30, 2022. The increase in the balance of loans collateralized by industrial/warehouse and multi-family property types is due to management’s active focus on originating these types of loans as mentioned above.

•Our business banking portfolio ~~was~~decreased by $238.3 million primarily as a result of a ~~decrease of $139.1~~$200.8 million decrease in business banking PPP loan balances during the nine months ended September 30, ~~2021.~~2022 as such loans were paid off or forgiven by the SBA.

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•The $251.6 million increase in our commercial real estate loans from December 31, 2020 to September 30, 2021 was primarily a result of an increase of $242.0 million of commercial real estate investment loan balances, which represents loans secured by commercial real estate that are non-owner-occupied, during the nine months ended September 30, 2021.

•The $41.2 million increase in our retail portfolio was primarily a result of an increase of $120.3 million in residential real estate loans during the nine months ended September 30, 2021 which was partially offset by a decrease in our other consumer and consumer home equity portfolios of $59.4 million and $19.7 million, respectively. The increase in residential real estate loans is due to the Company retaining more residential real estate loans as held for investment rather than selling such loans on the secondary market.

The following table shows the composition of our loan portfolio, by category, as of the dates indicated:

Loan Portfolio Composition


		As of September 30, 2021		As of December 31, 2020			As of September 30, 2022		As of December 31, 2021
		(In thousands)					(In thousands)
Commercial and industrial	Commercial and industrial	$	1,652,447	$	1,995,016	Commercial and industrial	$	3,023,729	$	2,960,527
Commercial real estate	Commercial real estate	3,825,186		3,573,630		Commercial real estate	4,985,654		4,522,513
Commercial construction	Commercial construction	243,146		305,708		Commercial construction	314,193		222,328
Business banking	Business banking	1,225,538		1,339,164		Business banking	1,096,436		1,334,694
Residential real estate	Residential real estate	1,491,269		1,370,957		Residential real estate	2,118,852		1,926,810
Consumer home equity	Consumer home equity	848,570		868,270		Consumer home equity	1,168,476		1,100,153
Other consumer	Other consumer	218,406		277,780		Other consumer	196,614		214,485
Total loans	Total loans	9,504,562		9,730,525		Total loans	12,903,954		12,281,510
Less:
Allowance for loan losses	Allowance for loan losses	(103,398)		(113,031)		Allowance for loan losses	(131,663)		(97,787)
Unamortized premiums, net of unearned discounts and deferred fees	Unamortized premiums, net of unearned discounts and deferred fees	(23,104)		(23,536)		Unamortized premiums, net of unearned discounts and deferred fees	(19,349)		(26,442)
Total loans receivable, net	Total loans receivable, net	$	9,378,060	$	9,593,958	Total loans receivable, net	$	12,752,942	$	12,157,281

We believe that our commercial loan portfolio composition is relatively diversified in terms of industry sectors, property types and various lending specialties, and is concentrated in the New England geographical area, with ~~90.0%~~82.1% of our commercial loans in Massachusetts and New Hampshire as of September 30, ~~2021.~~2022.

Asset quality. We continually monitor the asset quality of our loan portfolio utilizing portfolio scorecards and various credit quality indicators. Based on this process, loans meeting certain criteria are categorized as delinquent ~~impaired,~~ or non-performing and further assessed to determine if non-accrual status is appropriate.

For the commercial portfolio, which includes our commercial and industrial, commercial real estate, commercial construction and business banking loans, we monitor credit quality using a risk rating scale, which assigns a risk-grade to each borrower based on a number of quantitative and qualitative factors associated with a commercial loan transaction. ~~Effective December 2020, management implemented an enhanced~~Management utilizes a loan risk rating methodology based on a 15-point scale ~~and adopted new~~with the assistance of risk rating scorecard tools. ~~The rating scale expanded from the prior 12-point scale to provide more refinement in the pass grade categories; new pass~~Pass grades are ~~0-10. There are no changes to~~0-10 and non-pass categories, which ~~continue to~~ align with regulatory guidelines, ~~and are found in ratings:~~are: special mention (11), substandard (12), doubtful (13) and loss (14).

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Risk rating assignment is determined using one of 1415 separate scorecards developed for distinctive portfolio segments based on common attributes. Key factors 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 new risk rating methodology, inclusive of the expanded grade levels and the scorecard tools, has increased, and is expected to continue to increase, the granularity and distribution of risk rating assignment with more precision and effectiveness; provide customized and enhanced templates to incorporate more risk factors and attributes applicable to loan and collateral types; increase precision and effectiveness of credit risk identification; and provide a foundation for enhanced reporting, including migration of risk rating analysis.

Special mention, substandard and doubtful loans totaled ~~6.6%~~2.5% and ~~7.7%~~5.8% of total commercial loans outstanding at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. This decrease was driven by risk rating upgrades in the ~~construction~~commercial real estate and commercial and industrial portfolios.

Our philosophy toward managing our loan portfolios is predicated upon careful monitoring, which stresses early detection and response to delinquent and default situations. We seek to make arrangements to resolve any delinquent or default situation over the shortest possible time frame.

The delinquency rate of our total loan portfolio ~~decreased~~improved to ~~0.42%~~0.36% at September 30, ~~2021 from 0.49%~~2022, compared to 0.65% at December 31, ~~2020.~~2021.

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The following table provides details regarding our delinquency rates as of the dates indicated:

Loan Delinquency Rates


		Delinquency Rate as of (1)					Delinquency Rate as of (1)(2)
		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
Portfolio	Portfolio					Portfolio
Commercial and industrial	Commercial and industrial	0.28	%	0.11	%	Commercial and industrial	0.08	%	0.06	%
Commercial real estate	Commercial real estate	0.03	%	0.06	%	Commercial real estate	—	%	0.60	%
Commercial construction	Commercial construction	—	%	—	%	Commercial construction	—	%	—	%
Business banking	Business banking	0.77	%	1.40	%	Business banking	0.94	%	0.86	%
Residential real estate	Residential real estate	1.14	%	1.21	%	Residential real estate	0.99	%	1.38	%
Consumer home equity	Consumer home equity	0.69	%	0.60	%	Consumer home equity	0.92	%	0.90	%
Other consumer	Other consumer	1.03	%	0.98	%	Other consumer	0.80	%	1.23	%
Total	Total	0.42	%	0.49	%	Total	0.36	%	0.65	%

(1)In the calculation of the delinquency rate as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the total amount of loans outstanding includes ~~$0.5 billion~~$23.1 million and ~~$1.0 billion,~~$331.4 million, respectively, of PPP loans.

~~The following table provides details regarding the age analysis of past due loans~~(2)Delinquency rates as of September 30, 2022 were computed based upon amortized cost balances while delinquency rates as of December 31, 2021 were computed based upon recorded investment balances. The effect on the ~~dates indicated:~~

~~Age Analysis~~above delinquency rates of ~~Past Due Loans~~

~~Table of Contents~~the difference in methodology is not significant.

As of September 30, 2021 As of December 31, 2020
30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due
(In thousands)
Commercial and industrial $ 529 $ 2,068 $ 2,043 $ 4 $ 268 $ 1,924
Commercial real estate — — 1,171 — 556 1,545
Commercial construction — — — — — —
Business banking 3,351 634 5,497 5,279 3,311 10,196
Residential real estate 9,014 2,426 5,515 9,184 2,517 4,904
Consumer home equity 2,319 415 3,111 1,806 364 3,035
Other Consumer 1,107 362 771 1,978 234 517
Total $ 16,320 $ 5,905 $ 18,108 $ 18,251 $ 7,250 $ 22,121

As a general rule, loans more than 90 days past due with respect to principal or interest are classified as non-accrual loans. However, based on our assessment of collateral and/or payment prospects, certain loans that are more than 90 days past due may be kept on an accruing status. Income accruals are suspended on all non-accrual loans and all previously accrued and uncollected interest is reversed against current income. A loan is expected to remain on non-accrual status until it becomes current with respect to principal and interest, the loan is liquidated, or the loan is determined to be uncollectible and is charged-off against the allowance for loan losses.

Non-performing assets (“NPAs”) are comprised of non-performing loans (“NPLs”), OREO and non-performing securities. NPLs consist of non-accrual loans and loans that are more than 90 days past due but still accruing interest. OREO consists of real estate properties, which primarily serve as collateral to secure our loans, that we control due to ~~foreclosure or acceptance of a deed in lieu of~~ foreclosure.

~~The following table sets forth information regarding NPAs held as~~ These properties are recorded at the fair value less estimated costs to sell on the date we obtain control. Any write-downs to the cost of the ~~dates indicated:~~related asset upon transfer to OREO to reflect the asset at fair value less estimated costs to sell is recorded through the allowance for loan losses.

~~Non-performing Assets~~

As of September 30, 2021 As of December 31, 2020
(In thousands)
Non-accrual loans:
Commercial $ 29,166 $ 30,059
Residential 7,185 6,815
Consumer 4,262 4,131
Total non-accrual loans 40,613 41,005
Accruing loans past due 90 days or more:
Commercial 1,171 1,959
Residential 278 279
Consumer 9 9
Total accruing loans past due 90 days or more 1,458 2,247
Total non-performing loans 42,071 43,252
Total real estate owned — —
Other non-performing assets: — —
Total non-performing assets $ 42,071 $ 43,252
Total accruing troubled debt restructured loans $ 34,723 $ 41,095
Total non-performing loans to total loans 0.44 % 0.45 %
Total non-performing assets to total assets 0.24 % 0.27 %

NPLs decreased ~~$1.2~~$1.0 million, or ~~2.7%~~2.9%, to ~~$42.1~~$34.0 million at September 30, ~~2021~~2022 from ~~$43.3~~$35.0 million at December 31, ~~2020.~~2021. NPLs as a percentage of total loans decreased to ~~0.44%~~0.26% at September 30, ~~2021~~2022 from ~~0.45%~~0.29% at December 31, ~~2020 primarily due~~2021. Refer to the later “Allowance for Loan Losses” section in this Item 2 for a ~~decrease~~discussion of the change in ~~business banking~~ non-accrual loans ~~commercial real estate~~which comprise our NPLs as of September 30, 2022. As of December 31, 2021, NPLs included loans that were past due 90 days or more and still accruing which were comprised solely of purchased credit impaired (“PCI”) loans. PCI loans were not subject to classification as non-accrual

~~Table~~ in the same manner as originated loans as their interest income related to the accretable yield recognized and not to contractual interest payments at the loan level. In connection with our adoption of ~~Contents~~

ASU 2016-13 on January 1, 2022, all PCI loans are now considered purchased credit deteriorated (“PCD”) loans. Interest income recognition for PCD loans is consistent with originated loans and, ~~commercial and industrial~~therefore, PCD loans ~~greater than~~cease accruing interest at 90 days past due unless management believes that the applicable collateral held by the Company is clearly sufficient and ~~still accruing. The decreases~~ in ~~these categories was partially offset by an increase in commercial~~full satisfaction of both principal and ~~industrial non-accrual loans.~~

~~Non-accrual~~interest. There were no PCD or originated loans ~~decreased $0.4 million, or 1.0%, to $40.6 million~~ at September 30, ~~2021 from $41.0 million at December 31, 2020, primarily~~2022 that were past due ~~to a decrease in non-accrual loans in our business banking portfolio~~90 days or more and ~~commercial real estate portfolio, partially offset by an increase in non-accrual loans in our commercial and industrial portfolio.~~still accruing.

The total amount of interest recorded on NPLs ~~was $0.3 million for~~during both the nine months ended September 30, ~~2021.~~2022 and 2021 was not significant. The gross interest income that would have been recorded under the original terms of those loans if they had

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been performing amounted to $2.7 million and $2.1 million for the nine months ended September 30, 2021. The total amount of interest recorded on NPLs was $0.5 million for the nine months ended September 30, 2020. The gross interest income that would have been recorded under the original terms of those loans if they had been performing amounted to $2.4 million for the nine months ended September 30, 2020.2022 and 2021, respectively.

In the course of resolving NPLs, we may choose to restructure the contractual terms of certain loans. We attempt to work-out alternative payment schedules with the borrowers in order to avoid foreclosure actions. We review each loan that is modified to identify whether a TDR has occurred. TDRs involve situations in which, for economic or legal reasons related to the borrower’s financial difficulties, we grant a concession to the borrower that we would not otherwise consider. As noted within Note 4, “Loans and Allowance for ~~Loan~~Credit Losses” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item I in this Quarterly Report on Form 10-Q, loan modifications made in response to the COVID-19 pandemic that met the criteria of either Section 4013 of the CARES Act or the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) are not deemed TDRs.

~~All TDR loans are considered impaired and therefore are subject to a specific review for impairment loss. The impairment analysis discounts the present value of the anticipated cash flows~~ This election afforded by the ~~loan’s~~CARES Act and Interagency guidance expired on January 1, 2022.

In cases where a borrower experiences financial difficulties and we make certain concessionary modifications to contractual ~~rate of interest in effect prior to the loan’s modification or the fair value of collateral if~~terms, the loan is ~~collateral dependent. The amount of impairment loss, if any, is recorded~~classified as a specific reserve to each individual loan in the allowance for loan losses. Commercial loans (commercial and industrial, commercial real estate, commercial construction, and business banking) and residential loans that have been classified as TDRs and which subsequently default are reviewed to determine if the loan should be deemed collateral dependent.

~~TDR loans~~TDR. Loans modified during the nine months ended September 30, 2022 and 2021 which were determined to be TDRs were $9.6 million (post modification balance) and ~~2020 were~~ $1.0 million (post modification balance) ~~and $2.8 million,~~, respectively. The overall ~~decrease~~increase in TDR loans modified during the aforementioned periods consisted of ~~a decrease~~an increase of ~~$1.3~~$5.8 million and $2.8 million in commercial and consumer loan TDR modifications, respectively. There were no loans that had been modified during the preceding 12 months and ~~a decrease of $0.5 million in consumer loan TDR modifications.~~which subsequently defaulted during the nine months ended September 30, 2022. Two loans totaling $0.5 million were modified during the preceding 12 months, which subsequently defaulted during the nine months ended September 30, 2021. ~~One loan of less than $0.1 million was modified during the 12 months ended September 30, 2020, which subsequently defaulted during nine months ended September 30, 2020.~~

It is our policy to have any restructured ~~loans,~~loan, which ~~are~~is on non-accrual status prior to being modified, remain on non-accrual status for approximately six months subsequent to being modified before we consider its return to accrual status. If the restructured loan is on accrual status prior to being modified, we review it to determine if the modified loan should remain on accrual status.

~~PCI~~PCD loans are loans that we acquired that have shown evidence of deterioration of credit quality since origination and, therefore, it was deemed unlikely that all contractually required payments would be collected upon the acquisition date. We consider factors such as payment history, collateral values and accrual status when determining whether there was evidence of deterioration at the acquisition date. ~~The carrying value and prospective income recognition of PCI loans are predicated on future cash flows expected to be collected.~~ As of September 30, ~~2021 and~~2022, the carrying amount of PCD loans was $57.4 million. As discussed further below, we adopted ASU 2016-13, commonly referred to as CECL, on January 1, 2022. Prior to such adoption, our acquired loans that exhibited evidence of deterioration of credit quality since origination were designated as PCI loans. As of December 31, ~~2020~~2021, the carrying amount of PCI loans was ~~$4.4 million and $9.3 million, respectively.~~

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~~The following table provides additional details related to our loan portfolio and the distribution of NPLs as of the dates indicated:~~

~~Distribution of Non-performing Loans~~

As of September 30, 2021
Gross Loans Outstanding (1) 90+ Days Past Due
Still Accruing Non-accruing
Loans NPLs NPLs as a % of Outstanding Accruing Troubled Debt Restructured Loans
(In thousands)
Loans:
Commercial $ 6,946,317 $ 1,171 $ 29,166 $ 30,337 0.44 % $ 11,348
Residential 1,491,269 278 7,185 7,463 0.50 % 20,092
Consumer 1,066,976 9 4,262 4,271 0.40 % 3,283
Total $ 9,504,562 $ 1,458 $ 40,613 $ 42,071 0.44 % $ 34,723

~~(1) Total gross loans outstanding includes $0.5 billion of PPP loans.~~

As of December 31, 2020
Gross Loans Outstanding (1) 90+ Days Past Due
Still Accruing Non-accruing
Loans NPLs NPLs as a %
of Outstanding Accruing Troubled Debt Restructured Loans
(In thousands)
Loans:
Commercial $ 7,213,518 $ 1,959 $ 30,059 $ 32,018 0.44 % $ 13,620
Residential 1,370,957 279 6,815 7,094 0.52 % 23,416
Consumer 1,146,050 9 4,131 4,140 0.36 % 4,059
Total $ 9,730,525 $ 2,247 $ 41,005 $ 43,252 0.45 % $ 41,095

~~(1) Total gross loans outstanding includes $1.0 billion of PPP loans.~~

In the normal course of business, we become aware of possible credit problems in which borrowers exhibit potential for the inability to comply with the contractual terms of their loans, but which currently do not yet meet the criteria for classification as NPLs. In response to the COVID-19 pandemic, we reviewed all of our credit exposures in industries that were expected to experience significant problems due to the pandemic and resulting economic contraction. As part of that review, we downgraded our hotel loans, restaurant loans and other loans that we expected to have associated challenges as a result of the economic impact of the COVID-19 pandemic. These loans were neither delinquent nor on non-accrual status. At September 30, 2021 and December 31, 2020, our potential problem loans (including these COVID-19-related loans), or loans with potential weaknesses that were not included in the non-accrual loans or in the loans 90 days or more past due categories, totaled $463.7 million and $563.3 million, respectively. Of these potential problem loans, $235.0 million and $286.3 million at September 30, 2021 and December 31, 2020, respectively, are loans in COVID-19 impacted industries.$69.6 million.

COVID-19 Modifications. In light of the COVID-19 pandemic, we implemented loan modification programs for our borrowers that allowed for either full payment deferrals (both interest and principal) or deferral of principal only. These modifications met the criteria of either Section 4013 of the CARES Act or the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) and therefore are not deemed TDRs. We have deemed these modified loans “COVID-19 modifications.”

The Appropriations Act, which was enacted on December 27, 2020, ~~extends~~extended certain expiring tax provisions related to the COVID-19 pandemic in the United States and ~~provides~~provided additional emergency relief to individuals and businesses. Included within the provisions of the Appropriations Act is the extension of Section 4013 of the CARES Act to January 1, 2022. As such, we ~~intend to apply~~applied CARES Act TDR relief to any qualifying loan modifications executed during the allowable time period.

