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 June 30, ~~2020~~

2021

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

Commission File Number ~~333-239251~~

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 shares of the Registrant’s common stock, par value $0.01 per share, were issued and outstanding as of ~~September 23, 2020.~~

~~Index~~

August 12, 2021.

Table of Contents

Index


		PAGE
PART I.	FINANCIAL INFORMATION

~~ITEM~~ I tem 1.	Financial Statements

	Unaudited Consolidated Balance Sheets		2	4
	Unaudited Consolidated Statements of Income		4	5
	Unaudited Consolidated Statements of Comprehensive Income		6
	Unaudited Consolidated Statements of Changes in Shareholders’ Equity		7
	Unaudited Consolidated Statements of Cash Flows		8	9
	Notes to Unaudited Consolidated Financial Statements		10	11

~~ITEM~~ Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		55	53

~~ITEM~~ Item 3.	Quantitative and Qualitative Disclosures about Market Risk		85	90

~~ITEM~~ Item 4.	Controls and Procedures		85	91

PART II.	OTHER INFORMATION

~~ITEM~~ Item 1.	Legal Proceedings		86	91

~~ITEM~~ Item 1A.	Risk Factors		86	91

~~ITEM~~ Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		86	91

~~ITEM~~ Item 3.	Defaults Upon Senior Securities		86	91

~~ITEM~~ Item 4.	Mine Safety Disclosures		86	91

~~ITEM~~ Item 5.	Other Information		86	91

~~ITEM~~ Item 6.	Exhibits		86	92

EXHIBIT INDEX				87	92

SIGNATURES		89	93


	~~Page~~
		Page
Part I Financial Information

Item 1.I. Unaudited Consolidated Financial Statements

Unaudited Consolidated Balance Sheets as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020			2	4
Unaudited Consolidated Statements of Income for the three and six months ended June 30, ~~2020~~2021 and ~~2019~~2020			4	5
Unaudited Consolidated Statements of Comprehensive Income for the three and six months ended June 30, ~~2020~~2021 and ~~2019~~2020			6
Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended June 30, ~~2020~~2021 and ~~2019~~2020			7
Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, ~~2020~~2021 and ~~2019~~2020			8	9
Notes to the Unaudited Consolidated Financial Statements			10	11

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements

EASTERN ~~BANK CORPORATION~~

BANKSHARES, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

   As of June 30, As of
December 31,
   2020 2019
   (In Thousands)
ASSETS

Cash and due from banks
   $ 67,264 $ 135,503
Short-term investments
   1,365,297 227,099


Cash and cash equivalents
   1,432,561 362,602


Securities:

Trading
   —   961
Available for sale
   1,600,354 1,508,236


Total securities
   1,600,354 1,509,197


Loans held for sale
   2,972 26
Loans:

Commercial and industrial
   2,271,700 1,642,184
Commercial real estate
   3,584,358 3,535,441
Commercial construction
   282,246 273,774
Business banking
   1,234,961 771,498
Residential real estate
   1,400,855 1,428,630
Consumer home equity
   905,484 933,088
Other consumer
   334,734 402,431


Total Loans
   10,014,338 8,987,046
Less: allowance for loan losses
   (116,636 ) (82,297 )
Less: unamortized premiums, net of unearned discounts and deferred fees
   (34,722 ) (5,565 )


Net Loans
   9,862,980 8,899,184


Federal Home Loan Bank stock, at cost
   8,805 9,027
Premises and equipment
   52,475 57,453
Bank-owned life insurance
   77,528 77,546
Goodwill and other intangibles, net
   376,331 377,734
Deferred income taxes, net
   7,663 28,207
Prepaid expenses
   92,517 61,336
Other assets
   482,337 246,463


Total Assets
   $ 13,996,523 $ 11,628,775


							June 30, 2021		December 31, 2020
							(In thousands, except share data)
ASSETS						ASSETS
Cash and due from banks						Cash and due from banks	$	58,490	$	116,591
Short-term investments						Short-term investments	1,505,757		1,937,479
Cash and cash equivalents						Cash and cash equivalents	1,564,247		2,054,070
Available for sale securities						Available for sale securities	4,848,781		3,183,861
Loans held for sale						Loans held for sale	2,734		1,140
Loans:						Loans:
Commercial and industrial						Commercial and industrial	1,740,679		1,995,016
Commercial real estate						Commercial real estate	3,775,771		3,573,630
Commercial construction						Commercial construction	237,927		305,708
Business banking						Business banking	1,339,852		1,339,164
Residential real estate						Residential real estate	1,457,498		1,370,957
Consumer home equity						Consumer home equity	834,938		868,270
Other consumer						Other consumer	234,410		277,780
Total loans						Total loans	9,621,075		9,730,525
Less: allowance for loan losses						Less: allowance for loan losses	(105,637)		(113,031)
Less: unamortized premiums, net of unearned discounts and deferred fees						Less: unamortized premiums, net of unearned discounts and deferred fees	(29,739)		(23,536)
Net loans						Net loans	9,485,699		9,593,958
Federal Home Loan Bank stock, at cost						Federal Home Loan Bank stock, at cost	10,601		8,805
Premises and equipment						Premises and equipment	44,733		49,398
Bank-owned life insurance						Bank-owned life insurance	79,634		78,561
Goodwill and other intangibles, net						Goodwill and other intangibles, net	380,402		376,534
Deferred income taxes, net						Deferred income taxes, net	26,161		13,229
Prepaid expenses						Prepaid expenses	145,941		148,680
Other assets						Other assets	458,520		455,954
Total assets						Total assets	$	17,047,453	$	15,964,190
LIABILITIES AND EQUITY						LIABILITIES AND EQUITY
Deposits:						Deposits:
Demand	$	4,740,125	$	3,517,447		Demand	$	5,399,297	$	4,910,794
Interest checking accounts		2,385,912		1,814,327		Interest checking accounts	2,656,610		2,380,497
Savings accounts		1,157,606		971,119		Savings accounts	1,403,472		1,256,736
Money market investment		3,254,202		2,919,360		Money market investment	3,544,897		3,348,898
Certificate of deposits		308,920		329,139

Certificates of deposit						Certificates of deposit	246,157		258,859
Total deposits		11,846,765		9,551,392		Total deposits	13,250,433		12,155,784

Borrowed funds:						Borrowed funds:
Federal funds purchased		—		201,082
Federal Home Loan Bank advances		14,922		18,964		Federal Home Loan Bank advances	14,323		14,624
Escrow deposits of borrowers		14,233		15,349		Escrow deposits of borrowers	14,119		13,425

Total borrowed funds		29,155		235,395		Total borrowed funds	28,442		28,049

Other liabilities		426,973		241,835		Other liabilities	337,956		352,305

Total Liabilities		12,302,893		10,028,622

Commitments and contingencies
Total liabilities						Total liabilities	13,616,831		12,536,138
Commitments and contingencies (see footnote 10)						Commitments and contingencies (see footnote 10)	0		0
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 June 30, 2021 and December 31, 2020						Common shares, $0.01 par value, 1,000,000,000 shares authorized, 186,758,154 shares issued and outstanding at both June 30, 2021 and December 31, 2020	1,868		1,868
Additional paid in capital						Additional paid in capital	1,856,241		1,854,068
Unallocated common shares held by the Employee Stock Ownership Plan						Unallocated common shares held by the Employee Stock Ownership Plan	(145,219)		(147,725)
Retained earnings		1,681,164		1,644,000		Retained earnings	1,723,979		1,665,607
Accumulated other comprehensive income, net of tax		12,466		(43,847	)	Accumulated other comprehensive income, net of tax	(6,247)		54,234

Total equity		1,693,630		1,600,153

Total liabilities and equity	$	13,996,523	$	11,628,775

Total shareholders’ equity						Total shareholders’ equity	3,430,622		3,428,052
Total liabilities and shareholders’ equity						Total liabilities and shareholders’ equity	$	17,047,453	$	15,964,190

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

Table of Contents

EASTERN ~~BANK CORPORATION~~

BANKSHARES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

   Three months ended June 30, Six months ended June 30,
   2020 2019 2020 2019
   (In Thousands)
Interest and dividend income:

Interest and fees on loans
   $ 92,143 $ 102,216 $ 187,681 $ 202,772
Taxable interest and dividends on available for sale securities
   7,600 7,901 15,778 15,953
Non-taxable interest and dividends on available for sale securities
   1,905 2,049 3,826 4,403
Interest on federal funds sold and other short-term investments
   284 612 801 965
Interest and dividends on trading securities
   1 60 6 228


Total interest and dividend income
   101,933 112,838 208,092 224,321


Interest expense:

Interest on deposits
   3,104 7,313 8,518 13,832
Interest on borrowings
   74 2,002 673 4,294


Total interest expense
   3,178 9,315 9,191 18,126


Net interest income
   98,755 103,523 198,901 206,195
Provision for allowance for credit losses
   8,600 1,500 37,200 4,500


Net interest income after provision for credit losses
   90,155 102,023 161,701 201,695


Noninterest income:

Insurance commissions
   22,697 24,135 50,174 48,897
Service charges on deposit accounts
   4,364 6,771 10,462 13,175
Trust and investment advisory fees
   5,194 4,980 10,289 9,608
Debit card processing fees
   2,337 2,638 4,807 5,048
Interest rate swap income (losses)
   771 (810 ) (5,238 ) (470 )
Income from investments held in rabbi trusts
   7,745 1,822 1,002 5,969
(Losses) gains on trading securities, net
   (1 ) 152 (3 ) 1,294
Gains on sales of mortgage loans held for sale, net
   1,420 159 1,513 209
Gains on sales of securities available for sale, net
   163 1,966 285 2,016
Other
   2,967 3,819 7,735 7,686


Total noninterest income
   47,657 45,632 81,026 93,432


Noninterest expense:

Salaries and employee benefits
   63,335 62,364 124,924 129,670
Office occupancy and equipment
   8,615 8,383 17,304 17,182
Data processing
   12,180 10,912 22,184 21,588


														Three Months Ended June 30,				Six Months Ended June 30,
														2021		2020		2021		2020
														(In thousands, except per share data)
Interest and dividend income:													Interest and dividend income:
Interest and fees on loans													Interest and fees on loans	$	90,936	$	92,143	$	179,575	$	187,681
Taxable interest and dividends on available for sale securities													Taxable interest and dividends on available for sale securities	12,457		7,600		22,663		15,778
Non-taxable interest and dividends on available for sale securities													Non-taxable interest and dividends on available for sale securities	1,857		1,905		3,713		3,826
Interest on federal funds sold and other short-term investments													Interest on federal funds sold and other short-term investments	431		284		863		801
Interest and dividends on trading securities													Interest and dividends on trading securities	0		1		0		6
Total interest and dividend income													Total interest and dividend income	105,681		101,933		206,814		208,092
Interest expense:													Interest expense:
Interest on deposits													Interest on deposits	1,031		3,104		2,033		8,518
Interest on borrowings													Interest on borrowings	42		74		82		673
Total interest expense													Total interest expense	1,073		3,178		2,115		9,191
Net interest income													Net interest income	104,608		98,755		204,699		198,901
(Release of) provision for allowance for loan losses													(Release of) provision for allowance for loan losses	(3,300)		8,600		(3,880)		37,200
Net interest income after provision for loan losses													Net interest income after provision for loan losses	107,908		90,155		208,579		161,701
Noninterest income:													Noninterest income:
Insurance commissions													Insurance commissions	23,664		22,697		51,811		50,174
Service charges on deposit accounts													Service charges on deposit accounts	5,708		4,364		11,075		10,462
Trust and investment advisory fees													Trust and investment advisory fees	6,074		5,194		11,737		10,289
Debit card processing fees													Debit card processing fees	3,170		2,337		5,919		4,807
Interest rate swap (losses) income													Interest rate swap (losses) income	(1,164)		771		4,241		(5,238)
Income from investments held in rabbi trusts													Income from investments held in rabbi trusts	4,216		7,745		6,062		1,002
Losses on trading securities, net													Losses on trading securities, net	0		(1)		0		(3)
Gains on sales of mortgage loans held for sale, net													Gains on sales of mortgage loans held for sale, net	848		1,420		2,327		1,513
Gains on sales of securities available for sale, net													Gains on sales of securities available for sale, net	1		163		1,165		285
Other													Other	3,216		2,967		6,608		7,735
Total noninterest income													Total noninterest income	45,733		47,657		100,945		81,026
Noninterest expense:													Noninterest expense:
Salaries and employee benefits													Salaries and employee benefits	69,276		63,335		133,316		124,924
Office occupancy and equipment													Office occupancy and equipment	8,094		8,615		16,311		17,304
Data processing													Data processing	13,572		12,180		25,701		22,184
Professional services		4,396			3,966			8,085			7,104		Professional services	6,439		4,396		10,587		8,085
Charitable contributions		2,797			3,683			3,984			7,331		Charitable contributions	0		2,797		0		3,984
Marketing		1,645			2,683			4,113			4,406		Marketing	3,497		1,645		5,188		4,113
Loan expenses		2,036			886			3,148			1,551		Loan expenses	1,854		2,036		3,701		3,148
FDIC insurance		944			927			1,850			1,800		FDIC insurance	985		944		1,933		1,850
Amortization of intangible assets		701			886			1,403			1,773		Amortization of intangible assets	625		701		1,157		1,403
Net periodic benefit cost, excluding service cost		(2,443	)		(1,334	)		(4,885	)		(2,668	)
Other		6,559			8,214			13,827			16,662		Other	2,993		4,116		3,490		8,942

Total noninterest expense		100,765			101,570			195,937			206,399		Total noninterest expense	107,335		100,765		201,384		195,937

Income before income tax expense		37,047			46,085			46,790			88,728		Income before income tax expense	46,306		37,047		108,140		46,790
Income tax expense		7,197			11,032			8,495			20,710		Income tax expense	11,497		7,197		25,668		8,495

Net Income	$	29,850		$	35,053		$	38,295		$	68,018

Net income													Net income	$	34,809	$	29,850	$	82,472	$	38,295
Basic earnings per share													Basic earnings per share	$	0.20	$	0	$	0.48	$	0
Diluted earnings per share													Diluted earnings per share	$	0.20	$	0	$	0.48	$	0

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

Table of Contents

EASTERN ~~BANK CORPORATION~~

BANKSHARES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

   Three Months Ended June 30,    Six Months Ended June 30,
   2020 2019    2020    2019
   (In Thousands)
Net income
   $ 29,850 $ 35,053    $ 38,295    $ 68,018






Other comprehensive income, net of tax:

Net change in fair value of securities available for sale
   287 10,134    26,479    35,124
Net change in fair value of cash flow hedges
   (2,645 ) 11,375    26,430    15,377
Net change in other comprehensive income for defined benefit postretirement plans
   3,404 —      3,404    —






Total other comprehensive income
   1,046 21,509    56,313    50,501






Total comprehensive income
   $ 30,896 $ 56,562    $ 94,608    $ 118,519


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Net income	$	34,809	$	29,850	$	82,472	$	38,295
Other comprehensive income (loss), net of tax:
Net change in fair value of securities available for sale	25,428		287		(49,476)		26,479
Net change in fair value of cash flow hedges	(5,909)		(2,645)		(11,857)		26,430
Net change in other comprehensive income for defined benefit postretirement plans	426		3,404		852		3,404
Total other comprehensive income (loss)	19,945		1,046		(60,481)		56,313
Total comprehensive income	$	54,754	$	30,896	$	21,991	$	94,608

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

Table of Contents

EASTERN ~~BANK CORPORATION~~

BANKSHARES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

   Retained
Earnings Accumulated
Other
Comprehensive
Income Total
   (In Thousands)
Balance at December 31, 2019
   $ 1,644,000 $ (43,847 ) $ 1,600,153
Cumulative effect accounting adjustment ⁽¹⁾
   (1,131 ) (1,131 )
Net income
   8,445 —   8,445
Other comprehensive income, net of tax
   —   55,267 55,267


Balance at March 31, 2020
   $ 1,651,314 $ 11,420 $ 1,662,734


Net income
   29,850 —   29,850
Other comprehensive income, net of tax
   —   1,046 1,046


Balance at June 30, 2020
   $ 1,681,164 $ 12,466 $ 1,693,630


Balance at December 31, 2018
   $ 1,508,902 $ (75,761 ) $ 1,433,141
Net income
   32,965 —   32,965
Other comprehensive income, net of tax
   —   28,992 28,992


Balance at March 31, 2019
   $ 1,541,867 $ (46,769 ) $ 1,495,098


Net income
   35,053 —   35,053
Other comprehensive income, net of tax
   —   21,509 21,509


Balance at June 30, 2019
   $ 1,576,920 $ (25,260 ) $ 1,551,660

~~(1)~~

Represents cumulative impact on retained earnings pursuant to the Company’s adoption of Accounting Standards Update 2016-02 Leases. The transition adjustment to the opening balance of retained earnings 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.

Three Months Ended June 30, 2021 and 2020


	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 March 31, 2020	0	$	0	$	0	$	1,651,314	$	11,420	$	0	$	1,662,734
Net income	—	—		—		29,850		—		—		29,850
Other comprehensive income, net of tax	—	—		—		—		1,046		—		1,046
Balance at June 30, 2020	0	$	0	$	0	$	1,681,164	$	12,466	$	0	$	1,693,630

Balance at March 31, 2021	186,758,154	$	1,868	$	1,854,895	$	1,702,946	$	(26,192)	$	(146,472)	$	3,387,045
Dividends to common shareholders (1)	—	—		—		(13,776)		—		—		(13,776)
Net income	—	—		—		34,809		—		—		34,809
Other comprehensive income, net of tax	—	—		—		—		19,945		—		19,945
ESOP shares committed to be released	—	—		1,346		—		—		1,253		2,599
Balance at June 30, 2021	186,758,154	$	1,868	$	1,856,241	$	1,723,979	$	(6,247)	$	(145,219)	$	3,430,622

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

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

EASTERN ~~BANK CORPORATION~~

BANKSHARES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~

   Six Months Ended June 30,
   2020 2019
   (In Thousands)
Operating activities

Net income
   $ 38,295 $ 68,018
Adjustments to reconcile net income to net cash provided by operating activities

Provision for loan losses
   37,200 4,500
Depreciation and amortization
   8,471 9,781
Change in unamortized net loan costs and premiums
   (3,155 ) 2,501
Deferred income tax expense (benefit)
   1,773 6,052
Amortization of investment security premiums and discounts
   1,656 1,502
Right-of-use asset amortization
   6,042 —
Increase in cash surrender value of bank-owned life insurance
   (1,155 ) (1,092 )
Gain on life insurance benefits
   (147 ) —
Net gain on sale of securities available for sale
   (285 ) (2,016 )
Net gain on sale of mortgage loans held for sale
   (1,513 ) (209 )
Mark-to-market on loans held for sale
   19 —
Proceeds from sale of loans held for sale
   172,872 53,104
Originations of loans held for sale
   (174,324 ) (54,857 )
Amortization of gains from terminated interest rate swaps
   (373 ) —
Loss on sale of premises and equipment
   —   131
Change in:

Trading securities
   961 51,444
Prepaid pension expense
   (28,432 ) (15,515 )
Other assets
   (133,413 ) (30,070 )
Other liabilities
   77,509 (8,620 )


Net cash provided by operating activities
   2,001 84,654


Investing activities

Proceeds from sales of securities available for sale
   9,098 47,986
Proceeds from maturities and principal paydowns of securities available for sale
   153,542 85,226
Purchases of securities available for sale
   (171,226 ) (35,981 )
Proceeds from sale of Federal Home Loan Bank stock
   749 31,862
Purchases of Federal Home Loan Bank stock
   (527 ) (27,453 )
Contributions to low income housing tax credit investments
   (7,435 ) (946 )
Distributions from low income housing tax credit investments
   —   3
Contributions to other equity investments
   (1,092 ) —
Distributions from equity investments
   54 15
Net increase in outstanding loans
   (997,881 ) (176,135 )
Purchased banking premises and equipment, net
   (2,146 ) (3,780 )


Net cash used in investing activities
   (1,016,864 ) (79,203 )


Financing activities

Net increase in demand, savings, interest checking, and money market investment deposit accounts
   2,315,592 107,136
Net decrease in time deposits
   (20,219 ) (65,525 )
Net decrease in borrowed funds
   (206,240 ) (14,714 )
CHANGES IN SHAREHOLDERS’ EQUITY

Contingent consideration paid
   (158 ) (447 )
Payment of initial public offering costs
   (4,153 ) —


Net cash provided by financing activities
   2,084,822 26,450


Net increase in cash, cash equivalents, and restricted cash
   1,069,959 31,901
Cash, cash equivalents, and restricted cash at beginning of period
   362,602 259,708


Cash, cash equivalents, and restricted cash at end of period
   $ 1,432,561 $ 291,609


Supplemental disclosure of cash flow information

Cash paid during the period for:

Interest paid
   $ 10,533 $ 17,697
Income taxes
   14,976 20,335
Non-cash activities

Net increase in capital commitments relating to low income housing tax credit projects
   $ 13,214 $ —
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 —

Six Months Ended June 30, 2021 and 2020


	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 December 31, 2019	0	$	0	$	0	$	1,644,000	$	(43,847)	$	0	$	1,600,153
Cumulative effect accounting adjustment (1)	—	—		—		(1,131)		—		—		(1,131)
Net income	—	—		—		38,295		—		—		38,295
Other comprehensive income, net of tax	—	—		—		—		56,313		—		56,313
Balance at June 30, 2020	0	$	0	$	0	$	1,681,164	$	12,466	$	0	$	1,693,630

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)	—	—		—		(24,100)		—		—		(24,100)
Net income	—	—		—		82,472		—		—		82,472
Other comprehensive loss, net of tax	—	—		—		—		(60,481)		—		(60,481)
ESOP shares committed to be released	—	—		2,173		—		—		2,506		4,679
Balance at June 30, 2021	186,758,154	$	1,868	$	1,856,241	$	1,723,979	$	(6,247)	$	(145,219)	$	3,430,622

(1)Represents cumulative impact on retained earnings pursuant to the Company’s (as defined herein) adoption of Accounting Standards Update 2016-02 Leases. The transition adjustment to the opening balance of retained earnings 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 and $0.08 per share of common stock during the three months ended March 31, 2021 and June 30, 2021, respectively.

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

Table of Contents

EASTERN ~~BANK CORPORATION~~

BANKSHARES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,
(In thousands) 2021 2020
Operating activities
Net income $ 82,472 $ 38,295
Adjustments to reconcile net income to net cash provided by operating activities
(Release of) provision for loan losses (3,880) 37,200
Depreciation and amortization 6,636 8,471
Accretion of deferred loan fees and premiums, net (14,767) (3,155)
Deferred income tax expense 5,407 1,773
Amortization of investment security premiums and discounts 6,397 1,656
Right-of-use asset amortization 6,130 6,042
Increase in cash surrender value of bank-owned life insurance (1,073) (1,155)
Gain on sale of securities available for sale, net (1,165) (285)
Amortization of gains from terminated interest rate swaps (16,493) (373)
Employee Stock Ownership Plan expense 4,679 0
Other 248 (128)
Change in:
Trading securities 0 961
Loans held for sale (1,583) (2,965)
Prepaid pension expense 1,676 (28,432)
Other assets 9,746 (133,413)
Other liabilities (24,794) 77,509
Net cash provided by operating activities 59,636 2,001
Investing activities
Proceeds from sales of securities available for sale 23,237 9,098
Proceeds from maturities and principal paydowns of securities available for sale 381,123 153,542
Purchases of securities available for sale (2,138,024) (171,226)
Proceeds from sale of Federal Home Loan Bank stock 0 749
Purchases of Federal Home Loan Bank stock (1,796) (527)
Contributions to low income housing tax credit investments (4,553) (7,435)
Contributions to other equity investments (1,920) (1,092)
Distributions from other equity investments 170 54
Net decrease (increase) in outstanding loans 126,868 (997,881)
Acquisitions, net of cash and cash equivalents acquired (4,354) 0
Purchased banking premises and equipment, net (1,809) (2,146)
Proceeds from sale of premises held for sale 736 0
Net cash used in investing activities (1,620,322) (1,016,864)
Financing activities
Net increase in demand, savings, interest checking, and money market investment deposit accounts 1,107,351 2,315,592
Net decrease in time deposits (12,702) (20,219)
Net increase (decrease) in borrowed funds 393 (206,240)
Contingent consideration paid (79) (158)
Payment of deferred offering costs 0 (4,153)
Dividends declared and paid to common shareholders (24,100) 0
Net cash provided by financing activities 1,070,863 2,084,822
Net (decrease) increase in cash, cash equivalents, and restricted cash (489,823) 1,069,959
Cash, cash equivalents, and restricted cash at beginning of period 2,054,070 362,602
Cash, cash equivalents, and restricted cash at end of period $ 1,564,247 $ 1,432,561

Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest paid $ 2,127 $ 10,533
Income taxes $ 35,122 14,976
Non-cash activities
Net increase in capital commitments relating to low income housing tax credit projects $ 14,446 $ 13,214
Initial recognition of operating lease right-of-use assets upon adoption of Accounting Standards Update 2016-02 $ 0 $ 92,948
Initial recognition of operating lease liabilities upon adoption of Accounting Standards Update 2016-02 $ 0 $ 96,426
The accompanying notes are an integral part of these unaudited consolidated financial statements.
10
Table of Contents

EASTERN BANKSHARES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Corporate Structure and Nature of ~~the Business and~~Operations; Basis of Presentation

Corporate Structure and Nature of Operations

Eastern ~~Bank Corporation~~Bankshares, Inc., a Massachusetts corporation (the “Company”), is a ~~Massachusetts-chartered mutual~~ 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, trust and investment, ~~services,~~ and insurance services, through its full-service bank branches and insurance offices, located primarily in 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 ~~Board.~~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 (“CFPB”).~~Bureau. The Company and the activities of the Bank and Eastern Insurance Group are also subject to various Massachusetts, ~~and~~ New Hampshire and Rhode Island business and banking 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 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 June 30, 2021, the consolidated statements of income and comprehensive income and of changes in equity for the three and six months ended June 30, 2021 and 2020 and statement of cash flows for the six months ended June 30, 2021 and 2020 are unaudited. The consolidated balance sheet as of December 31, 2020 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 (“2020 Form 10-K”), as filed with the SEC. In the opinion of management, 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 and Accounting Standards Update as well as the rules and interpretive releasesreflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the ~~Securities~~results of operations for the periods presented. The results for the three and ~~Exchange Commission (“SEC”) under~~six months ended June 30, 2021 are not necessarily indicative of results to be expected for the ~~authority of federal securities laws.~~

year ending December 31, 2021, 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 June 30, 2021 and those that were adopted during the six months ended June 30, 2021. For a full discussion of significant accounting policies, refer to the notes included within the Company’s 2020 Form 10-K.

Use of Estimates

In preparing the ~~consolidated financial statements,~~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 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.

~~Unaudited Interim Financial Information~~

Table of Contents

Recent Accounting Pronouncements

The ~~accompanying consolidated balance sheet~~Company qualifies as an emerging growth company under the Jumpstart Our Business Act of ~~June 30, 2020, the consolidated statements of income~~2012 (“JOBS Act”) and comprehensive income, of changes in equity and of cash flows for the three and six months ended June 30, 2020 and 2019 are unaudited. The consolidated balance sheet as of December 31, 2019 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 prospectus, filed with the Securities and Exchange Commission pursuanthas elected to Rule 424(b)(3) on August 18, 2020. 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 six months ended June 30, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020, any other interim periods, or any future year or period.

~~Leases~~

On January 1, 2020, the Company adopted Accounting Standards Update (‘ASU”) 2016-02, “Leases” (“Topic 842”), using the modified retrospective method. The new guidance was applied to leases that existed or were entered into on or after January 1, 2020. The Company’s results for the reporting period beginning on January 1, 2020 have been presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with previous guidance. See “Note 5 – Leases” for further discussion ofdefer the adoption ~~and~~of new or revised accounting standards until the ~~impact on the Company’s consolidated financial statements.~~

nonpublic company effective dates.

~~Recent Accounting Pronouncements~~

Relevant standards that were recently issued but not yet adopted as of June 30, ~~2020:~~

2021:

In March 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). This update addresses optional expedients and exceptions for applying GAAP to certain contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The new guidance 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 existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. For public and nonpublic entities, the guidance is effective as of March 12, 2020 through December 31, 2022 and dodoes not apply to contract modifications made after December 31, 2022. The Company qualifies as an emerging growth company (“EGC”) under the Jumpstart Our Business Act of 2012 and has elected to defer the adoption of new or revised accounting standards until the nonpublic company effective dates. As such, the Company will adopt this standard on 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.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses on Financial Instruments and relevant amendments ~~(Topic~~(Topic 326) (“ASU 2016-13”). This update was created to replace the current GAAP method of calculating credit ~~losses~~losses. Specifically, the standard replaces the existing 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~~, credit losses are measured based on historical experience, current conditions and reasonable supportable forecasts. The standard also amends existing impairment guidance for available for sale securities, in which credit losses will be recorded as an allowance versus a write-down of the amortized cost basis of the security. It will also allow 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.~~Losses (“ASU 2018-19”). The amendments in ~~Update No.~~ASU 2018-19 ~~was~~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.~~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 that meet the definition of an SEC filer (excluding smaller reporting entities) the guidance is effective 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. The Company ~~which currently qualifies as an EGC,~~ anticipates ~~to early adopt~~deferring adoption of this standard ~~during~~to January 1, 2022.

To address the ~~year ending on December 31, 2021~~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 is evaluating portfolio segmentation, methodologies and other assumptions and has initiated model validation efforts. Third parties have been engaged to assist the Company in project management, documentation, model governance, model validation and related internal controls implementation. The Company is currently assessing the impact of the ~~adoption of this~~new standard on its consolidated financial statements. ~~To date,~~

In August 2018, the ~~Company has been assessing~~FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20) Disclosure Framework—Changes to the ~~key differences~~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 postretirement benefit plans. The guidance eliminates requirements for certain disclosures that are no longer considered cost

Table of Contents

beneficial and ~~gaps between its current allowance methodology and model and those it~~requires new ones that the FASB considers pertinent. For public companies, ASU 2018-14 is ~~considering using upon adoption.~~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. The Company ~~has contracted with a vendor and is currently assessing~~will adopt this standard on the adequacy of existing loss data and developing models for default and loss estimates. While currently unable to reasonably estimate the impact of adopting this ASU, it is expected that the impact of adoption will be influenced by the composition, characteristics and quality of the loan and securities portfolios as well as the prevailing economic conditions and forecasts as ofnonpublic company effective date. The Company expects the adoption ~~date.~~

of this standard will not have a material impact on its consolidated financial statements.

Relevant standards that were adopted during the six months ended June 30, ~~2019~~2021:

In August 2018, the FASB issued ASU 2018-15, Intangibles–Goodwill and ~~2020:~~

~~In accordance~~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”). This update addresses accounting for fees paid by a customer for implementation, set-up and other upfront costs incurred in a cloud computing arrangement that is hosted by the vendor (i.e., a service contract). The new guidance aligns treatment for capitalization of implementation costs with guidance on internal-use software. For public entities, the guidance is effective for annual reporting periods beginning after December 15, 2019. For nonpublic ~~company requirements,~~entities, the ~~Company adopted ASC 606 on January 1, 2019. In completing its assessment of the Company’s revenue streams within the scope of ASC 606, the Company did not identify any revenue sources~~guidance is effective for ~~which the timing of recognition needed to change under the new standard.~~annual reporting periods beginning after December 15, 2020, and for all interim periods beginning after December 15, 2021. The adoption of this standard on January 1, ~~2019~~2021 did not have a material impact on the Company’s consolidated financial statements, its current accounting policies and practices, or the timing or amount of revenue recognized. As a result, no adjustment has been made to retained earnings. Additionally, the Company evaluated and made necessary changes, where appropriate, to business processes, systems, and internal controls in order to support the recognition, measurement, and disclosure requirements of the new standard. The Company also considered the impact of ASC 606 subtopic ASC 340-40. Under ASC 340-40, the Company is required to capitalize and amortize incremental costs of obtaining a contract, such as sales commissions, over the period of benefit. The Company does not pay sales commissions and has not identified any other incremental cost to obtain a contract, therefore ASC 340-40 had no impact to its consolidated financial statements.

In ~~February 2016,~~January 2021, the FASB issued ASU ~~2016-02,~~ ~~Leases~~2021-01, Reference Rate Reform (Topic ~~842)~~848) (“ASU ~~2016-02”~~2021-01”)~~. Topic 842 was subsequently amended~~ 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 ~~2018-01,~~ ~~Land Easement Practical Expedient for Transition to Topic 842~~ (“2021-01 also clarifies and updates several items in ASU ~~2018-01”);~~2020-04 as part of the Board’s monitoring of global reference rate reform activities. ASU ~~2018-10,~~ ~~Codification Improvements to Topic 842, Leases~~ ~~(“ASU 2018-10”); ASU 2018-11,~~ ~~Targeted Improvements~~ ~~(“ASU 2018-11”); and ASU 2018-20~~ ~~Leases (Topic 842): Narrow-Scope Improvements for Lessors~~ ~~(“ASU 2018-20”). ASU 2018-01~~2021-01 permits ~~an entity~~entities to elect ancertain optional ~~transition practical expedient~~expedients and exceptions to ~~not evaluate under Topic 842 land easements~~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 ~~exist or expired before~~is provided as part of the ~~entity’s adoption~~above change on certain aspects of ~~Topic 842~~hedge accounting. The guidance was effective upon issuance and ~~that were not previously accounted for as leases under Topic 840. ASU 2018-10 was issued to clarify the Codification or to correct unintended application of guidance within ASU 2016-02. ASU 2018-11~~ allows for an optional transition method in which the provisions of Topic 842 would be applied upon the adoption date and would not have to be retroactively applied to the earliest reporting period presented in the consolidated financial statements. Lastly, ASU 2018-20 provided narrow-scope improvements for lessors, which was issued to increase transparency and comparability among organizations. ASU 2016-02 and the several additional amendments thereto are collectively referred to herein as ASC 842.