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The following table presents the balance of loans that received a COVID-19 modification and have not yet resumed repayment as of September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:

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		Remaining COVID-19 Modifications as of September 30, 2021 (1)				Remaining COVID-19 Modifications as of December 31, 2020 (1)					Remaining COVID-19 Modifications as of September 30, 2022 (1)				Remaining COVID-19 Modifications as of December 31, 2021 (1)
		Balance		% of Total Portfolio		Balance		% of Total Portfolio			Balance		% of Total Portfolio		Balance		% of Total Portfolio
		(Dollars in thousands)									(Dollars in thousands)
Portfolio	Portfolio									Portfolio
Commercial and industrial	Commercial and industrial	$	4,548	0.3	%	$	34,076	1.7	%	Commercial and industrial	$	—	—	%	$	4,548	0.2	%
Commercial real estate	Commercial real estate	92,377		2.4	%	231,794		6.5	%	Commercial real estate	12,825		0.3	%	93,519		2.1	%
Commercial construction	Commercial construction	—		—	%	10,987		3.6	%	Commercial construction	—		—	%	—		—	%
Business banking	Business banking	2,164		0.2	%	23,434		1.7	%	Business banking	518		0.1	%	649		0.1	%
Residential real estate	Residential real estate	9,947		0.7	%	26,772		2.0	%	Residential real estate	3,258		0.2	%	5,870		0.3	%
Consumer home equity	Consumer home equity	875		0.1	%	3,432		0.4	%	Consumer home equity	789		0.1	%	1,365		0.1	%
Other consumer	Other consumer	685		0.3	%	2,187		0.8	%	Other consumer	292		0.2	%	706		0.3	%
Total(2)	Total(2)	$	110,596	1.2	%	$	332,682	3.4	%	Total(2)	$	17,682	0.1	%	$	106,657	0.9	%

(1)Remaining COVID-19 modifications reflect only those loans which underwent a modification and have not yet resumed repayment. We define a modified loan to have resumed payment if it is one month past the modification end date and not more than 30 days past due.

(2)As of September 30, 2022 and December 31, 2021, remaining COVID-19 modifications included $12.8 million and $71.0 million, respectively, of loans to borrowers in the hotel industry.

As of September 30, 2022 and December 31, 2021, the aggregate amount of loans that received a COVID-19 modification and have become a non-performing loan after the respective deferral period is ~~$7.1 million.~~$4.5 million and $4.7 million, respectively.

~~High Risk~~COVID-19 Pandemic-Impacted Industries. As of September 30, ~~2021,~~2022, we believe loans to our borrowers in the categories of office, retail, restaurant, and hotel industry ~~categories~~to represent those which have experienced and will likely continue to experience the most adverse effects of the COVID-19 pandemic. As of September 30, 2022, the aggregate outstanding loan balance of loans to our borrowers in the office, retail, restaurant, and hotel industry categories was $1.1 billion, $605.6 million, $198.8 million, and $144.7 million respectively, representing 8.8%, 4.7%, 1.5%, and 1.1% of total loans, respectively. As of December 31, 2021, the aggregate outstanding loan balance of loans to our borrowers in the office, retail, restaurant, and hotel industry categories was ~~$492.4~~$1.1 billion, $549.0 million, ~~$179.3~~$188.9 million and ~~$165.5~~$189.0 million, respectively, representing ~~5.2%~~8.8%, ~~1.9%~~4.5%, 1.5% and ~~1.7%~~1.5% of total loans, respectively. As

Potential Problem Loans. In the normal course of business, we become aware of possible credit problems in which borrowers exhibit potential for the inability to comply with the contractual terms of their loans, but which currently do not yet meet the criteria for classification as NPLs. These loans are neither delinquent nor on non-accrual status. At September 30, 2022 and December 31, 2021, our potential problem loans (including COVID-19-related loans), or loans with potential weaknesses that were not included in the ~~percentage of~~non-accrual loans ~~to our borrowers~~or in ~~retail, restaurant,~~the loans 90 days or more past due categories, totaled $214.9 million and ~~hotel industry categories that we modified primarily due to the effects on borrowers of the~~$470.9 million, respectively. Of these potential problem loans, $129.5 million and $335.9 million at September 30, 2022 and December 31, 2021, respectively, are loans in COVID-19 ~~pandemic and related economic slowdown beginning in late March 2020 and which have not yet resumed repayment were 0.8%, 2.6% and 43.2%, respectively.~~pandemic-impacted industries.

Allowance for ~~loan~~credit losses. ~~Due~~Because we continued to ~~our~~qualify for emerging growth company (“EGC”) status under the ~~JOBS~~Jumpstart Our Business (“JOBS”) Act until December 31, 2021, we ~~still follow~~were permitted to delay adoption of the CECL standard until the earlier of the date at which non-public business entities are required to adopt the standard and the date that we ceased to be an EGC. Included in the Appropriations Act was an extension of the adoption date to the earlier of January 1, 2022 or 60 days after the date on which the COVID-19 national emergency terminates. We elected this extension and, accordingly, adopted the CECL standard on January 1, 2022. As of December 31, 2021, we followed the incurred loss allowance GAAP accounting model. For additional information, see “Risk Factors—We may be required to increase our allowance for loan losses as a result of our adoption as of January 1, 2022 of the new accounting standard for determining the amount of the allowance for loan losses” in Part I, Item 1A of our 2020 Form 10-K.

For the purpose of estimating our allowance for loan losses, we segregate the loan portfolio into ~~homogenous~~ loan ~~pools~~categories, for loans that share similar risk characteristics, that possess unique risk characteristics such as loan purpose, repayment source, and collateral that are considered when determining the appropriate level of the allowance for loan losses for each category. Loans that do not share similar risk characteristics with other loans are evaluated individually.

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While we use available information to recognize losses on loans, future additions or subtractions to/from the allowance for loan losses may be necessary based on changes in NPLs, changes in economic conditions, or other reasons. Additionally, various regulatory agencies, as an integral part of our examination process, periodically assess the adequacy of the allowance for loan losses to assess whether the allowance for loan losses was determined in accordance with GAAP and applicable guidance.

We perform an evaluation of our allowance for loan losses on a regular basis (at least quarterly), and establish the allowance for loan losses based upon an evaluation of our loan categories, as each possesses unique risk characteristics that are considered when determining the appropriate level of allowance for loan losses, including:

•~~estimated probable loss in all impaired loans in each category;~~

•known increases in concentrations within each category;

•certain higher risk classes of loans, or pledged collateral;

•historical loan loss experience within each category;

•results of any independent review and evaluation of the category’s credit quality;

•trends in volume, maturity and composition of each category;

•volume and trends in delinquencies and non-accruals;

•national and local economic conditions and downturns in specific local industries;

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•corporate goals and objectives;

•~~expertise of our~~ lending ~~staff;~~

•~~lending policy~~policies and procedures, including underwriting standards and collection, charge-off and recovery practices; and

•current and forecasted banking industry conditions, as well as the regulatory and competitive environment.

Loans are ~~periodically~~ evaluated on a regular basis by management. Expected lifetime losses are estimated on a collective basis for loans sharing similar risk characteristics and are determined using ~~changes~~a quantitative model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in ~~asset quality,~~the quantitative model output. For commercial and industrial, commercial real estate, commercial construction and business banking portfolios, the quantitative model uses a loan rating system which is comprised of management’s determination of probability of default, or PD, loss given default, or LGD and exposure at default, or EAD, which are derived from historical ~~losses,~~loss experience and other ~~loss allocation factors, which form~~factors. For residential real estate, consumer home equity and other consumer portfolios, our ~~basis for estimating incurred losses. For risk rated loans, our risk-rating system takes into consideration a number of~~ quantitative and qualitative factors, such as the borrower’s financial capacity, cash flow, liquidity, leverage, adequacy of collateral, tangible net worth, management team, industry, sales and supplier concentration, credit history, additional support and the impact of outside factors on repayment ability. Homogenous populations of loans that are not risk rated loans, are analyzed by loan category, taking into account delinquency ratios andmodel uses historical loss ~~experience.~~experience

The allowance for loan losses is allocated to loan categories using both a formula-based approach and an analysis of certain individual loans for impairment. We use a methodology to systematically estimate the amount of expected credit loss ~~incurred~~ in the loan portfolio. Under our current methodology, the allowance for loan losses contains ~~specific, general~~reserves related to loans for which the related allowance for loan losses is determined on individual loan basis and on a collective basis, and other qualitative components.

The ~~specific component consists~~allowance for loan losses increased by $33.9 million, or 34.6%, to $131.7 million, or 1.02% of total loans, at September 30, 2022 from $97.8 million, or 0.80% of total loans at December 31, 2021. The increase in the allowance for loan losses was primarily a result of our adoption of CECL, as previously described above, and increased loan balances, as previously described above. The additional reserves ~~for impaired loans (defined~~required as those where we determine it is probable we will not collect all payments when due, typically classified as either doubtful or substandard). All commercial, residential and consumer loan portfolios are periodically revieweda result of our adoption of CECL were primarily attributable to ~~identify~~ the loans we acquired in connection with deteriorating performance. The reports used to identify those loans include, but are not limited to, delinquency reports, risk rating migration (for risk rated loans), asset quality reports, watch loan list and other credit risk management reports. When a loan is determined to be impaired, the measurement will be based on the present valueour acquisition of ~~expected future cash flows, except for collateral-dependent loans, where the impairment is based on the~~Century which were recorded at fair value at the time of acquisition. Under ASU 2016-13, the credit mark that is a component of the ~~collateral.~~

~~The general loss reserves methodology, which is applied to categories of~~day-one fair value adjustment on acquired loans with similar characteristics, covers all non-impaired loans and is based on our portfolio’s segment historical loss experience adjusted for qualitative factors. The general loss reserve methodology considers multiple qualitative factors that may impactcannot be considered in the ~~loss experience during~~allowance computation, whereas under the incurred loss ~~horizon period, including internal infrastructure factors, external macroeconomic factors, internal~~model, the credit ~~quality factors and external industry data, tailored~~mark could be considered for reserve determination purposes. In connection with our adoption of this standard, we recorded an increase to the ~~specific~~allowance for loan ~~category.~~losses of $27.1 million which represented the one-time cumulative-effect adjustment.

For additional discussion of our ~~risk rating~~allowance for credit losses measurement methodology, seeNote 2, “Summary of Significant Accounting Policies” and Note 4, “Loans and Allowance for Loan Losses” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q.

~~The~~ For additional discussion of the change in allowance for loan losses, ~~decreased by $9.6 million, or 8.5%,~~refer to ~~$103.4 million, or 1.09%~~the later “Provision for Loan Losses,” included in the “Results of ~~total loans, at September 30, 2021 from $113.0 million, or 1.16%~~Operations” section within this Item 2. For discussion of ~~total loans at December 31, 2020. The decrease in~~our previous methodology for estimating the allowance for loan losses was primarily a result of improved macroeconomic conditions and risk rating upgrades in the commercial portfolios during the period. The economic environment during the three and nine months ended September 30, 2021 was assisted by government stimulus, the impacts of loan deferral programs, reductions in unemployment and reductions in COVID-19 related restrictions. These, along with other factors, resulted in a release of provisions for loan losses of $1.5 million and $5.4 million for the three and nine months ended September 30, 2021 in comparison to provisions for loan losses of $0.7 million and $37.9 million for the three and nine months ended September 30, 2020.

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losses, refer to Note 5, “Loans and Allowance for Loan Losses” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q and Note 2, “Summary of Significant Accounting Policies” included in Part II, Item 8 of the 2021 Form 10-K.

The following table summarizes ~~changes in the allowance for loan losses and other selected statistics~~credit ratios for the periods presented:

Summary of Changes in the Allowance for Loan Losses


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
		2021			2020			2021			2020				2022			2021			2022			2021
		(Dollars in thousands)													(Dollars in thousands)
Average total loans		$	9,528,522		$	9,914,864		$	9,712,948		$	9,603,208
Allowance for loan losses, beginning of the period		$	105,637		$	116,636		$	113,031		$	82,297
Charged-off loans:
Net loan charge-offs (recoveries):														Net loan charge-offs (recoveries):
Commercial and industrial	Commercial and industrial	—			140			550			167			Commercial and industrial	$	(115)		$	(40)		$	(1,061)		$	488
Commercial real estate	Commercial real estate	8			—			242			24			Commercial real estate	(3)			8			(53)			238
Commercial construction	Commercial construction	—			—			—			—			Commercial construction	—			—			—			—
Business banking	Business banking	867			1,179			4,089			3,714			Business banking	83			398			244			2,964
Residential real estate	Residential real estate	—			—			—			—			Residential real estate	(56)			(88)			(80)			(115)
Consumer home equity	Consumer home equity	—			22			—			495			Consumer home equity	(6)			(63)			(16)			(137)
Other consumer	Other consumer	742			1,077			1,381			1,625			Other consumer	445			536			1,221			827
Total charged-off loans		1,617			2,418			6,262			6,025
Recoveries on loans previously charged-off:
Total net loan charge-offs														Total net loan charge-offs	348			751			255			4,265
Average loans:														Average loans:
Commercial and industrial	Commercial and industrial	40			306			62			686			Commercial and industrial	2,882,511			1,717,722			2,903,239			1,896,900
Commercial real estate	Commercial real estate	—			4			4			10			Commercial real estate	4,939,754			3,905,280			4,796,453			3,786,625
Commercial construction	Commercial construction	—			—			—			—			Commercial construction	329,199			219,730			282,647			252,939
Business banking	Business banking	469			91			1,125			245			Business banking	986,565			1,152,823			1,036,857			1,267,439
Residential real estate	Residential real estate	88			43			115			116			Residential real estate	2,041,869			1,476,136			1,979,615			1,433,131
Consumer home equity	Consumer home equity	63			31			137			53			Consumer home equity	1,146,547			833,626			1,116,270			833,467
Other consumer	Other consumer	206			39			554			150			Other consumer	194,981			221,449			198,866			240,572
Total recoveries		866			514			1,997			1,260
Net loans charged-off (recoveries):
Average total loans (1)														Average total loans (1)	$	12,521,426		$	9,526,766		$	12,313,947		$	9,711,073
Net charge-offs (recoveries) to average loans outstanding during the period:														Net charge-offs (recoveries) to average loans outstanding during the period:
Commercial and industrial	Commercial and industrial	(40)			(166)			488			(519)			Commercial and industrial	0.00		%	0.00		%	(0.04)		%	0.03		%
Commercial real estate	Commercial real estate	8			(4)			238			14			Commercial real estate	0.00			0.00			0.00			0.01
Commercial construction	Commercial construction	—			—			—			—			Commercial construction	—			—			—			—
Business banking	Business banking	398			1,088			2,964			3,469			Business banking	0.01			0.03			0.02			0.23
Residential real estate	Residential real estate	(88)			(43)			(115)			(116)			Residential real estate	0.00			(0.01)			0.00			(0.01)
Consumer home equity	Consumer home equity	(63)			(9)			(137)			442			Consumer home equity	0.00			(0.01)			0.00			(0.02)
Other consumer	Other consumer	536			1,038			827			1,475			Other consumer	0.23			0.24			0.61			0.34
Total net loans charged-off		751			1,904			4,265			4,765
(Release of) provision for loan losses		(1,488)			700			(5,368)			37,900
Total allowance for loan losses, end of period		$	103,398		$	115,432		$	103,398		$	115,432
Net charge-offs to average total loans outstanding during this period		0.01		%	0.02		%	0.04		%	0.05		%
Total net charge-offs to average loans outstanding during the period:														Total net charge-offs to average loans outstanding during the period:	0.01		%	0.01		%	0.01		%	0.04		%
Total loans														Total loans	$	12,884,605		$	9,481,458		$	12,884,605		$	9,481,458
Total non-accrual loans														Total non-accrual loans	$	33,954		$	40,613		$	33,954		$	40,613
Allowance for loan losses														Allowance for loan losses	$	131,663		$	103,398		$	131,663		$	103,398
Allowance for loan losses as a percent of total loans	Allowance for loan losses as a percent of total loans	1.09		%	1.16		%	1.09		%	1.16		%	Allowance for loan losses as a percent of total loans	1.02		%	1.09		%	1.02		%	1.09		%
Allowance for loan losses as a percent of non-performing loans		245.77		%	257.47		%	245.77		%	257.47		%
Non-accrual loans as a percent of total loans														Non-accrual loans as a percent of total loans	0.26		%	0.43		%	0.26		%	0.43		%
Allowance for loan losses as a percent of non-accrual loans														Allowance for loan losses as a percent of non-accrual loans	387.77		%	254.59		%	387.77		%	254.59		%

(1)Average loan balances exclude loans held for sale

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Non-accrual loans decreased $6.7 million, or 16.4%, to $34.0 million at September 30, 2022 from $40.6 million at September 30, 2021, primarily due to decreases in non-accrual loans in our commercial and industrial and business banking portfolios of $5.4 million and $3.6 million, respectively. Partially offsetting these decreases were increases in non-accrual loans in our consumer home equity and residential real estate portfolios of $1.6 million and $1.3 million, respectively. Non-accrual commercial and industrial loans and business banking loans decreased primarily due to payoffs and curing of delinquency of such loans. Non-accrual consumer home equity loans and non-accrual residential real estate loans increased primarily due to several loans moving to non-accrual status which had been acquired in connection with our acquisition of Century.

The following table sets forth the allocation of the allowance for loan losses by loan categories listed in loan portfolio composition as of the dates indicated:

Summary of Allocation of Allowance for Loan Losses


		As of September 30, 2021						As of December 31, 2020							As of September 30, 2022						As of December 31, 2021
		Allowance for Loan Losses		Percent of Allowance in Category to Total Allocated Allowance		Percent of Loans in Category to Total Loans		Allowance for Loan Losses		Percent of Allowance in Category to Total Allocated Allowance		Percent of Loans in Category to Total Loans			Allowance for Loan Losses		Percent of Allowance in Category to Total Allocated Allowance		Percent of Loans in Category to Total Loans		Allowance for Loan Losses		Percent of Allowance in Category to Total Allocated Allowance		Percent of Loans in Category to Total Loans
		(Dollars in thousands)													(Dollars in thousands)
Commercial and industrial (1)	Commercial and industrial (1)	$	20,629	19.94	%	17.38	%	$	26,617	23.54	%	20.51	%	Commercial and industrial (1)	$	26,841	20.39	%	23.43	%	$	18,018	18.43	%	24.10	%
Commercial real estate	Commercial real estate	54,186		52.42	%	40.25	%	54,569		48.28	%	36.73	%	Commercial real estate	51,103		38.81	%	38.64	%	52,373		53.56	%	36.82	%
Commercial construction	Commercial construction	3,402		3.29	%	2.56	%	4,553		4.03	%	3.14	%	Commercial construction	5,981		4.54	%	2.43	%	2,585		2.64	%	1.81	%
Business banking (1)	Business banking (1)	11,378		11.00	%	12.89	%	13,152		11.64	%	13.76	%	Business banking (1)	16,262		12.35	%	8.50	%	10,983		11.23	%	10.87	%
Residential real estate	Residential real estate	6,430		6.22	%	15.69	%	6,435		5.69	%	14.09	%	Residential real estate	23,007		17.47	%	16.42	%	6,556		6.70	%	15.69	%
Consumer home equity	Consumer home equity	3,635		3.52	%	8.93	%	3,744		3.31	%	8.92	%	Consumer home equity	5,842		4.44	%	9.06	%	3,722		3.81	%	8.96	%
Other consumer	Other consumer	3,387		3.28	%	2.30	%	3,467		3.07	%	2.85	%	Other consumer	2,627		2.00	%	1.52	%	3,308		3.38	%	1.75	%
Other	Other	351		0.33	%	—	%	494		0.44	%	—	%	Other	—		—	%	—	%	242		0.25	%	—	%
Total	Total	$	103,398	100.00	%	100.00	%	$	113,031	100.00	%	100.00	%	Total	$	131,663	100.00	%	100.00	%	$	97,787	100.00	%	100.00	%

(1)PPP loans are included within these portfolios as of September 30, ~~2021~~2022 and December 31, ~~2020;~~2021; however, as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 no allowance for loan losses was recorded on these loans due to the SBA guarantee of 100% of the loans

To determine if a loan should be charged-off, all possible sources of repayment are analyzed. Possible sources of repayment include the potential for future cash flows, liquidation of the collateral and the strength of co-makers or guarantors. When available information confirms that specific loans or portions thereof are uncollectible, these amounts are promptly charged-off against the allowance for loan losses and any recoveries of such previously charged-off amounts are credited to the allowance for loan losses.

Regardless of whether a loan is unsecured or collateralized, we charge off the amount of any confirmed loan loss in the period when the loans, or portions of loans, are deemed uncollectible. For troubled, collateral-dependent loans, loss confirming events may include an appraisal or other valuation that reflects a shortfall between the value of the collateral and the carrying value of the loan or receivable, or a deficiency balance following the sale of the collateral.

For additional information regarding our allowance for loan losses, see Note 4, “Loans and Allowance for ~~Loan~~Credit Losses” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q.

Federal Home Loan Bank stock

The FHLBB is a cooperative that provides services to its member banking institutions. The primary reason for our membership in the FHLBB is to gain access to a reliable source of wholesale funding and as a tool to manage interest rate risk. The purchase of stock in the FHLB is a requirement for a member to gain access to funding. We purchase and/or are subject to redemption of FHLBB stock proportional to the volume of funding received and view the holdings as a necessary long-term investment for the purpose of balance sheet liquidity and not for investment return.

We held an investment in the FHLBB of ~~$10.6~~$18.7 million and ~~$8.8~~$10.9 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

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Goodwill and other intangible assets

Goodwill and other intangible assets were ~~$379.8~~$662.2 million and ~~$376.5~~$649.7 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The increase in goodwill and other intangibles assets was due to the purchase of two insurance agencies during the nine months ended September 30, ~~2021.~~2022. For more information regarding our insurance agency acquisitions, refer to Note 7, “Goodwill and Other Intangibles” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q. We did not record any impairment to our goodwill or other intangible assets during the nine months ended September 30, ~~2021.~~2022. We will continue to assess our goodwill and other intangible assets to determine if impairments are ~~necessary as it relates to the COVID-19 pandemic.~~necessary.

Deposits ~~and other interest-bearing liabilities~~

~~Table of Contents~~

Deposits originating within the markets we serve continue to be our primary source of funding our earning assets. We have been able to compete effectively for deposits in our primary market areas. The distribution and market share of deposits by type of deposit and by type of depositor are important considerations in our assessment of the stability of our fund sources and our access to additional funds. Furthermore, we shift the mix and maturity of the deposits depending on economic conditions and loan and investment policies in an attempt, within set policies, to minimize cost and maximize net interest margin. We do not rely upon, and in recent years have not obtained, deposit funding through brokered deposits.

The following table presents our deposits as of the dates presented:

Components of Deposits


		As of September 30, 2021		As of December 31, 2020		Change					As of September 30, 2022		As of December 31, 2021		Change
						Amount ($)		Percentage (%)							Amount ($)		Percentage (%)
		(Dollars in thousands)									(Dollars in thousands)
Demand	Demand	$	5,484,126	$	4,910,794	$	573,332	11.7	%	Demand	$	6,582,122	$	7,020,864	$	(438,742)	(6.2)	%
Interest checking	Interest checking	2,693,276		2,380,497		312,779		13.1	%	Interest checking	5,047,018		4,478,566		568,452		12.7	%
Savings	Savings	1,444,928		1,256,736		188,192		15.0	%	Savings	1,990,188		2,077,495		(87,307)		(4.2)	%
Money market investments	Money market investments	3,802,319		3,348,898		453,421		13.5	%	Money market investments	4,757,477		5,525,005		(767,528)		(13.9)	%
Certificate of deposits	Certificate of deposits	225,315		258,859		(33,544)		(13.0)	%	Certificate of deposits	356,576		526,381		(169,805)		(32.3)	%
Total deposits	Total deposits	$	13,649,964	$	12,155,784	$	1,494,180	12.3	%	Total deposits	$	18,733,381	$	19,628,311	$	(894,930)	(4.6)	%

~~Deposits increased by $1.5~~(1)The Bank’s estimate of total uninsured deposits was $9.8 billion ~~or 12.3%, to $13.6~~and $11.0 billion at September 30, 2022 and December 31, 2021, respectively.

Deposits decreased by $0.9 billion, or 4.6%, to $18.7 billion at September 30, 2022 from ~~$12.2~~$19.6 billion at December 31, ~~2020.~~2021. This ~~increase~~decrease was primarily the result of ~~an increase~~a decrease in money market investments of $0.8 billion, a decrease in demand deposits of ~~$573.3~~$0.4 billion, and a decrease in certificate of deposits of $0.2 billion. These decreases were partially offset by an increase ~~in money market deposits~~ of ~~$453.4 million and an increase~~$0.6 billion in interest checking ~~deposits of $312.8 million. These increases reflect strong deposit flows, in part~~deposits. The overall decrease is primarily due to a runoff of higher cost deposits acquired in connection with our acquisition of Century, the runoff of government ~~stimulus.~~stimulus funds which had been deposited by our customers, higher market rates resulting in greater industry-wide competition for deposits, and a transfer of deposits during the second quarter of 2022. On January 14, 2022, we announced we had entered into an asset purchase agreement for the transfer of our cannabis-related and money service business deposits relationships, which we acquired from Century, to Needham Bank. On April 1, 2022, we completed the transfer of such deposits, which was subject to a post-transfer settlement period of 60 days. The total amount transferred, which includes amounts transferred during the post-transfer settlement period, was $278.0 million.

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The following table presents the classification of deposits on an average basis for the periods below:

Classification of Deposits on an Average Basis


		For the Nine Months Ended September 30, 2021				For the Year Ended December 31, 2020					For the Nine Months Ended September 30, 2022				For the Year Ended December 31, 2021
		Average Amount		Average Rate		Average Amount		Average Rate			Average Amount		Average Rate		Average Amount		Average Rate
		(Dollars in thousands)									(Dollars in thousands)
Demand	Demand	$	5,318,903	—	%	$	4,535,066	—	%	Demand	$	6,698,640	—	%	$	5,547,615	—	%
Interest checking	Interest checking	2,541,113		0.04	%	2,227,185		0.09	%	Interest checking	4,897,321		0.19	%	2,866,091		0.07	%
Savings	Savings	1,376,243		0.02	%	1,123,584		0.02	%	Savings	2,046,254		0.01	%	1,483,271		0.02	%
Money market investments	Money market investments	3,576,648		0.06	%	3,212,752		0.23	%	Money market investments	5,151,384		0.09	%	3,870,712		0.06	%
Certificate of deposits	Certificate of deposits	243,621		0.17	%	300,381		0.52	%	Certificate of deposits	429,401		0.21	%	280,141		0.21	%
Total deposits	Total deposits	$	13,056,528	0.03	%	$	11,398,968	0.10	%	Total deposits	$	19,223,000	0.08	%	$	14,047,830	0.04	%

Other time deposits in excess of ~~$100,000 and greater,~~the FDIC insurance limit of $250,000, including certificates of deposits ~~of $100,000 and greater,~~ as of the dates indicated, had maturities as follows:


		As of September 30, 2021		As of December 31, 2020			As of September 30, 2022		As of December 31, 2021
Maturing in	Maturing in	(In thousands)				Maturing in	(In thousands)
Three months or less	Three months or less	$	43,299	$	49,740	Three months or less	$	39,179	$	113,019
Over three months through six months	Over three months through six months	17,214		24,608		Over three months through six months	25,785		53,899
Over six months through 12 months	Over six months through 12 months	22,732		31,009		Over six months through 12 months	28,106		33,295
Over 12 months	Over 12 months	9,991		9,956		Over 12 months	9,246		23,827
Total	Total	$	93,236	$	115,313	Total	$	102,317	$	224,040

Borrowings

~~Table of Contents~~

Our borrowings consist of both short-term and long-term borrowings and provide us with sources of funding. Maintaining available borrowing capacity provides us with a contingent source of liquidity.

Our total borrowings increased by ~~$2.0~~$388.4 million ~~or 7.2%,~~ to ~~$30.1~~$422.7 million at September 30, ~~2021~~2022 compared to ~~$28.0~~$34.3 million at December 31, ~~2020.~~2021. The increase was primarily due to an increase in ~~escrow deposits~~FHLB advances, which we borrowed to fund loan originations. The increase was also due, in part, to an increase in interest rate swap collateral funds, which represents collateral posted to us by our financial institution counterparties for over-the-counter interest rate swaps. At December 31, 2021, our financial institution counterparties were not required to post collateral to us due to the low level of market interest rates. Conversely, at September 30, 2022, following increases in market interest rates during the second quarter of 2022, our ~~borrowers.~~financial institutions counterparties were required to post collateral to us of $16.7 million.

The following table sets forth information concerning balances on our borrowings as of the dates and for the periods indicated:

Borrowings by Category


						Change									Change
		As of September 30, 2021		As of December 31, 2020		Amount ($)		Percentage (%)			As of September 30, 2022		As of December 31, 2021		Amount ($)		Percentage (%)
		(In thousands)									(In thousands)
FHLB advances	FHLB advances	$	14,172	$	14,624	$	(452)	(3.1)	%	FHLB advances	$	384,215	$	14,020	$	370,195	2640.5	%
Escrow deposits of borrowers	Escrow deposits of borrowers	15,900		13,425		2,475		18.4	%	Escrow deposits of borrowers	21,853		20,258		1,595		7.9	%
Interest rate swap collateral funds										Interest rate swap collateral funds	16,650		—		16,650		100.0	%
Total	Total	$	30,072	$	28,049	$	2,023	7.2	%	Total	$	422,718	$	34,278	$	388,440	1,133.2	%

Results of Operations

Summary of Results of Operations

Three Months Ended September 30, Nine Months Ended September 30,
Change Change
2021 2020 Amount
($) Percentage 2021 2020 Amount
($) Percentage
(Dollars in thousands)
Interest and dividend income $ 103,468 $ 100,513 $ 2,955 2.9 % $ 310,282 $ 308,605 $ 1,677 0.5 %
Interest expense 777 1,771 (994) (56.1) % 2,892 10,962 (8,070) (73.6) %
Net interest income 102,691 98,742 3,949 4.0 % 307,390 297,643 9,747 3.3 %
(Release of) provision for allowance for loan losses (1,488) 700 (2,188) (312.6) % (5,368) 37,900 (43,268) (114.2) %
Noninterest income 43,209 47,709 (4,500) (9.4) % 144,154 128,735 15,419 12.0 %
Noninterest expense 98,970 109,817 (10,847) (9.9) % 300,354 305,754 (5,400) (1.8) %
Income tax expense 11,312 7,429 3,883 52.3 % 36,980 15,924 21,056 132.2 %
Net income 37,106 28,505 8,601 30.2 % 119,578 66,800 52,778 79.0 %

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	Three Months Ended September 30,								Nine Months Ended September 30,
					Change								Change
	2022		2021		Amount ($)		Percentage		2022		2021		Amount ($)		Percentage
	(Dollars in thousands)
Interest and dividend income	$	157,827	$	103,468	$	54,359	52.5	%	$	430,183	$	310,282	$	119,901	38.6	%
Interest expense	5,648		777		4,871		626.9	%	12,123		2,892		9,231		319.2	%
Net interest income	152,179		102,691		49,488		48.2	%	418,060		307,390		110,670		36.0	%
Provision for (release of) allowance for loan losses	6,480		(1,488)		7,968		(535.5)	%	7,045		(5,368)		12,413		(231.2)	%
Noninterest income	43,353		43,209		144		0.3	%	131,645		144,154		(12,509)		(8.7)	%
Noninterest expense	116,840		98,970		17,870		18.1	%	336,845		300,354		36,491		12.1	%
Income tax expense	17,435		11,312		6,123		54.1	%	48,350		36,980		11,370		30.7	%
Net income	54,777		37,106		17,671		47.6	%	157,465		119,578		37,887		31.7	%

Comparison of the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021

Interest and Dividend Income

Interest and dividend income increased by ~~$3.0~~$54.4 million, or ~~2.9%~~52.5%, to $157.8 million during the three months ended September 30, 2022 from $103.5 million during the three months ended September 30, 2021. The increase was primarily attributable to our acquisition of Century on November 12, 2021, ~~from $100.5 million~~which added approximately $6.6 billion in interest-earning assets. Overall, the average balance of our interest-earning assets increased $5.2 billion, or 32.2%, to $21.5 billion during the three months ended September 30, ~~2020. The~~2022 compared to $16.3 billion during the three months ended September 30, 2021, reflecting the addition of Century assets. Also contributing to the increase in interest and dividend income was ~~primarily a result of~~ an increase in the ~~average balance of securities which was partially offset by a decrease in the~~ yield on ~~such securities.~~average interest-earning assets which increased by 43 basis points compared with the three months ended September 30, 2021. Our yields on loans and securities are generally presented on an FTE basis where the embedded tax benefit on loans or securities are calculated and added to the yield. Management believes that this presentation allows for better comparability between institutions with different tax structures.

•Interest income on securities and ~~federal funds sold and~~ other short-term investments increased ~~$6.9~~$16.1 million, or ~~70.6%~~96.2%, to $32.8 million during the three months ended September 30, 2022 from $16.7 million during the three months ended September 30, 2021. The increase in interest income on our securities was due to an increase in the average balance and yield of such securities. The average balance of our securities increased $2.2 billion, or 33.2%, to $9.0 billion for the three months ended September 30, 2022 from $6.8 billion for the three months ended September 30, 2021 ~~from $9.8~~which was primarily due to securities acquired in connection with our acquisition of Century of $3.1 billion, partially offset by maturities, principal paydowns and sales in excess of purchases during the three months ended September 30, 2022. The yield on our securities increased 46 basis points during the three months ended September 30, 2022 in comparison to the three months ended September 30, 2021 due to increases in market rates of interest.

•Interest income on loans increased $38.3 million, or 44.1%, to $125.0 million during the three months ended September 30, ~~2020.~~2022 from $86.7 million during the three months ended September 30, 2021. The increase in interest income on our ~~securities~~loans was primarily due to an increase in the average balance of ~~such securities~~loans and an increase in our yield on loans and was partially offset by a decrease in net accretion of ~~$3.6~~PPP loan deferred fees and costs. The average balance of our loans increased $3.0 billion, or ~~112.7%~~31.4%, to ~~$6.8~~$12.5 billion ~~for~~during the three months ended September 30, 2022 from $9.5 billion during the three months ended September 30, 2021 ~~from $3.2 billion for~~which was primarily due to loans acquired in connection with our acquisition of Century of $2.9 billion. The yield on our loans increased 41 basis points during the three months ended September 30, ~~2020 which~~2022 in comparison to the three months ended September 30, 2021 due to increases in market rates of interest. The increase in interest income attributable to the increase in average total loans and yields was partially offset by a decrease in ~~the yield on such securities.~~

•~~Interest income on loans decreased $4.0~~net accretion of PPP loan deferred fees and costs of $5.4 million, or ~~4.4%~~91.5%, to ~~$86.7~~$0.5 million during the three months ended September 30, ~~2021~~2022 from ~~$90.7~~$5.9 million during ~~the~~ three months ended September 30, ~~2020. The decrease~~2021.

Interest and dividend income increased by $119.9 million, or 38.6%, to $430.2 million during the nine months ended September 30, 2022 from $310.3 million during the nine months ended September 30, 2021. This increase was primarily a result of our acquisition of Century on November 12, 2021, which added approximately $6.6 billion in interest-earning assets. Overall, the average balance of our interest-earning assets increased $5.9 billion, or 37.2%, to $21.6 billion during the nine

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interest income on our loans was primarily due to the decrease in yield on average loans which was driven by the downward adjustment of the interest rates on our existing adjustable-rate loans as a result of lower interest rates. The decrease in loan yields was partially offset by an increase in net accretion of PPP loan deferred fees and costs of $1.8 million, or 43.9%, to $5.9 million during the three months ended September 30, ~~2021 from $4.1 million during three months ended September 30, 2020.~~

~~Interest and dividend income increased by $1.7 million, or 0.5%,~~2022 compared to ~~$310.3 million~~$15.7 billion during the nine months ended September 30, 2021, from $308.6 million during the nine months ended September 30, 2020. This increase was primarily a result of an increase in the average balance of interest-earning assets of $3.6 billion, or 30.0%, to $15.7 billion as of September 30, 2021 compared to $12.1 billion as of September 30, 2020, primarily reflecting the ~~investment~~addition of ~~the proceeds from our October 2020 IPO. Partially offsetting~~Century assets. Also contributing to this increase was ~~a decrease~~an increase in the yield on average interest-earning assets which ~~decreased~~increased by 785 basis points ~~to 2.7% during~~compared with the nine months ended September 30, 2021.