ASC 842 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The standard represents a wholesale change to lease accounting and requires all leasesretrospective or prospective application with a term longer than 12 months to be reported on the balance sheet through recognition of a right-of-use asset and a corresponding liability for future lease obligations. Leases will be classified as financing or operating, with classification affecting the pattern and grouping of expenses in the income statement. The standard also requires extensive disclosures for assets, expenses, and cash flows associated with leases, as well as a maturity analysis of lease liabilities. In November 2019, FASB issued guidance delaying the effective date for all entities except for public business entities that are SEC filers. For public business entities the guidance is effective for fiscal year beginning after December 15, 2018, for all other entities the guidance is effective for fiscal year beginning after December 15, 2020, early adoption is permitted for all entities.

certain conditions. The Company ~~early adopted this standard on January 1, 2020. In accordance with ASU 2018-11, the Company used the effective date as the date of application and, therefore, periods prior to January 1, 2020, were~~did not restated. The new standard provides a number of optional practical expedients in transition. The Company elected the “package of practical expedients”, which permits the Company to not reassess prior conclusions about lease identification, lease classification, and initial direct costs under ASC 842. The Company also elected the hindsight practical expedient and, therefore, used the hindsight knowledge as of the effective date when determining lease terms and impairment. In addition, the Company elected the practical expedient to not separate lease and non-lease components and, therefore, accounts for each separate lease component of a contract and its associated non-lease components as a single lease component. The new standard also provides a practical expedient for an entity’s ongoing accounting relating to leases of 12 months or less (“short-term leases”). The Company has elected the short-term lease recognition exemption for all leases that qualify and will not recognize right-of-use assets and lease liabilities for those leases.elect retrospective application. The adoption of this standard resulted in the recognition of right-of-use asset and lease liabilities on the Company’s balance sheet for its real estate and equipment operating leases of $92.9 million and $96.4 million, respectively. The Company recorded an adjustment to remove the Company’s existing deferred rent liability of approximately $3.5 million. The Company also recognized a transition adjustment to the opening balance of retained earnings on January 1, 2020 amounting to $1.1 million, net of tax, related to an incremental accrued rent adjustment calculated as a result of electing the hindsight practical expedient. The amount of right-of-use assets were determined based upon the present value of the remaining minimal rental payments under current leasing standards for existing operating leases, adjusted for options that the Company is reasonably certain to exercise, less accrued rent as of December 31, 2019 and the incremental accrued rent as a result of electing the hindsight practical expedient. Lastly, the amount of lease liabilities was determined based upon the present value of the remaining minimum rental payments under current leasing standards for existing operating leases, adjusted for options that the Company is reasonably certain to exercise.

~~In August 2018, the FASB issued ASU 2018-13,~~ ~~Fair Value Measurement (Topic 820) Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement~~ ~~(“ASU 2018-13”)~~. This update modifies the disclosure requirements related to the fair value measurements in Topic 820. Specifically, this update amends disclosure around changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used in Level 3 fair value measurements and the description of measurement uncertainty. The Company adopted ASU 2018-13 on January 1, 2020. This update did not have a material impact on ~~its~~the Company’s consolidated financial statements.

~~In October 2018, the FASB issued ASU 2018-16,~~ ~~Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes~~ (“ASU 2018-16”). This update permits the use of the Overnight Index Swap (“OIS”) rate based on the Secured Overnight Financing Rate (“SOFR”) as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815. The amendments should be adopted on a prospective basis for qualifying new or re-structured hedging relationships entered into on or after the date of adoption. The Company adopted this standard on January 1, 2020. This update did not have a material impact on its consolidated financial statements

3. Securities

~~Trading Securities~~

The Company had trading securities of $0 and $1.0 million as of June 30, 2020 and December 31, 2019, respectively. The reduction in the Company’s trading portfolio was due to the Company’s exit of its capital markets business during the year ended December 31, 2019.

Available for Sale Securities

The amortized cost, gross unrealized gains and losses, and fair value of available for sale securities ~~for the periods below~~as of June 30, 2021 and December 31, 2020 were as follows:

   As of and for the six months ended June 30, 2020
   Amortized
Cost    Unrealized
Gains    Unrealized
Losses    Fair
Value
   (In Thousands)
Debt securities:

Government-sponsored residential mortgage-backed securities
   $ 1,207,274    $ 44,750    $ (225 )    $ 1,251,799
U.S. Treasury securities
   60,189    747    —      60,936
State and municipal bonds and obligations
   264,615    16,725    —      281,340
Qualified zone academy bond
   6,209    70    —      6,279








   $ 1,538,287    $ 62,292    $ (225 )    $ 1,600,354

   As of and for the year ended December 31, 2019
   Amortized
Cost    Unrealized
Gains    Unrealized
Losses    Fair
Value
   (In Thousands)
Debt securities:

Government-sponsored residential mortgage-backed securities
   $ 1,151,305    $ 17,208    $ (545 )    $ 1,167,968
U.S. Treasury securities
   50,155    265    —      50,420
State and municipal bonds and obligations
   272,582    10,959    (3 )    283,538
Qualified zone academy bond
   6,155    155    —      6,310








   $ 1,480,197    $ 28,587    $ (548 )    $ 1,508,236


	As of June 30, 2021
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
	(In thousands)
Debt securities:
Government-sponsored residential mortgage-backed securities	$	3,480,643	$	22,240	$	(24,354)	$	3,478,529
Government-sponsored commercial mortgage-backed securities	183,062		66		(1,333)		181,795
U.S. Agency bonds	860,575		0		(19,570)		841,005
U.S. Treasury securities	69,401		23		(93)		69,331
State and municipal bonds and obligations	259,935		18,186		0		278,121
	$	4,853,616	$	40,515	$	(45,350)	$	4,848,781

Table of Contents


	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	$	0	$	2,148,800
Government-sponsored commercial mortgage-backed securities	17,054		27		0		17,081
U.S. Agency bonds	670,468		113		(3,872)		666,709
U.S. Treasury securities	70,106		263		0		70,369
State and municipal bonds and obligations	260,898		20,004		0		280,902
	$	3,125,184	$	62,549	$	(3,872)	$	3,183,861

The amortized cost and estimated fair value of available for sale securities by contractual maturities as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 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 available for sale securities as of the dates indicated were as follows:

As of June 30, 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 Fair Value Amortized Fair Value Amortized Fair Value Amortized Fair Value Amortized Fair Value
(In Thousands)
Available for sale securities:

Government-sponsored residential mortgage-backed securities
$ —   $ —   $ 24,413 �� $ 25,733 $ 150,726 $ 157,290 $ 1,032,135 $ 1,068,776 $ 1,207,274 $ 1,251,799
U.S. Treasury securities
50,070 50,778 10,119 10,158 —   —   —   —   60,189 60,936
State and municipal bonds and obligations
407 411 18,205 18,966 73,890 77,868 172,113 184,095 264,615 281,340
Qualified zone academy bond
6,209 6,279 —   —   —   —   —   —   6,209 6,279

Total available for sale securities
$ 56,686 $ 57,468 $ 52,737 $ 54,857 $ 224,616 $ 235,158 $ 1,204,248 $ 1,252,871 $ 1,538,287 $ 1,600,354

As of December 31, 2019
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 Fair Value Amortized Fair Value Amortized Fair Value Amortized Fair Value Amortized Fair Value
(In Thousands)
Available for sale securities:

Government-sponsored residential mortgage-backed securities
$ —   $ —   $ 8,139 $ 8,464 $ 199,428 $ 203,706 $ 943,738 $ 955,798 $ 1,151,305 $ 1,167,968
U.S. Treasury securities
40 40 50,115 50,380 —   —   —   —   50,155 50,420
State and municipal bonds and obligations
381 381 8,889 9,109 77,227 79,504 186,085 194,544 272,582 283,538
Qualified zone academy bond
6,155 6,310 —   —   —   —   —   —   6,155 6,310

Total available for sale securities
$ 6,576 $ 6,731 $ 67,143 $ 67,953 $ 276,655 $ 283,210 $ 1,129,823 $ 1,150,342 $ 1,480,197 $ 1,508,236


	As of June 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	$	0	$	0	$	18,156	$	19,323	$	593,853	$	597,546	$	2,868,634	$	2,861,660	$	3,480,643	$	3,478,529
Government-sponsored commercial mortgage-backed securities	0		0		24,038		23,781		159,024		158,014		0		0		183,062		181,795
U.S. Agency bonds	0		0		199,796		196,383		660,779		644,622		0		0		860,575		841,005
U.S. Treasury securities	10,048		10,071		59,353		59,260		0		0		0		0		69,401		69,331
State and municipal bonds and obligations	485		486		28,682		29,781		72,515		76,046		158,253		171,808		259,935		278,121
Total	$	10,533	$	10,557	$	330,025	$	328,528	$	1,486,171	$	1,476,228	$	3,026,887	$	3,033,468	$	4,853,616	$	4,848,781

Table of Contents


	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	$	0	$	0	$	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	0		0		0		0		17,054		17,081		0		0		17,054		17,081
U.S. Agency bonds	0		0		99,772		99,834		570,696		566,875		0		0		670,468		666,709
U.S. Treasury securities	50,023		50,251		20,083		20,118		0		0		0		0		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

Gross realized gains from sales of available for sale securities ~~were $0.2 million and $2.0 million~~ during the three months ended June 30, 2021 and 2020 were less than $0.1 million and ~~2019,~~$0.2 million, respectively, and ~~$0.3~~$1.2 million and ~~$2.1~~$0.3 million during the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The Company had no0 significant gross realized losses from sales of securities available for sale during both the six months ended June 30, ~~2020~~2021 and ~~2019. No~~2020. There was 0 other-than-temporary impairment ~~was~~(“OTTI”) recorded during the six months ended June 30, ~~2020~~2021 and ~~2019.~~

2020.

Management prepares an estimate of the expected cash flows for investment securities available for sale that potentially may be deemed to have been an OTTI. This estimate begins with the contractual cash flows of the security. This amount is 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 the credit quality and the ability to pay of the underlying issuers. Indicators of diminished credit quality of the issuers include defaults, interest deferrals, or “payments in kind.” Management also considers those factors listed in the ~~Investments~~“Investments – Debt and Equity ~~Securities~~Securities” topic of the FASB ASC when estimating the ultimate realizability of the cash flows for each individual security.

The resulting estimate of cash flows after considering credit is 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 cash flows is less than the current amortized cost basis, an OTTI is considered to have occurred and the security is written down to the fair value indicated by the cash flow analysis. As part of the analysis, management considers whether it intends to sell the security or whether it is more than likely that it would be required to sell the security before the expected recovery of its amortized cost basis.

Information pertaining to available for sale securities with gross unrealized losses as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, which the Company has not deemed to be OTTI, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

   June 30, 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)
Government-sponsored residential mortgage-backed securities
   1    225    100,685    —      —      225    100,685














   1    $ 225    $ 100,685    $ —      $ —      $ 225    $ 100,685














   December 31, 2019
      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
   1    $ 545    $ 74,550    $ —      $ —      $ 545    $ 74,550
State and municipal bonds and obligations
   2    3    850    —      —      3    850














   3    $ 548    $ 75,400    $ —      $ —      $ 548    $ 75,400

Table of Contents


	As of June 30, 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	20	$	24,354	$	2,178,499	$	0	$	0	$	24,354	$	2,178,499
Government-sponsored commercial mortgage-backed securities	8	1,333		161,684		0		0		1,333		161,684
U.S. Agency bonds	13	19,570		841,005		0		0		19,570		841,005
U.S. Treasury securities	2	93		59,262		0		0		93		59,262
	43	$	45,350	$	3,240,450	$	0	$	0	$	45,350	$	3,240,450


	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	$	0	$	0	$	3,872	$	416,824
	6	$	3,872	$	416,824	$	0	$	0	$	3,872	$	416,824

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 not consider these investments with gross unrealized losses to be OTTI. 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 June 30, ~~2020~~2021 and December 31, ~~2019:~~

•

~~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. The security at a loss position as of December 31, 2019 was subsequently in a gain position as of June 30, 2020. Additionally, 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 as of December 31, 2019 have contractual terms that generally do not permit the issuer to settle the securities at a price less than the current par value of the investment. The decline in market value of these securities as of December 31, 2019 is attributable to changes in interest rates and not credit quality. These securities were subsequently in a gain position as of June 30, 2020. These bonds are investment grade and are rated AA Standard and Poor’s.

2020:

•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 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 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.

Table of Contents

4. Loans and Allowance for Loan Losses

Loans

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

   At June 30,    At December 31,
   2020    2019
   (In thousands)
Commercial and industrial
   $ 2,271,700    $ 1,642,184
Commercial real estate
   3,584,358    3,535,441
Commercial construction
   282,246    273,774
Business banking
   1,234,961    771,498
Residential real estate
   1,400,855    1,428,630
Consumer home equity
   905,484    933,088
Other consumer
   334,734    402,431




Gross loans before unamortized premiums, unearned discounts and deferred fees
   10,014,338    8,987,046




Allowance for credit losses
   (116,636 )    (82,297 )
Unamortized premiums, net of unearned discounts and deferred fees
   (34,722 )    (5,565 )




Loans after the allowance for credit losses, unamortized premiums, unearned discounts and deferred fees
   $ 9,862,980    $ 8,899,184

At June 30, At December 31,
2021 2020
(In thousands)
Commercial and industrial $ 1,740,679 $ 1,995,016
Commercial real estate 3,775,771 3,573,630
Commercial construction 237,927 305,708
Business banking 1,339,852 1,339,164
Residential real estate 1,457,498 1,370,957
Consumer home equity 834,938 868,270
Other consumer (1) 234,410 277,780
Gross loans before unamortized premiums, unearned discounts and deferred fees 9,621,075 9,730,525
Allowance for loan losses (105,637) (113,031)
Unamortized premiums, net of unearned discounts and deferred fees (29,739) (23,536)
Loans after the allowance for credit losses, unamortized premiums, unearned discounts and deferred fees $ 9,485,699 $ 9,593,958

(1) Automobile loans are included in the other consumer portfolio above and amounted to $83.7 million and $126.7 million at June 30, 2021 and December 31, 2020, 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. 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. ~~The ability and willingness of airplane loan borrowers to repay is generally dependent on the health of the general economy.~~

Loans Pledged as Collateral

The carrying value of loans pledged to secure advances from the ~~FHLB~~Federal Home Loan Bank (“FHLB”) of Boston (“FHLBB”) were ~~$2.1~~$2.3 billion and ~~$1.5~~$2.4 billion at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

The balance of funds borrowed from the FHLBB were $14.3 million and $14.6 million at June 30, 2021 and December 31, 2020, respectively.

The carrying value of loans pledged to secure advances from the Federal Reserve Bank (“FRB”) were $812.6 million and $884.1 million at June 30, 2021 and December 31, 2020, respectively. There were 0 funds borrowed from the FRB outstanding at June 30, 2021 and December 31, 2020.

Serviced Loans

At June 30, ~~2020~~2021 and December 31, ~~3019,~~2020, mortgage loans partially or wholly-owned by others and serviced by the Company amounted to approximately ~~$14.9~~$12.1 million and ~~$15.6~~$13.5 million, respectively.

Allowance for Loan Losses

Table of Contents

The allowance for loan losses is established to provide for probable losses incurred in the Company’s loan portfolio 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. 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 table summarizes the changes in the allowance for loan losses for the periods indicated:~~

   For the Three Months Ended
June 30,    For the Six Months Ended
June 30,
   2020    2019    2020    2019

(In thousands)

Balance at the beginning of period
   $ 109,138    $ 82,493    $ 82,297    $ 80,655
Loans charged off
   (1,264 )    (2,563 )    (3,607 )    (4,487 )
Recoveries
   162    1,232    746    1,994
Provision charged to expense
   8,600    1,500    37,200    4,500








Balance at end of period
   $ 116,636    $ 82,662    $ 116,636    $ 82,662

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


	For the Three Months Ended June 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	$	25,406	$	55,138	$	3,350	$	13,504	$	6,235	$	3,576	$	3,498	$	373	$	111,080
Charge-offs	(550)		0		0		(1,838)		0		0		(275)		0		(2,663)
Recoveries	13		4		0		291		17		3		192		0		520
(Release of) provision	(2,273)		(2,383)		96		748		226		9		211		66		(3,300)
Ending balance	$	22,596	$	52,759	$	3,446	$	12,705	$	6,478	$	3,588	$	3,626	$	439	$	105,637


	For the Three Months Ended June 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	$	30,531	$	49,227	$	4,712	$	10,181	$	6,228	$	3,913	$	4,019	$	327	$	109,138
Charge-offs	(27)		(24)		0		(1,198)		0		0		(15)		0		(1,264)
Recoveries	58		5		0		27		13		8		51		0		162
Provision (release of)	2,667		5,020		104		795		328		(46)		(293)		25		8,600
Ending balance	$	33,229	$	54,228	$	4,816	$	9,805	$	6,569	$	3,875	$	3,762	$	352	$	116,636


	For the Six Months Ended June 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)		(234)		0		(3,222)		0		0		(639)		0		(4,645)
Recoveries	22		4		0		656		27		74		348		0		1,131
(Release of) provision	(3,493)		(1,580)		(1,107)		2,119		16		(230)		450		(55)		(3,880)
Ending balance	$	22,596	$	52,759	$	3,446	$	12,705	$	6,478	$	3,588	$	3,626	$	439	$	105,637

Table of Contents


	For the Six Months Ended June 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	(27)		(24)		0		(2,535)		0		(473)		(548)		0		(3,607)
Recoveries	380		6		0		154		73		22		111		0		746
Provision (release of)	11,957		19,516		1,392		3,926		116		299		26		(32)		37,200
Ending balance	$	33,229	$	54,228	$	4,816	$	9,805	$	6,569	$	3,875	$	3,762	$	352	$	116,636

The following tables bifurcate the amount of loans and the allowance allocated to each loan category based on ~~collective~~the type of impairment analysis ~~and loans evaluated individually for impairment:~~

   For the Three Months Ended June 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
   $ 30,531 $ 49,227 $ 4,712    $ 10,181 $ 6,228 $ 3,913 $ 4,019 $ 327 $ 109,138
Charge-offs
   (27 ) (24 ) —      (1,198 ) —   —   (15 ) —   (1,264 )
Recoveries
   58 5 —      27 13 8 51 —   162
Provision (benefit)
   2,667 5,020 104    795 328 (46 ) (293 ) 25 8,600




Ending balance
   $ 33,229 $ 54,228 $ 4,816    $ 9,805 $ 6,569 $ 3,875 $ 3,762 $ 352 $ 116,636




   For the Three Months Ended June 30, 2019
   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
   $ 20,844 $ 33,170 $ 4,225    $ 8,175 $ 7,169 $ 4,105 $ 4,390 $ 415 $ 82,493
Charge-offs
   (272 ) (169 ) —      (1,371 ) (46 ) (124 ) (581 ) —   (2,563 )
Recoveries
   908 2 —      193 12 20 97 —   1,232
Provision (benefit)
   (651 ) 583 537    1,057 (335 ) 96 418 (205 ) 1,500




Ending balance
   $ 20,829 $ 33,586 $ 4,762    $ 8,054 $ 6,800 $ 4,097 $ 4,324 $ 210 $ 82,662

   For the Six Months Ended June, 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
   (27 ) (24 ) —      (2,535 ) —      (473 ) (548 ) —   (3,607 )
Recoveries
   380 6 —      154 73    22 111 —   746
Provision (benefit)
   11,957 19,516 1,392    3,926 116    299 26 (32 ) 37,200






Ending balance
   $ 33,229 $ 54,228 $ 4,816    $ 9,805 $ 6,569    $ 3,875 $ 3,762 $ 352 $ 116,636






Ending balance: individually evaluated for impairment
   $ 3,028 $ 230 $ 22    $ 578 $ 1,639    $ 277 $ —   $ —   $ 5,774






Ending balance: acquired with deteriorated credit quality
   $ 1,732 $ 1,066 $ —      $ —   $ 293    $ —   $ —   $ —   $ 3,091






Ending balance: collectively evaluated for impairment
   $ 28,469 $ 52,932 $ 4,794    $ 9,227 $ 4,637    $ 3,598 $ 3,762 $ 352 $ 107,771






Loans ending balance:

Individually evaluated for impairment
   $ 18,864 $ 4,920 $ 280    $ 20,301 $ 28,301    $ 5,947 $ 22 $ —   $ 78,635
Acquired with deteriorated credit quality
   3,572 5,413 —      —   3,426    —   —   —   12,411
Collectively evaluated for impairment
   2,249,264 3,574,025 281,966    1,214,660 1,369,128    899,537 334,712 —   9,923,292






Total loans by group
   $ 2,271,700 $ 3,584,358 $ 282,246    $ 1,234,961 $ 1,400,855    $ 905,484 $ 334,734 $ —   $ 10,014,338






as of the periods indicated:

   For the Six Months Ended June 30, 2019
   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
   $ 19,321 $ 32,400 $ 4,606    $ 8,167 $ 7,059 $ 4,113 $ 4,600 $ 389 $ 80,655
Charge-offs
   (272 ) (169 ) —      (2,810 ) (63 ) (124 ) (1,049 ) —   (4,487 )
Recoveries
   1,368 4 —      320 71 28 203 —   1,994
Provision (benefit)
   412 1,351 156    2,377 (267 ) 80 570 (179 ) 4,500




Ending balance
   $ 20,829 $ 33,586 4,762    $ 8,054 $ 6,800 $ 4,097 $ 4,324 $ 210 $ 82,662




Ending balance: individually evaluated for impairment
   $ 1,918 $ 40 $ —      $ 198 $ 1,663 $ 296 $ —   $ —   $ 4,115




Ending balance: acquired with deteriorated credit quality
   $ 227 $ 85 $ —      $ —   $ 213 $ —   $ —   $ —   $ 525




Ending balance: collectively evaluated for impairment
   $ 18,684 $ 33,461 $ 4,762    $ 7,856 $ 4,924 $ 3,801 $ 4,324 $ 210 $ 78,022




Loans ending balance:

Individually evaluated for impairment
   $ 21,098 $ 10,421 $ —      $ 9,043 $ 27,287 $ 4,642 $ —   $ —   $ 72,491
Acquired with deteriorated credit quality
   4,109 7,591 —      —   3,405 —   —   —   15,105
Collectively evaluated for impairment
   1,726,510 3,331,951 310,860    736,417 1,414,741 950,713 470,858 —   8,942,050




Total loans by group
   $ 1,751,717 $ 3,349,963 $ 310,860    $ 745,460 $ 1,445,433 $ 955,355 $ 470,858 $ —   $ 9,029,646

As of June 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 $ 4,544 $ 0 $ 0 $ 937 $ 1,624 $ 263 $ 0 $ 0 $ 7,368
Acquired with deteriorated credit quality 0 249 0 0 293 0 0 0 542
Collectively evaluated for impairment 18,052 52,510 3,446 11,768 4,561 3,325 3,626 439 97,727
Total allowance for loan losses by group $ 22,596 $ 52,759 $ 3,446 $ 12,705 $ 6,478 $ 3,588 $ 3,626 $ 439 $ 105,637
Loans ending balance:
Individually evaluated for impairment $ 20,266 $ 4,051 $ 0 $ 18,179 $ 25,091 $ 3,954 $ 24 $ 0 $ 71,565
Acquired with deteriorated credit quality 1,397 249 0 0 2,880 0 0 0 4,526
Collectively evaluated for impairment 1,719,016 3,771,471 237,927 1,321,673 1,429,527 830,984 234,386 0 9,544,984
Total loans by group $ 1,740,679 $ 3,775,771 $ 237,927 $ 1,339,852 $ 1,457,498 $ 834,938 $ 234,410 $ 0 $ 9,621,075

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	$	0	$	1,435	$	1,565	$	289	$	0	$	0	$	8,054
Acquired with deteriorated credit quality	1,283		822		0		0		327		0		0		0		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	$	0	$	21,901	$	27,056	$	4,845	$	29	$	0	$	75,609
Acquired with deteriorated credit quality	3,432		2,749		0		0		3,116		0		0		0		9,297
Collectively evaluated for impairment	1,974,241		3,566,446		305,708		1,317,263		1,340,785		863,425		277,751		0		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	$	0	$	9,730,525

Management uses 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 are evaluated using a loan rating system, historical losses and other factors which form the basis for estimating incurred losses. Portfolios of more homogeneous populations of loans, including residential mortgages and consumer loans, are 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 segregates the loan portfolio into the categories noted in the above tables. Each of these loan categories ~~possess~~possesses unique 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 and equipment. The primary repayment source is operating cash flow and, secondarily, the liquidation of assets. The Company often obtains personal guarantees from individuals holding material ownership in the borrowing entity.

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, by liquidation of the collateral. The Company often obtains personal guarantees from individuals holding material ownership in the borrowing ~~equity.~~

entity.

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.

Table of Contents

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 consistent with a “prime” portfolio. Collateral consists of mortgage liens on 1-4 family residential dwellings. 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. 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 ~~airplane~~home improvement and automobile 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 and automobile loans.

Credit Quality

Commercial Lending Credit Quality

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 system to manage risk and identify potential problem loans. ~~Risk-rating~~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. 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 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. The Company supplements performance data with current business credit scores for the business banking portfolio on a quarterly basis. Unrated ~~loans managed outside of airplane loans~~commercial and business banking loans are generally restricted to commercial exposure of less than $1 ~~million with a line~~million. Loans

Table of ~~credit component restricted~~

Contents

~~to $350,000. Loans~~

included in this category have qualification requirements that include a risk rating of 6W10 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. ~~Restricted from this category are lines of credit managed with borrowing base requirements.~~

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

~~1-6W~~

1-10 Risk Rating – Pass

Loans with a ~~risk-rating~~risk rating of ~~1-6W~~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 ~~“acceptable risk”~~“low pass” which indicates acceptable rated loans that may be experiencing weak cash flow, impending lease rollover or minor liquidity concerns. The top end of the risk-rating category (6W) includes loans that, although contain the same risk-rating as those with a rating of 6, are being more closely monitored to determine if a downgrade is necessary.

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. ~~Management and owners may have limited depth, particularly when operating under strained circumstances.~~ The Company does 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 812 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. Credits in this category often may have reported a loss in the most recent fiscal year end and are likely to continue to report losses in the interim period, or interim losses are expected to result in a fiscal year-end loss. NonaccrualNon-accrual is possible, but not mandatory, in this class.

13 Risk Rating – Doubtful (Loss ~~Probably)~~

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 ~~exceeds 50%,~~exists, however, because of ~~reasonably~~reasonable specific pending factors that may work to strengthen the credit, estimated losses are deferred until a more exact status can be determined. ~~Pending factors may include the sale of the company, a merger, capital injection, new profitable purchase orders, and refinancing plans.~~ Specific reserves will be the amount identified after specific review. ~~Nonaccrual~~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 ~~uncollectable~~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 ~~seasoned workout~~experienced officers for individual attention.

Table of Contents

The following ~~table details~~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 June 30, 2020
Category
   Risk
Rating    Commercial and
Industrial    Commercial
Real Estate    Commercial
Construction    Business
Banking    Total
   (In thousands)
Unrated
   0    $ 753,943    $ 42,919    $ 332    $ 900,296    $ 1,697,490
Pass
   1-6W    1,269,284    3,211,054    248,400    291,751    5,020,489
Special mention
   7    180,485    297,016    29,671    32,406    539,578
Substandard
   8    51,338    30,654    3,843    10,508    96,343
Doubtful
   9    16,650    2,715    —      —      19,365
Loss
   10    —      —      —      —      —










Total
      $ 2,271,700    $ 3,584,358    $ 282,246    $ 1,234,961    $ 7,373,265










      As of December 31, 2019
Category
   Risk
Rating    Commercial and
Industrial    Commercial
Real Estate    Commercial
Construction    Business
Banking    Total
   (In thousands)
Unrated
   0    $ 150,226    $ 48,266    $ 331    $ 445,201    $ 644,024
Pass
   1-6W    1,405,902    3,436,267    260,615    315,194    5,417,978
Special mention
   7    24,171    28,606    9,438    2,006    64,221
Substandard
   8    42,894    21,635    3,390    8,207    76,126
Doubtful
   9    18,991    667    —      890    20,548
Loss
   10    —      —      —      —      —










Total
      $ 1,642,184    $ 3,535,441    $ 273,774    $ 771,498    $ 6,222,897


	As of June 30, 2021
Category	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Total
	(In thousands)
Unrated	$	434,766	$	5,105	$	61	$	913,151	$	1,353,083
Pass	1,201,952		3,492,582		218,073		346,198		5,258,805
Special mention	48,853		127,856		13,703		53,920		244,332
Substandard	39,751		150,177		6,090		25,299		221,317
Doubtful	15,357		51		0		1,284		16,692
Loss	0		0		0		0		0
Total	$	1,740,679	$	3,775,771	$	237,927	$	1,339,852	$	7,094,229


	As of December 31, 2020
Category	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Total
	(In thousands)
Unrated	$	655,346	$	6,585	$	0	$	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		0		1,706		18,690
Loss	0		0		0		0		0
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 ~~table~~tables above. Commercial and industrial PPP loans and business banking PPP loans amounted to ~~$633.0~~$366.1 million and ~~$467.2~~$459.7 million, respectively, at June 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 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 June 30, 2021 and December 31, 2020 was $149.8 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 TDRs (as defined herein). Additionally, loans that are performing in accordance with the contractual terms of the modification are not reflected as being

Table of Contents

past due and therefore are not impacting non-accrual or delinquency totals as of June 30, 2021 and December 31, 2020. The Company continued to accrue interest on these COVID-19 modified loans and evaluated the deferred interest for collectability as of June 30, 2021 and December 31, 2020.

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 ~~nonaccrual~~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 ~~PCI~~purchased credit impaired (“PCI”) loan. Therefore, 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. ~~Nonaccrual~~Non-accrual loans and loans that are more than 90 days past due but still accruing interest are considered ~~nonperforming~~non-performing loans.

~~Nonaccrual~~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. ~~Specifically, nonaccrual residential loans that have been restructured must perform for a period of six months before being considered for accrual status.~~

A loan is expected to remain on ~~nonaccrual~~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 ~~nonaccrual~~non-accrual loans:

   As of June 30,    As of December 31,
   2020    2019
   (In Thousands)
Commercial and industrial
   $ 13,435    $ 21,471
Commercial real estate
   1,399    4,120
Commercial construction
   281    —
Business banking
   16,158    8,502
Residential real estate
   11,693    5,598
Consumer home equity
   6,403    2,137
Other consumer
   2,971    623




Total non-accrual loans
   $ 52,340    $ 42,451


	As of June 30,		As of December 31,
	2021		2020
	(In thousands)
Commercial and industrial	$	14,591	$	11,714
Commercial real estate	531		915
Business banking	14,234		17,430
Residential real estate	6,445		6,815
Consumer home equity	3,592		3,602
Other consumer	514		529
Total non-accrual loans	$	39,907	$	41,005

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

   As of June 30, 2020
   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
and Accruing
   (In thousands)
Commercial and industrial
   $ 681    $ 671    $ 1,508    $ 2,860    $ 2,268,840    $ 2,271,700    $ 471
Commercial real estate
   —      257    3,045    3,302    3,581,056    3,584,358    2,331
Commercial construction
   —      —      280    280    281,966    282,246    —
Business banking
   4,541    4,160    13,021    21,722    1,213,239    1,234,961    —
Residential real estate
   26,859    2,084    8,981    37,924    1,362,931    1,400,855    244
Consumer home equity
   3,413    1,971    4,511    9,895    895,589    905,484    9
Other consumer
   2,992    1,734    2,971    7,697    327,037    334,734    —














Total
   $ 38,486    $ 10,877    $ 34,317    $ 83,680    $ 9,930,658    $ 10,014,338    $ 3,055


	As of December 31, 2019															As of June 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 and Accruing			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 and Accruing
	(In thousands)															(In thousands)
Commercial and industrial	$	1,407	$	—	$	963	$	2,370	$	1,639,814	$	1,642,184	$	—	Commercial and industrial	$	0	$	267	$	647	$	914	$	1,739,765	$	1,740,679	$	275
Commercial real estate		1,290		100		1,856		3,246		3,532,195		3,535,441		1,315	Commercial real estate	1,896		0		1,414		3,310		3,772,461		3,775,771		1,164
Commercial Construction		—		—		—				273,774		273,774		—
Commercial construction															Commercial construction	0		0		0		0		237,927		237,927		0
Business banking		3,031		763		6,095		9,889		761,609		771,498		—	Business banking	4,004		1,902		6,609		12,515		1,327,337		1,339,852		0
Residential real estate		14,030		2,563		3,030		19,623		1,409,007		1,428,630		—	Residential real estate	11,706		1,330		4,631		17,667		1,439,831		1,457,498		277
Consumer home equity		2,497		430		1,636		4,563		928,525		933,088		9	Consumer home equity	610		403		3,408		4,421		830,517		834,938		9
Other consumer		3,451		514		579		4,544		397,887		402,431		—	Other consumer	1,074		438		513		2,025		232,385		234,410		0

Total	$	25,706	$	4,370	$	14,159	$	44,235	$	8,942,811	$	8,987,046	$	1,324	Total	$	19,290	$	4,340	$	17,222	$	40,852	$	9,580,223	$	9,621,075	$	1,725

Table of Contents


	As of December 31, 2020
	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 and Accruing
	(In thousands)
Commercial and industrial	$	4	$	268	$	1,924	$	2,196	$	1,992,820	$	1,995,016	$	848
Commercial real estate	0		556		1,545		2,101		3,571,529		3,573,630		1,111
Commercial construction	0		0		0		0		305,708		305,708		0
Business banking	5,279		3,311		10,196		18,786		1,320,378		1,339,164		0
Residential real estate	9,184		2,517		4,904		16,605		1,354,352		1,370,957		279
Consumer home equity	1,806		364		3,035		5,205		863,065		868,270		9
Other consumer	1,978		234		517		2,729		275,051		277,780		0
Total	$	18,251	$	7,250	$	22,121	$	47,622	$	9,682,903	$	9,730,525	$	2,247

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 ~~nonperforming~~non-performing loans. However, based upon the Company’s past experiences, some of these loans with potential weaknesses will ultimately be restructured or placed in non-accrual status.

Troubled Debt Restructurings (“TDR”)

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. The objective is to aid in the resolution of ~~nonperforming~~non-performing loans by modifying the contractual obligation to avoid the possibility of foreclosure.

All TDR loans are considered impaired and therefore are subject to a specific review for impairment loss. The amount of impairment loss, if any, is recorded as a specific loss allocation to each individual loan in the allowance for loan losses. Commercial loans 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. 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 sell.