•Interest income on securities and ~~federal funds sold and~~ other short-term investments increased ~~$13.8~~$52.6 million, or ~~45.5%~~119.7%, to $96.6 million for the nine months ended September 30, 2022 compared to $44.0 million for the nine months ended September 30, ~~2021 compared to $30.2 million for the nine months ended September 30, 2020.~~2021. The increase in interest income on securities was due to ~~a larger~~an increase in the average ~~security~~ balance ~~driven by security purchases between~~and yield of such securities. The average balance of our securities increased $3.3 billion, or 54.0%, to $9.3 billion during the nine months ended September 30, ~~2020 and~~2022 compared to $6.0 billion during the nine months ended September 30, 2021, ~~partially offset by lower overall market rates.~~which was primarily due to securities acquired in connection with our acquisition of Century of $3.1 billion combined with security purchases in excess of sales, maturities and principal paydowns. The ~~FTE~~ yield on ~~average~~our securities ~~and other interest-earning assets decreased 69~~increased 40 basis points during the nine months ended September 30, 2022 in comparison to ~~1.0%~~the nine months ended September 30, 2021 due to increases in market rates of interest.

•Interest income on loans increased by $67.3 million, or 25.3%, to $333.6 million during the nine months ended September 30, 2022 from $266.3 million during the nine months ended September 30, 2021. The ~~average balance of securities and other interest-earning assets increased by $3.5 billion, or 140.5%, to $6.0 billion as of September 30, 2021 compared to $2.5 billion as of September 30, 2020. The~~ increase ~~was primarily due to the investment of the proceeds of our October 2020 IPO.~~

•Contributing to the overall increase in interest and dividend income was the recognition of net PPP loan fee accretion. During the nine months ended September 30, 2021, we recognized $23.5 million in net PPP loan fee accretion. We began originating PPP loans in the second quarter of 2020 and recognized $8.2 million in net PPP loan fee accretion during the nine months ended September 30, 2020.

•Interest income on loans decreased by $12.1 million, or 4.3%, to $266.3 million during the nine months ended September 30, 2021 from $278.4 million during the nine months ended September 30, 2020. The decrease in interest income on our loans was primarily due to an increase in the average balance of loans and was partially offset by a decrease in ~~the yield on average loans which was driven by the downward adjustment~~net accretion of ~~the interest rates on our existing adjustable-rate loans as a result of lower interest rates.~~PPP loan deferred fees and costs. The average balance of our loans increased ~~primarily due~~$2.6 billion, or 26.8%, to ~~PPP loan originations, partially offsetting the decline in interest rates. The FTE yield on average loans decreased 21 basis points to 3.7%~~$12.3 billion during the nine months ended September 30, ~~2021. The average balance of our loans increased by $109.7 million, or 1.1%, to~~2022 from $9.7 billion ~~as of~~during the nine months ended September 30, 2021 ~~compared~~which was primarily due to ~~$9.6 billion as~~loans acquired in connection with our acquisition of Century of $2.9 billion. The increase in interest income attributable to the increase in average total loans was partially offset by a decrease in net accretion of PPP loan deferred fees and costs of $14.7 million, or 62.6%, to $8.8 million during the nine months ended September 30, ~~2020.~~2022 from $23.5 million during the nine months ended September 30, 2021.

Interest Expense

~~Interest~~During the three and nine months ended September 30, 2022, interest expense ~~decreased $1.0~~increased $4.9 million and $9.2 million, respectively, or ~~56.1%~~626.9% and 319.2%, respectively, to $5.6 million and $12.1 million, respectively, from $0.8 million and $2.9 million during the three and nine months ended September 30, 2021, respectively. The increase was primarily attributable to an increase in deposit interest expense.

During the three months ended September 30, ~~2021 from $1.8 million during the three months ended September 30, 2020. The decrease was a result of lower funding costs associated with the decline in market~~2022, interest ~~rates.~~

•~~Interest~~ expense on our interest-bearing deposits ~~decreased~~increased by ~~$1.0~~$4.0 million, or ~~57.4%~~549.6%, to $4.8 million from $0.7 million during the three months ended September 30, 2021. This increase was due to an increase in average interest-bearing deposits and due to an increase in the rates paid on deposits. Average interest-bearing deposits increased $4.3 billion, or 53.1%, for the three months ended September 30, 2022 compared to the three months ended September 30, 2021, ~~from $1.7 million~~primarily as a result of the Century acquisition which added approximately $4.4 billion in interest-bearing deposits. Rates paid on deposits increased by 11 basis points to 0.15% during the three months ended September 30, ~~2020.~~

2022 from 0.04% during the three months ended September 30, 2021, which were increased in response to an increase in market rates of interest. Interest expense ~~decreased $8.1~~related to our borrowings also contributed to the overall increase in interest expense and increased by $0.8 million, ~~or 73.6%,~~for the three months ended September 30, 2022 compared to ~~$2.9 million during~~the three months ended September 30, 2021. The increase in borrowings interest expense is attributable to an increase in our utilization of our FHLB borrowing capacity which was drawn to fund loan originations.

During the nine months ended September 30, ~~2021 from $11.0 million during the nine months ended September 30, 2020. The decrease was a result of lower funding costs associated with the decline in market~~2022, interest ~~rates.~~

•~~Interest~~ expense on our interest-bearing deposits ~~decreased~~increased by ~~$7.5~~$8.4 million, or ~~73.0%~~303.2%, to $11.2 million from $2.8 million during the nine months ended September 30, ~~2021 from $10.2 million during~~2021. This increase was due to an increase in average interest-bearing deposits and due to an increase in the ~~nine months ended September 30, 2020.~~

•~~Interest expense~~rates paid on ~~borrowed funds decreased by $0.6 million, or 82.8%, to $0.1 million during the nine months ended September 30, 2021 from $0.7 million during the nine months ended September 30, 2020.~~

deposits. Average interest-bearing deposits increased ~~$1.0~~$4.8 billion, or ~~14.3%~~61.9%, for the nine months ended September 30, ~~2021~~2022 compared to the nine months ended September 30, ~~2020. The~~2021, primarily due to the Century acquisition as previously mentioned. Rates paid on deposits increased by 7 basis points to 0.12% during the nine months ended September 30, 2022 from 0.05% during the nine months ended September 30, 2021.

Net Interest Income

Net interest income increased by $49.5 million, or 48.2%, to $152.2 million during the three months ended September 30, 2022 from $102.7 million for the three months ended September 30, 2021. Net interest income increased due to an increase in ~~deposit costs associated with~~yields on interest-earning assets which exceeded the increase in ~~average~~the costs of interest-bearing liabilities. Also contributing to the increase in net interest income was an increase in net interest-earning assets of $0.8 billion, or 9.8%, to $8.9 billion during the three months ended September 30, 2022 from $8.1 billion during the three months ended September 30, 2021.

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~~deposits was more than offset by the reduction in rates paid on deposits during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.~~

~~Net Interest Income~~

Net interest income ~~was $102.7 million for the three months ended September 30, 2021 compared to $98.7 million for the three months ended September 30, 2020, representing an increase of $3.9~~increased by $110.7 million, or ~~4.0%. Net interest income was $307.4~~36.0%, to $418.1 million during the nine months ended September 30, ~~2021 compared to $297.6~~2022 from $307.4 million for the nine months ended September 30, ~~2020, representing an increase of $9.7 million, or 3.3%.~~2021. Net interest income increased slightly between the two periods as the reduction in interest income associated with the lower interest rate environment was more than offset by a related reduction in interest expense coupled with a substantialprimarily due to an increase in ~~average balances of~~net interest-earning assets of $1.0 billion, or 12.8%, to $9.0 billion during the ~~three and~~ nine months ended September 30, ~~2021 compared to~~2022 from $8.0 billion during the ~~three and~~ nine months ended September 30, ~~2020, primarily reflecting~~2021.

The following chart shows our net interest margin over the ~~investment of the proceeds from our October 2020 IPO.~~past five quarters including and excluding net PPP loan fee accretion:

Net interest margin is determined by dividing FTE net interest income by average-earning assets. For purposes of the following discussion, income from tax-exempt loans and investment securities has been adjusted to an FTE basis, using a marginal tax rate of ~~21.0%~~21.5% for the three and nine months ended September 30, ~~2021~~2022 and ~~21.8%~~21.0% for the three and nine months ended September 30, ~~2020.~~2021. Net interest margin, ~~decreased 69~~including PPP loan interest income, increased 34 basis points to 2.87% during the three months ended September 30, 2022, from 2.53% during the three months ended September 30, 2021. Net interest margin, including PPP loan interest income, remained flat at 2.64% during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021. The increase in net interest margin for the three months ended September 30, 2022 from the three months ended September 30, 2021 ~~from 3.33%~~was primarily due to an increase in market rates of interest and was partially offset by a decline in PPP net fee accretion of $5.4 million for such periods. The consistency in our net interest margin during the nine months ended September 30, ~~2020.~~2022 compared to the nine months ended September 30, 2021 is due to the impact of recent increases in market rates having been offset by a reduction in PPP net fee accretion for the same periods. For additional discussion of the decline in the PPP loan net fee accretion and increased interest rates, refer to the earlier “Outlook and Trends” section.

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The following tables set forth average balance sheet items, annualized average yields and costs, and certain other information for the periods indicated. All average balances in the table reflect daily average balances. Non-accrual loans were included in the computation of average balances but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees and costs, discounts and premiums that are amortized or accreted to interest income or expense.

Average Balances, Interest Earned/Paid, & Average Yields


		As of and for the three months ended September 30,															As of and for the three months ended September 30,
		2021							2020								2022							2021
		Average Outstanding Balance			Interest		Average Yield/Cost (5)		Average Outstanding Balance			Interest		Average Yield /Cost (5)			Average Outstanding Balance			Interest		Average Yield/Cost (5)		Average Outstanding Balance			Interest		Average Yield /Cost (5)
		(Dollars in thousands)															(Dollars in thousands)
Interest-earning assets:	Interest-earning assets:															Interest-earning assets:
Loans (1)	Loans (1)															Loans (1)
Residential	Residential	$	1,477,891		$	11,479	3.08	%	$	1,390,719		$	12,269	3.51	%	Residential	$	2,043,219		$	15,811	3.07	%	$	1,477,891		$	11,479	3.08	%
Commercial	Commercial	6,995,556			67,276		3.82	%	7,314,805			69,127		3.76	%	Commercial	9,138,029			96,270		4.18	%	6,995,556			67,276		3.82	%
Consumer	Consumer	1,055,075			8,803		3.31	%	1,209,340			10,091		3.32	%	Consumer	1,341,528			16,072		4.75	%	1,055,075			8,803		3.31	%
Total loans	Total loans	9,528,522			87,558		3.65	%	9,914,864			91,487		3.67	%	Total loans	12,522,776			128,153		4.06	%	9,528,522			87,558		3.65	%
Investment securities		5,249,742			16,656		1.26	%	1,712,928			10,007		2.32	%
Federal funds sold and other short-term investments		1,503,919			570		0.15	%	1,462,047			372		0.10	%
Non-taxable investment securities																Non-taxable investment securities	269,900			2,428		3.57	%	259,040			2,341		3.59	%
Taxable investment securities																Taxable investment securities	8,446,205			29,280		1.38	%	4,990,702			14,314		1.14	%
Other short-term investments																Other short-term investments	282,629			1,638		2.30	%	1,503,919			571		0.15	%
Total interest-earning assets	Total interest-earning assets	16,282,183			104,784		2.55	%	13,089,839			101,866		3.10	%	Total interest-earning assets	$	21,521,510		$	161,499	2.98	%	$	16,282,183		$	104,784	2.55	%
Non-interest-earning assets	Non-interest-earning assets	1,141,168							1,139,440							Non-interest-earning assets	911,025							1,141,168
Total assets	Total assets	$	17,423,351						$	14,229,279						Total assets	$	22,432,535						$	17,423,351
Interest-bearing liabilities:	Interest-bearing liabilities:															Interest-bearing liabilities:
Deposits:	Deposits:															Deposits:
Savings account	Savings account	$	1,441,385		$	36	0.01	%	$	1,187,083		$	62	0.02	%	Savings account	$	2,021,125		$	51	0.01	%	$	1,441,385		$	36	0.01	%
Interest checking account	Interest checking account	2,687,196			244		0.04	%	2,307,972			334		0.06	%	Interest checking account	5,211,914			2,686		0.20	%	2,687,196			244		0.04	%
Money market investment	Money market investment	3,762,855			360		0.04	%	3,311,847			1,051		0.13	%	Money market investment	4,824,452			1,893		0.16	%	3,762,855			360		0.04	%
Time account	Time account	233,145			96		0.16	%	294,025			280		0.38	%	Time account	380,560			151		0.16	%	233,145			96		0.16	%
Total interest-bearing deposits	Total interest-bearing deposits	8,124,581			736		0.04	%	7,100,927			1,727		0.10	%	Total interest-bearing deposits	12,438,051			4,781		0.15	%	8,124,581			736		0.04	%
Borrowings		26,074			41		0.62	%	25,478			44		0.69	%
Federal funds purchased																Federal funds purchased	3,804			24		2.50	%	—			—		—	%
Other borrowings																Other borrowings	153,882			843		2.17	%	26,074			41		0.62	%
Total interest-bearing liabilities	Total interest-bearing liabilities	8,150,655			777		0.04	%	7,126,405			1,771		0.10	%	Total interest-bearing liabilities	$	12,595,737		$	5,648	0.18	%	$	8,150,655		$	777	0.04	%
Demand accounts	Demand accounts	5,471,906							5,034,474							Demand accounts	6,614,467							5,471,906
Other noninterest-bearing liabilities	Other noninterest-bearing liabilities	350,111							362,073							Other noninterest-bearing liabilities	445,640							350,111
Total liabilities	Total liabilities	13,972,672							12,522,952							Total liabilities	19,655,844							13,972,672
Shareholders’ equity	Shareholders’ equity	3,450,679							1,706,327							Shareholders’ equity	2,776,691							3,450,679
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	17,423,351						$	14,229,279						Total liabilities and shareholders’ equity	$	22,432,535						$	17,423,351
Net interest income – FTE	Net interest income – FTE				$	104,007						$	100,095			Net interest income – FTE				$	155,851						$	104,007
Net interest rate spread (2)	Net interest rate spread (2)						2.51	%						3.00	%	Net interest rate spread (2)						2.80	%						2.51	%
Net interest-earning assets (3)	Net interest-earning assets (3)	$	8,131,528						$	5,963,434						Net interest-earning assets (3)	$	8,925,773						$	8,131,528
Net interest margin – FTE (4)	Net interest margin – FTE (4)						2.53	%						3.04	%	Net interest margin – FTE (4)						2.87	%						2.53	%
Average interest-earning assets to interest-bearing liabilities	Average interest-earning assets to interest-bearing liabilities	199.77		%					183.68		%					Average interest-earning assets to interest-bearing liabilities	170.86		%					199.77		%
Return on average assets (5)(6)																Return on average assets (5)(6)	0.97		%					0.84		%
Return on average equity (5)(7)																Return on average equity (5)(7)	7.83		%					4.27		%
Noninterest expense to average assets																Noninterest expense to average assets	2.07		%					2.25		%

(1)Non-accrual loans are included in loans.

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

(3)Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4)Net interest margin represents net interest income divided by average total interest-earning assets.

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(5)Presented on an annualized basis.

(6)Represents net income divided by average total assets.

(7)Represents net income divided by average equity.


	As of and for the nine months ended September 30,
	2022							2021
	Average Outstanding Balance			Interest		Average Yield /Cost (5)		Average Outstanding Balance			Interest		Average Yield/Cost (5)
	(Dollars in thousands)
Interest-earning assets:
Loans (1)
Residential	$	1,980,630		$	44,966	3.04	%	$	1,435,006		$	34,150	3.18	%
Commercial	9,019,196			258,082		3.83	%	7,203,903			208,228		3.86	%
Consumer	1,315,136			38,016		3.86	%	1,074,039			26,337		3.28	%
Total loans	12,314,962			341,064		3.70	%	9,712,948			268,715		3.70	%
Non-taxable investment securities	264,717			7,072		3.57	%	260,102			7,038		3.62	%
Taxable investment securities	8,484,540			88,277		1.39	%	4,154,480			36,977		1.19	%
Other short-term investments	541,285			2,726		0.67	%	1,619,873			1,434		0.12	%
Total interest-earning assets	$	21,605,504		$	439,139	2.72	%	$	15,747,403		$	314,164	2.67	%
Non-interest-earning assets	1,099,406							1,106,967
Total assets	$	22,704,910						$	16,854,370
Interest-bearing liabilities:
Deposits:
Savings account	$	2,046,254		$	153	0.01	%	$	1,376,243		$	169	0.02	%
Interest checking account	4,897,321			6,778		0.19	%	2,541,113			730		0.04	%
Money market investment	5,151,384			3,559		0.09	%	3,576,648			1,553		0.06	%
Time account	429,401			674		0.21	%	243,621			317		0.17	%
Total interest-bearing deposits	12,524,360			11,164		0.12	%	7,737,625			2,769		0.05	%
Federal funds purchased	1,282			24		2.50	%	—			—		—	%
Other borrowings	73,745			935		1.70	%	25,582			123		0.64	%
Total interest-bearing liabilities	$	12,599,387		$	12,123	0.13	%	$	7,763,207		$	2,892	0.05	%
Demand accounts	6,698,640							5,318,903
Other noninterest-bearing liabilities	436,724							347,237
Total liabilities	19,734,751							13,429,347
Shareholders’ equity	2,970,159							3,425,023
Total liabilities and shareholders’ equity	$	22,704,910						$	16,854,370
Net interest income – FTE				$	427,016						$	311,272
Net interest rate spread (2)						2.59	%						2.62	%
Net interest-earning assets (3)	$	9,006,117						$	7,984,196
Net interest margin – FTE (4)						2.64	%						2.64	%
Average interest-earning assets to interest-bearing liabilities	171.48		%					202.85		%
Return on average assets (5)(6)	0.93		%					0.95		%
Return on average equity (5)(7)	7.09		%					4.67		%
Noninterest expense to average assets	1.98		%					2.38		%

(1)Non-accrual loans are included in loans.

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

(3)Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4)Net interest margin represents net interest income divided by average total interest-earning assets.

(5)Presented on an annualized basis.

(6)Represents net income divided by average total assets.

(7)Represents net income divided by average equity.