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

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

   As of June 30, 2020
   TDRs on Accrual Status    TDRs on Nonaccrual Status    Total TDRs
      Balance of    Number of    Balance of    Number of    Balance of
   Number of Loans    Loans    Loans    Loans    Loans    Loans
   (Dollars in thousands)
Commercial and industrial
   2    $ 5,429    10    $ 11,259    12    $ 16,688
Commercial real estate
   1    3,521    2    707    3    4,228
Business banking
   5    4,143    2    224    7    4,367
Residential real estate
   149    23,714    28    4,172    177    27,886
Consumer home equity
   86    3,862    12    2,085    98    5,947
Other consumer
   1    22    —      —      1    22












Total
   244    $ 40,691    54    $ 18,447    298    $ 59,138












   As of December 31, 2019
   TDRs on Accrual Status    TDRs on Nonaccrual Status    Total TDRs
      Balance of    Number of    Balance of    Number of    Balance of
   Number of Loans    Loans    Loans    Loans    Loans    Loans
   (Dollars in thousands)
Commercial and industrial
   4    $ 10,899    14    $ 19,781    18    $ 30,680
Commercial real estate
   1    3,520    3    3,338    4    6,858
Business banking
   2    3,156    1    204    3    3,360
Residential real estate
   152    25,093    27    3,977    179    29,070
Consumer home equity
   89    5,955    5    600    94    6,555












Total
   248    $ 48,623    50    $ 27,900    298    $ 76,523


	As of June 30, 2021
	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
	(Dollars in thousands)
Commercial and industrial	1	$	5,675	6	$	9,607	7	$	15,282
Commercial real estate	1	3,520		0	0		1	3,520
Business banking	5	3,945		7	1,507		12	5,452
Residential real estate	135	21,677		26	3,129		161	24,806
Consumer home equity	77	3,494		12	460		89	3,954
Other consumer	2	5		1	19		3	24
Total	221	$	38,316	52	$	14,722	273	$	53,038

Table of Contents


	As of December 31, 2020
	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
	(Dollars in thousands)
Commercial and industrial	1	$	5,628	7	$	6,819	8	$	12,447
Commercial real estate	1	3,521		1	480		2	4,001
Business banking	6	4,471		6	722		12	5,193
Residential real estate	146	23,416		27	3,273		173	26,689
Consumer home equity	91	4,030		12	815		103	4,845
Other consumer	3	29		0	0		3	29
Total	248	$	41,095	53	$	12,109	301	$	53,204

The amount of specific reserve associated with the TDRs was ~~$4.4~~$4.0 million and ~~$3.2~~$3.5 million at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. ~~During the six months ended June 30, 2020 and the year ended December 31, 2019, $0 and $0.3 million, respectively, in TDRs moved from nonaccrual to accrual. The amount of~~There were 0 additional commitments to lend to borrowers who have been a party to a TDR ~~was $0 and $2.5 million at~~as of both June 30, ~~2020~~2021 and December 31, ~~2019, respectively.~~

2020.

The following ~~table shows~~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 June 30, 2020    For the Six Months Ended June 30, 2020
   Number
of
Contracts    Pre-
Modification
Outstanding
Recorded
Investment    Post-
Modification
Modification
Outstanding
Recorded
Investment (1)    Number
of
Contracts    Pre-Modification
Modification
Outstanding
Recorded
Investment    Post-
Modification
Modification
Outstanding
Recorded
Investment (1)
   (Dollars in thousands)
Commercial and industrial
   1    $ 141    $ 141    1    $ 141    $ 141
Commercial real estate
   1    506    506    1    506    506
Business banking
   4    1,165    1,165    4    1,165    1,165
Residential real estate
   2    155    155    3    399    399
Consumer home equity
   4    113    113    12    527    531
Other consumer
   —      —      —      1    24    24












Total
   12    $ 2,080    $ 2,080    22    $ 2,762    $ 2,766

   For the Three Months Ended June 30, 2019    For the Six Months Ended June 30, 2019
   Number
of
Contracts    Pre-
Modification
Outstanding
Recorded
Investment    Post-
Modification
Modification
Outstanding
Recorded
Investment (1)    Number
of
Contracts    Pre-Modification
Modification
Outstanding
Recorded
Investment    Post-
Modification
Modification
Outstanding
Recorded
Investment (1)
   (Dollars in thousands)
Commercial and industrial
   5    $ 7,141    $ 7,441    7    $ 7,462    $ 7,762
Commercial real estate
   2    3,277    3,277    2    3,277    3,277
Residential real estate
   3    433    445    3    433    445
Consumer home equity
   3    154    156    3    154    156












Total
   13    $ 11,005    $ 11,319    15    $ 11,326    $ 11,640

~~(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.~~

For the Three Months Ended June 30, 2021 For the Six Months Ended June 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)
(Dollars in thousands)
Business banking 1 $ 462 $ 462 1 $ 462 $ 462
Residential real estate 0 0 0 1 295 295
Total 1 $ 462 $ 462 2 $ 757 $ 757

(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.


	For the Three Months Ended June 30, 2020					For the Six Months Ended June 30, 2020
	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)
Commercial and industrial	1	$	141	$	141	1	$	141	$	141
Commercial real estate	1	506		506		1	506		506
Business banking	4	1,165		1,165		4	1,165		1,165
Residential real estate	2	155		155		3	399		399
Consumer home equity	4	113		113		12	527		531
Other consumer	0	0		0		1	24		24
Total	12	$	2,080	$	2,080	22	$	2,762	$	2,766

(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 June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the outstanding recorded investment of loans that were new to TDR loans during the ~~period were $2.7~~six months ended June 30, 2021 and the year ended December 31, 2020 was $0.8 million and ~~$36.2~~$3.9 million, respectively.

Table of Contents

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 June 30,    For the Six Months Ended June 30,
   2020    2019    2020    2019
   (In Thousands)
Adjusted interest rate and extended maturity
   $ —      $ 668    $ —      $ 668
Adjusted interest rate and principal deferred
   —      39    —      39
Interest only/principal deferred
   1,305    40    1,305    40
Extended maturity
   35    —      35    —
Extended maturity and interest only/principal deferred
   381    —      427    —
Additional underwriting - increased exposure
   —      10,572    —      10,572
Court-ordered concession
   359    —      999    321








Total
   $ 2,080    $ 11,319    $ 2,766    $ 11,640

For the Three Months Ended June 30, For the Six Months Ended June 30,
2021 2020 2021 2020
(In thousands)
Interest only/principal deferred $ 0 $ 1,305 $ 0 $ 1,305
Extended maturity 0 35 0 35
Extended maturity and interest only/principal deferred 0 381 0 427
Court-ordered concession 0 359 295 999
Principal and interest deferred 462 0 462 0
Total $ 462 $ 2,080 $ 757 $ 2,766

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 ~~nonaccrual:~~

   For the Three Months Ended June 30,    For the Six Months Ended June 30,
   2020    2019    2020    2019
   Number of
Contracts    Recorded
Investment    Number of
Contracts    Recorded
Investment    Number of
Contracts    Recorded
Investment    Number of
Contracts    Recorded
Investment
   (Dollars in thousands)
Troubled debt restructurings that subsequently defaulted (1):

Commercial and industrial
   —      $ —      5    $ 6,435    —      $ —      5    $ 6,435
Commercial real estate
   —      —      1    338    —      —      1    338
Residential real estate
   —      —      1    107    —      —      1    107
Consumer Home Equity
   —      —      —      —      1    1,317    —      —
















Total
   —      $ —      7    $ 6,880    1    $ 1,317    7    $ 6,880

~~(1)~~

~~This table does not reflect any TDRs which were charged off during the periods indicated.~~

non-accrual:


	For the Six Months Ended June 30,
	2021			2020
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Troubled debt restructurings that subsequently defaulted (1):
Business banking	1	$	411	0	$	0
Consumer home equity	1	57		1	1,317
Total	2	$	468	1	$	1,317

(1)This table does not reflect any TDRs which were fully charged off, paid off, or otherwise settled during the period. In addition, there were 0 TDRs modified during the prior 12 months which subsequently defaulted during the three months ended June 30, 2021 and June 30, 2020.

During the three and six months ended June 30, 2021, 0 amounts were charged-off on TDRs modified in the prior 12 months. During the three and six months ended June 30, 2020, ~~the amounts charged-off~~there were $0 and $0.4 million in charge-offs on TDRs modified in the prior 12 ~~months were $0 and $0.4 million, respectively. During both the three and six months ended June 30, 2019 there were no charge-offs on TDR loans modified in the prior 12~~ months.

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.

The Company measures 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 is collateral dependent. The Company has defined the population of impaired loans to include certain ~~nonaccrual~~non-accrual loans, TDR loans, and residential and home equity loans that have been partially charged off.

Table of Contents

The following table summarizes the Company’s impaired loans by loan portfolio as of the dates indicated:

   As of June 30, 2020    As of December 31, 2019
   Recorded
Investment    Unpaid
Principal
Balance    Related
Allowance    Recorded
Investment    Unpaid
Principal
Balance    Related
Allowance
   (In thousands)
With no related allowance recorded:

Commercial and industrial
   $ 13,052    $ 14,152    $ —      $ 22,074    $ 22,819    $ —
Commercial real estate
   4,419    4,635    —      7,553    7,808    —
Business banking
   3,076    4,369    —      2,738    4,062    —
Residential real estate
   12,502    14,205    —      16,517    17,858    —
Consumer home equity
   3,279    3,697    —      3,666    3,697    —
Other Consumer
   22    22    —      —      —      —












Sub-total
   36,350    41,080    —      52,548    56,244    —












With an allowance recorded:

Commercial and industrial
   5,812    6,041    3,028    10,296    10,503    2,337
Commercial real estate
   501    506    230    88    90    40
Commercial construction
   280    280    22    —      —      —
Business banking
   17,225    21,418    578    8,920    13,176    571
Residential real estate
   15,799    15,799    1,639    13,015    14,072    1,399
Consumer home equity
   2,688    2,688    277    2,889    2,913    322












Sub-total
   42,285    46,712    5,774    35,208    40,754    4,669












Total
   $ 78,635    $ 87,792    $ 5,774    $ 87,756    $ 96,998    $ 4,669

As of June 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 $ 12,433 $ 13,752 $ — $ 9,182 $ 11,212 $ —
Commercial real estate 4,051 4,101 — 3,955 3,974 —
Business banking 4,725 6,079 — 5,250 7,659 —
Residential real estate 13,676 15,186 — 14,730 17,010 —
Consumer home equity 2,105 2,105 — 2,571 2,571 —
Other consumer 24 24 — 29 29 —
Sub-total 37,014 41,247 — 35,717 42,455 —
With an allowance recorded:
Commercial and industrial 7,833 8,209 4,544 8,161 8,432 4,555
Commercial real estate 0 0 0 480 497 210
Business banking 13,454 19,172 937 16,651 21,146 1,435
Residential real estate 11,415 11,415 1,624 12,326 12,326 1,565
Consumer home equity 1,849 1,849 263 2,274 2,274 289
Sub-total 34,551 40,645 7,368 39,892 44,675 8,054
Total $ 71,565 $ 81,892 $ 7,368 $ 75,609 $ 87,130 $ 8,054

The following tables display information regarding interest income recognized on impaired loans, by portfolio, for the periods indicated:

   For the Three Months Ended    For the Six Months Ended
   June 30, 2020    June 30, 2020
   Average
Recorded
Investment    Total
Interest
Recognized    Average
Recorded
Investment    Total
Interest
Recognized
   (In Thousands)
With no related allowance recorded:

Commercial and industrial
   $ 12,304    $ 49    $ 16,592    $ 119
Commercial real estate
   4,401    44    5,946    89
Business banking
   2,392    17    2,339    36
Residential real estate
   11,678    125    11,728    252
Consumer home equity
   3,315    16    3,155    37
Other Consumer

22


—


23

   1








Sub-total
   34,112    251    39,783
534









With an allowance recorded:

Commercial and industrial
   6,545    —      9,138    —
Commercial real estate
   510    —      429    —
Commercial construction
   93    —      47    —
Business banking
   12,955    15    10,869    30
Residential real estate
   14,664    169    14,707    343
Consumer home equity
   2,706    22    3,087    51








Sub-total
   37,473    206    38,277    424








Total
   $ 71,585    $ 457    $ 78,060    $ 958

   For the Three Months Ended    For the Six Months Ended
   June 30, 2019    June 30, 2019
   Average
Recorded
Investment    Total
Interest
Recognized    Average
Recorded
Investment    Total
Interest
Recognized
   (In Thousands)
With no related allowance recorded:

Commercial and industrial
   $ 12,022    $ 108    $ 11,343    $ 177
Commercial real estate
   11,443    74    11,176    148
Business banking
   1,465    —      1,332    —
Residential real estate
   11,935    131    11,978    259
Consumer home equity
   1,989    26    2,034    51








Sub-total
   38,854    339    37,863    635








With an allowance recorded:

Commercial and industrial
   $ 4,386    $ —      $ 3,629    $ —
Commercial real estate
   1,179    —      634    —
Business banking
   7,314    —      6,937    —
Residential real estate
   12,606    153    12,625    302
Consumer home equity
   2,320    30    2,373    59








Sub-total
   27,805    183    26,198    361








Total
   $ 66,659    $ 522    $ 64,061    $ 996


	For the Three Months Ended				For the Six Months Ended
	June 30, 2021				June 30, 2021
	Average Recorded Investment		Total Interest Recognized		Average Recorded Investment		Total Interest Recognized
	(In thousands)
With no related allowance recorded:
Commercial and industrial	$	11,800	$	47	$	10,849	$	92
Commercial real estate	4,057		44		4,116		89
Business banking	4,748		25		4,886		51
Residential real estate	13,942		138		14,311		277
Consumer home equity	2,176		16		2,309		35
Other consumer	24		0		26		0
Sub-total	36,747		270		36,497		544
With an allowance recorded:
Commercial and industrial	7,774		0		7,870		0
Commercial real estate	155		0		405		0
Business banking	14,714		14		15,519		29
Residential real estate	11,638		121		11,927		243
Consumer home equity	1,910		14		2,028		31
Sub-total	36,191		149		37,749		303
Total	$	72,938	$	419	$	74,246	$	847

Table of Contents


	For the Three Months Ended				For the Six Months Ended
	June 30, 2020				June 30, 2020
	Average Recorded Investment		Total Interest Recognized		Average Recorded Investment		Total Interest Recognized
	(In thousands)
With no related allowance recorded:
Commercial and industrial	$	12,304	$	49	$	16,592	$	119
Commercial real estate	4,401		44		5,946		89
Business banking	2,392		17		2,339		36
Residential real estate	11,678		125		11,728		252
Consumer home equity	3,315		16		3,155		37
Other Consumer	22		0		23		1
Sub-total	34,112		251		39,783		534
With an allowance recorded:
Commercial and industrial	6,545		0		9,138		0
Commercial real estate	510		0		429		0
Commercial construction	93		0		47		0
Business banking	12,955		15		10,869		30
Residential real estate	14,664		169		14,707		343
Consumer home equity	2,706		22		3,087		51
Sub-total	37,473		206		38,277		424
Total	$	71,585	$	457	$	78,060	$	958

Purchased Credit Impaired Loans

The following table displays the outstanding and carrying amounts of PCI loans as of the dates indicated:

   June 30,    December 31,
   2020    2019
   (In Thousands)
Outstanding balance
   $ 13,572    $ 15,149
Carrying amount
   12,411    13,451


	June 30,		December 31,
	2021		2020
	(In thousands)
Outstanding balance	$	5,000	$	9,982
Carrying amount	4,526		9,297

The excess of cash flows expected to be collected over the carrying amount 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 in the accretable yield for the PCI loan portfolio:

   For the Three Months Ended June 30, For the Six Months Ended June 30,
   2020 2019 2020 2019
   (In Thousands)
Balance at beginning of period
   $ 3,346 $ 5,526 $ 3,923 $ 6,161
Acquisition
   —   —   —   —
Accretion
   (338 ) (569 ) (760 ) (1,142 )
Other change in expected cash flows
   (10 ) (338 ) (165 ) (400 )
Reclassification (to) from non-accretable difference for loans with (deteriorated) improved cash flows
   (4 ) 855 (4 ) 855


Balance at end of period
   $ 2,994 $ 5,474 $ 2,994 $ 5,474


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Balance at beginning of period	$	2,031	$	3,346	$	2,495	$	3,923
Accretion	(416)		(338)		(632)		(760)
Other change in expected cash flows	39		(10)		(209)		(165)
Reclassification from (to) non-accretable difference for loans with improved (deteriorated) cash flows	1,327		(4)		1,327		(4)
Balance at end of period	$	2,981	$	2,994	$	2,981	$	2,994

Table of Contents

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 of 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 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 ~~nonaccretable~~non-accretable difference to the accretable yield, and the amount of periodic accretion is adjusted accordingly over the remaining life of the loans.

Loan Participations

The Company occasionally purchases commercial loan ~~participations.~~participations, or participates in syndications through the SNC Program. These ~~loan~~ 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. As of both June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company held commercial loan participation interests totaling ~~$1.1 billion and $965.1 million, respectively.~~

$1.0 billion.

The following table summarizes the Company’s loan participations:

   As of and for the six months ended June 30, 2020    As of and for the year ended December 31, 2019
   Balance    NPL
Rate
(%) Impaired
(%) Gross
Charge-offs    Balance    NPL
Rate
(%) Impaired
(%) Gross
Charge-offs
   (Dollars in thousands)
Commercial and industrial
   $ 668,667    1.62 % 1.62 % $ —      $ 586,346    2.76 % 2.76 % $ —
Commercial real estate
   305,676    0.00 % 0.00 % —      314,487    0.00 % 0.00 % —
Commercial construction
   86,636    0.00 % 0.00 % —      64,259    0.00 % 0.00 % —
Business banking
   38    0.00 % 0.00 % 15    57    0.00 % 0.00 % —








Total loan participations
   $ 1,061,017    1.02 % 1.02 % $ 15    $ 965,149    1.68 % 1.68 % $ —


	As of and for the six months ended June 30, 2021								As of and for the year ended December 31, 2020
	Balance		Non-performing Loan Rate (%)		Impaired (%)		Gross Charge-offs		Balance		Non-performing Loan Rate (%)		Impaired (%)		Gross Charge-offs
	(Dollars in thousands)
Commercial and industrial	$	584,540	1.64	%	1.64	%	$	0	$	598,873	1.11	%	1.11	%	$	0
Commercial real estate	358,558		0.00	%	0.00	%	0		306,202		0.00	%	0.00	%	0
Commercial construction	85,790		0.00	%	0.00	%	0		119,600		0.00	%	0.00	%	0
Business banking	28		0.00	%	0.00	%	0		34		0.00	%	0.00	%	15
Total loan participations	$	1,028,916	0.93	%	0.93	%	$	0	$	1,024,709	0.65	%	0.65	%	$	15

5. Leases

The Company leases certain office space and equipment under various ~~noncancelable~~non-cancelable operating leases. These leases have original terms ranging from 1 year to 25 years. Operating lease liabilities and ~~right of use (ROU)~~right-of-use (“ROU”) assets are recognized at the lease commencement date based onupon the present value of the future minimum lease payments over the lease term. Operating lease liabilities are recorded within other liabilities and ROU assets are recorded within other assets in the Company’s consolidated balance ~~sheets.~~

sheet.

As of ~~June 30, 2020,~~the dates indicated, the Company had the following related to operating leases:

   As of
June 30, 2020
   (in thousands)
Right-of-use assets
   $ 87,573
Lease liabilities
   $ 91,221


	As of June 30, 2021		As of December 31, 2020
	(In thousands)
Right-of-use assets	$	76,678	$	81,596
Lease liabilities	$	80,653	$	85,330

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 sheet.

The following ~~table is~~tables are a summary of the Company’s components of net lease cost for the ~~three and six months ended June~~ periods indicated:


	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
	(In thousands)
Operating lease cost	$	3,521	$	7,082
Finance lease cost	35		66
Variable lease cost	457		947
Total lease cost	$	4,013	$	8,095

30 ~~2020:~~

   Three months ended
June 30, 2020    Six months ended
June 30, 2020
   (in thousands)    (in thousands)
Operating lease cost
   $ 3,601    $ 7,215
Finance lease cost
   17    20
Variable lease cost
   448    970




Total lease cost
   $ 4,066    $ 8,205

~~The rent expense under real estate operating leases for~~

Table of Contents


	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
	(In thousands)
Operating lease cost	$	3,601	$	7,215
Finance lease cost	17		20
Variable lease cost	448		970
Total lease cost	$	4,066	$	8,205

During the three and six months ended June 30, ~~2019 amounted to~~2021 the Company made $3.5 million and $7.1 million ~~respectively. The rent expense under equipment~~respectively, in cash payments for operating ~~leases for the three~~ and ~~six months ended June 30, 2019 amounted to $0.2 million and $0.3 million, respectively.~~

finance lease payments. During the three and six months ended June 30, 2020 the Company made $3.5 million and $7.1 million, respectively, in cash payments for operating and finance lease payments.

~~Finance leases are not material and are included in other assets, net in the Company’s consolidated balance sheets.~~

Supplemental balance sheet information related to operating leases ~~as of June 30, 2020 is~~are as follows:


	~~As of~~ ~~June 30, 2020~~
~~Weighted-average remaining lease term (in years)~~		~~8.84~~
~~Weighted-average discount rate~~		~~2.63~~	%

The following table sets forth the undiscounted cash flows of base rent related to operating leases outstanding at June 30, 2020 with payments scheduled over the next five years and thereafter, including a reconciliation to the operating lease liability recognized in the Company’s Consolidated Balance Sheet in other liabilities.

   (in thousands)
Remainder of 2020
   $ 7,098
2021
   13,746
2022
   12,746
2023
   12,206
2024
   11,402
Thereafter
   45,534


Total minimum lease payments
   $ 102,732
Less: amount representing interest
   11,511


Present value of future minimum lease payments
   $ 91,221


	As of June 30, 2021		As of December 31, 2020
Weighted-average remaining lease term (in years)	8.15		8.50
Weighted-average discount rate	2.63	%	2.65	%

6. Goodwill and Other Intangibles

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


	June 30, 2020							As of June 30, 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
Goodwill	$	298,611	$	70,420	$	369,031	Goodwill	$	298,611	$	73,861	$	372,472
Balances subject to amortization							Balances subject to amortization
Insurance agency		—		6,844		6,844	Insurance agency	0		7,833		7,833
Core deposits		456		—		456	Core deposits	97		0		97

Total other intangible assets		456		6,844		7,300	Total other intangible assets	97		7,833		7,930

Total goodwill and other intangible assets	$	299,067	$	77,264	$	376,331	Total goodwill and other intangible assets	$	298,708	$	81,694	$	380,402


	December 31, 2019
	Banking Business		Insurance Agency Business		Net Carrying Amount
	(In Thousands)
Balances not subject to amortization
Goodwill	$	298,611	$	70,420	$	369,031
Balances subject to amortization
Insurance agency		—		7,949		7,949
Core deposits		754		—		754

Total other intangible assets		754		7,949		8,703

Total goodwill and other intangible assets	$	299,365	$	78,369	$	377,734


	As of December 31, 2020
	Banking Business		Insurance Agency Business		Net Carrying Amount
	(In thousands)
Balances not subject to amortization
Goodwill	$	298,611	$	70,866	$	369,477
Balances subject to amortization
Insurance agency	0		6,899		6,899
Core deposits	158		0		158
Total other intangible assets	158		6,899		7,057
Total goodwill and other intangible assets	$	298,769	$	77,765	$	376,534

The Company acquired 2 insurance agencies during the three months ended June 30, 2021. The aggregate purchase price and goodwill recorded as a result of the acquisitions were not material.

Table of Contents

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 quantitative assessment was most recently performed as of September 30, 2020. During the three months ended December 31, 2020 and the three and six months ended June 30, 2021 there were no events or changes in circumstances not already considered in the Company's annual assessment. The Company considered the ~~current~~ 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 June 30, ~~2020. Additionally, the Company did not record any impairment charges during the year ended~~2021 or December 31, ~~2019.~~

2020.

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 June 30, 2021 or December 31, 2020.

7. ~~Income Taxes~~

~~The following table sets forth information regarding~~Earnings Per Share (“EPS”)

Basic EPS represents income available to common shareholders divided by the ~~Company’s tax provision and applicable tax rates~~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. Diluted EPS is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding for the ~~periods indicated:~~

   Three Months Ended June 30, Six Months Ended June 30,
   2020 2019 2020 2019
   (In thousands)
Combined federal and state income tax provisions
   $ 7,197 $ 11,032 $ 8,495 $ 20,710
Effective income tax rates
   19.4 % 23.9 % 18.2 % 23.3 %

~~The Company’s provision for income taxes was $7.2 million and $11.0 million for~~period, plus the ~~three months ended June 30, 2020 and 2019, respectively, and $8.5 million and $20.7 million for~~effect of potential dilutive common share equivalents computed using the ~~six months ended June 30, 2020 and 2019, respectively. The decrease in~~

~~income tax expense was due primarily to lower pre-tax income~~treasury stock method. There were no securities that had a dilutive effect during the three and six months ended June 30, ~~2020 compared~~2021, and therefore the weighted-average common shares outstanding used to calculate both basic and diluted EPS are the same. 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 six months ended June 30, ~~2019, while investment tax credits and other favorable permanent differences remained relatively constant.~~

~~The~~2020 as the Company ~~believes that it is more likely than not that its deferred tax assets as of June 30, 2020 and December 31, 2019 will be realized. As such, there was~~had no ~~deferred tax asset valuation allowance as of June 30, 2020 and December 31, 2019.~~

The Company files tax returns in the U.S. federal jurisdiction and various states. As of June 30, 2020, the Company’s open tax years for examination by the Internal Revenue Services (“IRS”) were 2016, 2017 and 2018. The Company’s open tax years for examination by state tax authorities varies by state, but no years prior to 2013 are open. The Company believes that its income tax returnsshares outstanding.


	For the Three Months Ended June 30, 2021		For the Six Months Ended June 30, 2021
	(Dollars in thousands, except per share data)
Net income applicable to common shares	$	34,809	$	82,472

Average number of common shares outstanding	186,758,154		186,758,154
Less: Average unallocated ESOP shares	(14,584,447)		(14,646,782)
Average number of common shares outstanding used to calculate basic earnings per common share	172,173,707		172,111,372
Common stock equivalents	0		0
Average number of common shares outstanding used to calculate diluted earnings per common share	172,173,707		172,111,372
Earnings per common share
Basic and diluted	$	0.20	$	0.48

All unallocated ESOP shares have been ~~filed based upon applicable statutes, regulations~~excluded from the calculation of basic and ~~case law in effect at the time of filing, however the IRS and/or state jurisdiction, upon examination, could disagree with the Company’s interpretation.~~

~~Management has performed an evaluation of the Company’s uncertain tax positions and determined that a liability for unrecognized tax benefits at June 30, 2020 and December 31, 2019 was not needed.~~

diluted EPS.

8. 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 ~~several~~ 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. ~~Typically, none of the original investment is expected to be repaid.~~ The return on these investments is generally generated through tax credits and tax losses. ~~The~~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 June 30, 2021 and December 31, 2020, the Company had $74.4 million and $59.8 million, respectively, in tax credit investments that were included in other assets in the consolidated balance sheets.

Table of Contents

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 ~~the net investment performance in the income statement~~that amortization as a component of income tax ~~expense (benefit).~~expense. The ~~Company’s maximum exposure to loss~~net investment in ~~its investments in qualified affordable~~the housing projects is ~~limited to its carrying value~~ included in other assets. The Company will continue to use the proportional amortization method on any new ~~investments going forward.~~

qualifying LIHTC investments.

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

   Six Months Ended
June 30, 2020    Year Ended
December 31, 2019
   (In Thousands)
Current recorded investment included in other assets
   $ 46,552    $ 37,665
Commitments to fund qualified affordable housing projects included in recorded investment noted above
   23,821    18,042
Tax credits and benefits ⁽¹⁾
   3,058    5,962
Amortization of investments included in current tax expense ⁽²⁾
   2,452    4,782

~~(1)~~

~~Amount reflects tax credits and tax benefits recognized in the consolidated statement of income for the six months ended June 30, 2020 (unaudited) and the year ended December 31, 2019.~~

~~(2)~~

~~Amount reflects amortization of qualified affordable housing projects for the six months ended June 30, 2020 (unaudited) and the year ended December 31, 2019.~~


	As of June 30, 2021		As of December 31, 2020
	(In thousands)
Current recorded investment included in other assets	$	70,184	$	58,504
Commitments to fund qualified affordable housing projects included in recorded investment noted above	41,380		31,487

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


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Tax credits and benefits recognized	$	1,523	$	1,539	$	2,987	$	3,058
Amortization expense included in income tax expense	1,495		1,261		2,759		2,452

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 and totaled $4.2 million and $1.2 million as of June 30, 2021 and December 31, 2020, respectively. There were 0 outstanding commitments related to these investments as of June 30, 2021. There was $1.7 million in outstanding commitments related to these investments as of December 31, 2020.

9. 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

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. The Company’s annual contribution to the Defined Benefit Plan is based upon standards established by the Pension Protection Act.

Table of Contents

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, 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 June 30,    Six Months Ended June 30,
   2020    2019    2020    2019
   (In Thousands)
Components of net periodic benefit cost:

Service cost
   $ 6,231    $ 4,730    $ 12,463    $ 9,463
Interest cost
   2,615    2,750    5,232    5,500
Expected return on plan assets
   (7,425 )    (5,906 )    (14,850 )    (11,812 )
Past service cost
   6    11    12    22
Recognized net actuarial loss
   2,361    1,811    4,721    3,622








Net periodic benefit cost
   $ 3,788    $ 3,396    $ 7,578    $ 6,795


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Components of net periodic benefit cost:
Service cost	$	7,898	$	6,231	$	15,794	$	12,463
Interest cost	1,267		2,615		2,536		5,232
Expected return on plan assets	(8,141)		(7,425)		(16,283)		(14,850)
Past service cost	(2,945)		6		(5,890)		12
Recognized net actuarial loss	3,538		2,361		7,075		4,721
Net periodic benefit cost	$	1,617	$	3,788	$	3,232	$	7,578

Service costs for the Defined Benefit Plan, the BEP, and the DB SERP are recognized within salaries and employee benefits in the statement of income. Service costs for the ~~Outside Directors’ Retainer Continuance Plan~~ODRCP are recognized within professional services in the statement of income. The remaining components of net periodic benefit cost are recognized in other noninterest expense in the statement 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 June 30, 2021 compared to the three months ended June 30, 2020 and decreased by $7.7 million for the six months ended June 30, 2021 compared to the six months ended June 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 not make any contributions to the Defined Benefit Plan during the six months ended June 30, 2021. During the six months ended June 30, 2020, the Company made contributions ~~for~~to the Defined Benefit Plan of $32.5 million.

Rabbi Trust Variable Interest Entity

The Company established a rabbi trust 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 considered a variable interest entity (“VIE”) as the equity investment at risk is insufficient to permit the trust to finance its activities without additional subordinated financial support from the Company. The Company is considered the primary beneficiary of the rabbi trust as it has the power to direct the activities of the rabbi trust that significantly affect the rabbi trust’s economic performance and it has the obligation to absorb losses of the rabbi trust that could potentially be significant to the rabbi trust by virtue of its contingent call options on the rabbi trust’s assets in the event of the Company’s bankruptcy. As the primary beneficiary of this VIE, 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 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. Changes in fair value are recorded in noninterest income. At June 30, 2021 and December 31, 2020 the amount of rabbi trust investments at fair value were $98.9 million and $91.7 million, respectively.

Table of Contents

Investments in rabbi trust accounts are recorded at fair value within the Company's consolidated balance sheet 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 June 30, 2021						As of December 31, 2020
	Book Value		Mark-to-Market		Fair Value		Book Value		Mark-to-Market		Fair Value
Asset Type	(In thousands)
Cash and cash equivalents	$	5,462	$	—	$	5,462	$	5,157	$	—	$	5,157
Equities	64,878		20,847		85,725		59,235		19,492		78,727
Fixed income	7,499		214		7,713		7,441		358		7,799
Total assets	$	77,839	$	21,061	$	98,900	$	71,833	$	19,850	$	91,683

10. 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:

   June 30, 2020    December 31, 2019
   (In Thousands)
Commitments to extend credit
   $ 3,745,517    $ 3,606,182
Standby letters of credit
   57,402    60,124
Forward commitments to sell loans
   67,745    21,357

As of June 30, 2021 As of December 31, 2020
(In thousands)
Commitments to extend credit $ 4,129,771 $ 3,818,952
Standby letters of credit 61,762 60,221
Forward commitments to sell loans 45,339 41,160

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 2 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 are expected to be consolidated into one matter for final settlement purposes. As of June 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.~~Boston (the “FRBB”). However, in response to the COVID-19 pandemic, the

Table of Contents

Federal Reserve temporarily eliminated reserve requirements and therefore there was no0 minimum reserve requirement as of either June 30, ~~2020. The amount of this reserve requirement included in cash and cash equivalents was approximately $3.7 million on~~2021 or December 31, ~~2019.~~

2020.

11. Derivative Financial Instruments

The Company uses derivative financial instruments to manage ~~the Company’s~~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. 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.

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 ~~has entered~~may enter into interest rate swaps in which ~~they pay~~it pays floating and ~~receive~~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. ~~The Company has~~For interest rate swaps that effectively convert the floating rate one-month LIBOR interest payments received on the commercial loans to a fixed rate and consequently reduce the Bank’s exposure to variability in short-term interest rates. The Company also has interest rate swaps that are based on overnight indexed swap rates. These swaps are accounted for as cash flow hedges, ~~and therefore~~ 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.

~~The following table reflects the Company’s derivative positions as~~ As of June 30, ~~2020~~2021 and December 31, ~~2019 for~~2020, the Company does not have any active interest rate swaps which qualify as cash flow hedges for accounting purposes.

June 30, 2020

         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
   900,000    1.27    0.18 % 2.57 % (38 )




Total
   $ 900,000       $ (38 )

December 31, 2019

         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
   2,120,000    2.16    1.74 % 2.11 % (321 )




Total
   $ 2,120,000       $ (321 )

~~(1)~~

~~Fair value included net accrued interest receivable of $1.0 million at June 30, 2020 and $0.4 million at December 31, 2019.~~

~~Central banks around~~Due to the ~~world, including the Federal Reserve, have commissioned working groups of market participants~~phase-out, and ~~official sector representatives with the goal of finding suitable replacements for the London Interbank Offered Rate (“LIBOR”) based on observable market transactions because~~eventual discontinuation, of the ~~probable phase-out of LIBOR. It is expected that a~~LIBOR, central clearinghouses have begun to transition ~~away from the widespread use of LIBOR~~ to alternative rates ~~will occur over~~for valuation purposes. As of October 16, 2020, the ~~course of~~Company changed its valuation methodology to reflect changes made by the ~~next few years. Although~~Chicago Mercantile Exchange (“CME”), through which the full impact of a transition, including the potential or actual discontinuance of LIBOR publication, remains unclear, this change may have an adverse impact on the value of, return on and trading markets for a broad array ofCompany clears derivative financial ~~products, including any LIBOR-based securities, loans and derivatives~~instruments that are ~~included~~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. The Company believes that its improvements to its valuation methodology will result in valuations for cleared interest rate swaps that better reflect prices obtainable in the markets in which the Company transacts. The changes in valuation methodology were applied prospectively as a change in accounting estimate and are immaterial to the Company’s financial ~~assets~~statements.