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As of and for the nine months ended September 30,
2021 2020
Average
Outstanding
Balance Interest Average
Yield /Cost
(5) Average
Outstanding
Balance Interest Average
Yield/Cost
(5)
(Dollars in thousands)
Interest-earning assets:
Loans (1)
Residential $ 1,435,006 $ 34,150 3.18 % $ 1,412,268 $ 38,127 3.61 %
Commercial 7,203,903 208,228 3.86 % 6,929,729 208,534 4.02 %
Consumer 1,074,039 26,337 3.28 % 1,261,211 34,108 3.61 %
Total loans 9,712,948 268,715 3.70 % 9,603,208 280,769 3.91 %
Investment securities 4,414,582 44,015 1.33 % 1,556,985 30,782 2.64 %
Federal funds sold and other short-term investments 1,619,873 1,434 0.12 % 952,141 1,173 0.16 %
Total interest-earning assets 15,747,403 314,164 2.67 % 12,112,334 312,724 3.45 %
Non-interest-earning assets 1,106,967 1,089,473
Total assets $ 16,854,370 $ 13,201,807
Interest-bearing liabilities:
Deposits:
Savings account $ 1,376,243 $ 169 0.02 % $ 1,086,957 $ 181 0.02 %
Interest checking account 2,541,113 730 0.04 % 2,208,517 1,801 0.11 %
Money market investment 3,576,648 1,553 0.06 % 3,162,528 6,883 0.29 %
Time account 243,621 317 0.17 % 311,462 1,380 0.59 %
Total interest-bearing deposits 7,737,625 2,769 0.05 % 6,769,464 10,245 0.20 %
Borrowings 25,582 123 0.64 % 87,738 717 1.09 %
Total interest-bearing liabilities 7,763,207 2,892 0.05 % 6,857,202 10,962 0.21 %
Demand accounts 5,318,903 4,322,809
Other noninterest-bearing liabilities 347,237 345,869
Total liabilities 13,429,347 11,525,880
Shareholders’ equity 3,425,023 1,675,927
Total liabilities and shareholders’ equity $ 16,854,370 $ 13,201,807
Net interest income – FTE $ 311,272 $ 301,762
Net interest rate spread (2) 2.62 % 3.24 %
Net interest-earning assets (3) $ 7,984,196 $ 5,255,132
Net interest margin – FTE (4) 2.64 % 3.33 %
Average interest-earning assets to interest-bearing liabilities 202.85 % 176.64 %

~~(1)Non-accrual loans are included in loans.~~

~~(2)Net interest rate spread represents~~The following chart shows the ~~difference between the weighted~~composition of our quarterly average ~~yield on~~ interest-earning assets ~~and~~for the ~~weighted average cost of interest-bearing liabilities.~~past five quarters:

~~(3)Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.~~

~~(4)Net interest margin represents net interest income divided by average total interest-earning assets.~~

~~(5)Presented on an annualized basis.~~

Provision for Loan Losses

The provision for loan losses represents the charge to expense that is required to maintain an appropriate level of allowance for loan losses.

We ~~currently follow the incurred loss model for determining the~~recorded a provision for loan losses ~~and anticipate adopting what is commonly referred~~of $6.5 million for the three months ended September 30, 2022, compared to ~~as the “CECL model” on January 1, 2022.~~

~~We recorded~~ a release ~~of the allowance for loan losses~~ of $1.5 million for the three months ended September 30, ~~2021, compared to~~2021. Management determined a provision ~~of $0.7 million for the three months ended September 30, 2020. Given~~to be necessary due to increased loan balances, which were partially offset by continued ~~improved economic and credit conditions~~low historical losses during the three months ended September 30, 2022, compared with average historical losses for periods preceding the three months ended September 30, 2022. With respect to the three months ended September 30, 2021, wemanagement had determined that a release ofwas necessary given the ~~allowance was necessary. We had made~~continued improved economic and credit conditions experienced at that time. Overall, we recorded a ~~similar determination in connection with the release of the~~net provision for allowance for loan losses of ~~$0.6~~$7.0 million ~~and $3.3 million recorded~~ for the ~~three~~nine months ended ~~March 31, 2021 and June~~September 30, ~~2021, respectively. Overall, we recorded~~2022 compared to a ~~total~~ release ~~of the allowance for loan losses~~ of $5.4 million for the nine months ended September 30, 2021 during which period management determined the Company’s allowance for loan losses in accordance with ASC 450, “Contingencies” and ASC 310, “Receivables” (i.e., prior to our adoption of ASU 2016-13).

To determine our allowance for loan losses as of September 30, 2022 and the provision for loan losses for the three and nine months ended September 30, 2022, we used Oxford Economics September 2022 Baseline forecast (“the forecast”) to generate our modeled expected losses by loan portfolio in order to reflect management’s reasonable expectations of current and future economic conditions, which remained relatively stable in comparison to the first and second quarters of 2022. The forecast assumed overall positive but slower economic growth supported by strong employment and consumer spending for the remainder of 2022 and expects a mild recession in 2023. Recession expectations were supported by high inflation, rising interest rates, lingering supply chain difficulties, and softer labor market dynamics. Primary macroeconomic assumptions included in management’s evaluation of the adequacy of the allowance for loan losses included continued low, but rising, unemployment rates and slowing gross domestic product growth. Further, the forecast assumed that the FOMC will continue to raise interest rates into early 2023 following its most recent September 2022 increase and a decrease in the core consumer price index which is expected to remain above the FOMC’s 2% target until mid-2023. Refer to the section titled “Outlook and Trends” within this Item 2 for additional discussion. For additional discussion of our allowance for credit losses measurement methodology, see Note 2, “Summary of Significant Accounting Policies” and Note 4, “Loans and Allowance for Loan Losses” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q. For discussion of our previous methodology for estimating the allowance for loan losses, refer to Note 5, “Loans and Allowance for Loan Losses” within the Notes to the Unaudited Consolidated Financial Statements included in Part

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~~compared to a provision~~I, Item 1 in this Quarterly Report on Form 10-Q and Note 2, “Summary of ~~$37.9 million for~~Significant Accounting Policies” within the ~~nine months ended September 30, 2020. In March 2020, in response~~Notes to the ~~COVID-19 pandemic, we downgraded~~Consolidated Financial Statements included in Part II, Item 8 of the ~~risk ratings for all commercial loans we expected to be significantly impacted by the pandemic, including our hotel and restaurant loan portfolios.~~2021 Form 10-K.

Our periodic evaluation of the appropriate allowance for loan losses considers the risk characteristics of the loan portfolio, current economic conditions, and trends in loan delinquencies and charge-offs.

Noninterest Income

The following table sets forth information regarding noninterest income for the periods shown:

Noninterest Income


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended September 30,								Nine Months Ended September 30,
						Change								Change									Change								Change
		2021		2020		Amount		%		2021		2020		Amount		%			2022		2021		Amount		%		2022		2021		Amount		%
		(Dollars in thousands)																	(Dollars in thousands)
Insurance commissions	Insurance commissions	$	21,956	$	21,884	$	72	0.3	%	$	73,767	$	72,058	$	1,709	2.4	%	Insurance commissions	$	23,788	$	21,956	$	1,832	8.3	%	$	77,183	$	73,767	$	3,416	4.6	%
Service charges on deposit accounts	Service charges on deposit accounts	5,935		5,052		883		17.5	%	17,010		15,514		1,496		9.6	%	Service charges on deposit accounts	6,708		5,935		773		13.0	%	23,558		17,010		6,548		38.5	%
Trust and investment advisory fees	Trust and investment advisory fees	6,310		5,311		999		18.8	%	18,047		15,600		2,447		15.7	%	Trust and investment advisory fees	5,832		6,310		(478)		(7.6)	%	17,967		18,047		(80)		(0.4)	%
Debit card processing fees	Debit card processing fees	3,030		2,721		309		11.4	%	8,949		7,528		1,421		18.9	%	Debit card processing fees	3,249		3,030		219		7.2	%	9,417		8,949		468		5.2	%
Interest swap income (losses)		881		1,319		(438)		(33.2)	%	5,122		(3,919)		9,041		230.7	%
Interest rate swap income																		Interest rate swap income	1,562		881		681		77.3	%	6,087		5,122		965		18.8	%
(Losses) income from investments held in rabbi trusts	(Losses) income from investments held in rabbi trusts	(289)		3,800		(4,089)		(107.6)	%	5,773		4,802		971		20.2	%	(Losses) income from investments held in rabbi trusts	(2,248)		(289)		(1,959)		677.9	%	(13,997)		5,773		(19,770)		(342.5)	%
Losses on trading securities, net		—		—		—		—	%	—		(3)		3		100.0	%
Gains on sales of mortgage loans held for sale, net	Gains on sales of mortgage loans held for sale, net	717		2,219		(1,502)		(67.7)	%	3,044		3,732		(688)		(18.4)	%	Gains on sales of mortgage loans held for sale, net	22		717		(695)		(96.9)	%	240		3,044		(2,804)		(92.1)	%
Gains on sales of securities available for sale, net		1		—		1		100.0	%	1,166		285		881		309.1	%
(Losses) gains on sales of securities available for sale, net																		(Losses) gains on sales of securities available for sale, net	(198)		1		(199)		(19,900.0)	%	(2,474)		1,166		(3,640)		(312.2)	%
Other	Other	4,668		5,403		(735)		(13.6)	%	11,276		13,138		(1,862)		(14.2)	%	Other	4,638		4,668		(30)		(0.6)	%	13,664		11,276		2,388		21.2	%
Total noninterest income	Total noninterest income	$	43,209	$	47,709	$	(4,500)	(9.4)	%	$	144,154	$	128,735	$	15,419	12.0	%	Total noninterest income	$	43,353	$	43,209	$	144	0.3	%	$	131,645	$	144,154	$	(12,509)	(8.7)	%

Noninterest income ~~decreased by $4.5~~remained flat with a slight increase of $0.1 million, or ~~9.4%~~0.3%, to $43.4 million for the three months ended September 30, 2022 from $43.2 million for the three months ended September 30, ~~2021 from $47.7 million for the three months ended September 30, 2020.~~2021. This ~~decrease~~increase was primarily due to a ~~$4.1~~$1.8 million increase in insurance commissions, a $0.8 million increase in service charges on deposit accounts, and a $0.7 million increase in interest rate swap income. These increases were partially offset by a $2.0 million decrease in income from investments held in rabbi trusts, and a ~~$1.5~~$0.7 million decrease in ~~gain~~net gains on sales of mortgage loans held for ~~sale, net, which were partially offset by a $1.0 million~~sale.

•Insurance commissions increased due to an increase in ~~trust and investment advisory fees and a $0.9 million increase in service~~recurring commissions which was attributable to recent insurance agency acquisitions. Refer to the section titled “Overview” within this Item 2 for additional discussion of such agency acquisitions.

•Service charges on deposit ~~accounts.~~

•~~(Losses) income from investments held in rabbi trust decreased to a loss~~accounts increased primarily as a result of increased corporate account analysis charges as a ~~less~~result of greater commercial deposit customer activity. The increased customer deposit activity is primarily attributable to our acquisition of Century.

•Interest rate swap income increased primarily as a result of a favorable mark-to-market adjustment during the three months ended September 30, ~~2021~~2022 compared to the three months ended September 30, ~~2020.~~2021.

•~~Gains~~Income from investments held in rabbi trusts decreased to a net loss primarily as a result of an unfavorable mark-to-market adjustment on equity securities held in these accounts resulting from a decline in the market value of equity securities held in the rabbi trusts.

•Net gains on sales of mortgage loans held for sale ~~net,~~ decreased due to a ~~combination~~reduction in the volume of ~~fewer residential real estate loans originated as held for sale and increases in~~our mortgage loan sales on the secondary market which was primarily attributable to rising market rates of ~~interest during~~interest.

Noninterest income decreased by $12.5 million, or 8.7%, to $131.6 million for the ~~three~~nine months ended September 30, ~~2021 compared to~~2022 from $144.2 million for the ~~three~~nine months ended September 30, ~~2020.~~2021. The decrease was primarily due to a $19.8 million decrease in income from investments held in rabbi trusts which resulted from a current period net loss from such investments, a $3.6 million decrease in gains on sales of securities available for sale which resulted from a current period net loss from such sales compared to a net gain in the comparative prior period, and a $2.8 million decrease in net gains on sales of

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mortgage loans. These decreases were partially offset by a $6.5 million increase in service charges on deposit accounts and a $3.4 million increase in insurance commissions.

•~~Trust and investment advisory fees increased~~Income from investments held in rabbi trusts decreased to a net loss primarily as a result of ~~higher asset values associated~~an unfavorable mark-to-market adjustment on equity securities held in these accounts resulting from a decline in the market value of equity securities held in the rabbi trusts.

•Gains on sales of securities available for sale, net, decreased to a net loss due to the decision by management to sell certain available for sale securities during the nine months ended September 30, 2022, a portion of which were acquired in connection with our acquisition of Century and were in a net unrealized loss position at the ~~principal assets~~time of sale.

•Net gains on sales of mortgage loans decreased due to a reduction in ~~customers’ accounts.~~the volume of our mortgage loan sales on the secondary market which was primarily attributable to rising market rates of interest.

•Service charges on deposit accounts increased primarily as a result of increased corporate account analysis charges as a result of greater commercial deposit customer activity and increased overdraft fees as a result of greater customer deposit activity.

~~Noninterest income~~ The increased ~~by $15.4 million, or 12.0%,~~customer deposit activity is primarily attributable to ~~$144.2 million for~~our acquisition of Century. Partially offsetting the ~~nine~~increase in overdraft fees attributable to greater customer activity was a reduction in overdraft fees charged to customers which went into effect during the three months ended September 30, 2021 from $128.7 million for the nine months ended September 30, 2020. The increase was primarily due to a $9.0 million increase in interest rate swap income, a $2.4 million increase in trust and investment advisory fees, and a $1.7 million increase in insurance commissions, which were partially offset by a $1.9 million decrease in other noninterest income.

•~~Swap income increased primarily as a result of a favorable mark-to-market adjustment due to the current interest rate and economic environment.~~

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•~~Trust and investment advisory fees increased primarily as a result of higher asset values associated with the principal assets in customers’ accounts.~~2022.

•Insurance commissions increased ~~primarily as a result of~~due to an increase in ~~our profit-sharing revenues~~recurring commissions and ~~commissions.~~profit sharing income which was attributable to recent insurance agency acquisitions. Refer to the section titled “Overview” within this Item 2 for additional discussion of such agency acquisitions.

•Other noninterest income decreased primarily as a result of a decrease in (loss) gain on commitment to originate and sell mortgage loans derivative which decreased due to a combination of fewer residential real estate loans originated as held for sale and increases in market rates of interest.

Noninterest Expense

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

Noninterest Expense


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended September 30,								Nine Months Ended September 30,
						Change								Change									Change								Change
		2021		2020		Amount		%		2021		2020		Amount		%			2022		2021		Amount		%		2022		2021		Amount		%
								(Dollars in thousands)																	(Dollars in thousands)
Salaries and employee benefits	Salaries and employee benefits	$	66,238	$	66,593	$	(355)	(0.5)	%	$	199,554	$	191,517	$	8,037	4.2	%	Salaries and employee benefits	$	78,060	$	66,238	$	11,822	17.8	%	$	220,582	$	199,554	$	21,028	10.5	%
Office occupancy and equipment	Office occupancy and equipment	7,960		8,294		(334)		(4.0)	%	24,271		25,598		(1,327)		(5.2)	%	Office occupancy and equipment	9,703		7,960		1,743		21.9	%	31,205		24,271		6,934		28.6	%
Data processing	Data processing	12,191		11,721		470		4.0	%	37,892		33,905		3,987		11.8	%	Data processing	13,294		12,191		1,103		9.0	%	42,959		37,892		5,067		13.4	%
Professional services	Professional services	4,024		5,510		(1,486)		(27.0)	%	14,611		13,595		1,016		7.5	%	Professional services	5,826		4,024		1,802		44.8	%	14,561		14,611		(50)		(0.3)	%
Charitable contributions		—		—		—		—	%	—		3,984		(3,984)		(100.0)	%
Marketing	Marketing	1,598		1,943		(345)		(17.8)	%	6,786		6,056		730		12.1	%	Marketing	2,219		1,598		621		38.9	%	6,444		6,786		(342)		(5.0)	%
Loan expenses	Loan expenses	1,586		1,554		32		2.1	%	5,287		4,702		585		12.4	%	Loan expenses	1,152		1,586		(434)		(27.4)	%	3,444		5,287		(1,843)		(34.9)	%
FDIC insurance	FDIC insurance	1,056		938		118		12.6	%	2,989		2,788		201		7.2	%	FDIC insurance	1,578		1,056		522		49.4	%	4,710		2,989		1,721		57.6	%
Amortization of intangible assets	Amortization of intangible assets	629		699		(70)		(10.0)	%	1,786		2,102		(316)		(15.0)	%	Amortization of intangible assets	1,033		629		404		64.2	%	2,767		1,786		981		54.9	%
Other	Other	3,688		12,565		(8,877)		(70.6)	%	7,178		21,507		(14,329)		(66.6)	%	Other	3,975		3,688		287		7.8	%	10,173		7,178		2,995		41.7	%
Total noninterest expense	Total noninterest expense	$	98,970	$	109,817	$	(10,847)	(9.9)	%	$	300,354	$	305,754	$	(5,400)	(1.8)	%	Total noninterest expense	$	116,840	$	98,970	$	17,870	18.1	%	$	336,845	$	300,354	$	36,491	12.1	%

Noninterest expense ~~decreased~~increased by ~~$10.8~~$17.9 million, or ~~9.9%~~18.1%, to $116.8 million during the three months ended September 30, 2022 from $99.0 million during the three months ended September 30, ~~2021 from $109.8 million during the three months ended September 30, 2020.~~2021. This ~~decrease~~increase was primarily due to an ~~$8.9~~$11.8 million ~~decrease~~increase in ~~other noninterest expenses~~salaries and employee benefits, a ~~$1.5~~$1.8 million ~~decrease~~increase in professional services, ~~expenses.~~a $1.7 million increase in office occupancy and equipment, and a $1.1 million increase in data processing.