The following table presents the pre-tax impact of terminated cash flow hedges on accumulated other comprehensive income (“AOCI”) for the three and ~~liabilities. A transition away from LIBOR may also require extensive changes to the contracts that govern these LIBOR-based products, as well as the Company’s systems~~six months ended June 30, 2021 and ~~processes.~~

June 30, 2020:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Unrealized gains on terminated hedges included in AOCI – beginning of respective period	$	33,199	$	0	$	41,473	$	0
Unrealized gains on terminated hedges arising during the period	0		30,952		0		30,952
Reclassification adjustments for amortization of unrealized (gains) into net income	(8,219)		(373)		(16,493)		(373)
Unrealized gains on terminated hedges included in AOCI – June 30	$	24,980	$	30,579	$	24,980	$	30,579

Table of Contents

The ~~maximum amount~~balance of ~~time over which the Company is currently hedging its exposure to the variability~~terminated cash flow hedges in ~~future cash flows of forecasted transactions related to the receipt of variable interest on existing financial instruments is 2 years.~~

AOCI will be amortized into earnings through January 2023. The Company expects approximately $20.6 million and $10.7 million to be reclassified into interest income from other comprehensive income related to the Company’s cash flow hedges in the next twelve months as of June 30, 2020 and December 31, 2019, respectively. This reclassification is due to anticipated payments that will be received on the swaps based upon the forward curve as of June 30, 2020 and December 31, 2019.

~~The Company expects approximately $12.8~~$23.1 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 June 30, 2020. This reclassification is due to the amortization of realized but unrecognized gains from the termination of interest rate swaps during the period ended June 30, 2020. At June 30, 2020, the remaining unamortized gain on terminated cash flow hedges is $30.6 million.

As of June 30, 2020 and December 31, 2019, the Company’s exposure to CME and the fair value of interest rate swap derivatives which qualify as cash flow hedges that contain credit-risk related contingent features that are in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, was less than $0.1 million and $0.3 million, respectively. In addition, at June 30, 2020 and December 31, 2019, the Company had posted initial-margin collateral in the form of cash and a U.S. Treasury Note, to CME for these derivatives amounting to $18.7 million and $22.8 million, respectively. The cash and U.S. Treasury Note were considered restricted assets and were included in cash and due from banks and in available for sale securities, respectively.

2021.

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 dealer 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 ~~table presents~~tables present the Company’s customer-related derivative positions as of the dates indicated below for those derivatives not designated as hedging.

   June 30, 2020
   Number of Positions    Total Notional
   (Dollars in Thousands)
Interest rate swaps
   603    $ 3,775,850
Risk participation agreements
   66    290,131
Foreign exchange contracts:

Matched commercial customer book
   86    9,252
Foreign currency loan
   23    7,986
   December 31, 2019
   Number of Positions    Total Notional
Interest rate swaps
   603    $ 3,749,474
Risk participation agreements
   67    299,576
Foreign exchange contracts:

Matched commercial customer book
   62    29,990
Foreign currency loan
   23    7,310


	June 30, 2021
	Number of Positions	Total Notional
	(Dollars in thousands)
Interest rate swaps	536	$	3,406,954
Risk participation agreements	68	277,452
Foreign exchange contracts:
Matched commercial customer book	72	9,467
Foreign currency loan	5	6,886


	December 31, 2020
	Number of Positions	Total Notional
	(Dollars in thousands)
Interest rate swaps	576	$	3,652,385
Risk participation agreements	70	287,732
Foreign exchange contracts:
Matched commercial customer book	40	4,242
Foreign currency loan	3	10,798

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.

Table of Contents

The table below presents the fair value of the Company’s derivative financial instruments, as well as their classification on the balance sheet for the periods indicated.

   Asset Derivatives    Liability Derivatives
   Balance
Sheet
Location    Fair Value
at June 30,
2020    Fair Value at
December 31,
2019    Balance Sheet
Location    Fair Value at
June 30,
2020    Fair Value at
December 31,
2019
   (In Thousands)
Derivatives designated as hedging instruments

Interest rate swaps
   Other assets    $ —      $ —      Other liabilities    $ 38    $ 321








Derivatives not designated as hedging instruments

Customer-related positions:

Interest rate swaps
   Other assets    $ 171,433    $ 64,463    Other liabilities    $ 51,319    $ 18,057
Risk participation agreements
   Other assets    995    482    Other liabilities    1,500    606
Foreign currency exchange contracts - matched customer book
   Other assets    151    469    Other liabilities    40    428
Foreign currency exchange contracts - foreign currency loan
   Other assets    —      —      Other liabilities    173    203








      $ 172,579    $ 65,414       $ 53,032    $ 19,294








Total
      $ 172,579    $ 65,414       $ 53,070    $ 19,615








There were no derivatives designated as hedging instruments at June 30, 2021 or December 31, 2020.

Asset Derivatives Liability Derivatives
Balance
Sheet
Location Fair Value at June 30,
2021 Fair Value at December 31,
2020 Balance Sheet
Location Fair Value at June 30,
2021 Fair Value at December 31,
2020
(In thousands)
Derivatives not designated as hedging instruments
Customer-related positions:
Interest rate swaps Other assets $ 92,980 $ 141,822 Other liabilities $ 28,498 $ 42,600
Risk participation agreements Other assets 432 722 Other liabilities 675 1,230
Foreign currency exchange contracts - matched customer book Other assets 94 90 Other liabilities 89 77
Foreign currency exchange contracts - foreign currency loan Other assets 48 9 Other liabilities 0 69
Total $ 93,554 $ 142,643 $ 29,262 $ 43,976

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 ~~OCI~~other comprehensive income (“OCI”) as follows:

   Three Months Ended
June 30,    Six Months Ended
June 30,
   2020    2019    2020    2019
Derivatives designated as hedges:

Gain in OCI on derivatives
   $ 3,455    $ 16,054    $ 47,011    $ 21,914








Gain reclassified from OCI into interest income (effective portion)
   7,134    231    10,246    524








Gain recognized in income on derivatives (ineffective portion and amount excluded from effectiveness test)

Interest income
   —      —      —      —
Other income
   —      —      —      —








Total
   —      —      —      —








Derivatives not designated as hedges:

Customer-related positions:

(Loss) recognized in interest rate swap income
   $ (687 )    $ (2,129 )    $ (6,967 )    $ (3,356 )
(Loss) recognized in interest rate swap income for risk participation agreements
   (80 )    (157 )    (381 )    (98 )
Gain (loss) recognized in other income for foreign currency exchange contracts:

Matched commercial customer book
   96    (41 )    69    (40 )
Foreign currency loan
   (367 )    (32 )    30    (24 )








Total (loss) for derivatives not designated as hedges
   $ (1,039 )    $ (2,359 )    $ (7,249 )    $ (3,518 )


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Derivatives designated as hedges:
Gain in OCI on derivatives	$	0	$	3,455	$	0	$	47,011
Gain reclassified from OCI into interest income (effective portion)	$	8,219	$	7,134	$	16,493	$	10,246
Gain recognized in income on derivatives (ineffective portion and amount excluded from effectiveness test)
Interest income	0		0		0		0
Other income	0		0		0		0
Total	$	0	$	0	$	0	$	0
Derivatives not designated as hedges:
Customer-related positions:
(Loss) gain recognized in interest rate swap income	$	(1,087)	$	(687)	$	3,764	$	(6,967)
(Loss) gain recognized in interest rate swap income for risk participation agreements	(105)		(80)		264		(381)
(Loss) gain recognized in other income for foreign currency exchange contracts:
Matched commercial customer book	(14)		96		(8)		69
Foreign currency loan	36		(367)		109		30
Total gain (loss) for derivatives not designated as hedges	$	(1,170)	$	(1,038)	$	4,129	$	(7,249)

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.

Table of Contents

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 derivative consists of exposure on cleared derivative transactions and exposure on non-cleared derivative transactions.

Cleared derivative transactions are with CME and exposure is settled to market daily, with additional credit exposure related to initial-margin collateral pledged to CME at trade execution. At June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company’s exposure to CME for settled variation margin in excess of the customer-related interest rate swap termination values was ~~$0.3~~$0.5 million, and ~~$1.5~~less than $0.1 million, respectively. In addition, at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had posted initial-margin collateral in the form of a U.S. Treasury ~~Note~~note amounting to ~~$42.2~~$49.5 million and ~~$27.6~~$60.4 million, respectively, to CME for these derivatives. The ~~cash and~~ U.S. Treasury ~~Note were~~note was considered a restricted ~~assets~~asset and ~~were~~was included ~~in cash and due from banks and~~ in available for sale securities ~~respectively.~~

within the Company's consolidated balance sheets.

At June 30, ~~2020~~2021 and December 31, ~~2019~~2020 the fair value of ~~non-cleared~~all customer-related interest rate swap derivatives ~~that contain~~with credit-risk related contingent features that ~~are~~were in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, ~~related to these agreements was $51.3~~totaled $26.1 million and ~~$14.6~~$42.6 million, respectively. The Company has minimum collateral posting thresholds with its ~~non-cleared~~ 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 June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had posted collateral in the form of cash amounting to ~~$51.7~~$35.0 million and ~~$22.2~~$49.2 million, respectively, which was considered to be a restricted asset and was included in other short-term ~~investments.~~investments within the Company's consolidated balance sheets. If the Company had breached any of these provisions at June 30, ~~2020~~2021 or December 31, ~~2019,~~2020, it would have been required to settle its 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.

12. 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 June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, it was determined that no additional collateral would have to be posted to immediately settle these instruments.

Table of Contents

The following ~~table presents~~tables present the Company’s asset and liability positions that were eligible for offset and the potential effect of netting arrangements on its financial position, as of the dates indicated:

Gross
Amounts

Net
Amounts

Gross Amounts Not Offset
in the Statement of

      Offset in the    Presented in    Financial Position
   Gross    Statement of    the Statement       Collateral
   Amounts    Financial    of Financial    Financial
Instruments    Pledged
(Received) Net
Amount
Description
   Recognized    Position    Position
   (In Thousands)
   As of June 30, 2020
Derivative Assets

Interest rate swaps
   $ —      $ —      $ —      $ —      $ —   $ —
Customer-related positions:

Interest rate swaps
   171,433    —      171,433    8    —   171,425
Risk participation agreements
   995    —      995    —      —   995
Foreign currency exchange contracts - matched customer book
   151    —      151    1    —   150










   $ 172,579    $ —      $ 172,579    $ 9    $ —   $ 172,570










Derivative Liabilities

Interest rate swaps
   $ 38    $ —      $ 38    $ 38    $ —   $ —
Customer-related positions:

Interest rate swaps
   51,319    —      51,319    8    51,311 —
Risk participation agreements
   1,500    —      1,500    —      —   1,500
Foreign currency exchange contracts - matched customer book
   40    —      40    1    (7 ) 46
Foreign currency exchange contracts - foreign currency loan
   173    —      173    —      —   173










   $ 53,070    $ —      $ 53,070    $ 47    $ 51,304 $ 1,719


			Gross Amounts		Net Amounts		Gross Amounts Not Offset in the Statement of
			Offset in the		Presented in		Financial Position
	Gross		Statement of		the Statement				Collateral						As of June 30, 2021
	Amounts		Financial		of Financial		Financial		Pledged			Net			Gross Amounts Recognized		Gross Amounts Offset in the Statement of Financial Position				Net Amounts Presented in the Statement of Financial Position				Gross Amounts Not Offset in the Statement of Financial Position								Net Amount
Description	Recognized		Position		Position		Instruments		(Received)			Amount		Description									Financial Instruments				Collateral Pledged (Received)
	(In Thousands)
	As of December 31, 2019														(In thousands)
Derivative Assets														Derivative Assets
Interest rate swaps	$	—	$	—	$	—	$	—	$	—		$	—	Interest rate swaps	$	0			$	0			$	0			$	0			$	0			$	0
Customer-related positions:														Customer-related positions:
Interest rate swaps		64,463		—		64,463		1,434		—			63,029	Interest rate swaps	92,980		0				92,980				1,057				0				91,923
Risk participation agreements		482		—		482		—		—			482	Risk participation agreements	432		0				432				0				0				432
Foreign currency exchange contracts - matched customer book		469		—		469		7		(462	)		—

	$	65,414	$	—	$	65,414	$	1,441	$	(462	)	$	63,511
Foreign currency exchange contracts – matched customer book														Foreign currency exchange contracts – matched customer book	94		0				94				0				0				94
Foreign currency exchange contracts – foreign currency loan														Foreign currency exchange contracts – foreign currency loan	48		0				48				0				0				48
															$	93,554	$	0			$	93,554			$	1,057			$	0			$	92,497
Derivative Liabilities														Derivative Liabilities
Interest rate swaps	$	321	$	—	$	321	$	321	$	—		$	—	Interest rate swaps	$	0	$	0			$	0			$	0			$	0			$	0
Customer-related positions:														Customer-related positions:
Interest rate swaps		18,057		—		18,057		1,434		16,623			—	Interest rate swaps	28,498		0				28,498				1,057				27,441				0
Risk participation agreements		606		—		606		—		—			606	Risk participation agreements	675		0				675				0				0				675
Foreign currency exchange contracts - matched customer book		428		—		428		7		—			421
Foreign currency exchange contracts - foreign currency loan		203		—		203		—		—			203
Foreign currency exchange contracts – matched customer book														Foreign currency exchange contracts – matched customer book	89		0				89				0				0				89
Foreign currency exchange contracts – foreign currency loan														Foreign currency exchange contracts – foreign currency loan	0		0				0				0				0				0
															$	29,262	$	0			$	29,262			$	1,057			$	27,441			$	764
	$	19,615	$	—	$	19,615	$	1,762	$	16,623		$	1,230

Table of Contents


	As of December 31, 2020
	Gross Amounts Recognized		Gross Amounts Offset in the Statement of Financial Position		Net Amounts Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position				Net Amount
Description							Financial Instruments		Collateral Pledged (Received)
	(In thousands)
Derivative Assets
Interest rate swaps	$	0	$	0	$	0	$	0	$	0	$	0
Customer-related positions:
Interest rate swaps	141,822		0		141,822		48		0		141,774
Risk participation agreements	722		0		722		0		0		722
Foreign currency exchange contracts – matched customer book	90		0		90		0		(1)		89
Foreign currency exchange contracts – foreign currency loan	9		0		9		0		0		9
	$	142,643	$	0	$	142,643	$	48	$	(1)	$	142,594
Derivative Liabilities
Interest rate swaps	$	—	$	0	$	0	$	0	$	0	$	0
Customer-related positions:
Interest rate swaps	42,600		0		42,600		48		42,552		0
Risk participation agreements	1,230		0		1,230		0		0		1,230
Foreign currency exchange contracts – matched customer book	77		0		77		0		0		77
Foreign currency exchange contracts – foreign currency loan	69		0		69		0		0		69
	$	43,976	$	0	$	43,976	$	48	$	42,552	$	1,376

13. 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.

Table of Contents

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.

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.

~~Trading~~

Available for Sale Securities

~~Trading~~

Available for sale securities ~~consisted of fixed income municipal securities and were~~ recorded at fair ~~value. All fixed income~~value consisted of U.S. Treasury securities, U.S. government-sponsored residential and commercial mortgage-backed securities, U.S. Agency bonds, and state and municipal bonds.

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 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 ~~valuations~~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.

~~Available for Sale Securities~~

Available for sale securities consisted of U.S. Treasury securities, U.S. government-sponsored residential mortgage-backed securities, state and municipal bonds, and others such as a qualified zone academy bond, and were recorded at fair value.

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

The fair value of other U.S. government-sponsored residential mortgage-backed securities 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.

~~Municipal bonds were classified as Level~~ 2 ~~for~~given the ~~same reasons described for the trading municipal securities.~~

The valuation technique for the qualified zone academy bond was a discounted cash flow methodology using market discount rates. The assumptions used included at least one significant model assumption or input that was unobservable, and therefore, this security was classified as Level 3.

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 ~~Note 3.~~

the Securities footnote.

Loans Held for Sale

~~Fair~~

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. ~~For loans held for sale, whose carrying amounts approximate fair value, the fair value was estimated by the anticipated market price based upon pricing indications provided by investor banks.~~

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.

Table of Contents

Loans are classified as Level 3 since the valuation methodology utilizes significant unobservable inputs.

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.

Rabbi Trust Investments

Rabbi trust investments consisted primarily of cash and cash equivalents, U.S. ~~Government~~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 2.2 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 1.1 as they were valued based upon quoted prices from the market. Mutual funds at net asset value amounted to ~~$46.4~~$54.5 million at June 30, ~~2020~~2021 and ~~$16.2~~$53.9 million at December 31, ~~2019.~~2020. There were no0 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).

~~Other Borrowed Funds~~

For other borrowed funds that mature in 90 days or less, the carrying amount reported in the consolidated balance sheets approximates fair value. For borrowed funds that mature in more than 90 days, the fair value was based on the discounted value of the contractual cash flows applying interest rates currently being offered in the market.

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 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 ~~volatilities.~~volatility. In addition, for customer-related interest rate swaps, the analysis reflects a credit valuation adjustment to reflect the Company’s own ~~nonperformance~~non-performance risk and the respective counterparty’s ~~nonperformance~~non-performance risk in the fair value measurements. The majority of inputs used to value its 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 June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the impact of

Table of Contents

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

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 ~~was~~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.

~~The carrying amounts~~

Table of Contents

Fair Value of Assets and ~~estimated fair values of the Company’s financial instruments as of June 30, 2020 and December 31, 2019 were as follows:~~

   As of June 30, 2020    As of December 31, 2019
   Carrying
Amount    Fair
Value    Carrying
Amount    Fair
Value
   (In Thousands)
Assets

Cash and cash equivalents
   $ 1,432,561    $ 1,432,561    $ 362,602    $ 362,602
Trading securities
   —      —      961    961
Securities available for sale
   1,600,354    1,600,354    1,508,236    1,508,236
Loans held for sale
   2,972    2,972    26    26
Loans, net of allowance for loan losses
   9,862,980    10,191,776    8,889,184    9,116,018
Accrued interest receivable
   28,017    28,017    26,835    26,835
FHLB stock
   8,805    8,805    9,027    9,027
Rabbi trust investments
   78,808    78,808    78,012    78,012
Bank-owned life insurance
   77,528    77,528    77,546    77,546
Interest rate swap contracts

Customer-related positions
   171,433    171,433    64,463    64,463
Risk participation agreements
   995    995    482    482
Foreign currency forward contracts

Matched customer book
   151    151    469    469
Liabilities

Deposits
   $ 11,846,765    $ 11,847,001    $ 9,551,392    $ 9,548,889
Other borrowed funds
   —      —      201,082    201,082
FHLB advances
   14,922    14,847    18,964    18,188
Escrow deposits of borrowers
   14,233    14,233    15,349    15,349
Accrued interest payable
   370    370    1,712    1,712
Interest rate swap contracts

Cash flow hedges - interest rate positions
   38    38    321    321
Customer-related positions
   51,319    51,319    18,057    18,057
Risk participation agreements
   1,500    1,500    606    606
Foreign currency forward contracts

Matched customer book
   40    40    428    428
Foreign currency loan
   173    173    203    203
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 June 30, ~~2020~~2021 and December 31, ~~2019:~~

      Fair Value Measurements at Reporting Date Using
      Quoted Prices in    Significant
Description
      Active Markets    Other    Significant
   Balance as of    for Identical    Observable    Unobservable
   June 30, 2020    Assets (Level 1)    Inputs (Level 2)    Inputs (Level 3)
   (Dollars in thousands)
Assets

Securities available for sale

U.S. Treasury securities
   $ 60,936    $ 60,936    $ —      $ —
Government-sponsored residential mortgage-backed securities
   1,251,799    —      1,251,799    —
State and municipal bonds and obligations
   281,340    —      281,340    —
Other bonds
   6,279    —      —      6,279
Rabbi trust investments
   78,808    71,248    7,560    —
Interest rate swap contracts

Customer-related positions
   171,433    —      171,433    —
Risk participation agreements
   995    —      995    —
Foreign currency forward contracts

Matched customer book
   151    —      151    —








Total
   $ 1,851,741    $ 132,184    $ 1,713,278    $ 6,279








Liabilities

Interest rate swap contracts

Cash flow hedges - interest rate positions
   $ 38    $ —      $ 38    $ —
Customer-related positions
   51,319    —      51,319    —
Risk participation agreements
   1,500    —      1,500    —
Foreign currency forward contracts

Matched customer book
   40    —      40    —
Foreign currency loan
   173    —      173    —








Total
   $ 53,070    $ —      $ 53,070    $ —








2020:


			Fair Value Measurements at Reporting Date Using
												Fair Value Measurements at Reporting Date Using
			Quoted Prices in		Significant					Balance as of June 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		Active Markets		Other		Significant		Description
	December 31, 2019		for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)			(In thousands)
	(Dollars In Thousands)
Assets									Assets
Trading securities
Municipal bonds	$	961	$	—	$	961	$	—
Securities available for sale									Securities available for sale
Government-sponsored residential mortgage-backed securities									Government-sponsored residential mortgage-backed securities	$	3,478,529			$	0			$	3,478,529			$	0
Government-sponsored commercial mortgage-backed securities									Government-sponsored commercial mortgage-backed securities	181,795		0				181,795				0
U.S. Agency bonds									U.S. Agency bonds	841,005		0				841,005				0
U.S. Treasury securities		50,420		50,420					U.S. Treasury securities	69,331		69,331				0				0
Government-sponsored residential mortgage-backed securities		1,167,968		—		1,167,968		—
State and municipal bonds and obligations		283,538		—		283,538		—	State and municipal bonds and obligations	278,121		0				278,121				0
Other bonds		6,310		—		—		6,310
Rabbi trust investments		78,012		63,945		14,067		—	Rabbi trust investments	98,900		91,187				7,713				0
Loans held for sale									Loans held for sale	2,734		0				2,734				0
Interest rate swap contracts									Interest rate swap contracts
Customer-related positions		64,463		—		64,463		—	Customer-related positions	92,980		0				92,980				0
Risk participation agreements		482		—		482		—	Risk participation agreements	432		0				432				0
Foreign currency forward contracts									Foreign currency forward contracts
Matched customer book		469		—		469		—	Matched customer book	94		0				94				0

Foreign currency loan									Foreign currency loan	48		0				48				0
Total	$	1,652,623	$	114,365	$	1,531,948	$	6,310	Total	$	5,043,969	$	160,518			$	4,883,451			$	0


Liabilities									Liabilities
Interest rate swap contracts									Interest rate swap contracts
Cash flow hedges - interest rate positions	$	321	$	—	$	321	$	—
Customer-related positions		18,057		—		18,057		—	Customer-related positions	$	28,498	$	0			$	28,498			$	0
Risk participation agreements		606		—		606		—	Risk participation agreements	675		0				675				0
Foreign currency forward contracts									Foreign currency forward contracts
Matched customer book		428		—		428		—	Matched customer book	89		0				89				0
Foreign currency loan		203		—		203		—	Foreign currency loan	0		0				0				0

Total	$	19,615	$	—	$	19,615	$	—	Total	$	29,262	$	0			$	29,262			$	0

Table of Contents


			Fair Value Measurements at Reporting Date Using
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)
	(In thousands)
Assets
Securities available for sale
Government-sponsored residential mortgage-backed securities	$	2,148,800	$	0	$	2,148,800	$	0
Government-sponsored commercial mortgage-backed securities	17,081		0		17,081		0
U.S. Agency bonds	666,709		0		666,709		0
U.S. Treasury securities	70,369		70,369		0		0
State and municipal bonds and obligations	280,902		0		280,902		0
Rabbi trust investments	91,683		83,884		7,799		0
Loans held for sale	1,140		0		1,140		0
Interest rate swap contracts
Customer-related positions	141,822		0		141,822		0
Risk participation agreements	722		0		722		0
Foreign currency forward contracts
Matched customer book	90		0		90		0
Foreign currency loan	9		0		9		0
Total	$	3,419,327	$	154,253	$	3,265,074	$	0
Liabilities
Interest rate swap contracts
Customer-related positions	$	42,600	$	0	$	42,600	$	0
Risk participation agreements	1,230		0		1,230		0
Foreign currency forward contracts
Matched customer book	77		0		77		0
Foreign currency loan	69		0		69		0
Total	$	43,976	$	0	$	43,976	$	0

There were no0 transfers to or from Level 1, 2 and 3 during the six months ended June 30, ~~2020~~2021 and year ended December 31, ~~2019.~~

For the fair value measurements which are classified as Level 3 within the fair value hierarchy, the Company’s Treasury and Finance groups determine the valuation policies and procedures. For the valuation of the qualified zone academy bond, the2020.

The Company ~~uses third-party valuation information. Management determined that~~held no changes to the quantitative unobservable inputs were necessary. Management employs various techniques to analyze the valuation it receives from third parties, such as analyzing changes in market yields. Management reviews changes in fair value from period to period to ensure that values received from the third parties are consistent with their expectation of the market.

~~The tables below presents a reconciliation for all~~ assets ~~and~~or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) ~~during the three and six months ended~~as of June 30, ~~2020~~2021 or December 31, 2020.

Fair Value of Assets and ~~2019:~~

   Securities
Available for Sale
   (Dollars In Thousands)
Balance at January 1, 2019
   $ 6,045
Gains and losses (realized/unrealized):

Included in earnings
   55


Balance at June 30, 2019
   $ 6,100


Balance at January 1, 2020
   $ 6,310
Gains and losses (realized/unrealized):

Included in net income
   55
Included in other comprehensive income
   (86 )


Balance at June 30, 2020
   $ 6,279


Balance at April 1, 2019
   $ 6,073
Gains and losses (realized/unrealized):

Included in earnings
   27


Balance at June 30, 2019
   $ 6,100


Balance at April 1, 2020
   $ 6,249
Gains and losses (realized/unrealized):

Included in earnings
   27
Included in other comprehensive income
   3


Balance at June 30, 2020
   $ 6,279

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 June 30, ~~2020~~2021 and December 31, ~~2019.~~

2020.

      Fair Value Measurements at Reporting Date Using
      Quoted Prices
in Active    Significant
Description
      Markets for    Other    Significant
   Balance as of June
30, 2020    Identical Assets
(Level 1)    Observable
Inputs (Level 2)    Unobservable
Inputs (Level 3)
   (Dollars in thousands)
Assets

Other real estate owned
   $ 40    $ —      $ —      $ 40
Collateral-dependent impaired loans whose fair value is based upon appraisals
   13,011    —      —      13,011








Total
   $ 13,051    $ —      $ —      $ 13,051

      Fair Value Measurements at Reporting Date Using
      Quoted Prices
in Active    Significant
Description
      Markets for    Other    Significant
   Balance as of
December 31, 2019    Identical Assets
(Level 1)    Observable
Inputs (Level 2)    Unobservable
Inputs (Level 3)
   (Dollars in thousands)
Assets

Collateral-dependent impaired loans whose fair value is based upon appraisals
   $ 4,261    $ —      $ —      4,261

Table of Contents


			Fair Value Measurements at Reporting Date Using
Description	Balance as of June 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
Collateral-dependent impaired loans whose fair value is based upon appraisals	$	13,109	$	0	$	0	$	13,109


			Fair Value Measurements at Reporting Date Using
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)
	(In thousands)
Assets
Collateral-dependent impaired loans whose fair value is based upon appraisals	$	11,036	$	0	$	0	11,036

For the valuation of the ~~other real estate owned and~~ 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.

Impaired loans in which ~~the~~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 June 30, 2021		Fair Value as of June 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	$	9,485,699	$	9,632,348	$	0	$	0	$	9,632,348
FHLB stock	10,601		10,601		0		10,601		0
Bank-owned life insurance	79,634		79,634		0		79,634		0
Liabilities
Deposits	$	13,250,433	$	13,250,334	$	0	$	13,250,334	$	0
FHLB advances	14,323		14,072		0		14,072		0
Escrow deposits from borrowers	14,119		14,119		0		14,119		0

Table of Contents


					Fair Value Measurements at Reporting Date Using
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)
	(In thousands)
Assets
Loans, net of allowance for loan losses	$	9,593,958	$	9,779,195	$	0	$	0	$	9,779,195
FHLB stock	8,805		8,805		0		8,805		0
Bank-owned life insurance	78,561		78,561		0		78,561		0
Liabilities
Deposits	$	12,155,784	$	12,155,843	$	0	$	12,155,843	$	0
FHLB advances	14,624		14,434		0		14,434		0
Escrow deposits from borrowers	13,425		13,425		0		13,425		0

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. Revenue from Contracts with Customers

~~The Company adopted the new revenue recognition standard under ASC 606 on January 1, 2019 using the modified retrospective approach.~~

Revenue recognition remained substantially unchanged following adoption of ASC 606 and, therefore, there were no material changes to the Company’s consolidated financial statements at or for the year ended December 31, 2019, as a result of adopting the new guidance.

~~The Company derives a portion of its noninterest income~~ from contracts with customers ~~as such, revenue~~within the scope of ASC, Revenue from ~~such arrangements~~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 or 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:

~~Identify the contract(s) with the customers~~

~~Identify the performance obligations~~

~~Determine the transaction price~~

~~Allocate the transaction price to the performance obligations~~

~~Recognize revenue when (or as) the entity satisfies a performance obligation~~

1.Identify the contract(s) with the customers

2.Identify the performance obligations

3.Determine the transaction price

4.Allocate the transaction price to the performance obligations

5.Recognize revenue when (or as) the entity satisfies a performance obligation

The Company 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.

~~The Company has disaggregated its revenue~~

Table of Contents

A portion of the Company's noninterest income is derived from contracts with customers within the scope of ASC ~~606~~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 June 30,    Six months ended June 30,
   2020    2019    2020    2019
   (Dollars In Thousands)
Insurance commissions
   $ 22,697    $ 24,135    $ 50,174    $ 48,897
Service charges on deposit accounts
   4,364    6,771    10,462    13,175
Trust and investment advisory fees
   5,194    4,980    10,289    9,608
Debit card processing fees
   2,337    2,638    4,807    5,048
Other non-interest income
   1,485    2,045    3,537    3,919








Total noninterest income in-scope of ASC 606
   36,077    40,569    79,269    80,647
Total noninterest income out-of-scope of ASC 606
   11,580    5,063    1,757    12,785








Total noninterest income
   $ 47,657    $ 45,632    $ 81,026    $ 93,432


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Insurance commissions	$	23,664	$	22,697	$	51,811	$	50,174
Service charges on deposit accounts	5,708		4,364		11,075		10,462
Trust and investment advisory fees	6,074		5,194		11,737		10,289
Debit card processing fees	3,170		2,337		5,919		4,807
Other non-interest income	2,123		1,485		3,915		3,537
Total noninterest income in-scope of ASC 606	40,739		36,077		84,457		79,269
Total noninterest income out-of-scope of ASC 606	4,994		11,580		16,488		1,757
Total noninterest income	$	45,733	$	47,657	$	100,945	$	81,026

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 LLC.~~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 ~~$7.7~~$14.4 million as of June 30, ~~2020,~~2021, and ~~$3.9~~$15.8 million as of December 31, ~~2019,~~2020, 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.

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 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.

~~Cash Management~~

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~~management fees earned but not yet received amounted to ~~$0.8~~$0.9 million and $1.0 million as of ~~both~~ June 30, ~~2020~~2021 and December 31, ~~2019~~2020 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. 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 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 June 30, ~~2020~~2021 and December 31, ~~2019~~2020 and were included in other assets.

~~Trust and Investment Advisory Fees~~

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 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.

Other Noninterest Income

The Company earns various types of other noninterest income that ~~fall within the scope of the new revenue recognition rules and~~ have been aggregated into one general revenue stream in the table noted above. ~~The amount~~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 and insured cash sweep fee income.~~fees. Individually, these sources of noninterest income are immaterial.

Table of Contents

15. Other Comprehensive Income

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

   Three months ended June 30, 2020 Six months ended June 30, 2020
   Pre Tax
Amount Tax
(Expense)
Benefit After Tax
Amount Pre Tax
Amount    Tax
(Expense)
Benefit After Tax
Amount

   (Dollars In Thousands)
Unrealized gains (losses) on securities available for sale:

Change in fair value of securities available for sale
   $ 511 $ (97 ) $ 414 $ 34,313    $ (7,612 ) $ 26,701
Less: reclassification adjustment for gains included in net income
   163 (36 ) 127 285    (63 ) 222




Net change in fair value of securities available for sale
   348 (61 ) 287 34,028    (7,549 ) 26,479
Unrealized gains (losses) on cash flow hedges:

Change in fair value of cash flow hedges
   3,455 (971 ) 2,484 47,011    (13,215 ) 33,796
Less: net cash flow hedge losses reclassified into interest income
   7,134 (2,005 ) 5,129 10,246    (2,880 ) 7,366




Net change in fair value of cash flow hedges
   (3,679 ) 1,034 (2,645 ) 36,765    (10,335 ) 26,430
Defined benefit pension plans:

Amortization of actuarial net loss
   4,721 (1,326 ) 3,395 4,721    (1,326 ) 3,395
Amortization of prior service cost
   12 (3 ) 9 12    (3 ) 9




Net change in other comprehensive income for defined benefit postretirement plans
   4,733 (1,329 ) 3,404 4,733    (1,329 ) 3,404




Total other comprehensive income
   $ 1,402 $ (356 ) $ 1,046 $ 75,526    $ (19,213 ) $ 56,313

   Three months ended June 30, 2019    Six months ended June 30, 2019
   Pre Tax
Amount    Tax
(Expense)
Benefit After Tax
Amount    Pre Tax
Amount    Tax
(Expense)
Benefit After Tax
Amount

   (Dollars In Thousands)
Unrealized gains (losses) on securities available for sale:

Change in fair value of securities available for sale
   $ 15,006    $ (3,354 ) $ 11,652    $ 47,135    $ (10,454 ) $ 36,681
Less: reclassification adjustment for gains included in net income
   1,966    (448 ) 1,518    2,016    (459 ) 1,557








Net change in fair value of securities available for sale
   13,040    (2,906 ) 10,134    45,119    (9,995 ) 35,124
Unrealized gains (losses) on cash flow hedges:

Change in fair value of cash flow hedges
   16,054    (4,513 ) 11,541    21,914    (6,160 ) 15,754
Less: net cash flow hedge losses reclassified into interest income
   231    (65 ) 166    524    (147 ) 377








Net change in fair value of cash flow hedges
   15,823    (4,448 ) 11,375    21,390    (6,013 ) 15,377








Total other comprehensive income
   $ 28,863    $ (7,354 ) $ 21,509    $ 66,509    $ (16,008 ) $ 50,501

~~(1)~~

Includes amortization of $0.3 million of the remaining balance of realized but unrecognized gains, net of tax, from the termination of interest rate swaps during Q2 2020. The original gain of $22.3 million, net of tax, will be recognized in earnings through January 2023. The balance of this gain had amortized to $22.0 million, net of tax, at June 30, 2020.


	Three Months Ended June 30, 2021						Six Months Ended June 30, 2021
	Pre Tax Amount		Tax (Expense) Benefit		After Tax Amount		Pre Tax Amount		Tax (Expense) Benefit		After Tax Amount
	(In thousands)
Unrealized gains (losses) on securities available for sale:
Change in fair value of securities available for sale	$	32,632	$	(7,203)	$	25,429	$	(62,347)	$	13,779	$	(48,568)
Less: reclassification adjustment for gains included in net income	1		0		1		1,165		(257)		908
Net change in fair value of securities available for sale	32,631		(7,203)		25,428		(63,512)		14,036		(49,476)
Unrealized gains (losses) on cash flow hedges:
Change in fair value of cash flow hedges	0		0		0		0		0		0
Less: net cash flow hedge gains reclassified into interest income(1)	8,219		(2,310)		5,909		16,493		(4,636)		11,857
Net change in fair value of cash flow hedges	(8,219)		2,310		(5,909)		(16,493)		4,636		(11,857)
Defined benefit pension plans:
Change in actuarial net loss	0		0		0		0		0		0
Less: amortization of actuarial net loss	(3,538)		995		(2,543)		(7,075)		1,989		(5,086)
Less: amortization of prior service cost	2,945		(828)		2,117		5,890		(1,656)		4,234
Net change in other comprehensive income for defined benefit postretirement plans	593		(167)		426		1,185		(333)		852
Total other comprehensive income (loss)	$	25,005	$	(5,060)	$	19,945	$	(78,820)	$	18,339	$	(60,481)

(1)Represents amortization of realized gains on terminated cash flow hedges for the three and six months ended June 30, 2021. 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 $18.0 million, net of tax, at June 30, 2021.

Table of Contents


	Three Months Ended June 30, 2020						Six Months Ended June 30, 2020
	Pre Tax Amount		Tax (Expense) Benefit		After Tax Amount		Pre Tax Amount		Tax (Expense) Benefit		After Tax Amount
	(In thousands)
Unrealized gains (losses) on securities available for sale:
Change in fair value of securities available for sale	$	511	$	(97)	$	414	$	34,313	$	(7,612)	$	26,701
Less: reclassification adjustment for gains included in net income	163		(36)		127		285		(63)		222
Net change in fair value of securities available for sale	348		(61)		287		34,028		(7,549)		26,479
Unrealized gains (losses) on cash flow hedges:
Change in fair value of cash flow hedges	3,455		(971)		2,484		47,011		(13,215)		33,796
Less: net cash flow hedge gains reclassified into interest income(1)	7,134		(2,005)		5,129		10,246		(2,880)		7,366
Net change in fair value of cash flow hedges	(3,679)		1,034		(2,645)		36,765		(10,335)		26,430
Defined benefit pension plans:
Change in actuarial net loss	0		0		0		0		0		0
Less: amortization of actuarial net loss	(4,721)		1,326		(3,395)		(4,721)		1,326		(3,395)
Less: amortization of prior service cost	(12)		3		(9)		(12)		3		(9)
Net change in other comprehensive income for defined benefit postretirement plans	4,733		(1,329)		3,404		4,733		(1,329)		3,404
Total other comprehensive income	$	1,402	$	(356)	$	1,046	$	75,526	$	(19,213)	$	56,313

(1)Includes amortization of $0.3 million of the remaining balance of realized but unrecognized gains, net of tax, on terminated cash flow hedges for the three and six months ended June 30, 2020. The original realized gain of $22.3 million, net of tax, will be recognized in earnings through January 2023. The balance of this gain had amortized to $22.0 million, net of tax, at June 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, 2020
   $ 21,798    $ 15,624    $ 81,269    $ (43,847 )
Other comprehensive income (loss) before reclassifications
   26,701    33,796    —      60,497
Less: Amounts reclassified from accumulated other comprehensive income
   222    7,366    3,404    4,184








Net current-period other comprehensive income
   26,479    26,430    (3,404 )    56,313








Ending Balance: June 30, 2020
   $ 48,277    $ 42,054    $ 77,865    $ 12,466








Beginning Balance: January 1, 2019
   $ (19,360 )    $ 2,988    $ 59,389    $ (75,761 )
Other comprehensive income (loss) before reclassifications
   36,681    15,754    —      52,435
Less: Amounts reclassified from accumulated other comprehensive income
   1,557    377    —      1,934








Net current-period other comprehensive income
   35,124    15,377    —      50,501








Ending Balance: June 30, 2019
   $ 15,764    $ 18,365    $ 59,389    $ (25,260 )


	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	(48,568)		0		0		(48,568)
Less: Amounts reclassified from accumulated other comprehensive income	908		11,857		(852)		11,913
Net current-period other comprehensive (loss) income	(49,476)		(11,857)		852		(60,481)
Ending Balance: June 30, 2021	$	(3,804)	$	17,958	$	(20,401)	$	(6,247)
Beginning Balance: January 1, 2020	$	21,798	$	15,624	$	(81,269)	$	(43,847)
Other comprehensive income before reclassifications	26,701		33,796		0		60,497
Less: Amounts reclassified from accumulated other comprehensive income (loss)	222		7,366		(3,404)		4,184
Net current-period other comprehensive income	26,479		26,430		3,404		56,313
Ending Balance: June 30, 2020	$	48,277	$	42,054	$	(77,865)	$	12,466

Table of Contents

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 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 June 30, ~~2020~~2021 and ~~2019,~~2020, and for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, was as follows:

As of and for the three months ended June 30,
2020 2019
Banking
Business Insurance
Agency
Business Other /
Eliminations Total Banking
Business Insurance
Agency
Business Other /
Eliminations Total
(dollars in thousands)
Net interest income
$ 98,755 $ —   $ —   $ 98,755 $ 103,523 $ —   $ —   $ 103,523
Provision for loan losses
8,600 —   —   8,600 1,500 —   —   1,500

Net interest income after provision for loan losses
90,155 —   —   90,155 102,023 —   —   102,023
Noninterest income
23,779 23,886 (8 ) 47,657 21,143 24,489 —   45,632
Noninterest expense
81,713 20,084 (1,032 ) 100,765 83,205 19,200 (835 ) 101,570

Income before provision for income taxes
32,221 3,802 1,024 37,047 39,961 5,289 835 46,085
Income tax provision
6,121 1,076 —   7,197 9,517 1,515 —   11,032

Net income
$ 26,100 $ 2,726 $ 1,024 $ 29,850 $ 30,444 $ 3,774 $ 835 $ 35,053

Total assets
$ 13,867,746 $ 193,320 $ (64,543 ) $ 13,996,523 $ 11,397,392 $ 164,576 $ (48,284 ) $ 11,513,684

Total liabilities
$ 12,314,286 $ 53,150 $ (64,543 ) $ 12,302,893 $ 9,975,081 $ 35,228 $ (48,284 ) $ 9,962,025

For the six months ended June 30,
2020 2019
Banking
Business Insurance
Agency
Business Other /
Eliminations Total Banking
Business Insurance
Agency
Business Other /
Eliminations Total
(dollars in thousands)
Net interest income
$ 198,901 $ —   $ —   $ 198,901 $ 206,195 $ —   $ —   $ 206,195
Provision for loan losses
37,200 —   —   37,200 4,500 —   —   4,500

Net interest income after provision for loan losses
161,701 —   —   161,701 201,695 —   —   201,695
Noninterest income
30,647 50,408 (29 ) 81,026 43,405 50,048 (21 ) 93,432
Noninterest expense
160,178 37,725 (1,966 ) 195,937 169,096 39,067 (1,764 ) 206,399

Income before provision for income taxes
32,170 12,683 1,937 46,790 76,004 10,981 1,743 88,728
Income tax provision
4,906 3,589 —   8,495 17,576 3,134 —   20,710

Net income
$ 27,264 $ 9,094 $ 1,937 $ 38,295 $ 58,428 $ 7,847 $ 1,743 $ 68,018

~~17. Subsequent Events~~

~~Plan of Reorganization and Conversion~~

On June 12, 2020, the Board of Trustees of the Company adopted a Plan of Conversion (the “Plan”). Pursuant to the Plan, the Company will reorganize from a mutual holding company into a publicly traded stock form of organization. In connection with the reorganization, the Company will transfer to Eastern Bankshares, Inc., a recently formed Massachusetts corporation, 100% of the Bank’s common stock, and immediately thereafter the Company will merge into Eastern Bankshares, Inc. Pursuant to the Plan, Eastern Bankshares, Inc. will issue shares of common stock in a public offering. Eastern Bankshares, Inc. will offer 100% of its outstanding common stock to the Company’s eligible depositors, the employee stock ownership plan (“ESOP”) and certain other persons. Eastern Bankshares, Inc. will determine the range of the offering value and the number of shares of common stock to be issued based upon an independent appraiser’s valuation. The stock will be priced at $10.00 per share. In addition, the Boards of Directors of Eastern Bankshares, Inc. and the Company have adopted an ESOP, which is permitted to subscribe for up to 8% of the common stock to be outstanding following the completion of the reorganization and the offering. The Plan provides for Eastern Bankshares, Inc. to donate to the Eastern Bank Charitable Foundation (the “Foundation”) immediately after the offering a number of authorized but previously unissued shares of Eastern Bankshares, Inc. common stock equal to 4% of the number of shares of common stock that will be issued and outstanding immediately after the offering (including the shares donated to the Foundation) (the “Stock Donation”).

On August 6, 2020, the corporators of the Company separately approved the Plan and the Stock Donation. The Board of Governors of the Federal Reserve System approved the application of Eastern Bankshares, Inc. to become a bank holding company upon the completion of the conversion, although the approval of the Federal Reserve Board is required before Eastern Bankshares, Inc. can consummate the offering. The Company has filed an application with respect to the offering with the Massachusetts Commissioner of Banks, and the Massachusetts Commissioner of Banks authorized Eastern Bankshares, Inc. to commence the offering. However, final regulatory approval is required before Eastern Bankshares, Inc. can consummate the offering. The subscription offering commenced on August 18, 2020 and expired on September 16, 2020. The Company expects that the offering will close and the conversion will be completed in October 2020.

The Plan provides that eligible account holders will receive an interest in a liquidation account maintained by Eastern Bankshares, Inc. in an amount equal to (i) the Company’s ownership interest in the Bank’s total shareholders’ equity as of the date of the latest statement of financial position included in the latest prospectus filed with the U.S. Securities and Exchange Commission for the offering, plus (ii) the value of the net assets of the Company as of the date of the latest statement of financial position of the Company prior to the consummation of the conversion (excluding its ownership of the Bank). The Plan also provides for the establishment of a parallel liquidation account maintained at the Bank to support Eastern Bankshares, Inc.’s liquidation account in the event Eastern Bankshares, Inc. does not have sufficient assets to fund its obligations under Eastern Bankshares, Inc.’s liquidation account. Eastern Bankshares, Inc. and the Bank will hold the liquidation accounts for the benefit of eligible account holders who continue to maintain deposits in the Bank after the conversion. Following the completion of the offering, Eastern Bankshares, Inc. will not be permitted to pay dividends on its capital stock if the shareholders’ equity of Eastern Bankshares, Inc. would be reduced below the amount of the liquidation account. The liquidation account will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation accounts. In the event of a complete liquidation of the Bank, and only in such event, each account holder will be entitled to receive a distribution from the liquidation account in an amount proportionate to the adjusted qualifying account balances then held.

Costs associated with the stock offering have been deferred and will be deducted from the proceeds of the shares sold in the stock issuance. If the stock offering is not completed, all costs will be charged to expense. At June 30, 2020, approximately $4.5 million of stock offering costs had been incurred and deferred.


	As of and for the three months ended June 30,
	2021								2020
	Banking Business		Insurance Agency Business		Other / Eliminations		Total		Banking Business		Insurance Agency Business		Other / Eliminations		Total
	(In thousands)
Net interest income	$	104,608	$	0	$	0	$	104,608	$	98,755	$	0	$	0	$	98,755
(Release of) provision for loan losses	(3,300)		0		0		(3,300)		8,600		0		0		8,600
Net interest income after provision for loan losses	107,908		0		0		107,908		90,155		0		0		90,155
Noninterest income	21,567		24,166		0		45,733		23,779		23,886		(8)		47,657
Noninterest expense	87,799		20,496		(960)		107,335		81,713		20,084		(1,032)		100,765
Income before provision for income taxes	41,676		3,670		960		46,306		32,221		3,802		1,024		37,047
Income tax provision	10,464		1,033		0		11,497		6,121		1,076		0		7,197
Net income	$	31,212	$	2,637	$	960	$	34,809	$	26,100	$	2,726	$	1,024	$	29,850
Total assets	$	16,905,267	$	209,416	$	(67,230)	$	17,047,453	$	13,867,746	$	193,320	$	(64,543)	$	13,996,523
Total liabilities	$	13,628,092	$	55,969	$	(67,230)	$	13,616,831	$	12,314,286	$	53,150	$	(64,543)	$	12,302,893

For the six months ended June 30,
2021 2020
Banking
Business Insurance
Agency
Business Other /
Eliminations Total Banking
Business Insurance
Agency
Business Other /
Eliminations Total
(In thousands)
Net interest income $ 204,699 $ 0 $ 0 $ 204,699 $ 198,901 $ 0 $ 0 $ 198,901
(Release of) provision for loan losses (3,880) 0 0 (3,880) 37,200 0 0 37,200
Net interest income after provision for loan losses 208,579 0 0 208,579 161,701 0 0 161,701
Noninterest income 48,527 52,450 (32) 100,945 30,647 50,408 (29) 81,026
Noninterest expense 163,074 40,307 (1,997) 201,384 160,178 37,725 (1,966) 195,937
Income before provision for income taxes 94,032 12,143 1,965 108,140 32,170 12,683 1,937 46,790
Income tax provision 22,257 3,411 0 25,668 4,906 3,589 0 8,495
Net income $ 71,775 $ 8,732 $ 1,965 $ 82,472 $ 27,264 $ 9,094 $ 1,937 $ 38,295

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 June 30, ~~2020,~~2021, and our results of operations for the ~~three-~~three and ~~six-month periods~~six months ended June 30, ~~2020~~2021 and ~~2019.~~2020. 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 ~~prospectus, filed with~~2020 Form 10-K.

Table of Contents

Forward-Looking Statements

When we use the ~~Securities~~terms “we,” “us,” “our,” and ~~Exchange Commission pursuant to Rule 424(b)(3) on August 18, 2020.~~

~~Forward-Looking Statements~~

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;~~ 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;

•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;

•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;

•reputational risks relating to the Company’s participation in the ~~Paycheck Protection Program~~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 Form 10-K, as updated by Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q for the ~~other risks.~~ three months ended March 31, 2021 (“Q1 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 ~~U.S.~~ GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities

Table of Contents

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 ~~the Company’s prospectus, filed with the Securities and Exchange Commission pursuant to Rule 424(b)(3) on August 18, 2020.~~our 2020 Form 10-K. There have been no material changes ~~to our~~in critical accounting policies ~~as compared to~~during the ~~critical accounting policies described in the Company’s prospectus.~~

three and six months ended June 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.

   As of June 30,
2020    As of December 31,
2019
   (Dollars in thousands)
Selected Financial Condition Data:

Total assets
   $ 13,996,523    $ 11,628,775
Cash and cash equivalents
   1,432,561    362,602
Trading securities
   —      961
Securities available for sale
   1,600,354    1,508,236
Loans, net of allowance for loan losses and unamortized premiums, net of unearned discounts and deferred fees
   9,862,980    8,899,184
Federal Home Loan Bank stock, at cost
   8,805    9,027
Goodwill and other intangibles, net
   376,331    377,734
Total liabilities
   12,302,893    10,028,622
Total deposits
   11,846,765    9,551,392
Total borrowings
   29,155    235,395
Total equity
   1,693,630    1,600,153
Nonperforming loans
   55,395    43,775
Nonperforming assets
   55,435    43,775
   Six months ended June 30,
   2020    2019
   (Dollars in thousands)
Selected Operating Data:

Interest and dividend income
   $ 208,092    $ 224,321
Interest expense
   9,191    18,126




Net interest income
   198,901    206,195
Provision for loan losses
   37,200    4,500




Net interest income after provision for loan losses
   161,701    201,695
Noninterest income
   81,026    93,432
Noninterest expense
   195,937    206,399




Income before income taxes
   46,790    88,728
Provision for income taxes
   8,495    20,710




Net income
   $ 38,295    $ 68,018

   As of and for the six months ended June 30,
   2020 2019
Performance Ratios:

Return on average assets ^{(1) (6)}
   0.61 % 1.21 %
Return on average equity ^{(2) (6)}
   4.64 % 9.20 %
Interest rate spread (FTE) ^{(3) (6)}
   3.38 % 3.80 %
Net interest margin (FTE) ^{(4) (6)}
   3.49 % 4.03 %
Noninterest expenses to average assets ⁽⁶⁾
   3.11 % 3.68 %
Efficiency ratio ⁽⁵⁾
   70.00 % 68.89 %
Average interest-earning assets to average interest-bearing liabilities
   172.86 % 165.60 %
Capital Ratios:

Average equity to average assets
   13.09 % 13.16 %
Total capital to risk weighted assets
   14.00 % 12.79 %
Tier 1 capital to risk weighted assets
   12.77 % 11.89 %
Common equity tier 1 capital to risk weighted assets
   12.77 % 11.89 %
Tier 1 capital to average assets
   9.99 % 10.99 %
Asset Quality Ratios:

Allowance for loan losses as a percentage of total loans
   1.17 % 0.92 %
Allowance for loan losses as a percentage of nonperforming loans
   210.55 % 251.34 %
Net charge-offs (recoveries) to average outstanding loans during the period ⁽⁶⁾
   0.06 % 0.06 %
Nonperforming loans as a percentage of total loans
   0.56 % 0.36 %
Nonperforming loans as a percentage of total assets
   0.40 % �� 0.29 %
Total nonperforming assets as a percentage of total assets
   0.40 % 0.29 %

~~(1)~~

~~Represents net income divided by average total assets.~~


	As of June 30, 2021		As of December 31, 2020
	(In thousands, except per share data)
Selected Financial Position Data:
Total assets	$	17,047,453	$	15,964,190
Cash and cash equivalents	1,564,247		2,054,070
Securities available for sale	4,848,781		3,183,861
Loans, net of allowance for loan losses and unamortized premiums, net of unearned discounts and deferred fees	9,485,699		9,593,958
FHLB stock, at cost	10,601		8,805
Goodwill and other intangibles, net	380,402		376,534
Total liabilities	13,616,831		12,536,138
Total deposits	13,250,433		12,155,784
Total borrowings	28,442		28,049
Total shareholders’ equity	3,430,622		3,428,052
Nonperforming loans	41,632		43,252
Nonperforming assets	41,670		43,252
Per Share Data:
Book value	$	18.37	$	18.36
Tangible book value (1)	$	16.33	$	16.34

~~(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.~~

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


	Six Months Ended June 30,
	2021		2020
	(In thousands, except per share data)
Selected Operating Data:
Interest and dividend income	$	206,814	$	208,092
Interest expense	2,115		9,191
Net interest income	204,699		198,901
(Release of) provision for loan losses	(3,880)		37,200
Net interest income after provision for loan losses	208,579		161,701
Noninterest income	100,945		81,026
Noninterest expense	201,384		195,937
Income before income taxes	108,140		46,790
Provision for income taxes	25,668		8,495
Net income	$	82,472	$	38,295
Per Share Data:
Basic earnings per share	$	0.48	$	—
Diluted earnings per share	$	0.48	$	—

Table of Contents


	As of and for the Six Months Ended June 30,
	2021		2020
Performance Ratios:
Return on average assets (1) (6)	1.00	%	0.61	%
Return on average equity (2) (6)	4.87	%	4.64	%
Interest rate spread (FTE) (3) (6)	2.67	%	3.38	%
Net interest margin (FTE) (4) (6)	2.70	%	3.49	%
Noninterest expenses to average assets (6)	2.45	%	3.11	%
Efficiency ratio (5)	65.89	%	70.00	%
Average interest-earning assets to average interest-bearing liabilities	204.53	%	172.86	%
Capital Ratios:
Average equity to average assets	20.60	%	13.09	%
Total capital to risk weighted assets	29.13	%	14.00	%
Tier 1 capital to risk weighted assets	28.08	%	12.77	%
Common equity tier 1 capital to risk weighted assets	28.08	%	12.77	%
Tier 1 capital to average assets	18.66	%	9.99	%
Asset Quality Ratios:
Allowance for loan losses as a percentage of total loans	1.10	%	1.17	%
Allowance for loan losses as a percentage of nonperforming loans	253.74	%	210.55	%
Net charge-offs to average outstanding loans during the period (6)	0.07	%	0.06	%
Nonperforming loans as a percentage of total loans	0.43	%	0.56	%
Nonperforming loans as a percentage of total assets	0.24	%	0.40	%
Total nonperforming assets as a percentage of total assets	0.24	%	0.40	%

(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.

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 ~~$14.0~~$17.0 billion and ~~$11.6~~$16.0 billion at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. We are subject to comprehensive regulation and examination by the Massachusetts Commissioner of Banks, the ~~Federal Deposit Insurance Corporation (“FDIC”),~~FDIC, the Federal Reserve Board and the Consumer Financial Protection Bureau.

We manage our business under two business segments: our banking business, which contributed ~~$125.7~~$126.2 million, or ~~84.0%~~83.9%, of our total income ~~(interest~~(pre-provision net interest and dividend income and noninterest income) for the three months ended June 30, ~~2020~~2021 and ~~contributed $238.7~~$253.2 million, or ~~82.6%~~82.8%, of our total income for the six months ended June 30, ~~2020,~~2021, and our insurance agency business, which contributed ~~$23.9~~$24.2 million, or ~~16.0%~~16.1%, of our total income for the three months ended June 30, ~~2020~~2021 and ~~$50.4~~$52.5 million, or ~~17.4%~~17.2%, of our total income for the six months ended June 30, ~~2020.~~2021. 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 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 six months ended June 30, 2021 computed in accordance with GAAP was $34.8 million and $82.5 million, respectively, as compared to $29.9 million and $38.3 million for the three and six months ended

Table of Contents

June 30, 2020, respectively, representing an increase of 16.6% and 115.4%, respectively. This increase was largely driven by a decrease in the provision for the allowance for loan losses of $11.9 million and $41.1 million for the three and six months ended June 30, 2021 compared to the three and six months ended June 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 $3.3 million and $3.9 million for the three and six months ended June 30, 2021, respectively. These items are discussed further in the “Results of Operations” section below. Net income for the three and six months ended June 30, 2021 and 2020 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 six months ended June 30, 2021 was $37.1 million and $83.6 million compared to operating net income for the three and six months ended June 30, 2020 of $27.3 million and $38.2 million, respectively, representing a respective increase of 35.9% and increase of 119.2%. These increases were largely driven by the aforementioned change in the provision for the allowance for loan losses. See “Non-GAAP Financial Measures” below for a reconciliation of operating net income to GAAP net income.

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 ~~Federal Home Loan Bank (“FHLB”) of Boston (“FHLBB”)~~FHLBB advances and ~~Federal~~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 June 30, 2020 and December 31, 2019, we had total commercial and industrial loans of $2.3 billion and $1.6 billion, representing 22.7% and 18.3%, 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 market and the Shared National Credit Program (“SNC Program”). As of June 30, 2020 and December 31, 2019, our SNC Program portfolio totaled $514.5 million and $419.0 million, or 22.6%% and 25.5%, respectively, of our commercial and industrial portfolio, and 41.0% and 47.0%, 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”). As of June 30, 2020 and December 31, 2019, our ABL Portfolio totaled $159.1 million and $163.0 million, or 7.0% and 9.9%, respectively, of our commercial and industrial portfolio.

•

~~Commercial real estate~~: Loans in this category include mortgage loans on commercial real estate, both investment and owner occupied. As of June 30, 2020 and December 31, 2019, we had total commercial real estate loans of $3.6 billion and $3.5 billion, representing 35.8% and 39.3%, respectively, of our total loans. Property types financed include office, industrial, multi-family, affordable housing, retail, hotel and other types of properties. Collateral values are established by independent third-party appraisals and evaluations. The primary repayment sources include operating income generated by the real estate, permanent debt refinancing and/or the sale of the real estate.

•

~~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. Substantially all of our commercial construction portfolio is in commercial real estate. As of June 30, 2020 and December 31, 2019, we had total commercial construction loans of $282.2 million and $273.8 million, representing 2.8% and 3.0%, 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 June 30, 2020 and December 31, 2019, we had total business banking loans of $1.2 billion and $771.5 million, respectively, representing 12.3% and 8.6% of our total loans for each period, respectively. In this category, commercial and industrial loans and commercial real estate loans totaled $676.2 million and $558.8 million, respectively, as of June 30, 2020, and $229.0 million and $542.0 million, respectively, as of December 31, 2019. 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 Small Business Association (“SBA”) lending. SBA guarantees reduce our risk of loss when default occurs and are considered a credit enhancement to the loan structure. During the three months ended June 30, 2020, we originated $1.1 billion of loans to approximately 8,100 borrowers under the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), as described in further detail elsewhere in this Quarterly Report.

•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 June 30, 2021 and December 31, 2020, we had total commercial and industrial loans of $1.7 billion and $2.0 billion, representing 18.1% and 20.6%, 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 market and the SNC Program. As of June 30, 2021 and December 31, 2020, our SNC Program portfolio totaled $374.4 million and $425.1 million, or 21.5% and 21.3%, respectively, of our commercial and industrial portfolio, and 42.6% and 46.4%, 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”). As of June 30, 2021 and December 31, 2020, our ABL Portfolio totaled $141.6 million and $134.5 million, or 8.1% and 6.7%, respectively, of our commercial and industrial portfolio. Our commercial and industrial portfolio also includes a portion of our PPP loans. As of June 30, 2021 and December 31, 2020, the amount of PPP loans included in our commercial and industrial portfolio was $366.1 million and $568.8 million, respectively.

•Commercial real estate: Loans in this category include mortgage loans on commercial real estate, both investment and owner occupied. As of June 30, 2021 and December 31, 2020, we had total commercial real estate loans of $3.8 billion and $3.6 billion, representing 39.4% and 36.8%, respectively, of our total loans. As of June 30, 2021, and December 31, 2020, owner occupied loans totaled $713.5 million and $694.6 million, representing 18.9% and 19.4%, respectively, of our commercial real estate loans. Collateral values are established by independent third-party appraisals and evaluations. The primary repayment sources include operating income generated by the real estate, permanent debt refinancing and/or the sale of the real estate.

Table of Contents

•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 June 30, 2021 and December 31, 2020, we had total commercial construction loans of $237.9 million and $305.7 million, representing 2.5% and 3.1%, 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 both June 30, 2021 and December 31, 2020, we had total business banking loans of $1.3 billion representing 14.0% and 13.8% of our total loans for each period end, respectively. In this category, commercial and industrial loans and commercial real estate loans totaled $649.3 million and $690.6 million, respectively, as of June 30, 2021, and $675.1 million and $664.1 million, respectively, as of December 31, 2020. 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 total. As of June 30, 2021 and December 31, 2020, the amount of PPP loans included in our business banking portfolio was $459.7 million and $457.4 million, respectively.

Residential Lending

•

~~Residential real estate~~: Loans in this category consist of mortgage loans on residential real estate. As of both June 30, 2020 and December 31, 2019, we had total residential loans of $1.4 billion, representing 14.0% and 15.9%, 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 score 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 six months ended June 30, 2020 and year ended December 31, 2019, residential real estate mortgage originations were $256.9 million, $380.3 million and $443.0 million, respectively, of which $130.9 million, $201.4 million and $209.0 million, respectively, were sold on the secondary markets. We generally do not continue to service residential loans that we sell in the secondary market.

•Residential real estate: Loans in this category consist of mortgage loans on residential real estate. As of June 30, 2021 and December 31, 2020, we had total residential loans of $1.5 billion and $1.4 billion, respectively, representing 15.2% and 14.1%, 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 six months ended June 30, 2021, residential real estate mortgage originations were $236.5 million and $496.6 million, respectively, of which $46.1 million and $103.3 million, respectively, were sold on the secondary markets. Comparatively, during the three and six months ended June 30, 2020, residential real estate mortgage originations were $256.9 million and $380.3 million, respectively, of which $130.9 million and $201.4 million, respectively, were sold on the secondary markets. We generally do not continue to service residential loans that we sell in the secondary market.

Consumer Lending

•

~~Consumer home equity~~: Loans in this category consist of home equity lines of credit and home equity loans. As of June 30, 2020 and December 31, 2019, we had total consumer home equity loans of $905.5 million and $933.1 million, representing 9.0% and 10.4%, respectively, of our total loans. Home equity lines of credit are granted for ten years with monthly interest-only repayment requirements. Home equity lines of credit can be converted to term loans that are fully amortized. 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~~: Loans in this category consist of unsecured personal lines of credit, overdraft protection, automobile and aircraft loans, and other personal loans. As of June 30, 2020 and December 31, 2019, we had total other consumer loans of $334.7 million and $402.4 million, representing 3.3% and 4.5%, respectively, of our total loans. Our policy and underwriting in this category 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 $181.3 million and $243.9 million of automobile loans, respectively, at June 30, 2020 and December 31, 2019.

•Consumer home equity: Loans in this category consist of home equity lines of credit and home equity loans. As of June 30, 2021 and December 31, 2020, we had total consumer home equity loans of $834.9 million and $868.3 million, representing 8.7% and 8.9%, respectively, of our total loans. Home equity lines of credit are granted for ten years with monthly interest-only repayment requirements. 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, and other personal loans. As of June 30, 2021 and December 31, 2020, we had total other consumer loans of $234.4 million and $277.8 million, representing 2.4% and 2.9%, respectively, of our total loans. Our policy and underwriting in this category 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 $83.7 million and $126.7 million of automobile loans, respectively, at June 30, 2021 and December 31, 2020.

Table of Contents

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. 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 June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, our total commercial deposits were ~~$4.6~~$5.0 billion and ~~$3.2~~$4.4 billion, ~~respectively,~~respectively. During the three and six months ended June 30, 2021 our commercial noninterest income ~~during~~was $4.1 million and $8.3 million, respectively, compared to $5.0 million and $8.4 million for the three and six months ended June 30, 2020, ~~and year ended December 31, 2019 were $21.1 million, $26.1 million and $29.8 million,~~ respectively. As of June 30, 2020, there were no Federal funds provided to us by financial institution customers. During the month of March 2020, Federal funds provided to us by our financial institution customers were transferred to interest-bearing deposits and totaled $299.5 million as of June 30, 2020. As of December 31, 2019, Federal funds provided to us by our financial institution customers were $201.1 million.

Other Consumer Deposit Products

•We offer a wide variety of deposit products and services to our consumer customers. We service these customers through our 8986 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.

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 June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we held ~~$2.6~~$3.0 billion and ~~$2.7~~$2.9 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.~~Report on Form 10-Q. For the three and six months ended June 30, ~~2020 and the year ended December 31, 2019,~~2021, we had noninterest income of ~~$5.2 million, $10.3~~$6.1 million and ~~$19.7~~$11.7 million, respectively, from providing these ~~services.~~

services compared to $5.2 million and $10.3 million, respectively, for the three and six months ended June 30, 2020.

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 LLC.~~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 retirement 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 ~~$22.7 million, $50.2~~$23.7 million and ~~$90.6~~$51.8 million, respectively, or ~~47.6%, 62.0%~~51.7% and ~~49.7%~~51.3%, respectively of our noninterest income during the three and six months ended June 30, ~~2020~~2021. Comparatively, such income represented $22.7 million and ~~year~~$50.2 million, or 47.6% and 61.9%, respectively, of our noninterest income during the three and six months ended ~~December 31, 2019.~~June 30, 2020. Our insurance business operates through 22 25 non-branch offices located primarily in eastern Massachusetts and had ~~406~~396 full-time equivalent employees as of June 30, ~~2020.~~

2021.

~~Outlook~~Acquisitions

Proposed Acquisition

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 ~~Trends~~

Trust Company, a Massachusetts-chartered stock bank headquartered in Medford, Massachusetts with $6.4 billion in assets, $5.4 billion in deposits and 27 full-service branches in Massachusetts as of December 31, 2020. Pursuant to the

Table of Contents

terms of the Merger Agreement, Century Bank and Trust Company will merge with and into Eastern Bank, our wholly-owned subsidiary, upon completion of the transaction. The ~~COVID-19~~ ~~pandemic has had~~transaction is subject to customary closing conditions, including the receipt of regulatory approval and ~~continues~~Century shareholder approval. On July 7, 2021, Century held its special meeting of shareholders at which Century's shareholders approved the Merger Agreement. We currently expect the merger to ~~have an adverse effect on our business~~be completed during the fourth quarter of 2021. For additional information about the Merger Agreement and the ~~markets~~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 ~~which we operate. We expect~~Part II, Item 1A of Q1 Form 10-Q.

Other Acquisitions

During the ~~short-term~~three and ~~long-term economic consequences of the~~ ~~COVID-19~~ pandemic to our customers will continue to be significant, and that the continuing health and safety concerns relating to the ongoing pandemic will change the way we conduct our business and interact with our customers. Consistent with our philosophy of seeking to be a source of economic strength to our communities, we have taken a broad range of steps to help our colleagues, our borrowers and our communities during the ~~COVID-19~~ ~~pandemic.~~

~~Our Colleagues.~~ For our colleagues, we have enabled more than half of our employees to work remotely and we are providing premium pay for those colleagues who travel to our workplaces to serve in customer-facing positions or other positions that require them to work ~~on-site.~~ We have taken significant measures to ensure the health of our colleagues who must work in our branches, including promoting online and mobile banking and automatic teller machine/interactive teller machine transactions in an effort to limit ~~in-branch~~ ~~transactions and limiting access to lobbies in branches with drive-through banking.~~

~~Our Borrowers.~~ ~~In light of the~~ ~~COVID-19~~ ~~pandemic, we have temporarily modified our practices with respect to the collection of delinquent loans to assist our customers during this difficult economic time, and during the three~~six months ended June 30, ~~2020,~~2021, Eastern Insurance Group completed two insurance agency acquisitions. The aggregate purchase price and goodwill recorded as a result of the acquisitions were not material.

Outlook and Trends

Century Acquisition

During the three and six months ended June 30, 2021, we ~~originated $1.1 billion~~incurred and recorded merger and acquisition costs related to the proposed Century acquisition of ~~PPP loans.~~

~~For our retail customers, we suspended all collection of overdue payments beginning March 16, 2020, including residential property foreclosure~~$3.5 million and ~~related property sales. We resumed collection activities with respect to delinquent consumer loans beginning in late July 2020.~~

~~For our commercial~~$4.1 million, respectively. The following table depicts Century-related merger and ~~small business customers, starting in March 2020, we began modifying the terms of loans with customers impacted~~acquisition costs broken down by the ~~COVID-19 pandemic. Through June 30, 2020, we had modified approximately $946.1 million~~line item on the consolidated statements of ~~loans, of~~income for the periods indicated in which ~~approximately 56% were for full payment deferrals (both interest~~the costs are included:


	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021

	(In thousands)
Salaries and employee benefits	$	2	$	2
Data processing	1,084		1,084
Professional services	2,393		2,978
Total	$	3,479	$	4,064

In addition to the Century-related costs, total merger and principal) and 44% were for deferral of only principal payments, and included $558.9 million of commercial real estate loans, including construction loans, $157.4 million of commercial and industrial loans, $106.9 million of business banking loans, $92.8 million of residential real estate loans and $30.1 million of consumer loans, including home equity loans. Most of these deferrals will endacquisition expenses disclosed in our non-GAAP financial measures include costs associated with the ~~third or fourth quarter~~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~~ended December 31, ~~2020.~~ 2021.