•~~Other noninterest expenses decreased~~Salaries and employee benefits increased primarily due to ~~a reduction in impairment charges taken on certain tax credit investments~~salaries and ~~reduced costs associated with the conversion~~wages for newly hired employees and former employees of our Defined Benefit Plan and BEP from a traditional final average earnings plan design to a cash balance plan design. Impairment charges taken on certain tax credit investments decreased primarily due to an impairment charge taken of $7.6 million on certain tax credit investments accounted for under the equity method of accounting during the three months ended September 30, 2020 compared to an impairment charge taken of $1.1 million for the three months ended September 30, 2021. For additional information on this impairment charge see ~~Note 8, “Low Income Housing Tax Credits and Other Tax Credit Investments”~~ ~~within the Notes~~Century who were retained subsequent to the ~~Consolidated Financial Statements included~~acquisition. In addition, we incurred $3.6 million in ~~Part I, Item I~~share-based compensation expense related to restricted stock awards granted in ~~this Quarterly Report on Form 10-Q. Non-service cost~~the fourth quarter of 2021 and awards of restricted stock units and performance stock units granted in the first quarter of 2022 and restricted stock awards granted in the second quarter of 2022. No related expenses ~~for the Defined Benefit Plan and the BEP decreased by $3.2 million and $0.6 million, respectively, for the three months ended September 30, 2021 compared to the three months ended September 30, 2020.~~

•~~Professional services expenses decreased primarily as a result of higher costs~~were incurred during the three months ended September 30, ~~2020~~2021 as ~~compared to the three months ended September 30, 2021 related to corporate-related matters and~~no such awards had been granted. Lastly, our ~~commercial banking strategy and development services.~~deferrals of loan

Noninterest expense decreased by $5.4 million, or 1.8%, to $300.4 million during the nine months ended September 30, 2021 from $305.8 million during the nine months ended September 30, 2020. The decrease was primarily due to a $14.3 million decrease in other noninterest expenses and $4.0 million decrease in charitable contributions. Partially offsetting these decreases was an $8.0 million increase in salaries and employee benefits and a $4.0 million increase in data processing expenses.

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origination-related costs decreased by $2.1 million resulting in a corresponding increase in salaries and employee benefits expenses.

•~~Other noninterest~~Professional services increased primarily as a result of interest rate swap professional transactional fees which were associated with our interest swaps qualifying for hedge accounting, which we had not entered into during the three months ended September 30, 2021. Also contributing to the increase in professional fees were increased fees incurred for employee search and placement.

•Office occupancy and equipment expenses ~~decreased~~increased primarily due to ~~reduced~~the addition of properties resulting from our acquisition of Century which included a $0.6 million increase in depreciation expense.

•Data processing expenses are primarily comprised of costs associated with the ~~conversion~~processing of customer transactions including loans and deposits and are partially impacted by fluctuations in related transaction volume. Such expenses increased during the three months ended September 30, 2022 from the three months ended September 30, 2021, primarily due to our ~~Defined Benefit Plan~~acquisition of Century in the fourth quarter of 2022 which resulted in the acquisition of additional loan and ~~BEP from a traditional final average earnings plan design~~deposit customers.

Noninterest expense increased by $36.5 million, or 12.1%, to ~~a cash balance plan design and a reduction in impairment charges taken on certain tax credit investments. Non-service cost expenses for the Defined Benefit Plan and the BEP decreased by $9.6~~$336.8 million ~~and $1.9 million, respectively, for~~during the nine months ended September 30, 2022 from $300.4 million during the nine months ended September 30, 2021. The increase was primarily due to a $21.0 million increase in salaries and employee benefits, a $6.9 million increase in office occupancy and equipment expenses, a $5.1 million increase in data processing expenses and a $3.0 million increase in other noninterest expenses.

•Salaries and employee benefits increased primarily due to salaries and wages for newly hired employees and former employees of Century who were retained subsequent to the acquisition. In addition, we incurred $8.1 million in share-based compensation expense related to restricted stock awards granted in the fourth quarter of 2021 and awards of restricted stock units and performance stock units granted in the first quarter of 2022 and restricted stock awards granted in the second quarter of 2022. No comparable expenses were incurred during the nine months ended September 30, 2021, during which period the Company did not have an equity incentive plan and no such awards were granted. Lastly, our deferrals of loan origination-related costs decreased by $7.8 million, resulting in a corresponding increase in salaries and employee benefits expenses.

•Office occupancy and equipment increased during the nine months ended September 30, 2022 as compared to the nine months ended September 30, ~~2020. Impairment charges taken on certain tax credit investments decreased~~2021 primarily due to the addition of properties resulting from our acquisition of Century which included a $2.0 million increase in depreciation expense, and lease impairment charges of $0.6 million, which were due to an ~~impairment charge taken~~early termination of ~~$7.6 million on certain tax credit investments accounted for under~~a lease acquired from Century.

•Data processing expenses are primarily comprised of costs associated with the ~~equity method~~processing of ~~accounting~~customer transactions including loans and deposits and are partially impacted by fluctuations in related transaction volume. Such expenses increased during the nine months ended September 30, ~~2020 compared to a net recovery of an impairment charge of $0.3 million for~~2022 from the nine months ended September 30, ~~2021. For~~2021 primarily due to our acquisition of Century in the fourth quarter of 2022 which resulted in the acquisition of additional ~~information on this impairment charge see~~ loan and deposit customers.

•~~Note 8, “Low Income Housing Tax Credits~~Other noninterest expenses increased primarily due to a $2.1 million increase in liability insurance expense, which was primarily due to regular insurance rate premium increases and ~~Other Tax Credit Investments”~~ ~~within~~our acquisition of Century, which increased the ~~Notes to~~number of our properties and, therefore, the ~~Consolidated Financial Statements included~~scope of our required insurance coverage, and a $1.7 million increase in ~~Part I, Item I in this Quarterly Report on Form 10-Q.Partially offsetting these decreases, was an accrual~~customer bad check losses during the nine months ended September 30, 2022 compared to during nine months ended September 30, 2021, ~~for legal expenses~~consistent with a nationwide increase in mail-based check fraud. Partially offsetting the effect of these items was a decrease of $3.3 million in legal expenses associated with the ~~preliminary~~ settlement of ~~the~~two putative class action litigation matters related to overdraft and non-sufficient funds fees. The accrual for such expenses was initially recorded during the second quarter of 2021 and final settlement of the legal matters occurred during the first quarter of 2022. For additional information, refer to Note 12, “Commitments and Contingencies” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q.

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•Charitable contributions decreased as no contributions were made during the nine months ended September 30, 2021 following the Company’s stock donation to the Foundation that occurred in October 2020 in connection with the Company’s IPO.

•Salaries and employee benefits increased primarily as a result of ESOP expense, for which no expenses were incurred during the nine months ended September 30, 2020 as the ESOP was established in October 2020, and higher pension service costs. The higher pension service costs were more than offset by a decrease in the non-service cost components of net periodic pension expense for the Defined Benefit Plan and the BEP, as discussed further above.

•Data processing expenses increased due to an increase in software service and support expenses (including depreciation expense) of $2.4 million and an increase in core data processing expenses of $1.6 million. Core data processing expenses increased primarily as a result of increased costs due to costs incurred associated with the Company’s proposed acquisition of Century Bancorp, Inc.

Income Taxes

We recognize the tax effect of all income and expense transactions in each year’s consolidated statements of income, regardless of the year in which the transactions are reported for income tax purposes. The following table sets forth information regarding our tax provision and applicable tax rates for the periods indicated:

Tax Provision and Applicable Tax Rates


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
		2021			2020			2021			2020				2022			2021			2022			2021
		(Dollars in thousands)													(Dollars in thousands)
Combined federal and state income tax provisions	Combined federal and state income tax provisions	$	11,312		$	7,429		$	36,980		$	15,924		Combined federal and state income tax provisions	$	17,435		$	11,312		$	48,350		$	36,980
Effective income tax rates	Effective income tax rates	23.4		%	20.7		%	23.6		%	19.2		%	Effective income tax rates	24.1		%	23.4		%	23.5		%	23.6		%
Blended statutory tax rate	Blended statutory tax rate	28.1		%	28.1		%	28.1		%	28.1		%	Blended statutory tax rate	28.1		%	28.1		%	28.1		%	28.1		%

Income tax expense increased by ~~$3.9~~$6.1 million, or ~~52.3%~~54.1%, to $17.4 million in the three months ended September 30, 2022 from $11.3 million in the three months ended September 30, 2021 ~~from $7.4~~and increased by $11.4 million, or 30.7%, to $48.4 million in the ~~three~~nine months ended September 30, ~~2020. Income tax expense increased by $21.1 million, or 132.2%, to~~2022 from $37.0 million in the nine months ended September 30, ~~2021 from $15.9 million in the nine months ended September 30, 2020.~~2021. The increase in income tax expense was due primarily to higher pre-tax income during the three and nine months ended September 30, ~~2021~~2022 compared to the three and nine months ended September 30, ~~2020, decreasing the impact on the effective rate related to favorable permanent differences, including investment tax credits and tax exempt income.~~2021. For additional information related to the Company’s income taxes see Note 12, “Income Taxes” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in ~~the Company’s 2020~~our 2021 Form 10-K.

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Financial Position and Results of Operations of our Business Segments

Comparison of the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021


		As of and for the three months ended September 30,																	As of and for the three months ended September 30,
		2021								2020									2022								2021
		Banking Business		Insurance Agency Business		Other/ Eliminations		Total		Banking Business		Insurance Agency Business		Other/ Eliminations		Total			Banking Business		Insurance Agency Business		Other/ Eliminations		Total		Banking Business		Insurance Agency Business		Other/ Eliminations		Total
		(In thousands)																	(In thousands)
Net interest income	Net interest income	$	102,691	$	—	$	—	$	102,691	$	98,742	$	—	$	—	$	98,742	Net interest income	$	152,179	$	—	$	—	$	152,179	$	102,691	$	—	$	—	$	102,691
(Release of) provision for loan losses		(1,488)		—		—		(1,488)		700		—		—		700
Provision for (release of) allowance for loan losses																		Provision for (release of) allowance for loan losses	6,480		—		—		6,480		(1,488)		—		—		(1,488)
Net interest income after provision for loan losses	Net interest income after provision for loan losses	104,179		—		—		104,179		98,042		—		—		98,042		Net interest income after provision for loan losses	145,699		—		—		145,699		104,179		—		—		104,179
Noninterest income	Noninterest income	20,783		22,508		(82)		43,209		25,288		22,571		(150)		47,709		Noninterest income	19,777		23,714		(138)		43,353		20,783		22,508		(82)		43,209
Noninterest expense	Noninterest expense	80,474		19,538		(1,042)		98,970		91,509		19,506		(1,198)		109,817		Noninterest expense	96,749		21,197		(1,106)		116,840		80,474		19,538		(1,042)		98,970
Income before provision for income taxes		44,488		2,970		960		48,418		31,821		3,065		1,048		35,934
Income tax provision		10,471		841		—		11,312		6,561		868		—		7,429
Income before income tax expense																		Income before income tax expense	68,727		2,517		968		72,212		44,488		2,970		960		48,418
Income tax expense																		Income tax expense	16,717		718		—		17,435		10,471		841		—		11,312
Net income	Net income	$	34,017	$	2,129	$	960	$	37,106	$	25,260	$	2,197	$	1,048	$	28,505	Net income	$	52,010	$	1,799	$	968	$	54,777	$	34,017	$	2,129	$	960	$	37,106
Total assets	Total assets	$	17,324,816	$	207,996	$	(71,589)	$	17,461,223	$	15,332,420	$	202,319	$	(74,145)	$	15,460,594	Total assets	$	21,894,550	$	221,941	$	(73,558)	$	22,042,933	$	17,324,816	$	207,996	$	(71,589)	$	17,461,223
Total liabilities	Total liabilities	$	14,051,100	$	52,420	$	(71,589)	$	14,031,931	$	13,761,414	$	59,953	$	(74,145)	$	13,747,222	Total liabilities	$	19,644,824	$	55,504	$	(73,558)	$	19,626,770	$	14,051,100	$	52,420	$	(71,589)	$	14,031,931

		For the nine months ended September 30,																	For the nine months ended September 30,
		2021								2020									2022								2021
		Banking Business		Insurance Agency Business		Other/ Eliminations		Total		Banking Business		Insurance Agency Business		Other/ Eliminations		Total			Banking Business		Insurance Agency Business		Other/ Eliminations		Total		Banking Business		Insurance Agency Business		Other/ Eliminations		Total
		(In thousands)																	(In thousands)
Net interest income	Net interest income	$	307,390	$	—	$	—	$	307,390	$	297,643	$	—	$	—	$	297,643	Net interest income	$	418,060	$	—	$	—	$	418,060	$	307,390	$	—	$	—	$	307,390
(Release of) provision for loan losses		(5,368)		—		—		(5,368)		37,900		—		—		37,900
Provision for (release of) allowance for loan losses																		Provision for (release of) allowance for loan losses	7,045		—		—		7,045		(5,368)		—		—		(5,368)
Net interest income after provision for loan losses	Net interest income after provision for loan losses	312,758		—		—		312,758		259,743		—		—		259,743		Net interest income after provision for loan losses	411,015		—		—		411,015		312,758		—		—		312,758
Noninterest income	Noninterest income	69,308		74,959		(113)		144,154		55,935		72,979		(179)		128,735		Noninterest income	55,919		76,054		(328)		131,645		69,308		74,959		(113)		144,154
Noninterest expense	Noninterest expense	243,549		59,844		(3,039)		300,354		251,688		57,231		(3,165)		305,754		Noninterest expense	279,823		60,186		(3,164)		336,845		243,549		59,844		(3,039)		300,354
Income before provision for income taxes		138,517		15,115		2,926		156,558		63,990		15,748		2,986		82,724
Income tax provision		32,728		4,252		—		36,980		11,468		4,456		—		15,924
Income before income tax expense																		Income before income tax expense	187,111		15,868		2,836		205,815		138,517		15,115		2,926		156,558
Income tax expense																		Income tax expense	43,870		4,480		—		48,350		32,728		4,252		—		36,980
Net income	Net income	$	105,789	$	10,863	$	2,926	$	119,578	$	52,522	$	11,292	$	2,986	$	66,800	Net income	$	143,241	$	11,388	$	2,836	$	157,465	$	105,789	$	10,863	$	2,926	$	119,578

Banking Segment

•Average interest-earning assets grew ~~$3.2~~$5.2 billion, or ~~24.4%~~32.2%, to $21.5 billion for the three months ended September 30, 2022 from $16.3 billion for the three months ended September 30, ~~2021 from $13.1 billion for the three months ended September 30, 2020.~~2021. The increase is primarily due to ~~an increase~~the acquisition of Century, which closed on November 12, 2021 and added $6.6 billion in average investment securities and federal funds sold and other short-term investments which increased $3.6 billion, or 112.7%, to $6.8 billion for the three months ended September 30, 2021 compared to $3.2 billion for the three months ended September 30, 2020.interest-earning assets. The increase in average interest-earning assets, combined with an overall increase in our yield on interest-earning assets of 43 basis points, resulted in an increase in interest ~~income and was partially offset by a decline in market rates of interest.~~income. For additional discussion, refer to the earlier “Interest and Dividends” section.

•Average interest-bearing liabilities grew ~~$1.0~~$4.4 billion, or ~~14.4%~~54.5%, to $12.6 billion for the three months ended September 30, 2022 from $8.2 billion for the three months ended September 30, 2021, ~~from $7.1 billion for the three months ended September 30, 2020,~~ with average total interest-bearing deposits, our largest category of average interest-bearing liabilities, growing ~~$1.0~~$4.3 billion, or ~~14.4%~~53.1%, to $12.4 billion for the three months ended September 30, 2022 compared to $8.1 billion for the three months ended September 30, ~~2021 compared~~2021. Average deposits increased due to ~~$7.1~~our acquisition of Century, which added $4.4 billion ~~for~~in interest-bearing deposits. Also contributing to the ~~three months ended September 30, 2020. The~~ increase in ~~average interest-bearing liabilities~~interest expenses was ~~more than offset by a reduction~~an increase of 11 basis points in rates paid on ~~deposits resulting in an overall decrease in interest expense.~~deposits. For additional discussion, refer to the earlier “Interest and Dividends” section.

•Average interest-earning assets grew ~~$3.6~~$5.9 billion, or ~~30.0%~~37.2%, to $21.6 billion for the nine months ended September 30, 2022 from $15.7 billion for the nine months ended September 30, ~~2021 from $12.1 billion for the nine months ended September 30, 2020.~~2021. The increase iswas

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primarily due to ~~an increase~~the acquisition of Century, which closed on November 12, 2021 and added $6.6 billion in average investment securities and federal funds sold and other short-term investments which increased $3.5 billion, or 140.5%, to $6.0 billion for the nine months ended September 30, 2021 compared to $2.5 billion for the nine months ended September 30, 2020. The increase in average interest-earning ~~assets resulted in an increase in interest income and was partially offset by a decline in market rates of interest.~~assets. For additional discussion, refer to the earlier “Interest and Dividends” section.

•Average interest-bearing liabilities grew ~~$0.9~~$4.8 billion, or ~~13.2%~~62.3%, to $12.6 billion for the nine months ended September 30, 2022 from $7.8 billion for the nine months ended September 30, 2021, ~~from $6.9 billion for the nine months ended September 30, 2020,~~ with average total interest-bearing deposits, our largest category of average interest-bearing liabilities, growing ~~$1.0~~$4.8 billion, or ~~14.3%~~61.9%, to $12.5 billion for the nine months ended September 30, 2022 compared to $7.7 billion for the nine months ended September 30, ~~2021 compared~~2021. Average deposits increased due to ~~$6.8~~our acquisition of Century, which added $4.4 billion ~~for~~in interest-bearing deposits. Also contributing to the ~~nine months ended September 30, 2020. The~~ increase in ~~average interest-bearing liabilities~~interest expenses was ~~more than offset by a reduction~~an increase of 7 basis points in rates paid on ~~deposits resulting in an overall decrease in interest expense.~~deposits. For additional discussion, refer to the earlier “Interest and Dividends” section.

•We recorded a ~~release of~~ provision for loan losses of $6.5 million for the three months ended September 30, 2022, compared to a release of $1.5 million for the three months ended September 30, ~~2021, compared to~~2021. We determined a provision ~~of $0.7 million for~~to be appropriate due to overall increased loan balances during the three months ended September 30, 2022 in comparison to the second quarter of 2022. Comparatively, in March 2020, in response to the COVID-19 pandemic, we downgraded the risk ratings for all commercial loans we expected to be significantly impacted by the COVID-19 pandemic, including our hotel and ~~a total release of provision for~~restaurant loan ~~losses of $5.4 million for~~portfolios. During the ~~nine~~three months ended September 30, 2021 ~~compared to a provision of $37.9 million for the nine months ended September 30, 2020. Given~~and following continued improved economic and credit conditions, ~~during the three and nine months ended September 30, 2021,~~ we determined that a release of the provision was necessary. For additional discussion, refer to the earlier “Provision for Loan Losses” section.

•~~Income~~Losses from investments held in rabbi trust accounts ~~decreased $3.5~~were $2.0 million ~~or 105.8%~~ for the three months ended September 30, ~~2021~~2022 which represents a decrease of $1.8 million, or 926.4%, from $0.2 million recorded for the three months ended September 30, 2021. The decrease was primarily as a result of ~~a less favorable~~an unfavorable mark-to-market adjustment on equity securities held in these ~~accounts.~~accounts during the three months ended September 30, 2022.

•~~Income~~Losses from investments held in rabbi trust accounts ~~increased $1.1~~were $12.4 million for the nine months ended September 30, 2022 which represents a decrease of $17.7 million, or ~~26.3%~~330.2%, from income of $5.4 million for the nine months ended September 30, 2021. The decrease was primarily as a result of an unfavorable mark-to-market adjustment on equity securities held in these accounts during the nine months ended September 30, 2022.

•Losses on sales of securities available for sale, net, were $2.5 million during the nine months ended September 30, 2022 which represents a decrease of $3.6 million from the nine months ended September 30, 2021, a period during which we recognized a net gain of $1.2 million. The net loss on sale was due to the decision by management to sell certain AFS securities during the nine months ended September 30, 2022, the majority of which were acquired in connection with our acquisition of Century and were in a net unrealized loss position at the time of sale.

•Partially offsetting the losses from investments held in rabbi trust accounts during the three months ended September 30, 2022 was interest rate swap income which increased $0.7 million primarily as a result of a favorable mark-to-market adjustment during the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

•Partially offsetting the losses from investments held in rabbi trust accounts during the three and nine months ended September 30, 2022 and losses on sales of securities available for sale during the nine months ended September 30, 2022 were service charges on deposit accounts which increased $0.8 million and $6.5 million during the three and nine months ended September 30, 2022, respectively, compared to the three and nine months ended September 30, 2021, primarily as a result of increased corporate account analysis charges as a ~~favorable mark-to-market adjustment on equity securities held in these accounts.~~result of greater commercial deposit customer activity and increased overdraft fees during the nine months ended September 30, 2022 as a result of greater customer deposit activity.

•Noninterest expense increased $16.3 million, or 20.2%, to $96.7 million during the three months ended September 30, 2022 from $80.5 million during the three months ended September 30, 2021. This increase was driven primarily by a $7.8 million increase in salaries and wages expense, a $1.8 million increase in office occupancy and equipment expenses and a $0.9 million increase in data processing expenses. Refer to the earlier “Noninterest Expense” section for additional discussion of this items.

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•Noninterest expense increased $36.3 million, or 14.9%, to $279.8 million during the nine months ended September 30, ~~2021 compared to~~2022 from $243.5 million during the ~~three and~~ nine months ended September 30, ~~2020~~2021. This increase was driven primarily ~~due to costs associated with our proposed acquisition~~by a $17.7 million increase in salaries and wages expense, a $7.0 million increase in office occupancy and equipment expenses, and a $5.1 million increase in data processing expenses. Partially offsetting these increases was a decrease of ~~Century and an accrual for~~$3.3 million in legal expenses associated with the ~~preliminary~~ settlement of ~~the~~two putative class action litigation matters related to overdraft and non-sufficient funds fees. The accrual for such expenses was initially recorded during the second quarter of 2021 and final settlement of the legal matters occurred during the first quarter of 2022. Refer to the earlier “Noninterest Expense” section for additional discussion of this items.

Insurance Agency Segment

•Noninterest income related to our insurance agency business ~~decreased~~increased by ~~$0.1~~$1.2 million, or ~~0.28%~~5.4%, to $23.7 million during the three months ended September 30, 2022 from $22.5 million during the three months ended September 30, 2021 from $22.6 million during the three months ended September 30, 2020. The slight decrease was driven by decreases in income from investments held in rabbi trusts and recurring commissions of $0.6 million and $0.1 million, respectively. The decrease in income from investments held in rabbi trusts was primarily attributable to a less favorable mark-to-market adjustment on equity securities held in these accounts during the three months ended September 30, 2021 compared to the three months ended September 30, 2020. These decreases were partially offset by an increase in gain on sale of assets of $0.4 million which is primarily attributable to the sale of Eastern Insurance Group’s Retirement Plan Services business during the three months ended September 30, 2020 which was sold at a sale price of $0.4 million.

•~~Noninterest~~2021. Similarly, noninterest income related to our insurance agency business increased by ~~$2.0~~$1.1 million, or ~~2.71%~~1.5%, to $76.1 million during the nine months ended September 30, 2022 from $75.0 million during the nine months ended September 30, ~~2021~~2021. These increases are primarily attributable to increased commission income. Refer to the earlier “Noninterest Income” section for additional discussion of this items.

•Noninterest expense related to our insurance agency business increased by $1.7 million, or 8.5%, to $21.2 million during three months ended September 30, 2022 from ~~$73.0~~$19.5 million during three months ended September 30, 2021. Noninterest expense related to our insurance agency business remained relatively consistent with a slight increase of $0.3 million, or 0.6%, to $60.2 million during the nine months ended September 30, ~~2020.~~2022 from $59.8 million during the nine months ended September 30, 2021. The increase ~~was driven primarily by profit sharing revenues~~in noninterest expense for both the three and ~~recurring commissions which increased by $1.0 million~~nine months ended September 30, 2022, compared to the three and ~~$0.8 million, respectively.~~

~~Off-Balance Sheet Arrangements~~

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. The financial instruments include commitments to originate loans, unused lines of credit, unadvanced portions of construction loans and standby letters of credit, all of which involve elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. Our exposure to credit loss is represented by the

~~Table of Contents~~

~~contractual amount of the instruments. We use the same credit policies in making commitments as we do for on-balance sheet instruments.~~

Atnine months ended September 30, 2021 ~~we had $4.4 billion of commitments~~was primarily due to originate loans, comprised of $2.6 billion of commitments under commercial loans and lines of credit (including $476.0 million of unadvanced portions of construction loans), $1.4 billion of commitments under home equity loans and lines of credit, $181.6 millionan increase in standard overdraft coverage commitments, $70.6 million of unfunded commitments related to residential real estate loans and $61.5 million in other consumer loans and lines of credit. In addition, at September 30, 2021, we had $58.7 million in standby letters of credit outstanding. We also had $49.1 million in forward commitments to sell loans.executive retirement benefit costs.

Management of Market Risk

General. Market risk is the sensitivity of net present value of assets and liabilities and/or income to changes in interest rates, foreign exchange rates, commodity prices and other market-driven rates or prices. Interest rate sensitivity is the most significant market risk to which we are exposed. Interest rate risk is the sensitivity of net present value of assets and liabilities and/or income to changes in interest rates. Changes in interest rates, as well as fluctuations in the level and duration of assets and liabilities, affect net interest income, our primary source of income. Interest rate risk arises directly from our core banking activities. In addition to directly impacting net interest income, changes in the level of interest rates can also affect the amount of loans originated, the timing of cash flows on loans and securities, and the fair value of securities and derivatives, as well as other effects. The primary goal of interest rate risk management is to control this risk within limits approved by the Risk Management Committee of our Board of Directors.

These limits reflect our tolerance for interest rate risk over both short-term and long-term horizons. We attempt to manage interest rate risk by identifying, quantifying, and where appropriate, hedging its exposure. If assets and liabilities do not re-price simultaneously and in equal volume, the potential for interest rate exposure exists. Our objective is to maintain stability in the growth of net interest income through the maintenance of an appropriate mix of interest-earning assets and interest-bearing liabilities and, when necessary and within limits that management determines to be prudent, through the use of off-balance sheet hedging instruments ~~such as~~including, but not limited to, interest rate swaps, floors and caps.

Net Interest Income. We analyze our sensitivity to changes in interest rates through a net interest income model. We estimate what our net interest income would be for a 12-month period assuming no changes in interest rates. We then calculate what the net interest income would be for the same period under the assumption that ~~the U.S. Treasury yield curve increases~~market rates increase or ~~decreases~~decrease instantaneously by +200, +300, +400, -100 and ~~-100~~-200 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Changes in Interest Rates” column below. The model requires that interest rates remain positive for all points along the yield curve for each rate scenario which may preclude the modeling of certain falling rate scenarios during periods of lower market interest rates. The relatively low level of market interest rates prevalent at ~~September 30, 2021 and~~ December 31, ~~2020~~2021 precluded the modeling of certain falling rate scenarios. We do not model negative interest rate scenarios.

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The tables below set forth, as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the calculation of the estimated changes in our net interest income on an FTE basis that would result from the designated immediate changes in ~~the U.S. Treasury yield curve:~~

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market interest rates:

Interest Rate Sensitivity


		As of September 30, 2021					As of September 30, 2022
Change in Interest Rates (basis points) ~~(1)~~	Change in Interest Rates (basis points) ~~(1)~~	Net Interest Income Year 1 Forecast		Year 1 Change from Level		Change in Interest Rates (basis points) ~~(1)~~	Net Interest Income Year 1 Forecast		Year 1 Change from Level
		(Dollars in thousands)					(Dollars in thousands)
400	400	$	532,656	35.7	%	400	$	667,725	(2.5)	%
300	300	498,065		26.9	%	300	671,459		(2.0)	%
200	200	463,935		18.2	%	200	676,242		(1.3)	%
Flat	Flat	392,588		—	%	Flat	685,079		—	%
(100)	(100)	361,518		(7.9)	%	(100)	669,475		(2.3)	%
(200)						(200)	639,707		(6.6)	%

		As of December 31, 2020					As of December 31, 2021
Change in Interest Rates (basis points) (1)	Change in Interest Rates (basis points) (1)	Net Interest Income Year 1 Forecast		Year 1 Change from Level		Change in Interest Rates (basis points) (1)	Net Interest Income Year 1 Forecast		Year 1 Change from Level
		(Dollars in thousands)					(Dollars in thousands)
400	400	$	571,842	50.0	%	400	$	663,207	30.2	%
300	300	524,847		37.7	%	300	624,384		22.6	%
200	200	478,307		25.5	%	200	586,319		15.1	%
Flat	Flat	381,259		—	%	Flat	509,379		—	%
(100)	(100)	362,186		(5.0)	%	(100)	479,489		(5.9)	%

(1)Assumes an immediate uniform change in market interest rates at all maturities, except in the down 100 basis ~~points~~point scenario, where rates are floored at zero at all maturities.

As of September 30, 2022, our models, as indicated above, show a decline in our net interest income in both rising and falling rate scenarios. In the rising rate scenarios, interest expense is expected to rise at a faster rate than interest income due, in part, to the extension of asset duration from our interest rate swap portfolio designated as cash flow hedges. In the declining rate scenarios, the reduction of interest income exceeds the reduction in interest expense due primarily to the relatively low level of deposit costs at September 30, 2022. The tables above indicate that at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, in the event of an instantaneous parallel 200 basis points increase in rates, we would have experienced ~~an 18.2%~~a 1.3% decrease and ~~25.5%~~a 15.1% increase, respectively, in net interest income on an FTE basis, and in the event of an instantaneous 100 basis points decrease in interest rates, we would have experienced a ~~7.9%~~2.3% and a ~~5.0%~~5.9% decrease at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, in net interest income, on an FTE basis. We also modeled an instantaneous 200 basis point decrease in interest rates at September 30, 2022, the results of which showed we would have experienced a 6.6% decrease in net interest income, on an FTE basis. We did not model an instantaneous 200 basis points decrease in interest rates at December 31, 2021, as indicated above, given the relatively low level of interest rates. Management may use investment strategy, loan and deposit pricing, non-core funding strategies, and interest rate derivative financial instruments, within internal policy guidelines, to manage interest rate risk as part of our asset/liability strategy. These derivatives provide significant protection against falling interest rates. For additional information related to our interest rate derivative financial instruments, see Note 13, “Derivative Financial Instruments” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q.

Economic Value of Equity Analysis. We also analyze the sensitivity of our financial condition in interest rates through our economic value of equity (“EVE”) model. This analysis calculates the difference between the present value of expected cash flows from assets and liabilities assuming various changes in current interest rates.

The table below represents an analysis of our interest rate risk (excluding the effect of our pension plans) as measured by the estimated changes in our EVE, resulting from an instantaneous and sustained parallel shift in the yield curve (+200, +300, +400 basis points and -100, -200 basis points) at September 30, ~~2021~~2022 and (+200, +300, +400 basis points and -100

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basis points) December 31, ~~2020.~~2021. The model requires that interest rates remain positive for all points along the yield curve for each rate scenario which may preclude the modeling of certain falling rate scenarios during periods of lower market interest rates. The relatively low level of interest rates prevalent at ~~September 30, 2021 and~~ December 31, ~~2020~~2021 precluded the modeling of certain falling rate scenarios, including negative interest rates.

Our earnings are not directly or materially impacted by movements in foreign currency rates or commodity prices. Movements in equity prices may have a modest impact on earnings by affecting the volume of activity or the amount of fees from investment-related business lines.

~~Table of Contents~~

EVE Interest Rate Sensitivity


Change in Interest Rate (basis points) (1)					As of September 30, 2021
		Estimated EVE (2)			Estimated Increase (Decrease) in EVE from Level					EVE as a Percentage of Total Assets (3)
				Amount			Percent
Change in Interest Rates (basis points)												Change in Interest Rates (basis points)						As of September 30, 2022
															Estimated EVE (2)			Estimated Increase (Decrease) in EVE from Level							EVE as a Percentage of Total Assets (3)
																Amount			Percent
				(Dollars in thousands)														(Dollars in thousands)
400	400	$	4,422,737		$	234,002		5.6	%			27.29	%	400		$	3,909,354		$	(621,310)			(13.7)	%			20.23	%
300	300	4,382,385			193,650			4.6	%	26.53	%	300			4,033,461			(497,204)			(11.0)	%			20.34	%
200	200	4,335,471			146,736			3.5	%	25.72	%	200			4,185,619			(345,046)			(7.6)	%			20.53	%
Flat	Flat	4,188,735			—			—		23.83	%	Flat			4,530,664			—			—				20.92	%
(100)	(100)	3,950,150			(238,585)			(5.7)	%	22.18	%	(100)			4,620,091			89,426			2.0	%			20.74	%
(200)												(200)			4,694,030			163,365			3.6	%			20.46	%


Change in Interest Rate (basis points) (1)					As of December 31, 2020
		Estimated EVE (2)			Estimated Increase (Decrease) in EVE from Level					EVE as a Percentage of Total Assets (3)
				Amount			Percent
Change in Interest Rates (basis points) (1)												Change in Interest Rates (basis points) (1)						As of December 31, 2021
															Estimated EVE (2)			Estimated Increase (Decrease) in EVE from Level							EVE as a Percentage of Total Assets (3)
																Amount			Percent
				(Dollars in thousands)														(Dollars in thousands)
400	400	$	4,385,795		$	452,022		11.5	%			29.09	%	400		$	4,573,359		$	27,408			0.6	%			21.30	%
300	300	4,297,682			363,909			9.3	%	28.06	%	300			4,565,019			19,068			0.4	%			20.80	%
200	200	4,205,867			272,094			6.9	%	27.00	%	200			4,589,035			43,084			0.9	%			20.39	%
Flat	Flat	3,933,773			—			—		24.38	%	Flat			4,545,951			—			—				17.06	%
(100)	(100)	3,663,432			(270,341)			(6.9)	%	22.65	%	(100)			4,270,433			(275,518)			(6.1)	%			17.75	%

(1)Assumes an immediate uniform change in market interest rates at all maturities, except in the down 100 basis points scenario, where rates are floored at zero at all maturities.

(2)EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3)Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

Certain shortcomings are inherent in the interest rate risk measurement methodologies underlying the data presented in the tables in this section. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. For example, the models assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assume that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the tables provide an indication of our 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.

Liquidity, ~~and~~ Capital Resources, Contractual Obligations, Commitments and Contingencies

Liquidity. Liquidity describes our ability to meet the financial obligations that arise in the normal course of business. Liquidity is primarily needed to meet deposit withdrawals and anticipated loan fundings, as well as current and planned expenditures. We seek to maintain sources of liquidity that are deep and diversified and that may be used during the normal course of business as well as on a contingency basis.

The net proceeds from our IPO significantly increased our liquidity and capital resources at both Eastern Bankshares, Inc. and Eastern Bank. Over time, the initial level of liquidity has been and will continue to be reduced as net proceeds from the IPO are used for general corporate ~~purposes, including the funding of loans.~~purposes. Our financial condition and results of operations ~~have been~~were enhanced by the net proceeds from the ~~IPO, resulting~~stock offering and resulted in increased net interest-earning assets and net interest and dividend income. ~~In April~~On November 12, 2021, we ~~announced that we had executed the Merger Agreement~~completed our merger with ~~Century, under which we expect to acquire~~ Century for $641.9 million in cash. ~~The~~Although the transaction ~~which we expect to close in the middle of the fourth quarter of 2021, will reduce~~reduced the net proceeds from the ~~IPO. However,~~IPO, we continue to expect that, due to the increase in equity resulting from the net proceeds

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raised in our IPO, our return on equity has been and will continue to be adversely affected until we can effectively ~~employ~~deploy the remaining proceeds of the IPO.

Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from calls, maturities and sales of ~~securities.~~securities, subject to market conditions. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are unencumbered cash and ~~due from banks~~cash equivalents and securities classified as available for sale. In the future, our liquidity position will be affected by the level of customer deposits and payments, as well as acquisitions, dividends, and stock repurchases in which we may engage. We believe that our existing resources will be sufficient to meet the liquidity and capital requirements of our operations for the foreseeable future.

We participate in the IntraFi Network, ~~(formerly “Promontory”),~~ which allows us to provide access to multi-million dollar FDIC deposit insurance protection on customer deposits for consumers, businesses and public entities. We can elect to sell or repurchase this funding as reciprocal deposits from other IntraFi Network banks depending on our funding needs. At September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had a total of ~~$402.3~~$12.2 million and ~~$364.8~~$520.5 million of IntraFi Network one-way sell deposits, respectively. At September 30, ~~2021,~~2022, we had repurchased ~~$45.6~~$656.9 million of previously sold reciprocal

~~Table of Contents~~

deposits. At December 31, ~~2020,~~2021, no amounts were repurchased of previously sold reciprocal deposits. The additional capacity of ~~$402.3~~$12.2 million and ~~$364.8~~$520.5 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, should be considered a source of liquidity.

Although customer deposits remain our preferred source of funds, maintaining additional back up sources of liquidity is part of our prudent liquidity risk management practices. We have the ability to borrow from the FHLBB. At September 30, ~~2021,~~2022, we had ~~$14.2~~$384.2 million in outstanding advances and the ability to borrow up to an additional ~~$1.6~~$1.8 billion. At December 31, 2020, we had the ability to borrow from the FRBB as well as the Federal Reserve Paycheck Protection Program Liquidity Facility (“PPPLF”). The Federal Reserve ended the PPPLF as of July 30, 2021. Accordingly, at September 30, 2021, we no longer had additional capacity under the PPPLF. At September 30, ~~2021,~~2022, we had a ~~$450.7~~$543.2 million collateralized line of credit from the FRBB with no outstanding balance. We had a total of ~~$770.0~~$790.0 million of discretionary lines of credit at September 30, ~~2021.~~2022.