Paycheck Protection Program Loans

We ~~have not deferred our recognition of interest income with respect to loans subject to modifications.~~

~~As of the date of this Quarterly Report, we~~ are unable to reasonably estimate the aggregate amount of loans that will likely become delinquent after the respective deferral period. The following table shows certain data, as of June 30, 2020, related to loans to our borrowersa participating lender in the ~~industry categories that we believe will likely experience~~SBA’s Paycheck Protection Program. We concluded PPP loan originations during the ~~most adverse effects of the~~ ~~COVID-19~~ pandemic. Loans included in the table that had been modified as of June 30, 2020 represented approximately 28.9% of our aggregate outstanding loan balances to all borrowers in those categories as of June 30, 2020. However, the table does not include all loans that had been modified on or before June 30, 2020.

Loan Balance Credit
Exposure ⁽¹⁾ Number of
Borrowers⁽²⁾ COVID-19
Modification % ⁽³⁾
(Dollars in thousands)
Commercial and Industrial: Commercial and Business Banking

Restaurants
$ 148,373 $ 156,747 420 60.6 %
Construction contractors
105,127 281,435 1,036 11.0 %
Non-essential retail
41,859 101,736 436 2.5 %
Entertainment and recreation
34,368 49,664 158 31.1 %
Educational and child care services
16,219 50,948 196 5.3 %
Private medical and dental offices
16,299 34,602 294 20.2 %
Water and air passenger transportation
19,811 30,557 12 0.1 %
Auto and other vehicle dealerships
7,557 10,138 21 — %
Hotels
377 527 12 37.3 %
Commercial Real Estate: Commercial and Business Banking

Retail
437,267 458,839 298 26.7 %
Hotels
179,577 181,076 45 37.6 %
Auto dealerships
78,152 80,361 36 2.8 %
Restaurants
51,566 52,766 67 48.5 %

Total
$ 1,136,552 $ 1,489,396 3,031 28.9 %

~~(1)~~

~~Our aggregate potential credit exposure as of June 30, 2020, considering all loan agreements and lines of credit that permit a borrower to increase the borrower’s indebtedness to us.~~

~~(2)~~

Each individual obligor is a single borrower for purposes of this column. Affiliated borrowers under common control are not aggregated as a single borrower even if in the same industry category, and therefore the actual concentration of credit exposure may be greater than indicated

~~(3)~~

The percentage of loans in each category, calculated as a percentage of aggregate outstanding loan balances for each category as of June 30, 2020, that we modified primarily due to the effects on borrowers of the ~~COVID-19~~ ~~pandemic and related economic slowdown beginning in late March 2020.~~

~~During the quarter~~six months ended June 30, ~~2020, we originated $1.1 billion of loans to approximately 8,100 borrowers under~~2021 as the SBA announced that PPP ~~under the CARES Act.~~funds were exhausted. The vast 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 LLC.~~Group.

•During the six months ended June 30, 2021, we originated approximately 6,600 PPP loans totaling $543.2 million. These loans have a maturity of five years. Fees received from the SBA and direct loan origination costs are being deferred over the five-year loan term. Through June 30, 2021, we had received $28.7 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 six months ended June 30, 2021, certain 2020 originations were modified and we received a nominal amount of additional fees from the SBA. We anticipate that the vast majority of ~~our PPP exposure~~the remaining 2020 originations will be forgiven ~~late in~~during the year ending December 31, ~~2020 or early in~~2021.

Table of Contents

•Net PPP fee accretion (fee accretion less cost amortization) for all PPP loans for the ~~year ending December 31, 2021. Only $4.9 million of our PPP exposure at~~six months ended June 30, ~~2020 had a maturity of five years; all of our other PPP loans outstanding at June 30, 2020 have a~~ ~~two-year~~ ~~maturity.~~

2021 was $17.6 million.

~~We received approximately $35.8 million of PPP loan origination fees from the SBA. We also deferred~~The following table shows certain ~~origination costs, totaling $3.5 million,~~data related to PPP ~~loans.~~

originations by period:


	PPP Loans Originated During the				Total
	Six Months Ended June 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	540,173		285,611		825,784
Total SBA fees received(1)	28,677		37,224		65,901
SBA fees recognized in interest income related to loans originated in respective periods(2)	2,249		33,650		35,899
Unaccreted SBA fees related to loans originated in respective periods	26,427		3,574		30,001

(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 as of June 30, ~~2020:~~

Loan Size
   Loan Balance    Number
of Loans    Fees
Collected
   (Dollars in thousands)
$0 to $50 thousand
   $ 95,528    4,987    $ 4,826
$50 thousand to $150 thousand
   148,994    1,731    7,419
$150 thousand to $1 million
   410,872    1,176    15,374
$1 million to $2 million
   190,254    137    5,618
$2 million to $5 million
   176,277    59    1,744
Over $5 million
   78,256    13    785






Total
   $ 1,100,181    8,103    $ 35,766

~~Our Operating Results.~~2021:


Loan Size	Loan Balance		Number of Loans
	(Dollars in thousands)
$0 to $50 thousand	$	110,281	6,454
$50 thousand to $150 thousand	125,647		1,452
$150 thousand to $1 million	338,263		1,020
$1 million to $2 million	112,351		79
$2 million to $5 million	118,961		45
Over $5 million	20,281		3
Total	$	825,784	9,053

The ~~COVID-19~~ ~~pandemic has had a significant impact on~~following table shows the balance of our ~~operating results for the six months ended~~PPP loans by industry as of June 30, ~~2020, and we believe it will continue to have a significant impact for at least the remainder~~2021:


Industry	Loan Balance		Number of Loans
	(Dollars in thousands)
Accommodation & food services	$	129,421	880
Construction	114,574		1,205
Health care & social assistance	97,958		783
Professional, scientific & technical services	92,711		1,324
Other services	76,691		1,320
Manufacturing	61,301		338
Administrative & support	56,378		481
Wholesale trade	44,260		234
Retail trade	38,314		814
Transportation & warehousing	28,954		560
Real estate, rental & leasing	27,483		366
All other	57,739		748
Total	$	825,784	9,053

Non-GAAP Financial Measures

Table of ~~the year ending December 31, 2020 and likely continuing into the year ending December 31, 2021.~~

Contents

During March 2020, the Federal Reserve took multiple steps to lower interest rates and reduced the target range for the federal funds rate to between 0.0% and 0.25%, compared to the previous target of between 1.00% and 1.25%. These interest rate reductions, combined with the decline in longer term rates, will lower our net interest income over time from the levels we experienced in the year ended December 31, 2019.

Our loan loss provision for the quarter ended June 30, 2020 was $8.6 million compared to $28.6 million for the quarter ended March 31, 2020. We experienced negative migrations in our loan risk ratings in the quarter ended June 30, 2020, although the extent of negative migrations was less than we experienced in the quarter ended March 31, 2020. We expect our loan loss provision to be greater in the remainder of the year ending December 31, 2020 as compared to comparable prior periods, as the positive impacts of the modifications and PPP loans wane. The economic uncertainties caused by the ~~COVID-19~~ ~~pandemic are significant, and the timing and pace of the economic recovery both locally and nationally will determine the severity and timing of our future loan losses.~~

~~Our Communities.~~ To continue providing critical banking services in underbanked inner-city communities served by branches without drive-through banking capabilities, we have committed to remaining open in these communities to ensure our customers continue to have a place to bank. To further support our communities, the Eastern Bank Charitable Foundation has directed approximately $8 million through June 30, 2020 in charitable donations to help address food, shelter, small business and housing stability, particularly for vulnerable populations, as well as providing help to public health organizations fighting to contain the spread of ~~COVID-19.~~

~~Non-GAAP~~ ~~Measures~~

We present certain non-GAAP financial measures, which ~~are used~~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 believes excluding these items facilitates greater visibility for investors into our core businesses ~~and~~as well as underlying trends that may, to some extent, be obscured by inclusion of such ~~items.~~

items in the corresponding GAAP financial measures.

There are items in our financial statements that impact our results ~~that~~but which we believe are unrelated to our core business. ~~Therefore,~~Accordingly, we present operating net ~~operating earnings,~~income, noninterest income on an operating basis, noninterest expense on an operating basis, total operating ~~income~~revenue, operating earnings per share, and the operating efficiency ratio, ~~on an operating basis,~~ each of which excludes the impact of ~~the~~such items ~~that we do not believe are related to our core business as~~because we believe ~~excluding these items provides~~such exclusion can provide greater visibility into our core business and underlying trends. ~~Items~~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 ~~benefit~~benefits, (v) impairment charges on tax credit investments and ~~(v)~~associated tax credit benefits, (vi) expenses indirectly associated with our initial public offering (“IPO”), (vii) other real estate owned (“OREO”) gains, (viii) merger and acquisition expenses, (ix) the stock donation to the Eastern Bank Charitable Foundation (now known as the Eastern Bank Foundation, or 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 OREO gains 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, and tangible ~~equity to tangible assets ratios,~~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 ~~information on these~~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.

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 ~~noncore~~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 ~~noncore~~non-core items recorded for the time periods indicated below and reconciles them to the most directly comparable GAAP ~~measure.~~

   Three months ended June 30,    Six months ended June 30,
   2020    2019    2020    2019
      (Dollars in thousands)
Net income (GAAP)
   $ 29,850    $ 35,053    $ 38,295    $ 68,018








Non-GAAP adjustments:

Noninterest income components:

(Income) from investments held in rabbi trusts
   (7,745 )    (1,822 )    (1,002 )    (5,969 )
(Gain) on sales of securities available for sale, net
   (163 )    (1,966 )    (285 )    (2,016 )
(Gains) losses on sale of other assets
   27    102    (2 )    73
Noninterest expense components:

Rabbi trust employee benefit
   3,985    808    506    2,754








Total impact of Non-GAAP adjustments
   (3,896 )    (2,878 )    (783 )    (5,158 )








Less net tax benefit associated with Non-GAAP adjustment⁽^l)
   1,073    675    179    1,301








Non-GAAP adjustments, net of tax
   $ (2,823 )    $ (2,203 )    $ (604 )    $ (3,857 )








Net operating earnings (Non-GAAP)
   $ 27,027    $ 32,850    $ 37,691    $ 64,161

~~(1)~~

The net tax (expense) 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.

financial measure:

Table of Contents


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in thousands, except per share data)
Net income (GAAP)	$	34,809	$	29,850	$	82,472	$	38,295
Non-GAAP adjustments:
Add:
Noninterest income components:
Income from investments held in rabbi trusts	(4,216)		(7,745)		(6,062)		(1,002)
Gains on sales of securities available for sale, net	(1)		(163)		(1,165)		(285)
(Gains) losses on sale of other assets	(29)		27		(47)		(2)
Noninterest expense components:
Rabbi trust employee benefit expenses	2,063		3,985		3,049		506
Impairment reversal on tax credit investments	(1,419)		—		(1,419)		—
Indirect IPO costs (1)	—		380		—		650
Merger and acquisition expenses	3,479		—		4,068		—
Settlement and expenses for putative consumer class action matters	3,325		—		3,325		—
Total impact of non-GAAP adjustments	3,202		(3,516)		1,749		(133)
Less net tax benefit (expense) associated with non-GAAP adjustment (2)	914		(967)		587		3
Non-GAAP adjustments, net of tax	$	2,288	$	(2,549)	$	1,162	$	(136)
Operating net income (non-GAAP)	$	37,097	$	27,301	$	83,634	$	38,159

Weighted average common shares outstanding during the period:
Basic	172,173,707		n.a		172,111,372		n.a
Diluted	172,173,707		n.a		172,111,372		n.a

Earnings per share, basic	$	0.20	n.a		$	0.48	n.a
Earnings per share, diluted	$	0.20	n.a		$	0.48	n.a

Operating earnings per share, basic (non-GAAP)	$	0.22	n.a		$	0.49	n.a
Operating earnings per share, diluted (non-GAAP)	$	0.22	n.a		$	0.49	n.a

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

   Three months ended June 30, Six months ended June 30,
   2020 2019 2020 2019
   (Dollars in thousands)
Net interest income (GAAP)
   $ 98,755 $ 103,523 $ 198,901 $ 206,195
Add:

Tax-equivalent adjustment (non-GAAP)
   1,378 1,269 2,746 2,649


Net interest income (non-GAAP)
   100,133 104,792 201,647 208,844
Noninterest income (GAAP)
   47,657 45,632 81,026 93,432
Less:

Income from investments held in rabbi trusts
   7,745 1,822 1,002 5,969
Gains on sales of securities available for sale, net
   163 1,966 285 2,016
Gains (losses) on sale of other assets
   (27 ) (102 ) 2 (73 )


Noninterest income on an operating basis (non-GAAP)
   39,776 41,946 79,737 85,520


Noninterest expense (GAAP)
   $ 100,765 $ 101,570 $ 195,937 $ 206,399


Plus:

Rabbi trust benefit expense (income)
   3,985 808 506 2,754


Noninterest expense on an operating basis (non- GAAP)
   $ 104,750 $ 102,378 $ 196,443 $ 209,153


Total income (GAAP)
   $ 146,412 $ 149,155 $ 279,927 $ 299,627


Total operating income (non-GAAP)
   $ 139,909 $ 146,738 $ 281,384 $ 294,364


Ratios

Efficiency ratio (GAAP)
   68.82 % 68.10 % 70.00 % 68.89 %
Efficiency ratio on an operating basis (non-GAAP)
   74.87 % 69.77 % 69.81 % 71.05 %

Table of Contents


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	(Dollars in thousands)
Net interest income (GAAP)	$	104,608		$	98,755		$	204,699		$	198,901
Add:
Tax-equivalent adjustment (non-GAAP)	1,269			1,378			2,566			2,746
Fully-taxable equivalent net interest income (non-GAAP)	105,877			100,133			207,265			201,647
Noninterest income (GAAP)	45,733			47,657			100,945			81,026
Less:
Income from investments held in rabbi trusts	4,216			7,745			6,062			1,002
Gains on sales of securities available for sale, net	1			163			1,165			285
Gains (losses) on sales of other assets	29			(27)			47			2
Noninterest income on an operating basis (non-GAAP)	41,487			39,776			93,671			79,737
Noninterest expense (GAAP)	$	107,335		$	100,765		$	201,384		$	195,937
Less:
Rabbi trust benefit expense	2,063			3,985			3,049			506
Impairment reversal on tax credit investments	(1,419)			—			(1,419)			—
Indirect IPO costs (1)	—			380			—			650
Merger and acquisition expenses	3,479			—			4,068			—
Settlement and expenses for putative consumer class action matters	3,325			—			3,325			—
Noninterest expense on an operating basis (non- GAAP)	$	99,887		$	96,400		$	192,361		$	194,781
Total revenue (GAAP)	$	150,341		$	146,412		$	305,644		$	279,927
Total operating revenue (non-GAAP)	$	147,364		$	139,909		$	300,936		$	281,384
Ratios:
Efficiency ratio (GAAP)	71.39		%	68.82		%	65.89		%	70.00		%
Operating efficiency ratio (non-GAAP)	67.78		%	68.90		%	63.92		%	69.22		%

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

Table of Contents

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

   As of June 30, As of December 31,
   2020 2019
   (Dollars in Thousands)
Tangible equity:

Total equity
   $ 1,693,630 $ 1,600,153
Less: Goodwill and other intangibles
   376,331 377,734


Tangible equity (Non-GAAP)
   1,317,299 1,222,419


Tangible assets:

Total assets (GAAP)
   13,996,523 11,628,775
Less: Goodwill and other intangibles
   376,331 377,734


Tangible assets (Non-GAAP)
   $ 13,620,192 $ 11,251,041


Equity to assets ratio (GAAP)
   12.1 % 13.8 %
Tangible equity to tangible assets ratio (Non-GAAP)
   9.7 % 10.9 %

As of June 30, As of December 31,
2021 2020
(Dollars in thousands, except per share data)
Tangible shareholders’ equity:
Total shareholders’ equity (GAAP) $ 3,430,622 $ 3,428,052
Less: Goodwill and other intangibles 380,402 376,534
Tangible shareholders’ equity (non-GAAP) 3,050,220 3,051,518
Tangible assets:
Total assets (GAAP) 17,047,453 15,964,190
Less: Goodwill and other intangibles 380,402 376,534
Tangible assets (Non-GAAP) $ 16,667,051 $ 15,587,656
Shareholders’ equity to assets ratio (GAAP) 20.1 % 21.5 %
Tangible shareholders’ equity to tangible assets ratio (Non-GAAP) 18.3 % 19.6 %
Book value per share:
Common shares issued and outstanding 186,758,154 186,758,154
Book value per share (GAAP) $ 18.37 $ 18.36
Tangible book value per share (non-GAAP) $ 16.33 $ 16.34

Financial Position

Summary of Financial Position

   As of June 30,
2020    As of December 31,
2019    Change
   Amount ($)    Percentage (%)
      (Dollars in thousands)
Cash and cash equivalents
   $ 1,432,561    $ 362,602    $ 1,069,959    295.1 %
Securities available for sale
   1,600,354    1,508,236    92,118    6.1 %
Loans, net of allowance for credit losses
   9,862,980    8,899,184    963,796    10.8 %
Federal Home Loan Bank Stock
   8,805    9,027    (222 )    (2.5 )%
Goodwill and other intangible assets
   376,331    377,734    (1,403 )    (0.4 )%
Deposits
   11,846,765    9,551,392    2,295,373    24.0 %
Borrowed funds
   29,155    235,395    (206,240 )    (87.6 )%

As of June 30, 2021 As of December 31, 2020 Change
Amount ($) Percentage (%)
(Dollars in thousands)
Cash and cash equivalents $ 1,564,247 $ 2,054,070 $ (489,823) (23.8) %
Securities available for sale 4,848,781 3,183,861 1,664,920 52.3 %
Loans, net of allowance for loan losses 9,485,699 9,593,958 (108,259) (1.1) %
Federal Home Loan Bank Stock 10,601 8,805 1,796 20.4 %
Goodwill and other intangible assets 380,402 376,534 3,868 1.0 %
Deposits 13,250,433 12,155,784 1,094,649 9.0 %
Borrowed funds 28,442 28,049 393 1.4 %

Cash and cash equivalents

Total cash and cash equivalents ~~increased~~decreased by ~~$1.1~~$0.5 billion, or ~~295.1%~~23.8%, to ~~$1.4~~$1.6 billion at June 30, ~~2020~~2021 from ~~$362.6 million~~$2.1 billion at December 31, ~~2019.~~2020. This decrease was primarily due to available for sale security purchases partially offset by an increase ~~resulted primarily from~~in total customer ~~deposit growth, which exceeded our funding needs for new lending activities.~~

deposits.

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. 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~~government securities: At June 30, 2021 and December 31, 2020, our U.S. government securities consisted of U.S. Agency bonds and U.S. Treasury securities. We maintain these investments, to the extent appropriate, for liquidity

Table of Contents

purposes, at zero risk weighting for capital purposes, and as collateral for interest rate derivative positions. ~~At June 30, 2020~~U.S. Agency bonds include securities issued by Fannie Mae, Freddie Mac, the FHLB, and ~~December 31, 2019, our U.S. Government securities consisted solely of U.S. Treasury securities.~~

the Federal Farm Credit Bureau.

Mortgage-backed securities:We invest in residential and commercial mortgage-backed securities insured or guaranteed by Freddie Mac or Fannie Mae. 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 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 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 June 30,
2020    As of December 31,
2019
   (Dollars in thousands)
Available for sale securities:

Government-sponsored residential mortgage-backed securities
   $ 1,251,799    $ 1,167,968
U.S. treasury securities
   60,936    50,420
State and municipal bonds and obligations
   281,340    283,538
Other
   6,279    6,310
Trading Securities:

Municipal bonds and obligations
   —      961




Total
   $ 1,600,354    $ 1,509,197


	As of June 30, 2021		As of December 31, 2020
	(In thousands)
Available for sale securities:
Government-sponsored residential mortgage-backed securities	$	3,478,529	$	2,148,800
Government-sponsored commercial mortgage-backed securities	181,795		17,081
U.S. Agency bonds	841,005		666,709
U.S. Treasury securities	69,331		70,369
State and municipal bonds and obligations	278,121		280,902
Total	$	4,848,781	$	3,183,861

Our securities portfolio has ~~grown~~ increased year-to-date. Available for sale securities increased ~~$92.0 million,~~$1.7 billion, or ~~6.1%~~52.3%, to ~~$1.6~~$4.8 billion at June 30, ~~2020~~2021 from ~~$1.5~~$3.2 billion at December 31, ~~2019.~~2020. This increase is due to investment purchases ~~as well as an increase in unrealized gains~~ during the six months ended June 30, ~~2020. Trading~~2021. Partially offsetting the increase in the securities ~~totaled $1.0~~portfolio from December 31, 2020 to June 30, 2021 was the reduction in the unrealized gain on the securities. At June 30, 2021 the unrealized loss was $4.8 million compared to an unrealized gain of $58.7 million at December 31, ~~2019, and all securities have matured as of June 30, 2020.~~

2020, representing a $63.5 million decrease.

We did not have trading or held-to-maturity investments at June 30, ~~2020~~2021 or December 31, ~~2019.~~

2020.

A portion of our securities portfolio continues to be tax-exempt. Investments in federally tax-exempt securities totaled ~~$281.3~~$278.1 million at June 30, ~~2020~~2021 compared to ~~$284.5~~$280.9 million at December 31, ~~2019.~~

2020.

Our available for sale 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 unobservable are classified as ~~level~~Level 3 within the fair value hierarchy. As of both June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had ~~$6.3 million of~~no securities categorized as ~~level~~Level 3 within the fair value hierarchy.

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.

Table of Contents

The following tables show contractual maturities of our available for sale securities and weighted average yields at and for the periods ended June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. Weighted average yields in the table below have been calculated based on the amortized cost of the security:

Securities Portfolio, Amounts Maturing

   Securities Maturing as of June 30, 2020
   Within One
Year After One
Year But
Within Five
Years After Five
Years But
Within Ten
Years After Ten
Years Total
   (Dollars in thousands)
Available for sale securities:

Government-sponsored residential mortgage-backed securities
   $ —   $ 25,733 $ 157,290 $ 1,068,776 $ 1,251,799
U.S. Treasury securities
   50,778 10,158 —   —   60,936
State and municipal bonds and obligations
   411 18,966 77,868 184,095 281,340
Other
   6,279 —   —   —   6,279
Trading securities:

Municipal bonds and obligations
   —   —   —   —   —


Total
   $ 57,468 $ 54,857 $ 235,158 $ 1,252,871 $ 1,600,354


Weighted-average yield
   2.50 % 2.69 % 2.80 % 2.49 % 2.54 %


	Securities Maturing as of December 31, 2019																Securities Maturing as of June 30, 2021
	Within One Year			After One Year But Within Five Years			After Five Years But Within Ten Years			After Ten Years			Total				Within One Year			After One Year But Within Five Years			After Five Years But Within Ten Years			After Ten Years			Total
	(Dollars in thousands)																(In thousands)
Available for sale securities:																Available for sale securities:
Government-sponsored residential mortgage-backed securities	$	—		$	8,464		$	203,706		$	955,798		$	1,167,968		Government-sponsored residential mortgage-backed securities	$	—		$	19,323		$	597,546		$	2,861,660		$	3,478,529
Government-sponsored commercial mortgage-backed securities																Government-sponsored commercial mortgage-backed securities	—			23,781			158,014			—			181,795
U.S. Agency bonds																U.S. Agency bonds	—			196,383			644,622			—			841,005
U.S. Treasury securities		40			50,380			—			—			50,420		U.S. Treasury securities	10,071			59,260			—			—			69,331
State and municipal bonds and obligations		381			9,109			79,504			194,544			283,538		State and municipal bonds and obligations	486			29,781			76,046			171,808			278,121
Other		6,310			—			—			—			6,310
Trading securities:
Municipal bonds and obligations		961			—			—			—			961

Total	$	7,692		$	67,953		$	283,210		$	1,150,342		$	1,509,197		Total	$	10,557		$	328,528		$	1,476,228		$	3,033,468		$	4,848,781

Weighted-average yield		5.44	%		2.38	%		2.95	%		2.92	%		2.90	%	Weighted-average yield	0.50		%	0.87		%	1.01		%	1.54		%	1.33		%


	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
	(In thousands)
Available for sale securities:
Government-sponsored residential mortgage-backed securities	$	—		$	48,925		$	100,278		$	1,999,597		$	2,148,800
Government-sponsored commercial mortgage-backed securities	—			—			17,081			—			17,081
U.S. Agency bonds	—			99,834			566,875			—			666,709
U.S. Treasury securities	50,251			20,118			—			—			70,369
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		%

The yield on tax-exempt obligations of states and political subdivisions has been adjusted to a ~~fully taxable equivalent~~FTE basis ~~(“FTE”)~~ 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 June 30, ~~2020~~2021 and December 31, ~~2019~~2020 totaled ~~$62.1~~$(4.8) million and ~~$28.0~~$58.7 million, respectively.

The change from December 31, 2020 to June 30, 2021 is primarily driven by a steepening yield curve.

Loans

We consider our ~~loans~~loan portfolio to be relatively diversified by borrower and industry. Our loans ~~increased $1.0 billion,~~decreased $109.5 million, or ~~11.4%~~1.1%, to ~~$10.0~~$9.6 billion at June 30, ~~2020~~2021 from ~~$9.0~~$9.7 billion at December 31, ~~2019.~~2020. The ~~increase~~decrease as of June 30, ~~2020~~2021 was primarily due to ~~$1.1 billion PPP loan originations, partially offset by~~ a decrease in ~~other consumer loans of $67.7 million.~~

our PPP loan balances within the C&I portfolio, as further noted below.

•The ~~increase~~$254.3 million decrease in our commercial and industrial ~~loans from December 31, 2019 to June 30, 2020 was primarily a result of the $633.2 million PPP loan originations during the six months ended June 30, 2020.~~

~~The increase in our business banking loans from December 31, 2019 to June 30, 2020 was primarily a result of $467.0 million in PPP loan originations during the six months ended June 30, 2020.~~

~~The decrease in other consumer loans from December 31, 2019 to June 30, 2020~~portfolio was primarily a result of a decrease of ~~$62.6~~$202.7 million in ~~our automobile portfolio~~PPP loan balances during the six months ended June 30, 2021.

•The $202.1 million increase in our commercial real estate loans from December 31, 2020 ~~due~~ to ~~our exit from our indirect automobile lending business,~~ June 30, 2021 was primarily a result of an increase of $176.2 million of commercial real estate investment loan balances,

Table of Contents

which ~~commenced~~represents loans secured by commercial real estate that are non-owner-occupied, during the ~~year~~six months ended ~~December 31, 2018.~~

June 30, 2021.

•The $9.8 million increase in our retail portfolio was primarily a result of an increase of $86.5 million in residential real estate loans during the six months ended June 30, 2021 which was partially offset by a decrease in our other consumer and consumer home equity portfolios of $43.4 million and $33.3 million, respectively.

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

Loan Portfolio Composition

   June 30,
2020    December 31,
2019
   Amount    Amount
   (In thousands)
Commercial and industrial
   $ 2,271,700    $ 1,642,184
Commercial real estate
   3,584,358    3,535,441
Commercial construction
   282,246    273,774
Business banking
   1,234,961    771,498
Residential real estate
   1,400,855    1,428,630
Consumer home equity
   905,484    933,088
Other consumer
   334,734    402,431




Total loans
   $ 10,014,338    $ 8,987,046
Less:

Allowance for loan losses
   (116,636 )    (82,297 )
Unamortized premiums, net of unearned discounts and deferred fees
   (34,722 )    (5,565 )




Total loans receivable, net
   $ 9,862,980    $ 8,899,184


	As of June 30, 2021		As of December 31, 2020
	(In thousands)
Commercial and industrial	$	1,740,679	$	1,995,016
Commercial real estate	3,775,771		3,573,630
Commercial construction	237,927		305,708
Business banking	1,339,852		1,339,164
Residential real estate	1,457,498		1,370,957
Consumer home equity	834,938		868,270
Other consumer	234,410		277,780
Total loans	9,621,075		9,730,525
Less:
Allowance for loan losses	(105,637)		(113,031)
Unamortized premiums, net of unearned discounts and deferred fees	(29,739)		(23,536)
Total loans receivable, net	$	9,485,699	$	9,593,958

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 ~~88.5%~~90.7% of our loans in Massachusetts and New Hampshire as of June 30, ~~2020.~~

2021.

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 ~~nonperforming~~non-performing and further assessed to determine if ~~nonaccrual~~non-accrual status is appropriate.

For the commercial portfolio, which includes our commercial and industrial, commercial real estate, ~~and~~ commercial construction and business banking loans, we monitor credit quality using a ~~12-point~~ ~~commercial risk-rating system is utilized,~~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 loan risk rating methodology based on a 15-point scale and adopted new 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 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).

Risk rating assignment is determined using one of 14 separate scorecards developed for distinctive portfolio segments based on common attributes. Key factors ~~include~~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 ~~categories are as follows: unrated (0), pass~~ ~~(1-6W),~~ ~~special mention (7), substandard (8), doubtful (9)~~methodology, inclusive of the expanded grade levels and ~~loss (10).~~

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 ~~8.9%~~6.8% and ~~2.6%~~7.7% of total commercial loans outstanding at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. This ~~increase~~decrease was driven by ~~an increase~~risk rating upgrades in the ~~special mention category, due to the downgrading~~construction and commercial and industrial portfolios.

Table of ~~our hotel and restaurant loan portfolios as a result of the~~ ~~COVID-19~~ ~~pandemic.~~

Contents

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 ~~increased~~decreased to ~~0.84%~~0.42% at June 30, ~~2020~~2021 from 0.49% at December 31, 2019, primarily due to an increase in delinquencies in our (i) residential real estate portfolio, (ii) other consumer portfolio, (iii) consumer home equity portfolio and (iv) business banking portfolio, partially offset by a decrease in our commercial and industrial portfolio.

2020.

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

Loan Delinquency Rates

   Delinquency Rate as of ⁽¹⁾
   June 30, 2020 December 31, 2019
Portfolio

Commercial and industrial
   0.13 % 0.14 %
Commercial real estate
   0.09 % 0.09 %
Commercial construction
   0.10 % —   %
Business banking
   1.76 % 1.28 %
Residential real estate
   2.71 % 1.37 %
Consumer home equity
   1.09 % 0.49 %
Other consumer
   2.30 % 1.13 %


Total
   0.84 % 0.49 %

~~(1)~~

~~In the calculation of the delinquency rate as of June 30, 2020, the total amount of loans outstanding includes $1.1 billion of PPP loans.~~


	Delinquency Rate as of (1)
	June 30, 2021		December 31, 2020
Portfolio
Commercial and industrial	0.05	%	0.11	%
Commercial real estate	0.09	%	0.06	%
Commercial construction	—	%	—	%
Business banking	0.93	%	1.40	%
Residential real estate	1.21	%	1.21	%
Consumer home equity	0.53	%	0.60	%
Other consumer	0.86	%	0.98	%
Total	0.42	%	0.49	%

(1)In the calculation of the delinquency rate as of June 30, 2021 and December 31, 2020, the total amount of loans outstanding includes $0.8 billion and $1.0 billion, respectively, of PPP loans.

The following table provides details regarding the age analysis of past due loans as of the dates indicated:

Age Analysis of Past Due Loans

   As of June 30, 2020    As of December 31, 2019
   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
   $ 681    $ 671    $ 1,508    $ 1,407    $ —      $ 963
Commercial real estate
   —      257    3,045    1,290    100    1,856
Commercial construction
   —      —      280    —      —      —
Business banking
   4,541    4,160    13,021    3,031    763    6,095
Residential real estate
   26,859    2,084    8,981    14,030    2,563    3,030
Consumer home equity
   3,413    1,971    4,511    2,497    430    1,636
Other Consumer
   2,992    1,734    2,971    3,451    514    579












Total
   $ 38,486    $ 10,877    $ 34,317    $ 25,706    $ 4,370    $ 14,159


	As of June 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	$	—	$	267	$	647	$	4	$	268	$	1,924
Commercial real estate	1,896		—		1,414		—		556		1,545
Commercial construction	—		—		—		—		—		—
Business banking	4,004		1,902		6,609		5,279		3,311		10,196
Residential real estate	11,706		1,330		4,631		9,184		2,517		4,904
Consumer home equity	610		403		3,408		1,806		364		3,035
Other Consumer	1,074		438		513		1,978		234		517
Total	$	19,290	$	4,340	$	17,222	$	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.

Nonperforming assets (“NPAs”) are comprised of nonperforming loans (“NPLs”), ~~other real estate owned (“OREO”)~~OREO and nonperforming securities. NPLs consist of ~~nonaccrual~~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. These properties are recorded at the lower~~foreclosure or acceptance of ~~cost or fair value less estimated costs to sell on the date we obtain control.~~

a deed in lieu of foreclosure.

Table of Contents

The following table sets forth information regarding NPAs held as of the dates indicated:

Nonperforming Assets

   As of
June 30, 2020 As of
December 31, 2019
   (In thousands)
Non-accrual loans:

Commercial
   $ 31,273 $ 34,093
Residential
   11,693 5,598
Consumer
   9,374 2,760


Total non-accrual loans
   52,340 42,451


Accruing loans past due 90 days or more:

Commercial
   2,802 1,315
Residential
   244 —
Consumer
   9 9


Total accruing loans past due 90 days or more
   3,055 1,324


Total non-performing loans
   55,395 43,775
Total real estate owned
   40 —


Other non-performing assets:
   —   —


Total non-performing assets
   $ 55,435 $ 43,775


Total accruing troubled debt restructured loans
   $ 40,691 $ 48,623
Total non-performing loans to total loans
   0.56 % 0.49 %
Total non-performing assets to total assets
   0.40 % 0.38 %


	As of June 30, 2021			As of December 31, 2020
	(In thousands)
Non-accrual loans:
Commercial	$	29,356		$	30,059
Residential	6,445			6,815
Consumer	4,106			4,131
Total non-accrual loans	39,907			41,005
Accruing loans past due 90 days or more:
Commercial	1,439			1,959
Residential	277			279
Consumer	9			9
Total accruing loans past due 90 days or more	1,725			2,247
Total nonperforming loans	41,632			43,252
Total real estate owned	38			—
Other nonperforming assets:	—			—
Total nonperforming assets	$	41,670		$	43,252
Total accruing troubled debt restructured loans	$	38,316		$	41,095
Total nonperforming loans to total loans	0.43		%	0.45		%
Total nonperforming assets to total assets	0.24		%	0.27		%

NPLs ~~increased $11.6~~decreased $1.6 million, or ~~26.5%~~3.7%, to ~~$55.4~~$41.6 million at June 30, ~~2020~~2021 from ~~$43.8~~$43.3 million at December 31, ~~2019.~~2020. NPLs as a percentage of total loans ~~increased~~decreased to ~~0.56%~~0.43% at June 30, ~~2020~~2021 from ~~0.49%~~0.45% at December 31, ~~2019 as~~2020 primarily due to a ~~result of an increase~~decrease in business banking, commercial real estate, and residential real estate non-accrual loans.