Sources of Liquidity


		As of September 30, 2021				As of December 31, 2020					As of September 30, 2022				As of December 31, 2021
		Outstanding		Additional Capacity		Outstanding		Additional Capacity			Outstanding		Additional Capacity		Outstanding		Additional Capacity
				(In thousands)									(In thousands)
IntraFi Network deposits	IntraFi Network deposits	$	45,639	$	402,317	$	—	$	364,794	IntraFi Network deposits	$	656,850	$	12,160	$	—	$	520,461
Federal Home Loan Bank (1)	Federal Home Loan Bank (1)	14,172		1,646,260		14,624		1,581,016		Federal Home Loan Bank (1)	384,215		1,848,035		14,020		1,839,540
Federal Reserve Bank of Boston (2)	Federal Reserve Bank of Boston (2)	—		450,650		—		503,512		Federal Reserve Bank of Boston (2)	—		543,176		—		456,148
Federal Reserve Paycheck Protection Program Liquidity Facility		—		—		—		1,026,117
Unsecured lines of credit	Unsecured lines of credit	—		770,000		—		620,000		Unsecured lines of credit	—		790,000		—		790,000
Total deposits	Total deposits	$	59,811	$	3,269,227	$	14,624	$	4,095,439	Total deposits	$	1,041,065	$	3,193,371	$	14,020	$	3,606,149

(1)As of ~~both~~ September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, loans have been pledged to the FHLBB with a carrying value of ~~$2.4~~$3.3 billion and $2.6 billion to secure additional borrowing capacity.

(2)Loans with a carrying value of ~~$761.8 million~~$1.1 billion and ~~$884.1~~$784.0 million at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, have been pledged to the FRBB resulting in this additional unused borrowing capacity.

We believe that advanced preparation, early detection, and prompt responses can avoid, minimize, or shorten potential liquidity crises. Our Board of Directors and our management's Asset Liability Committee have put a ~~Liquidity Contingency Plan~~liquidity contingency plan in place to establish methods for assessing and monitoring risk levels, as well as potential responses during unanticipated stress events. As part of our risk management framework, we perform periodic liquidity stress testing to assess its need for liquid assets as well as backup sources of liquidity.

Capital Resources. We are subject to various regulatory capital requirements administered by the Massachusetts Commissioner of Banks, the FDIC and the Federal Reserve (with respect to our consolidated capital requirements). At September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we exceeded all applicable regulatory capital requirements, and were considered “well capitalized” under regulatory guidelines. To be categorized as well-capitalized, the Company must maintain (1) a minimum of total risk-based capital ratio of 10%; (2) a minimum of Tier 1 risk-based capital ratio of 8%; (3) a minimum of common equity Tier 1 capital ratio of 6.5%; and (4) a minimum of Tier 1 leverage ratio of 5%. Management believes that the Company met all capital adequacy requirements to which it is subject as of September 30, 2022 and December 31, 2021. There have been no conditions or events that management believes would cause a change in the Company’s categorization. The Company has also received a notice of non-objection from the Federal Reserve with respect to a new share repurchase program through August 31, 2023. For more information regarding the Company’s share repurchase programs, see Note 10,

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“Shareholders’ Equity – Share Repurchases” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q.

The Company’s actual capital ratios are presented in the following table:


	As of September 30, 2022		As of December 31, 2021
Capital Ratios:
Average equity to average assets (1)	12.38	%	19.17	%
Total regulatory capital (to risk-weighted assets)	18.47	%	19.77	%
Common equity Tier 1 capital (to risk-weighted assets)	17.56	%	19.04	%
Tier 1 capital (to risk-weighted assets)	17.56	%	19.04	%
Tier 1 capital (to average assets) leverage	12.18	%	13.96	%

(1)The ratio presented as of September 30, 2022 represents quarter-to-date average equity as a percentage of quarter-to-date average total assets.

Contractual Obligations, Commitments and ~~Contingencies~~

Contingencies.In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities. OnAt September 30, 2021, we executed a definitive Purchase and Sale Agreement (the “P&S Agreement”) that provides for the Bank to sell real estate that currently is owned by Century and located at 400 Mystic Avenue, Medford, Massachusetts (the “400 Mystic Parcel”), where Century maintains its executive offices. The purchase price for the 400 Mystic Parcel is $20.5 million in cash payable at the closing of the sale which is expected to occur in the mid-fourth quarter of 2021. Our obligations to complete the sale of the 400 Mystic Parcel are expressly contingent upon the completion of our merger with Century and our resulting ownership of the 400 Mystic Parcel. For more information about the P&S Agreement, see our Current Report on Form 8-K filed with the SEC on October 6, 2021.

~~Other than the P&S Agreement, at September 30, 2021~~2022, there were no material changes in our contractual obligations, other commitments and contingencies from those disclosed in our ~~2020~~2021 Form 10-K.

~~Table of Contents~~

At September 30, 2022, we had $5.6 billion of commitments to originate loans, comprised of $3.2 billion of commitments under commercial loans and lines of credit (including $629.4 million of unadvanced portions of construction loans), $2.1 billion of commitments under home equity loans and lines of credit, $198.9 million in standard overdraft coverage commitments, $41.6 million of unfunded commitments related to residential real estate loans and $58.4 million in other consumer loans and lines of credit. In addition, at September 30, 2022, we had $66.5 million in standby letters of credit outstanding. We also had $8.1 million in forward commitments to sell loans.

Commitments to originate loans are agreements to lend to a customer provided there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments are expected to expire without being drawn upon, the total commitments do not necessarily represent future cash requirements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES

The information required by this Item is included in Part I, Item 2 of this Quarterly Report on Form 10-Q under the heading “Management of Market Risk.”

ITEM 4. CONTROLS AND PROCEDURES

Effectiveness of Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(c) promulgated under the Exchange Act of 1934. Based upon that evaluation, the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, ~~2021,~~2022, the end of the period covered by this Quarterly Report on Form 10-Q.

Changes to Internal Controls over Financial Reporting

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There were no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended September 30, ~~2021~~2022 that have materially affected or are reasonably likely to materially affect the Company’s internal controls over financial reporting. The Company has not experienced any material impact to the Company’s internal controls over financial reporting due to the fact that most of the Company’s employees responsible for financial reporting are working remotely during the COVID-19 pandemic. The Company is continually monitoring and assessing the impact of the COVID-19 pandemic on the Company’s internal controls to minimize the impact to their design and operating effectiveness.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We operate in a legal and regulatory environment that exposes us to potentially significant risks. For more information regarding the Company’s exposure generally to legal and regulatory risks, see “Business—Legal and Regulatory Proceedings” in Part I, Item 1 of the ~~2020~~2021 Form 10-K.

As of the date of this Quarterly Report on Form 10-Q, we are not involved in any pending legal proceeding as a plaintiff or a defendant the outcome of which we believe would be material to our financial condition or results of operations. For additional information related to the Company’s ongoing legal proceedings see Note ~~10,~~12, “Commitments and Contingencies” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

For information regarding the Company’s risk factors, see Part I, Item 1A “Risk Factors” in our ~~2020~~2021 Form 10-K, as updated by Part II, Item 1A “Risk Factors” ofin our Q1 Form 10-Q and by Part II, Item 1A “Risk Factors” in our Q2 Form 10-Q. AsExcept for the revised risk factor below regarding “an increase in FDIC insurance assessments could significantly increase our expenses,” as of the date of this Quarterly Report on Form 10-Q, the risk factors of the Company have not changed materially from those disclosed in our ~~2020~~2021 Form 10-K, as updated by the Q1 Form 10-Q and by the Q2 Form 10-Q. The COVID-19 pandemic has led to general uncertainty and adverse changes in economic conditions and has heightened, and in some cases manifested, certain of the risks we normally face in operating our business, including those disclosed in our ~~2020~~2021 Form 10-K, ~~and~~ updated in the Q1 Form 10-Q and the Q2 Form 10-Q. The risk factors disclosure in our ~~2020~~2021 Form 10-K, our Q1 Form 10-Q, and our Q1Q2 Form 10-Q is therefore qualified by the information relating to COVID-19 that is described in this Quarterly Report on Form 10-Q.

An increase in FDIC insurance assessments could significantly increase our expenses.

The Dodd-Frank Act eliminated the maximum Deposit Insurance Fund (“DIF”) ratio of 1.5% of estimated deposits, and the FDIC has established a long-term ratio of 2.0%. On September 30, 2021, the Deposit Insurance Fund reserve ratio was 1.27%. In September 2020, the FDIC adopted a restoration plan designed to ensure that the DIF reserve ratio reaches 1.35% by September 2028. In October 2020, the FDIC increased the initial base deposit insurance assessment rate schedules for all FDIC insured depository institutions by 2 basis points, beginning with the quarterly assessment period ending March 31, 2023. The new assessment rate schedules will remain in effect unless and until the DIF reserve ratio meets or exceeds 2%, absent further FDIC action. In addition, if our regulators issue downgraded ratings of Eastern Bank in connection with their examinations, the FDIC could impose significant additional fees and assessments on us.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None.~~The following table sets forth information regarding the Company’s repurchases of its common stock during the nine months ended September 30, 2022:

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Period	Total Number of Shares	Average Price Paid per Share		Total Number of Shares Purchased as Part of the Publicly Announced Share Repurchase Programs	Maximum Number of Shares That May Yet Be Purchased Under the Share Repurchase Programs (1)(2)
January 1, 2022 – January 31, 2022	987,526	$	21.02	2,123,404	7,214,496
February 1, 2022 – February 28, 2022	1,109,697	21.08		3,233,101	6,104,799
March 1, 2022 – March 31, 2022	769,398	21.31		4,002,499	5,335,401
April 1, 2022 – April 30, 2022	1,194,185	20.19		5,196,684	4,141,216
May 1, 2022 – May 31, 2022	1,880,381	18.93		7,077,065	2,260,835
June 1, 2022 – June 30, 2022	1,141,903	18.78		8,218,968	1,118,932
July 1, 2022 – July 31, 2022	909,785	19.02		9,128,753	209,147
August 1, 2022 - August 31, 2022	—	—		9,128,753	209,147
September 1, 2022 – September 30, 2022	571,463	20.33		9,700,216	8,537,684
Total	8,564,338	$	19.92

(1)On October 28, 2021, the Company announced that its Board of Directors had approved a share repurchase program, subject to receipt of a notice of non-objection from the Board of Governors of the Federal Reserve System (“Non-Objection Notice”). On November 12, 2021, the Company announced it had received the Non-Objection Notice to the share repurchase program, which authorizes the purchase of up to 9,337,900 shares over a 12-month period. The program is limited to $225 million through November 30, 2022. The Company completed the repurchase of the total number of shares authorized through this program during the three months ended September 30, 2022.

(2)On September 7, 2022, the Company announced receipt of a notice of non-objection from the Federal Reserve for a new share repurchase program. The program, which authorizes the purchase of up to 8,900,000 shares over a 12-month period, is limited to $200.0 million through August 31, 2023.

See Note 10, “Shareholders’ Equity,” within the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q for additional information.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.MINE SAFETY DISCLOSURES

~~Table of Contents~~

Not applicable.

ITEM 5.OTHER INFORMATION

None.

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ITEM 6.EXHIBITS

The exhibits listed in the Exhibit Index (following the signatures section of this report) are included in, or incorporated by reference into, this Quarterly Report on Form 10-Q.

EXHIBIT INDEX

The following exhibits are included in this Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2021~~2022 (and are numbered in accordance with Item 601 of Regulation S-K):


Exhibit No.						Description

~~2.1~~						~~Agreement and Plan of Merger by and among Eastern Bankshares, Inc., Clarion Acquisition Corp., Century Bancorp, Inc. and Century Bank and Trust Company, dated as of April 7, 2021~~ ~~(incorporated by reference to exhibit 2.1 to Form 8-K filed with the Securities and Exchange Commission on April 8, 2021)~~

10.1*						~~Amendment to Eastern Bank Supplemental Executive Retirement Plan, dated as of July 26, 2021~~

10.2*						~~Purchase and Sale Agreement by and among Eastern Bank and Herb Chambers 273 Turnpike Road, LLC dated as of September 30, 2021(1)~~

31.1*						Certification of Chief Executive Officer Required by Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act

31.2*						Certification of Chief Financial Officer Required by Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act

32.1+						Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2+						Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101*						Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Unaudited Consolidated Balance Sheets as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, (ii) the Unaudited Consolidated Statements of Income for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 (iii) the Unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, (iv) the Unaudited Consolidated Statements of Changes in Equity for the three and nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, (v) the Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, and (vi) the Notes to the Unaudited Consolidated Financial Statements.

104						Cover page interactive data file (formatted as inline XBRL with applicable taxonomy extension information) contained in Exhibit 101 to this report+

*Filed herewith

+ Furnished herewith

(1) Schedules to the Purchase & Sale Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant will furnish copies of any such schedules to the U.S. Securities and Exchange Commission upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	EASTERN BANKSHARES, INC.

~~Date :~~Date: November ~~10, 2021~~4, 2022	/s/ Robert F. Rivers
	By:	Robert F. Rivers
		Chief Executive Officer and Chair of the Board
		(Principal Executive Officer)

~~Date :~~Date: November ~~10, 2021~~4, 2022	/s/ James B. Fitzgerald
	By:	James B. Fitzgerald
		Chief Financial Officer
		(Principal Financial Officer)

98110


			Page
Part I Financial Information

Item I. Unaudited Consolidated Financial Statements

Unaudited Consolidated Balance Sheets as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021			4
Unaudited Consolidated Statements of Income for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021			5
Unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021			6
Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021			7
Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021			9
Notes to the Unaudited Consolidated Financial Statements			11


	For the Three Months Ended September 30, 2021				For the Nine Months Ended September 30, 2021
	Average Recorded Investment		Total Interest Recognized		Average Recorded Investment		Total Interest Recognized
	(In thousands)
With no related allowance recorded:
Commercial and industrial	$	12,517	$	39	$	11,405	$	131
Commercial real estate	3,909		45		4,047		133
Business banking	3,988		25		4,586		75
Residential real estate	11,561		113		12,349		344
Consumer home equity	1,877		13		1,988		47
Other consumer	22		—		24		—
Sub-total	33,874		235		34,399		730
With an allowance recorded:
Commercial and industrial	7,808		—		7,849		—
Commercial real estate	—		—		271		—
Business banking	12,642		14		14,560		43
Residential real estate	12,290		127		13,093		387
Consumer home equity	2,108		15		2,232		53
Other consumer	67		—		22		—
Sub-total	34,915		156		38,027		483
Total	$	68,789	$	391	$	72,426	$	1,213


	September 30,		December 31,
	2021		2020
	(In thousands)
Outstanding balance	$	4,484	$	9,982
Carrying amount	4,426		9,297


	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
	(In thousands)
Operating lease cost	$	3,596	$	10,810
Finance lease cost	24		43
Variable lease cost	509		1,479
Total lease cost	$	4,129	$	12,332


					Fair Value Measurements at Reporting Date Using
Description	Carrying Value as of September 30, 2021		Fair Value as of September 30, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets
Loans, net of allowance for loan losses	$	9,378,060	$	9,512,887	$	—	$	—	$	9,512,887
FHLB stock	10,601		10,601		—		10,601		—
Bank-owned life insurance	79,259		79,259		—		79,259		—
Liabilities
Deposits	$	13,649,964	$	13,649,818	$	—	$	13,649,818	$	—
FHLB advances	14,172		13,728		—		13,728		—
Escrow deposits from borrowers	15,900		15,900		—		15,900		—


	PPP Loans Originated During the				Total
	Nine Months Ended September 30, 2021		Year ended December 31, 2020
	(Dollars in thousands)
Number of loans originated	6,628		8,902		15,530
Original balance of loans originated	$	543,212	$	1,167,137	$	1,710,349
Current balance of loans originated in respective periods	503,377		30,588		533,965
Total SBA fees received(1)	28,697		37,249		65,946
SBA fees recognized in interest income related to loans originated in respective periods(2)	5,927		36,934		42,861
Unaccreted SBA fees related to loans originated in respective periods	22,770		315		23,085


Loan Size	Loan Balance		Number of Loans
	(Dollars in thousands)
$0 to $50 thousand	$	76,961	4,454
$50 thousand to $150 thousand	88,864		1,020
$150 thousand to $1 million	231,104		697
$1 million to $2 million	71,600		50
$2 million to $5 million	51,363		22
Over $5 million	14,073		2
Total	$	533,965	6,245


Industry	Loan Balance		Number of Loans
	(Dollars in thousands)
Accommodation & food services	$	102,057	650
Construction	79,965		862
Health care & social assistance	61,254		536
Professional, scientific & technical services	61,096		899
Other services	48,299		913
Manufacturing	36,921		230
Retail trade	24,612		519
Administrative & support	23,506		329
Wholesale trade	22,102		151
Transportation & warehousing	18,684		380
Real estate, rental & leasing	16,503		248
All other	38,966		528
Total	$	533,965	6,245


	As of September 30, 2021						As of December 31, 2020
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due
	(In thousands)
Commercial and industrial	$	529	$	2,068	$	2,043	$	4	$	268	$	1,924
Commercial real estate	—		—		1,171		—		556		1,545
Commercial construction	—		—		—		—		—		—
Business banking	3,351		634		5,497		5,279		3,311		10,196
Residential real estate	9,014		2,426		5,515		9,184		2,517		4,904
Consumer home equity	2,319		415		3,111		1,806		364		3,035
Other Consumer	1,107		362		771		1,978		234		517
Total	$	16,320	$	5,905	$	18,108	$	18,251	$	7,250	$	22,121


	As of September 30, 2021
	Gross Loans Outstanding (1)		90+ Days Past Due Still Accruing		Non-accruing Loans		NPLs		NPLs as a % of Outstanding		Accruing Troubled Debt Restructured Loans
	(In thousands)
Loans:
Commercial	$	6,946,317	$	1,171	$	29,166	$	30,337	0.44	%	$	11,348
Residential	1,491,269		278		7,185		7,463		0.50	%	20,092
Consumer	1,066,976		9		4,262		4,271		0.40	%	3,283
Total	$	9,504,562	$	1,458	$	40,613	$	42,071	0.44	%	$	34,723