Non-accrual loans decreased $1.1 million, or 2.7%, to $39.9 million at June 30, 2021 from $41.0 million at December 31, 2020, primarily due to a decrease in non-accrual loans in our business banking ~~and residential real estate portfolios,~~portfolio, partially offset by ~~a decrease~~an increase in non-accrual loans in our commercial and industrial ~~portfolio due to a single, larger loan payoff and a reduction in~~portfolio.

The total amount of interest recorded on NPLs was $0.2 million for the ~~outstanding balance of a single, larger Asset Based Lending (“ABL”) credit.~~

~~Non-accrual~~ ~~loans increased $9.9 million, or 23.3%, to $52.3 million at~~six months ended June 30, ~~2020 from $42.5~~2021. The gross interest income that would have been recorded under the original terms of those loans if they had been performing amounted to $1.5 million ~~at December 31, 2019, primarily due to a $7.7 million increase in our business banking portfolio and $6.1 million increase in our residential real estate portfolio, partially offset by~~for the ~~paydowns of certain NPLs as discussed above.~~

six months ended June 30, 2021. The total amount of interest recorded on NPLs was $0.3 million for the six months ended June 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 $2.0 million for the six months ended June 30, 2020.

~~Troubled debt restructuring (“TDR”)~~

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 previously, loan modifications made in response to the COVID-19 pandemic 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.

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 by the loan’s contractual 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 impairment loss, if any, is recorded 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 modified during the six months ended June 30, 2021 and 2020 were ~~$2.8~~$0.8 million (post modification balance)~~. There was one~~ and $2.8 million, respectively. The overall decrease in TDR loans modified during the aforementioned periods consisted of a decrease of $1.4 million in commercial loan ~~with~~TDR modifications and a ~~balance~~decrease of ~~$1.3~~$0.7 million in consumer loan

Table of Contents

TDR modifications. Two loans totaling $0.5 million were modified during the preceding 12 months, which subsequently defaulted during the six months ended June 30, 2021. One loan totaling $1.3 million was modified during the 12 months ended June 30, 2020, which subsequently defaulted during six months ended June 30, 2020. ~~The increase in TDR~~

It is our policy to have any restructured loans, ~~was driven by $1.8 million in commercial loans and $1.0 million in consumer loans.~~

~~Purchase credit impaired (“PCI”)~~which are 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 loans are loans 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 June 30, ~~2020~~2021 and December 31, ~~2019~~2020 the carrying amount of PCI loans was ~~$12.4~~$4.5 million and ~~$13.5~~$9.3 million, respectively.

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

Distribution of Nonperforming Loans

   As of June 30, 2020
   Outstanding    90+ Days Due
Still Accruing    Non-accruing
Loans    Troubled Debt
Restructured
Loans, but
Accruing    NPLs    NPLs as a %
of Outstanding
         (Dollars in thousands)
Loans:

Commercial
   $ 7,373,265    $ 2,802    $ 31,273    $ 13,093    $ 34,075    0.46 %
Residential
   1,400,855    244    11,693    23,714    11,937    0.85 %
Consumer
   1,240,218    9    9,374    3,884    9,383    0.76 %












Total
   $ 10,014,338    $ 3,055    $ 52,340    $ 40,691    $ 55,395    0.55 %

   As of December 31, 2019
   Outstanding    90+ Days Due
Still Accruing    Non-accruing
Loans    Troubled Debt
Restructured
Loans, but
Accruing    NPLs    NPLs as a %
of Outstanding
         (Dollars in thousands)
Loans:

Commercial
   $ 6,222,897    $ 1,315    $ 34,093    $ 17,575    $ 35,408    0.57 %
Residential
   1,428,630    —      5,598    25,093    5,598    0.39 %
Consumer
   1,335,519    9    2,760    5,955    2,769    0.21 %












Total
   $ 8,987,046    $ 1,324    $ 42,451    $ 48,623    $ 43,775    0.49 %


	As of June 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	$	7,094,229	$	1,439	$	29,356	$	30,795	0.43	%	$	13,140
Residential	1,457,498		277		6,445		6,722		0.46	%	21,677
Consumer	1,069,348		9		4,106		4,115		0.38	%	3,499
Total	$	9,621,075	$	1,725	$	39,907	$	41,632	0.43	%	$	38,316

(1) Total gross loans outstanding includes $0.8 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.

Table of Contents

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 inas a result of the ~~current~~ economic ~~environment.~~impact of the COVID-19 pandemic. These loans were neither delinquent nor on non-accrual status. At June 30, ~~2020~~2021 and December 31, ~~2019,~~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 ~~$660.6~~$492.1 million and ~~$157.3~~$563.3 million, respectively.

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 certain expiring tax provisions related to the COVID-19 pandemic in the United States 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, we intend to apply CARES Act TDR relief to any qualifying loan modifications executed during the allowable time period.

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

Remaining COVID-19 Modifications as of June 30, 2021 (1)
Remaining COVID-19 Modifications as of December 31, 2020 (1)
Balance % of Total Portfolio Balance % of Total Portfolio
(Dollars in thousands)
Portfolio
Commercial and industrial $ 18,850 1.1 % $ 34,076 1.7 %
Commercial real estate 113,301 3.0 % 231,794 6.5 %
Commercial construction — — % 10,987 3.6 %
Business banking 2,102 0.2 % 23,434 1.7 %
Residential real estate 13,428 0.9 % 26,772 2.0 %
Consumer home equity 1,124 0.1 % 3,432 0.4 %
Other consumer 999 0.4 % 2,187 0.8 %
Total $ 149,805 1.6 % $ 332,682 3.4 %

(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.

High Risk Industries.As of the date of this Quarterly Report on Form 10-Q, we are unable to reasonably estimate the aggregate amount of loans that will likely become delinquent after the respective deferral period. As of June 30, 2021, we believe loans to our borrowers in retail, restaurant, and hotel industry categories represent those which have experienced and will likely continue to experience the most adverse effects of the COVID-19 pandemic. As of June 30, 2021, the aggregate outstanding loan balance of loans to our borrowers in retail, restaurant, and hotel industry categories was $477.5 million, $191.2 million and $169.6 million, respectively, representing 5.0%, 2.0% and 1.8% of total loans, respectively. As of June 30, 2021, the percentage of loans to our borrowers in retail, restaurant, and hotel industry categories that we modified primarily due to the effects on borrowers of the COVID-19 pandemic and related economic slowdown beginning in late March 2020 were 0.9%, 9.9% and 52.6%, respectively.

Allowance for loan losses.Due to our emerging growth company status under the JOBS Act, we still follow the incurred loss allowance GAAP accounting model. For additional information, see “Risk Factors—We may be required to

Table of Contents

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 ~~the~~our allowance for loan losses, we segregate the loan portfolio into ~~the~~ homogenous loan pools 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.

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 possess 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;

•corporate goals and objectives;

•expertise of our lending staff;

•lending policy and practices; and

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

Loans are periodically evaluated using changes in asset quality, historical losses, and other loss allocation factors, which form 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 and historical loss experience.

The allowance for loan losses ~~increased~~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 credit loss incurred in the loan portfolio. Under our current methodology, the allowance for loan losses contains specific, general and other components.

The specific component consists of reserves for impaired loans (defined 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 reviewed to identify the loans 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 value of expected future cash flows, except for collateral-dependent loans, where the impairment is based on the fair value of the collateral.

The general loss reserves methodology, which is applied to categories of 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 impact the loss experience during the incurred loss horizon period, including internal infrastructure factors, external macroeconomic factors, internal credit quality factors and external industry data, tailored to the specific loan category.

For additional discussion of our risk rating methodology, see Note 4, “Loans and Allowance for Loan Losses” within the Notes to the Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q.

The allowance for loan losses decreased by ~~$34.3~~$7.4 million, or ~~41.7%~~6.5%, to ~~$116.6~~$105.6 million, or ~~1.17%~~1.10% of total loans, at June 30, ~~2020~~2021 from ~~$82.3~~$113.0 million, or ~~0.92%~~1.16% of total loans at December 31, ~~2019.~~2020. The ~~increase~~decrease in the allowance for loan losses

Table of Contents

was primarily a result of ~~our response to~~improved macroeconomic conditions and risk rating upgrades in the ~~COVID-19-related~~commercial portfolios during the period. The economic ~~impact. During~~environment during the three and six months ended June 30, ~~2020, we downgraded our risk ratings for all loans secured~~2021 was assisted by ~~hotels~~government stimulus, the impacts of loan deferral programs, reductions in unemployment and ~~restaurants, and any of our other commercial loans for which our customers are expecting to face financial difficulties due to the current economic environment, and the lower risk ratings resulted~~reductions in higher levels of reserves for the allowance. In total, we downgraded the risk rating on $1.7 billion of commercial loans, of which $511.9 million were transferred into the special mention, or worse, risk rating category. This,COVID-19 related restrictions. These, along with other factors, resulted in a ~~provision~~release of provisions for loan ~~loss~~losses of $3.3 million and $3.9 million for the three and six months ended June 30, 2021 in comparison to provisions for loan losses of $8.6 million and $37.2 million for the three and six months ended June 30, 2020.

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

Summary of Changes in the Allowance for Loan Losses

   Three months ended June 30, Six months ended June 30,
   2020 2019 2020 2019
   (Dollars in thousands)
Average total loans
   $ 9,445,666 $ 8,916,224 $ 9,445,666 $ 8,916,224


Allowance for loan losses, beginning of the period
   $ 109,138 $ 82,493 $ 82,297 $ 80,655
Charged-off loans:

Commercial and industrial
   27 272 27 272
Commercial real estate
   24 169 24 169
Commercial construction
   —   —   —   —
Business banking
   1,198 1,371 2,535 2,810
Residential real estate
   —   46 —   63
Consumer home equity
   —   124 473 124
Other consumer
   15 581 548 1,049


Total charged-off loans
   1,264 2,563 3,607 4,487


Recoveries on loans previously charged-off:

Commercial and industrial
   58 908 380 1,368
Commercial real estate
   5 2 6 4
Commercial construction
   —   —   —   —
Business banking
   27 193 154 320
Residential real estate
   13 12 73 71
Consumer home equity
   8 20 22 28
Other consumer
   51 97 111 203


Total recoveries
   162 1,232 746 1,994


Net loans charged-off (recoveries):

Commercial and industrial
   (31 ) (636 ) (353 ) (1,096 )
Commercial real estate
   19 167 18 165
Commercial construction
   —   —   —   —
Business banking
   1,171 1,178 2,381 2,490
Residential real estate
   (13 ) 34 (73 ) (8 )
Consumer home equity
   (8 ) 104 451 96
Other consumer
   (36 ) 484 437 846


Total net loans charged-off
   1,102 1,331 2,861 2,493


Provision for loan losses
   8,600 1,500 37,200 4,500


Total allowance for loan losses, end of period
   $ 116,636 $ 82,662 $ 116,636 $ 82,662


Net charge-offs to average total loans outstanding during this period
   0.01 % 0.01 % 0.03 % 0.03 %
Allowance for loan losses as a percent of total loans
   1.17 % 0.92 % 1.17 % 0.92 %
Allowance for loan losses as a percent of nonperforming loans
   210.55 % 251.34 % 210.55 % 251.34 %

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(Dollars in thousands)
Average total loans $ 9,796,701 $ 9,875,110 $ 9,806,688 $ 9,445,666
Allowance for loan losses, beginning of the period $ 111,080 $ 109,138 $ 113,031 $ 82,297
Charged-off loans:
Commercial and industrial 550 27 550 27
Commercial real estate — 24 234 24
Commercial construction — — — —
Business banking 1,838 1,198 3,222 2,535
Residential real estate — — — —
Consumer home equity — — — 473
Other consumer 275 15 639 548
Total charged-off loans 2,663 1,264 4,645 3,607
Recoveries on loans previously charged-off:
Commercial and industrial 13 58 22 380
Commercial real estate 4 5 4 6
Commercial construction — — — —
Business banking 291 27 656 154
Residential real estate 17 13 27 73
Consumer home equity 3 8 74 22
Other consumer 192 51 348 111
Total recoveries 520 162 1,131 746
Net loans charged-off (recoveries):
Commercial and industrial 537 (31) 528 (353)
Commercial real estate (4) 19 230 18
Commercial construction — — — —
Business banking 1,547 1,171 2,566 2,381
Residential real estate (17) (13) (27) (73)
Consumer home equity (3) (8) (74) 451
Other consumer 83 (36) 291 437
Total net loans charged-off 2,143 1,102 3,514 2,861
(Release of) provision for loan losses (3,300) 8,600 (3,880) 37,200
Total allowance for loan losses, end of period $ 105,637 $ 116,636 $ 105,637 $ 116,636
Net charge-offs to average total loans outstanding during this period 0.02 % 0.01 % 0.04 % 0.03 %
Allowance for loan losses as a percent of total loans 1.10 % 1.20 % 1.10 % 1.20 %
Allowance for loan losses as a percent of nonperforming loans 253.74 % 210.55 % 253.74 % 210.55 %

Table of Contents

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 June 30, 2020 As of December 31, 2019
   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)
Commercial and industrial ⁽¹⁾
   $ 33,229    28.49 % 22.69 % $ 20,919    25.42 % 18.27 %
Commercial real estate
   54,228    46.49 % 35.79 % 34,730    42.20 % 39.34 %
Commercial construction
   4,816    4.13 % 2.82 % 3,424    4.16 % 3.05 %
Business banking⁽¹⁾
   9,805    8.41 % 12.33 % 8,260    10.04 % 8.58 %
Residential real estate
   6,569    5.63 % 13.99 % 6,380    7.75 % 15.90 %
Consumer home equity
   3,875    3.32 % 9.04 % 4,027    4.89 % 10.38 %
Other consumer
   3,762    3.23 % 3.34 % 4,173    5.07 % 4.48 %
Unallocated
   352    0.30 % —   % 384    0.47 % —   %






Total
   $ 116,636    100.00 % 100.00 % $ 82,297    100.00 % 100.00 %

~~(1)~~

~~PPP loans are included within this portfolio; however, no allowance for loan losses have been recorded on these loans due to the SBA guarantee of 100% of the loans~~

As of June 30, 2021 As of December 31, 2020
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)
Commercial and industrial (1)
$ 22,596 21.39 % 18.09 % $ 26,617 23.54 % 20.51 %
Commercial real estate 52,759 49.95 % 39.24 % 54,569 48.28 % 36.73 %
Commercial construction 3,446 3.26 % 2.47 % 4,553 4.03 % 3.14 %
Business banking (1)
12,705 12.03 % 13.93 % 13,152 11.64 % 13.76 %
Residential real estate 6,478 6.13 % 15.15 % 6,435 5.69 % 14.09 %
Consumer home equity 3,588 3.40 % 8.68 % 3,744 3.31 % 8.92 %
Other consumer 3,626 3.43 % 2.44 % 3,467 3.07 % 2.85 %
Other 439 0.41 % — % 494 0.44 % — %
Total $ 105,637 100.00 % 100.00 % $ 113,031 100.00 % 100.00 %

(1)PPP loans are included within these portfolios as of June 30, 2021 and December 31, 2020; however, as of June 30, 2021 and December 31, 2020 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 Losses” within the Notes to the 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 ~~$8.8~~$10.6 million and ~~$9.0~~$8.8 million at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

Goodwill and other intangible assets

Goodwill and other intangible assets were ~~$376.3~~$380.4 million and ~~$377.7~~$376.5 million at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The ~~decrease~~increase in goodwill and other intangibles assets was due to the ~~amortization~~purchase of ~~definite- lived intangibles~~two insurance agencies during the six months ended June 30, ~~2020.~~2021. We did not record any impairment to our goodwill or other intangible assets atduring the six months ended June 30, ~~2020.~~2021. We will continue to assess our goodwill and other intangible assets to determine if impairments are necessary ~~during the remainder of the year ending December 31, 2020 and beyond~~ as it relates to the COVID-19 pandemic.

Table of Contents

Deposits and other interest-bearing liabilities

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 June 30, 2020 As of December 31, 2019
   Amount    % Change Amount    % Change
      (Dollars in thousands)
Demand
   $ 4,740,125    34.8 % $ 3,517,447    2.11 %
Interest checking
   2,385,912    31.5 % 1,814,327    (4.48 )%
Savings
   1,157,606    19.2 % 971,119    (2.85 )%
Money market investments
   3,254,202    11.5 % 2,919,360    13.12 %
Certificate of deposits
   308,920    (6.1 )% 329,139    (30.70 )%





Total deposits
   $ 11,846,765    24.0 % $ 9,551,392    1.62 %


	As of June 30, 2021		As of December 31, 2020		Change
					Amount ($)		Percentage (%)
	(Dollars in thousands)
Demand	$	5,399,297	$	4,910,794	$	488,503	9.9	%
Interest checking	2,656,610		2,380,497		276,113		11.6	%
Savings	1,403,472		1,256,736		146,736		11.7	%
Money market investments	3,544,897		3,348,898		195,999		5.9	%
Certificate of deposits	246,157		258,859		(12,702)		(4.9)	%
Total deposits	$	13,250,433	$	12,155,784	$	1,094,649	9.0	%

Deposits increased by ~~$2.3~~$1.1 billion, or ~~24.0%~~9.0%, to ~~$11.8~~$13.3 billion at June 30, ~~2020~~2021 from ~~$9.6~~$12.2 billion at December 31, ~~2019.~~2020. This increase was primarily the result of an increase in demand deposits of $488.5 billion, an increase in interest checking deposits of ~~$571.6~~$276.1 million and an increase in money market deposits of ~~$1.2 billion~~$196.0 million. These increases reflect strong deposit flows, in ~~demand deposits. During the six months ended June 30, 2020, we transferred a product for our Financial Institutions customers from borrowings~~part due to ~~deposits totaling $299.5 million.~~

government stimulus.

The following table presents the classification of deposits on an average basis for the years below. We believe the presentation of average deposits for the respective years below provide a better understanding of the business mix and low cost structure of our deposit portfolio than the composition of deposits as of the respective year ends below, due to the overnight program of the Federal Reserve Bank of Boston described above.

periods below:

Classification of ~~deposits~~Deposits on an Average Basis

   As of June 30, 2020 As of December 31, 2019
   Average
Amount    Average
Rate Average
Amount    Average
Rate
   (Dollars in thousands)
Demand
   $ 3,963,066    0.00 % $ 3,369,375    0.00 %
Interest checking
   2,158,242    0.14 % 1,842,993    0.21 %
Savings
   1,036,344    0.02 % 991,244    0.02 %
Money market investments
   3,087,048    0.38 % 2,769,934    0.69 %
Certificate of deposits
   320,277    0.69 % 392,035    1.02 %





Total deposits
   $ 10,564,977    0.16 % $ 9,365,581    0.29 %


	For the Six Months Ended June 30, 2021				For the Year Ended December 31, 2020
	Average Amount		Average Rate		Average Amount		Average Rate
	(Dollars in thousands)
Demand	$	5,241,134	—	%	$	4,535,066	—	%
Interest checking	2,466,860		0.04	%	2,227,185		0.09	%
Savings	1,343,133		0.02	%	1,123,584		0.02	%
Money market investments	3,482,002		0.07	%	3,212,752		0.23	%
Certificate of deposits	248,946		0.18	%	300,381		0.52	%
Total deposits	$	12,782,075	0.03	%	$	11,398,968	0.10	%

Other time deposits of $100,000 and greater, including certificates of deposits of $100,000 and greater, as of the dates indicated had maturities as follows:

   As of
June 30, 2020    As of
December 31, 2019
Maturing in
   Amount    Amount
   (Dollars in thousands)
Three months or less
   $ 74,297    $ 58,958
Over three months through six months
   39,072    43,008
Over six months through 12 months
   19,433    44,643
Over 12 months
   12,794    11,029




Total
   $ 145,596    $ 157,638

As of June 30, 2021 As of December 31, 2020
Maturing in (In thousands)
Three months or less $ 58,098 $ 49,740
Over three months through six months 26,877 24,608
Over six months through 12 months 16,083 31,009
Over 12 months 9,626 9,956
Total $ 110,684 $ 115,313

Table of Contents

Borrowings

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

Our total borrowings ~~decreased~~increased by ~~$206.2~~$0.4 million, or ~~87.6%~~1.4%, to ~~$29.2~~$28.4 million at June 30, ~~2020 from $235.4~~2021 compared to $28.0 million at December 31, ~~2019.~~2020. The ~~decrease~~increase was primarily due to ~~a reduction~~an increase in escrow deposits of ~~$201.1 million of federal funds purchased. The reduction in~~ our ~~federal funds purchased was a result of the transfer of a product for our Financial Institution customers from borrowings to deposits.~~

borrowers.

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

Borrowings by Category

   As of June 30,    As of December 31,    % Change from
December 31, 2019
to June 30, 2020 % Change from
June 30, 2019
to June 30, 2020
   2020    2019    2019
         (Dollars in thousands)
Federal funds purchased
   $ —      $ 182,814    $ 201,082    (100.0 )% (100.0 )%
Federal Home Loan Bank advances
   14,922    121,888    18,964    (21.3 )% (87.8 )%
Escrow deposits of borrowers
   14,233    14,871    15,349    (7.3 )% (4.3 )%







Total
   $ 29,155    $ 319,573    $ 235,395    (87.6 )% (90.9 )%

Change
As of June 30, 2021 As of December 31, 2020 Amount ($) Percentage (%)
(In thousands)
FHLB advances $ 14,323 $ 14,624 $ (301) (2.1) %
Escrow deposits of borrowers 14,119 13,425 694 5.2 %
Total $ 28,442 $ 28,049 $ 393 1.4 %

Results of Operations

Summary of Results of Operations

   Three months ended June 30, Six months ended June 30,
         Change       Change
   2020    2019    Amount ($) Percentage 2020    2019    Amount ($) Percentage
   (dollars in thousands)
Interest and dividend income
   $ 101,933    $ 112,838    (10,905 ) (9.7 )% $ 208,092    $ 224,321    $ (16,229 ) (7.2 )%
Interest expense
   3,178    9,315    (6,137 ) (65.9 )% 9,191    18,126    (8,935 ) (49.3 )%
Net interest income
   98,755    103,523    (4,768 ) (4.6 )% 198,901    206,195    (7,294 ) (3.5 )%
Provision for loan losses
   8,600    1,500    7,100 473.3 % 37,200    4,500    32,700 726.7 %
Noninterest income
   47,657    45,632    2,025 4.4 % 81,026    93,432    (12,406 ) (13.3 )%
Noninterest expense
   100,765    101,570    (805 ) (0.8 )% 195,937    206,399    (10,462 ) (5.1 )%
Income taxes
   7,197    11,032    (3,835 ) (34.8 )% 8,495    20,710    (12,215 ) (59.0 )%
Net income
   29,850    35,053    (5,203 ) (14.8 )% 38,295    68,018    (29,723 ) (43.7 )%


	Three Months Ended June 30,							Six Months Ended June 30,
					Change						Change
	2021		2020		Amount ($)	Percentage		2021		2020	Amount ($)		Percentage
	(Dollars in thousands)
Interest and dividend income	$	105,681	$	101,933	3,748	3.7	%	$	206,814	208,092	$	(1,278)	(0.6)	%
Interest expense	1,073		3,178		(2,105)	(66.2)	%	2,115		9,191	(7,076)		(77.0)	%
Net interest income	104,608		98,755		5,853	5.9	%	204,699		198,901	5,798		2.9	%
Provision for loan losses	(3,300)		8,600		(11,900)	(138.4)	%	(3,880)		37,200	(41,080)		(110.4)	%
Noninterest income	45,733		47,657		(1,924)	(4.0)	%	100,945		81,026	19,919		24.6	%
Noninterest expense	107,335		100,765		6,570	6.5	%	201,384		195,937	5,447		2.8	%
Income tax expense	11,497		7,197		4,300	59.7	%	25,668		8,495	17,173		202.2	%
Net income	34,809		29,850		4,959	16.6	%	82,472		38,295	44,177		115.4	%

Comparison of the three and six months ended June 30, ~~2020~~2021 and ~~2019~~

2020

Interest and Dividend Income

Interest and dividend income ~~decreased~~increased by ~~$10.9~~$3.7 million, or ~~9.7%~~3.7%, to $105.7 million during the three months ended June 30, 2021 from $101.9 million during the three months ended June 30, ~~2020 from $112.8~~2020. The increase was primarily a result of an increase in the average balance of securities partially offset by a decrease in the yield on such securities.

•Interest income on securities and federal funds sold and other short-term investments increased $5.0 million, or 50.6%, to $14.7 million during the three months ended June 30, ~~2019.~~2021 from $9.8 million during the three months ended June 30, 2020. The increase in interest income on our securities was primarily due to an increase in the average balance of such securities of $3.4 billion, or 129.0%, to $6.0 billion for the three months ended June 30, 2021 from $2.6 billion for the three months ended June 30, 2020 which was partially offset by a decrease ~~was a result of~~in the ~~negative impact of a lower interest rate environment.~~

yield on such securities.

•Interest income on loans decreased ~~by $10.1~~$1.2 million, or ~~9.9%~~1.3%, to $90.9 million during the three months ended June 30, 2021 from $92.1 million during the three months ended June 30, ~~2020 from $102.2~~2020. The decrease in 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

Table of Contents

and costs of $5.2 million, or 126.8%, to $9.3 million during the three months ended June 30, ~~2019.~~

~~Interest income on securities decreased $0.8~~2021 from $4.1 million ~~or 7.8%, to $9.8 million for the~~during three months ended June 30, ~~2020 compared to $10.6 million for the three months ended June 30, 2019.~~

2020.

Interest and dividend income decreased by ~~$16.2~~$1.3 million, or ~~7.2%~~0.6%, to $206.8 million during the six months ended June 30, 2021 from $208.1 million during the six months ended June 30, ~~2020 from $224.3 million during the six months ended June 30, 2019.~~2020. This decrease was a result of lower interest income on our loans as the yield on average interest-earning assets on an FTE basis decreased 7392 basis points to 2.7% during the six months ended June 30, ~~2020,~~2021, partially offset by ~~our recording~~accretion of deferred fees related to our PPP loans. Our average interest-earning assets increased by ~~$1.2~~$3.9 billion, or ~~11.1%~~33.2%, to $15.5 billion as of June 30, 2021 compared to $11.6 billion as of June 30, 2020, ~~compared to $10.5 billion as~~primarily reflecting the investment of ~~June 30, 2019.~~the proceeds from our October 2020 IPO. 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. This presentation allows for better comparability between institutions with different tax structures.

•Interest income on loans decreased by ~~$15.1~~$8.1 million, or ~~7.4%~~4.3%, to $179.6 million during the six months ended June 30, 2021 from $187.7 million during the six months ended June 30, ~~2020 from $202.8 million during the six months ended June 30, 2019.~~2020. The decrease in interest income on our loans was primarily due to the decrease in the yield on average ~~loans. The decrease in the average yield on our~~ loans which was ~~primarily due to~~driven by the downward adjustment of the interest rates on our existing adjustable-rate loans as a result of ~~the lowering~~lower interest ~~rate environment, whereas the~~rates. The average balance of loans increased primarily due to ~~continued efforts to expand our~~PPP loan ~~portfolio.~~originations, partially offsetting the decline in interest rates. The FTE yield on average loans decreased 5930 basis points to ~~4.03%~~3.7% during the six months ended June 30, ~~2020.~~2021. The average balance of our loans increased by ~~$529.4~~$361.0 million, or ~~5.9%~~3.8%, to $9.8 billion as of June 30, 2021 compared to $9.4 billion as of June 30, ~~2020 compared to $8.9 billion as~~2020.

•Partially offsetting the negative impact of the downward adjustment of the interest rates on our existing adjustable-rate loans was the recognition of net PPP loan fee accretion. During the six months ended June 30, ~~2019.~~

2021, we recognized $17.6 million in net PPP loan fee accretion. We began originating PPP loans in the second quarter of 2020 and recognized $4.1 million in net PPP loan fee accretion during the six months ended June 30, 2020.

•Interest income on securities ~~decreased $1.1~~and federal funds sold and other short-term investments increased $6.8 million, or ~~5.3%~~33.5%, to $27.2 million for the six months ended June 30, 2021 compared to $20.4 million for the six months ended June 30, ~~2020 compared to $21.5 million for the six months ended June 30, 2019.~~2020. The ~~decrease~~increase in interest income on securities was due to a larger average security balance driven by security purchases between June 30, 2021 and June 30, 2020, partially offset by lower overall market rates. The FTE yield on average securities and other interest-earning assets decreased ~~100~~99 basis points to ~~2.0%~~1.0% during the six months ended June 30, ~~2019.~~2021. The average balance of securities and other ~~interest earning~~interest-earning assets increased by ~~$628.2 million,~~$3.5 billion, or ~~40.7%~~160.9%, to $5.7 billion as of June 30, 2021 compared to $2.2 billion as of June 30, ~~2020 compared~~2020. The increase was primarily due to ~~$1.5 billion as of June 30, 2019.~~

~~We received approximately $35.8 million of PPP loan origination fees from~~ the ~~SBA. We also deferred certain origination costs, totaling $3.5 million, related to our PPP loans. The loan fees and the deferred costs will be amortized through interest income over the life~~investment of the ~~PPP loans, which is expected~~proceeds of our October 2020 IPO.

Interest Expense

Interest expense decreased $2.1 million, or 66.2%, to ~~be 24 months, but~~$1.1 million during the ~~amortization period will be adjusted as PPP loans are forgiven or repaid. During the six~~three months ended June 30, ~~2020, we recorded $4.1 million in PPP loan fees, net in interest income.~~

~~Interest Expense~~

~~Interest expense decreased $6.1 million, or 65.9%, to~~2021 from $3.2 million during the three months ended June 30, ~~2020 from $9.3 million during the three months ended June 30, 2019.~~2020. The decrease was a result of lower funding costs associated with the decline in market interest rates.

•Interest expense on our interest-bearing deposits decreased by ~~$4.2~~$2.1 million, or ~~57.6%~~66.8%, to $1.0 million during the three months ended June 30, 2021 from $3.1 million during the three months ended June 30, ~~2020 from $7.3 million~~2020.

•Interest expense on borrowed funds decreased by $32.0 thousand, or 43.2%, to $42.0 thousand during the three months ended June 30, ~~2019.~~

~~Interest expense on borrowed funds decreased by $1.9 million, or 96.3%, to $0.1 million~~2021 from $74.0 thousand during the three months ended June 30, ~~2020 from $2.0~~2020.

Interest expense decreased $7.1 million, or 77.0%, to $2.1 million during the ~~three~~six months ended June 30, ~~2019.~~

~~Interest expense decreased $8.9 million, or 49.3%, to~~2021 from $9.2 million during the six months ended June 30, ~~2020 from $18.1~~2020. The decrease was a result of lower funding costs associated with the decline in market interest rates.

•Interest expense on our interest-bearing deposits decreased by $6.5 million, or 76.1%, to $2.0 million during the six months ended June 30, 2019. The decrease was a result of decreased rates paid on deposits. The overall rates paid on average interest-bearing liabilities decreased 31 basis points to 0.27% during the six months ended June 30, 2020. Average interest-bearing liabilities increased $404.3 million, or 6.4%, to $6.7 billion as of six months ended June 30, 2020 compared to $6.3 billion as of six months ended June 30, 2019.

~~Interest expense on our interest-bearing deposits decreased by $5.3 million, or 38.4%, to~~2021 from $8.5 million during the six months ended June 30, 2020.

•Interest expense on borrowed funds decreased by $591.0 thousand, or 87.8%, to $82.0 thousand during the six months ended June 30, 2021 from $673.0 thousand during the six months ended June 30, 2020.

Table of Contents

Average interest-bearing deposits increased $0.9 billion, or 14.2%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. The increase in deposit costs associated with the increase in average deposits was more than offset by the reduction in rates paid on deposits during the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

Net Interest Income

Net interest income was $104.6 million for the three months ended June 30, 2021 compared to $98.8 million for the three months ended June 30, 2020, ~~from $13.8~~representing an increase of $5.9 million, or 5.9%. Net interest income was $204.7 million during the six months ended June 30, 2019. The decrease in our interest expense on interest-bearing deposits was due to a decrease in the cost of deposits. The average balance of deposits increased due to our increasing core deposits to help fund loan growth, whereas the average cost of deposits decreased due to the interest rate decreases occurring in the six months ended June 30, 2020. The average cost of our interest-bearing deposits decreased 21 basis points to 0.26% during the six months ended June 30, 2020. The average balance of our interest-bearing deposits increased by $637.5 million, or 10.7%, to $6.6 billion as of June 30, 20202021 compared to ~~$6.0 billion as of June 30, 2019.~~

~~Interest expense on borrowed funds decreased by $3.6~~$198.9 million ~~or 84.3%, to $0.7 million during~~for the six months ended June 30, 2020, ~~from $4.3~~representing an increase of $5.8 million, or 2.9%. 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 substantial increase in average balances of interest-earning assets during the three and six months ended June 30, ~~2019. The decrease in interest expense on borrowed funds was primarily due~~2021 compared to the ~~average balance of the FHLB advances decreasing by $143.8 million to $16.2 million during the~~three and six months ended June 30, 2020, ~~compared to $160.0 million during~~primarily reflecting the ~~six months ended June 30, 2019. The average balance of borrowed funds decreased by $233.2 million, or 66.2%, to $119.2 million as of June 30, 2020 compared to $352.5 million as of June 30, 2019.~~

~~Net Interest Income~~

Net interest income decreased by $4.8 million, or 4.6%, to $98.8 million during the three months ended June 30, 2020 from $103.5 million during the three months ended June 30, 2019. The decrease was a resultinvestment of the ~~Bank’s asset sensitivity combined with a lower interest rate environment. The decline in interest income was only partially offset by a decline in interest expense.~~

~~Net interest income decreased by $7.3 million, or 3.5%, to $198.9 million during the six months ended June 30,~~proceeds from our October 2020 from $206.2 million during the six months ended June 30, 2019. The decrease was primarily a result of the decrease in interest and dividend income partially offset by the decrease in interest expense, both due to the decrease in interest rates during the six months ended June 30, 2020.

IPO.

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 ~~21.7%~~20.9% for the six months ended June 30, ~~2020~~2021 and ~~21.8% for~~2020. Net interest margin decreased 79 basis points to 2.70% during the six months ended June 30, ~~2019. Net interest margin decreased 54 basis points to~~2021, from 3.49% during the six months ended June 30, 2020.

Table of Contents

The following tables set forth average balance sheet items, annualized average yields and costs, and certain other information for the periods indicated. ~~Interest income on~~ ~~tax-exempt~~ ~~loans and investment securities has been adjusted to an FTE basis using a marginal tax rate of 21.7% and 21.8% for the six months ended June 30, 2020 and 2019, respectively.~~ All average balances ~~are~~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, discounts and premiums that are amortized or accreted to interest income or expense.

Average Balances, Interest Earned/Paid, & Average Yields

   Three months ended June 30,
   2020 2019
   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
   $ 1,423,161 $ 12,555    3.51 % $ 1,435,561 $ 13,439    3.72 %
Commercial
   6,735,075 69,779    4.12 % 6,024,268 74,064    4.89 %
Consumer
   1,287,430 10,610    3.28 % 1,456,395 15,349    4.19 %






Total loans
   9,445,666 92,944    3.91 % 8,916,224 102,852    4.59 %
Investment securities
   1,478,156 10,083    2.71 % 1,460,262 10,644    2.90 %
Federal funds sold and other short-term investments
   694,386 284    0.16 % 84,044 612    2.90 %






Total interest-earning assets
   11,618,208 103,311    3.54 % 10,460,530 114,108    4.34 %
Non-interest-earning assets
   1,064,218    859,928





Total assets
   $ 12,682,426    $ 11,320,458





Interest-bearing liabilities:

Deposits:

Savings account
   $ 1,036,344 $ 64    0.02 % $ 1,008,737 $ 52    0.02 %
Interest checking account
   2,158,242 648    0.12 % 1,877,777 1,075    0.23 %
Money market investment
   3,087,048 1,928    0.25 % 2,634,820 4,997    0.75 %
Time account
   320,277 462    0.57 % 443,070 1,188    1.07 %






Total interest-bearing deposits
   6,601,911 3,102    0.19 % 5,964,404 7,312    0.49 %
Borrowings
   119,211 74    0.25 % 352,453 2,001    2.26 %






Total interest-bearing liabilities
   6,721,122 3,176    0.19 % 6,316,857 9,313    0.59 %
Demand accounts
   3,963,066    3,320,873
Other noninterest-bearing liabilties
   337,679    192,521





Total liabilities
   11,021,867    9,830,251





Total net worth
   1,660,559    1,490,207





Total liabilities and retained earnings
   $ 12,682,426    $ 11,320,458





Net interest income - FTE
   $ 100,135    $ 104,795





Net interest rate spread ⁽²⁾
      3.35 %    3.75 %




Net interest-earning assets ⁽³⁾
   $ 4,897,086    $ 4,143,673





Net interest margin - FTE ⁽⁴⁾
      3.43 %    4.02 %




Average interest-earning assets to interest-bearing liabilities
   172.86 %    165.60 %

~~(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)~~

~~Annualized.~~

   Six months ended June 30,
   2020 2019
   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
   $ 1,423,161 $ 25,858    3.65 % $ 1,435,561 $ 26,861    3.77 %
Commercial
   6,735,075 139,394    4.16 % 6,024,268 146,483    4.90 %
Consumer
   1,287,430 24,017    3.75 % 1,456,395 30,706    4.25 %






Total loans
   9,445,666 189,269    4.03 % 8,916,224 204,050    4.61 %
Investment securities
   1,478,156 20,768    2.83 % 1,460,262 21,956    3.03 %
Federal funds sold and other short-term investments
   694,386 801    0.23 % 84,044 965    2.32 %






Total interest-earning assets
   11,618,208 210,838    3.65 % 10,460,530 226,971    4.38 %
Non-interest-earning assets
   1,064,218    859,928





Total assets
   $ 12,682,426    $ 11,320,458





Interest-bearing liabilities:

Deposits:

Savings account
   $ 1,036,344 $ 118    0.02 % $ 1,008,737 $ 105    0.02 %
Interest checking account
   2,158,242 1,467    0.14 % 1,877,777 1,973    0.21 %
Money market investment
   3,087,048 5,832    0.38 % 2,634,820 9,287    0.71 %
Time account
   320,277 1,100    0.69 % 443,070 2,467    1.12 %






Total interest-bearing deposits
   6,601,911 8,517    0.26 % 5,964,404 13,832    0.47 %
Borrowings
   119,211 673    1.14 % 352,453 4,293    2.46 %






Total interest-bearing liabilities
   6,721,122 9,190    0.27 % 6,316,857 18,125    0.58 %
Demand accounts
   3,963,066    3,320,873
Other noninterest-bearing liabilties
   337,679    192,521





Total liabilities
   11,021,867    9,830,251





Total net worth
   1,660,559    1,490,207





Total liabilities and retained earnings
   $ 12,682,426    $ 11,320,458





Net interest income - FTE
   $ 201,648    $ 208,846





Net interest rate spread ⁽²⁾
      3.38 %    3.80 %




Net interest-earning assets ⁽³⁾
   $ 4,897,086    $ 4,143,673





Net interest margin - FTE ⁽⁴⁾
      3.49 %    4.03 %




Average interest-earning assets to interest-bearing liabilities
   172.86 %    165.60 %

~~(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)~~

~~Annualized.~~


	As of and for the three months ended June 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	$	1,433,056		$	11,397	3.19	%	$	1,416,326		$	12,555	3.57	%
Commercial	7,301,745			71,747		3.94	%	7,195,093			69,779		3.90	%
Consumer	1,061,900			8,597		3.25	%	1,263,691			10,610		3.38	%
Total loans	9,796,701			91,741		3.76	%	9,875,110			92,944		3.79	%
Investment securities	4,344,690			14,778		1.36	%	1,455,901			10,083		2.79	%
Federal funds sold and other short-term investments	1,617,741			431		0.11	%	1,148,332			284		0.10	%
Total interest-earning assets	15,759,132			106,950		2.72	%	12,479,343			103,311		3.33	%
Non-interest-earning assets	1,061,121							1,106,217
Total assets	$	16,820,253						$	13,585,560
Interest-bearing liabilities:
Deposits:
Savings account	$	1,385,735		$	69	0.02	%	$	1,095,806		$	64	0.02	%
Interest checking account	2,541,862			253		0.04	%	2,414,356			649		0.11	%
Money market investment	3,523,330			605		0.07	%	3,192,669			1,929		0.24	%
Time account	246,801			104		0.17	%	313,410			462		0.59	%
Total interest-bearing deposits	7,697,728			1,031		0.05	%	7,016,241			3,104		0.18	%
Borrowings	25,042			42		0.67	%	74,960			74		0.40	%
Total interest-bearing liabilities	7,722,770			1,073		0.06	%	7,091,201			3,178		0.18	%
Demand accounts	5,355,170							4,448,756
Other noninterest-bearing liabilities	335,816							356,700
Total liabilities	13,413,756							11,896,657
Shareholders’ equity	3,406,497							1,688,903
Total liabilities and shareholders’ equity	$	16,820,253						$	13,585,560
Net interest income – FTE				$	105,877						$	100,133
Net interest rate spread (2)						2.66	%						3.15	%
Net interest-earning assets (3)	$	8,036,362						$	5,388,142
Net interest margin – FTE (4)						2.69	%						3.23	%
Average interest-earning assets to interest-bearing liabilities	204.06		%					175.98		%

(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.

Table of Contents

As of and for the six months ended June 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 $ 1,413,208 $ 22,671 3.24 % $ 1,423,161 $ 25,858 3.65 %
Commercial 7,309,803 140,952 3.89 % 6,735,075 139,394 4.16 %
Consumer 1,083,677 17,534 3.26 % 1,287,430 24,017 3.75 %
Total loans 9,806,688 181,157 3.73 % 9,445,666 189,269 4.03 %
Investment securities 3,990,080 27,360 1.38 % 1,478,156 20,768 2.83 %
Federal funds sold and other short-term investments 1,678,812 863 0.10 % 694,386 801 0.23 %
Total interest-earning assets 15,475,580 209,380 2.73 % 11,618,208 210,838 3.65 %
Non-interest-earning assets 1,089,585 1,064,218
Total assets $ 16,565,165 $ 12,682,426
Interest-bearing liabilities:
Deposits:
Savings account $ 1,343,133 $ 133 0.02 % $ 1,036,344 $ 118 0.02 %
Interest checking account 2,466,860 487 0.04 % 2,158,242 1,467 0.14 %
Money market investment 3,482,002 1,193 0.07 % 3,087,048 5,833 0.38 %
Time account 248,946 220 0.18 % 320,277 1,100 0.69 %
Total interest-bearing deposits 7,540,941 2,033 0.05 % 6,601,911 8,518 0.26 %
Borrowings 25,332 82 0.65 % 119,211 673 1.14 %
Total interest-bearing liabilities 7,566,273 2,115 0.06 % 6,721,122 9,191 0.27 %
Demand accounts 5,241,134 3,963,066
Other noninterest-bearing liabilities 345,776 337,679
Total liabilities 13,153,183 11,021,867
Shareholders’ equity 3,411,982 1,660,559
Total liabilities and shareholders’ equity $ 16,565,165 $ 12,682,426
Net interest income – FTE $ 207,265 $ 201,647
Net interest rate spread (2) 2.67 % 3.38 %
Net interest-earning assets (3) $ 7,909,307 $ 4,897,086
Net interest margin – FTE (4) 2.70 % 3.49 %
Average interest-earning assets to interest-bearing liabilities 204.53 % 172.86 %
(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.

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. ~~The~~We currently follow the incurred loss model for determining the provision for loan losses ~~increased by $7.1~~and anticipate adopting what is commonly referred to as the “CECL model” on January 1, 2022.

We recorded a release of provision for loan losses of $3.3 million ~~or 473.3%,~~for the three months ended June 30, 2021, compared to a provision of $8.6 million for the three months ended June 30, ~~2020, compared to $1.5 million for~~2020. Given continued improved economic and credit conditions during the three months ended June 30, ~~2019. This increase was due to the loan risk rating migration in commercial and industrial and commercial real estate portfolios to reflect the impact~~2021, we determined that a release of the ~~current economic environment resulting from~~provision was necessary. We had made a similar determination in connection with the ~~COVID-19 pandemic.~~

~~The~~release of provision for loan losses ~~increased by $32.7~~of $0.6 million ~~or 726.7%,~~recorded for the three months ended March 31, 2021. Overall, we recorded a total release of provision for loan losses of $3.9 million for the six months ended June 30, 2021 compared to a provision of $37.2 million for the six months ended June 30, 2020. In March 2020, ~~compared to $4.5 million for the six months ended June 30, 2019. The increase was primarily due~~

Table of Contents

in response to the ~~change in loan~~COVID-19 pandemic, we downgraded the risk ratings for all commercial loans we expected to ~~reflect~~be significantly impacted by the ~~impact of the increased concerns about customers that are expecting to face financial difficulties due to the current economic environment resulting from the~~ ~~COVID-19~~pandemic, ~~primarily related to the downgrading of~~including our hotel and restaurant loan portfolios. ~~The increase in the provision also reflects the increased concern about the performance of the loan portfolio given the increase in the~~ ~~non-performing~~ ~~loans and delinquent loans during the quarter ended June 30, 2020.~~

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 June 30, Six Months Ended June 30,
   Change Change
   2020 2019 Amount % 2020 2019 Amount %
   (Dollars in thousands)
Insurance commissions
   $ 22,697 $ 24,135 (1,438 ) (6.0 )% $ 50,174 $ 48,897 1,277 2.6 %
Service charges on deposit accounts
   4,364 6,771 (2,407 ) (35.5 )% 10,462 13,175 (2,713 ) (20.6 )%
Debit card processing fees
   5,194 4,980 214 4.3 % 10,289 9,608 681 7.1 %
Trust and investment advisory fees
   2,337 2,638 (301 ) (11.4 )% 4,807 5,048 (241 ) (4.8 ) %
Interest swap income
   771 (810 ) 1,581 (195.2 )% (5,238 ) (470 ) (4,768 ) (1,014.5 )%
Income from investments held in rabbi trusts
   7,745 1,822 5,923 325.1 % 1,002 5,969 (4,967 ) (83.2 )%
Trading securities gains, net
   (1 ) 152 (153 ) (100.7 )% (3 ) 1,294 (1,297 ) (100.2 )%
Net gain on sales of mortgage loans held for sale
   1,420 159 1,261 793.1 % 1,513 209 1,304 623.9 %
Gains on sales of securities available for sale, net
   163 1,966 (1,803 ) (91.7 )% 285 2,016 (1,731 ) (85.9 )%
Other
   2,967 3,819 (852 ) (22.3 )% 7,735 7,686 49 0.6 %


Total noninterest income
   $ 47,657 $ 45,632 $ 2,025 4.4 % $ 81,026 $ 93,432 $ (12,406 ) (13.3 )%


	Three Months Ended June 30,								Six Months Ended June 30,
					Change								Change
	2021		2020		Amount		%		2021		2020		Amount		%
	(Dollars in thousands)
Insurance commissions	$	23,664	$	22,697	$	967	4.3	%	$	51,811	$	50,174	$	1,637	3.3	%
Service charges on deposit accounts	5,708		4,364		1,344		30.8	%	11,075		10,462		613		5.9	%
Trust and investment advisory fees	6,074		5,194		880		16.9	%	11,737		10,289		1,448		14.1	%
Debit card processing fees	3,170		2,337		833		35.6	%	5,919		4,807		1,112		23.1	%
Interest swap (losses) income	(1,164)		771		(1,935)		(251.0)	%	4,241		(5,238)		9,479		(181.0)	%
Income (losses) from investments held in rabbi trusts	4,216		7,745		(3,529)		(45.6)	%	6,062		1,002		5,060		505.0	%
Losses on trading securities, net	—		(1)		1		(100.0)	%	—		(3)		3		(100.0)	%
Gain on sales of mortgage loans held for sale, net	848		1,420		(572)		(40.3)	%	2,327		1,513		814		53.8	%
Gains on sales of securities available for sale, net	1		163		(162)		(99.4)	%	1,165		285		880		308.8	%
Other	3,216		2,967		249		8.4	%	6,608		7,735		(1,127)		(14.6)	%
Total noninterest income	$	45,733	$	47,657	$	(1,924)	(4.0)	%	$	100,945	$	81,026	$	19,919	24.6	%

Noninterest income ~~increased~~decreased by ~~$2.0~~$1.9 million, or ~~4.4%~~4.0%, to $45.7 million for the three months ended June 30, 2021 from $47.7 million for the three months ended June 30, ~~2020 from $45.6 million for the three months ended June 30, 2019.~~2020. This increase was primarily due to a $5.9 million increase in income from investments held in rabbi trusts, a $1.6 million increase in interest rate swap income, and a $1.3 million increase in net gains on sales of mortgage loans held for sale and partially offset by a $2.4 million decrease in service charges on deposit accounts, a $1.8 million decrease in gains on sales of securities available for sale, net, and a $1.4 million decrease in insurance commissions.

~~Noninterest income decreased by $12.4 million, or 13.3%, to $81.0 million for the six months ended June 30, 2020 from $93.4 million for the six months ended June 30, 2019. The~~ decrease was primarily due to a ~~$5.0~~$3.5 million decrease in income from investments held in rabbi trusts and a ~~$4.8~~$1.9 million decrease in interest rate swap income, ~~and a $2.7 million decrease in deposit service charges, net,~~which were partially offset by a $1.3 million increase in ~~insurance commissions.~~

service charges on deposit accounts.

~~Insurance commissions increased primarily as a result of an increase in our profit-sharing revenues and commissions.~~

•Income (loss) from investments held in rabbi trust decreased primarily as a result of a less favorable mark-to-market adjustment during the ~~six~~three months ended June 30, ~~2020,~~2021 compared to the ~~six~~three months ended June 30, ~~2019.~~

2020.

~~Swap~~•The Company experienced swap losses during the three months ended June 30, 2021 as compared to income ~~decreased~~during the three months ended June 30, 2020 primarily as a result of an unfavorable mark-to-market adjustment due to the current interest rate and economic environment.

•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.

Noninterest income increased by $19.9 million, or 24.6%, to $100.9 million for the six months ended June 30, 2021 from $81.0 million for the six months ended June 30, 2020. The increase was primarily due to a $9.5 million increase in interest rate swap income, a $5.1 million increase in income from investments held in rabbi trusts, a $1.6 million increase in insurance commissions, a $1.4 million increase in trust and investment advisory fees, and a $1.1 million increase in debit card processing fees.

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

•Income (loss) from investments held in rabbi trusts increased primarily as a result of a more favorable mark-to-market adjustment during the six months ended June 30, 2021, compared to the six months ended June 30, 2020.

•Insurance commissions increased primarily as a result of an increase in our profit-sharing revenues and commissions.

Table of Contents

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

•Debit card processing fees increased as a result of greater customer spending volume.

Noninterest Expense

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

Noninterest Expense

   Three Months Ended June 30, Six Months Ended June 30,
   Change Change
   2020 2019 Amount % 2020 2019 Amount %
   (Dollars in thousands)
Salaries and employee benefits
   $ 63,335 $ 62,364 971 1.6 % $ 124,924 $ 129,670 (4,746 ) (3.7 )%
Office occupancy and equipment
   8,615 8,383 232 2.8 % 17,304 17,182 122 0.7 %
Data processing
   12,180 10,912 1,268 11.6 % 22,184 21,588 596 2.8 %
Professional services
   4,396 3,966 430 10.8 % 8,085 7,104 981 13.8 %
Charitable contributions
   2,797 3,683 (886 ) (24.1 )% 3,984 7,331 (3,347 ) (45.7 )%
Marketing
   1,645 2,683 (1,038 ) (38.7 )% 4,113 4,406 (293 ) (6.7 )%
Loan expenses
   2,036 886 1,150 129.8 % 3,148 1,551 1,597 103.0
FDIC insurance
   944 927 17 1.8 % 1,850 1,800 50 2.8 %
Amortization of intangible assets
   701 886 (185 ) (20.9 )% 1,403 1,773 (370 ) (20.9 )%
Net periodic benefit cost, excluding service cost
   (2,443 ) (1,334 ) (1,109 ) (83.1 )% (4,885 ) (2,668 ) (2,217 ) (83.1 )%
Other
   6,559 8,214 (1,655 ) (20.1 )% 13,827 16,662 (2,835 ) (17.0 )%


Total noninterest expense
   $ 100,765 $ 101,570 $ (805 ) (0.8 )% $ 195,937 $ 206,399 $ (10,462 ) (5.1 )%


	Three Months Ended June 30,								Six Months Ended June 30,
					Change								Change
	2021		2020		Amount		%		2021		2020		Amount		%
							(Dollars in thousands)
Salaries and employee benefits	$	69,276	$	63,335	$	5,941	9.4	%	$	133,316	$	124,924	$	8,392	6.7	%
Office occupancy and equipment	8,094		8,615		(521)		(6.0)	%	16,311		17,304		(993)		(5.7)	%
Data processing	13,572		12,180		1,392		11.4	%	25,701		22,184		3,517		15.9	%
Professional services	6,439		4,396		2,043		46.5	%	10,587		8,085		2,502		30.9	%
Charitable contributions	—		2,797		(2,797)		(100.0)	%	—		3,984		(3,984)		(100.0)	%
Marketing	3,497		1,645		1,852		112.6	%	5,188		4,113		1,075		26.1	%
Loan expenses	1,854		2,036		(182)		(8.9)	%	3,701		3,148		553		17.6	%
FDIC insurance	985		944		41		4.3	%	1,933		1,850		83		4.5	%
Amortization of intangible assets	625		701		(76)		(10.8)	%	1,157		1,403		(246)		(17.5)	%
Other	2,993		4,116		(1,123)		(27.3)	%	3,490		8,942		(5,452)		(61.0)	%
Total noninterest expense	$	107,335	$	100,765	$	6,570	6.5	%	$	201,384	$	195,937	$	5,447	2.8	%

Noninterest expense ~~decreased~~increased by ~~$0.8~~$6.6 million, or ~~0.8%~~6.5%, to $107.3 million during the three months ended June 30, 2021 from $100.8 million during the three months ended June 30, ~~2020 from $101.6~~2020. This increase was primarily due to a $5.9 million increase in salaries and employee benefits partially offset by a decrease in charitable contributions of $2.8 million.

•Salaries and employee benefits increased primarily as a result of ESOP expense, for which no expenses were incurred during the three months ended June 30, ~~2019. This decrease~~2020 as the ESOP was established in October 2020, and lower deferrals of nonrefundable costs associated with originating or acquiring loans.

•Professional services expenses increased primarily ~~due to~~as a ~~decrease in other noninterest expense~~result of ~~$1.7 million, a $1.1 million increase in net periodic benefit cost, excluding service cost, and a $1.0 million decrease in marketing expenses and partially offset by an increase in loan expenses~~costs incurred associated with the Company’s acquisition of ~~$1.2 million~~Century Bancorp, Inc and an ~~increase~~accrual for legal expenses associated with the anticipated settlement of the putative consumer class action litigation matters related to overdraft and non-sufficient funds fees.

•Charitable contributions decreased as no contributions were made during the six months ended June 30, 2021 following the Company’s stock donation to the Foundation that occurred in ~~data processing expenses of $1.3 million.~~

2020 in connection with the Company’s IPO.

Noninterest expense ~~decreased~~increased by ~~$10.5~~$5.4 million, or ~~5.1%~~2.8%, to $201.4 million during the six months ended June 30, 2021 from $195.9 million during the six months ended June 30, ~~2020 from $206.4~~2020. The increase was primarily due to an $8.4 million increase in salaries and employee benefits, a $3.5 million increase in data processing expenses and a $2.5 million increase in professional services. Partially offsetting these increases was a $4.0 million decrease in charitable contributions and a $5.5 million decrease in other noninterest expenses.

•Salaries and employee benefits increased primarily as a result of ESOP expense, for which no expenses were incurred during the six months ended June 30, ~~2019. The decrease~~2020 as the ESOP was ~~primarily~~established in October 2020, and higher pension service costs.

•Data processing expenses increased due to a $4.7 million decrease in salaries and employee benefits, a $3.3 million decrease in charitable contributions and a $2.2 million decrease in net periodic benefit cost, excluding service cost, partially offset by a $1.0 millionan increase in ~~professional services expense~~software service and ~~$1.6~~support expenses (including depreciation expense) of $2.8 million and an increase in ~~loan expenses.~~

core data processing expenses of $1.5 million. Core data processing expenses increased primarily as a results of increased costs due to costs incurred associated with the Company’s acquisition of Century Bancorp, Inc.

~~Salaries and employee benefits decreased~~

Table of Contents

•Professional services expenses increased primarily as a result of ~~a favorable defined contribution supplemental executive retirement plan expense as a result~~costs incurred associated with the Company’s acquisition of Century Bancorp, Inc and an accrual for legal expenses associated with the anticipated settlement of the ~~less favorable~~ ~~mark-to-market~~ ~~adjustment on securities held~~putative consumer class action litigation matters related to overdraft and non-sufficient funds fees.

•Other noninterest expenses ~~and deferrals of nonrefundable fees and costs associated with originating or acquiring loans (primarily~~decreased primarily due to the ~~PPP loans), partially offset~~conversion of our Defined Benefit Plan and BEP from a traditional final average earnings plan design to a cash balance plan design. Non-service cost expenses for the Defined Benefit Plan and the BEP decreased by ~~higher commissions.~~

~~Charitable contributions decreased primarily as a result of lower contributions to the Eastern Bank Charitable Foundation, as a result of lower taxable income~~$6.4 million and $1.2 million, respectively, for the six months ended June 30, ~~2020,~~2021 compared to the six months ended June 30, ~~2019.~~

2020.

~~Net period benefit cost, excluding service cost, decreased primarily as a result of a reduction in the expected return on plan assets.~~

Professional services increased primarily as a result of higher legal costs related to (i) corporate-related matters, (ii) loan- related matters and (iii) our commercial banking strategy and development services.

~~Loan expenses increased primarily as a result of increased mortgage loan originations.~~

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 June 30, Six months ended June 30,
   2020 2019 2020 2019
   (Dollars in thousands)
Combined federal and state income tax provisions
   $ 7,197 $ 11,032 $ 8,495 $ 20,710
Effective income tax rates
   19.4 % 23.9 % 18.2 % 23.3 %
Blended statutory tax rate
   28.1 % 28.1 % 28.1 % 28.1 %


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	(Dollars in thousands)
Combined federal and state income tax provisions	$	11,497		$	7,197		$	25,668		$	8,495
Effective income tax rates	24.8		%	19.4		%	23.7		%	18.2		%
Blended statutory tax rate	28.1		%	28.1		%	28.1		%	28.1		%

Income tax expense ~~decreased~~increased by ~~$3.8~~$4.3 million, or ~~34.8%~~59.7%, to $11.5 million in the three months ended June 30, 2021 from $7.2 million in the three months ended June 30, ~~2020 from $11.0~~2020. Income tax expense increased by $17.2 million, or 202.2%, to $25.7 million in the ~~three~~six months ended June 30, 2019. This decrease was due primarily to lower pre-tax income during the three months ended June 30, 2020 compared to the three months ended June 30, 2019, while investment tax credits and other favorable permanent differences have remained relatively constant.

~~Income tax expense decreased by $12.2 million, or 59.0%, to~~2021 from $8.5 million in the six months ended June 30, ~~2020 from $20.7 million~~2020. The increase in income tax expense was due primarily to higher pre-tax income during the three and six months ended June 30, ~~2019. The decrease was due primarily~~2021 compared to ~~lower~~ ~~pre-tax~~ ~~income during~~ the three and six months ended June 30, 2020, ~~compared~~decreasing the impact on the effective rate related to ~~the six months ended June 30, 2019, while~~favorable permanent differences, including investment tax credits and ~~other favorable permanent differences have remained relatively constant.~~

tax exempt income. 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 10-K.

Table of Contents

Financial Position and Results of Operations of our Business Segments

Comparison of the three and six months ended June 30, ~~2020~~2021 and ~~2019~~

As of and for the three months ended June 30,
2020 2019
Banking
Business Insurance
Agency
Business Other/
Eliminations Total Banking
Business Insurance
Agency
Business Other/
Eliminations Total
(Dollars In Thousands)
Net interest income
$ 98,755 $ —   $ —   $ 98,755 $ 103,523 $ —   $ —   $ 103,523
Provision for loan losses
8,600 —   —   8,600 1,500 —   —   1,500

Net interest income after provision for loan losses
90,155 —   —   90,155 102,023 —   —   102,023
Noninterest income
23,779 23,886 (8 ) 47,657 21,143 24,489 —   45,632
Noninterest expense
81,713 20,084 (1,032 ) 100,765 83,205 19,200 (835 ) 101,570

Income before provision for income taxes
32,221 3,802 1,024 37,047 39,961 5,289 835 46,085
Income tax provision (benefit)
6,121 1,076 —   7,197 9,517 1,515 —   11,032

Net income
$ 26,100 $ 2,726 $ 1,024 $ 29,850 $ 30,444 $ 3,774 $ 835 $ 35,053

Total assets
$ 13,867,746 $ 193,320 $ (64,543 ) $ 13,996,523 $ 11,397,392 $ 164,576 $ (48,284 ) $ 11,513,684

Total liabilities
$ 12,314,286 $ 53,150 $ (64,543 ) $ 12,302,893 $ 9,975,081 $ 35,228 $ (48,284 ) $ 9,962,025

For the six months ended June 30
2020 2019
Banking
Business Insurance
Agency
Business Other/
Eliminations Total Banking
Business Insurance
Agency
Business Other/
Eliminations Total
(Dollars in Thousands)
Net interest income
$ 198,901 $ —   $ —   $ 198,901 $ 206,195 —   —   206,195
Provision for loan losses
37,200 —   —   37,200 4,500 —   —   4,500

Net interest income after provision for loan losses
161,701 —   —   161,701 201,695 —   —   201,695
Noninterest income
30,647 50,408 (29 ) 81,026 43,405 50,048 (21 ) 93,432
Noninterest expense
160,178 37,725 (1,966 ) 195,937 169,096 39,067 (1,764 ) 206,399

Income before provision for income taxes
32,170 12,683 1,937 46,790 76,004 10,981 1,743 88,728
Income tax provision
4,906 3,589 —   8,495 17,576 3,134 —   20,710

Net income
$ 27,264 $ 9,094 $ 1,937 $ 38,295 $ 58,428 $ 7,847 $ 1,743 $ 68,018

2020

As of and for the three months ended June 30,
2021 2020
Banking
Business Insurance
Agency
Business Other/
Eliminations Total Banking
Business Insurance
Agency
Business Other/
Eliminations Total
(In thousands)
Net interest income $ 104,608 $ — $ — $ 104,608 $ 98,755 $ — $ — $ 98,755
(Release of) provision for loan losses (3,300) — — (3,300) 8,600 — — 8,600
Net interest income after provision for loan losses 107,908 — — 107,908 90,155 — — 90,155
Noninterest income 21,567 24,166 — 45,733 23,779 23,886 (8) 47,657
Noninterest expense 87,799 20,496 (960) 107,335 81,713 20,084 (1,032) 100,765
Income before provision for income taxes 41,676 3,670 960 46,306 32,221 3,802 1,024 37,047
Income tax provision 10,464 1,033 — 11,497 6,121 1,076 — 7,197
Net income $ 31,212 $ 2,637 $ 960 $ 34,809 $ 26,100 $ 2,726 $ 1,024 $ 29,850
Total assets $ 16,905,267 $ 209,416 $ (67,230) $ 17,047,453 $ 13,867,746 $ 193,320 $ (64,543) $ 13,996,523
Total liabilities $ 13,628,092 $ 55,969 $ (67,230) $ 13,616,831 $ 12,314,286 $ 53,150 $ (64,543) $ 12,302,893
For the six months ended June 30,
2021 2020
Banking
Business Insurance
Agency
Business Other/
Eliminations Total Banking
Business Insurance
Agency
Business Other/
Eliminations Total
(In thousands)
Net interest income $ 204,699 $ — $ — $ 204,699 $ 198,901 $ — $ — $ 198,901
(Release of ) provision for loan losses (3,880) — — (3,880) 37,200 — — 37,200
Net interest income after provision for loan losses 208,579 — — 208,579 161,701 — — 161,701
Noninterest income 48,527 52,450 (32) 100,945 30,647 50,408 (29) 81,026
Noninterest expense 163,074 40,307 (1,997) 201,384 160,178 37,725 (1,966) 195,937
Income before provision for income taxes 94,032 12,143 1,965 108,140 32,170 12,683 1,937 46,790
Income tax provision 22,257 3,411 — 25,668 4,906 3,589 — 8,495
Net income $ 71,775 $ 8,732 $ 1,965 $ 82,472 $ 27,264 $ 9,094 $ 1,937 $ 38,295

Banking Segment

•Average interest-earning assets grew ~~$1.2~~$3.3 billion, or ~~11.1%~~26.3%, to ~~$11.6~~$15.8 billion ~~as of~~for the three months ended June 30, ~~2020~~2021 from ~~$10.5~~$12.5 billion ~~as of~~for the three months ended June 30, ~~2019, with~~2020. The increase is primarily due to an increase in average ~~total loans, our largest category of~~investment securities and federal funds sold and other short-term investments which increased $3.4 billion, or 129.0%, to $6.0 billion for the three months ended June 30, 2021 compared to $2.6 billion for the three months ended June 30, 2020. The increase in average interest-earning assets ~~growing $529.4 million, or 5.9%,~~resulted in an increase in interest income and was partially offset by a decline in market rates of interest. For additional discussion, refer to ~~$9.4 billion as of June 30, 2020 from $8.9 billion as of June 30, 2019.~~

the earlier “Interest and Dividends” section.

•Average interest-bearing liabilities grew ~~$404.3 million,~~$0.6 billion, or ~~6.4%~~8.9%, to ~~$6.7~~$7.7 billion ~~as of~~for the three months ended June 30, 2021 from $7.1 billion for the three months ended June 30, 2020, ~~from $6.3 billion as of June 30, 2019,~~ with average total interest-bearing deposits, our largest category of average interest-bearing liabilities, growing ~~$637.5 million,~~$0.7 billion, or ~~10.7%~~9.7%, to $7.7 billion for the three months ended June 30, 2021 compared to $7.0 billion for the three months ended June 30, 2020. The increase in average interest-bearing liabilities was more than offset by a decline in market rates of interest resulting in an overall decrease in interest expense. For additional discussion, refer to the earlier “Interest and Dividends” section.

•Average interest-earning assets grew $3.9 billion, or 33.2%, to $15.5 billion for the six months ended June 30, 2021 from $11.6 billion for the six months ended June 30, 2020, with average total loans, our largest

Table of Contents

category of average interest-earning assets, growing $0.4 billion, or 3.8%, to $9.8 billion for the six months ended June 30, 2021 compared to $9.4 billion for the six months ended June 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. For additional discussion, refer to the earlier “Interest and Dividends” section.

•Average interest-bearing liabilities grew $0.8 billion, or 12.6%, to $7.6 billion for the six months ended June 30, 2021 from $6.7 billion for the six months ended June 30, 2020, with average total interest-bearing deposits, our largest category of average interest-bearing liabilities, growing $0.9 billion, or 14.2%, to $7.5 billion for the six months ended June 30, 2021 compared to $6.6 billion ~~as of~~for the six months ended June 30, ~~2020 from $6.0 billion as~~2020. The increase in average interest-bearing liabilities was more than offset by a decline in market rates of interest resulting in an overall decrease in interest expense. For additional discussion, refer to the earlier “Interest and Dividends” section.

•We recorded a release of provision for loan losses of $3.3 million for the three months ended June 30, ~~2019.~~

~~Assets under management in our wealth management business increased by $134.5 million, or 5.5%,~~2021, compared to ~~$2.6 billion as~~a provision of ~~June 30, 2020 from $2.4 billion as of June 30, 2019. Our income related to our asset management business, which we record as noninterest income, increased by $0.2 million, or 4.3%, to $5.2~~$8.6 million for the three months ended June 30, 2020 ~~compared to $5.0 million~~and a total release of provision for ~~the three months ended June 30, 2019. The increase was due to the fees we earned during the three months ended June 30, 2020, primarily due to higher valuations~~loan losses of ~~our assets under management.~~

~~Our income related to our asset management business increased by $0.7 million, or 7.3%, to $10.3~~$3.9 million for the six months ended June 30, ~~2020~~2021 compared to ~~$9.6~~a provision of $37.2 million for the six months ended June 30, ~~2019. The increase~~2020. Given continued improved economic and credit conditions during the three and six months ended June 30, 2021, we determined that a release of the provision was ~~due~~necessary. Refer to the ~~fees we earned~~earlier discussion within this section for additional information.

•Income from investments held in rabbi trust accounts decreased $2.8 million, or 43.0% for the three months ended June 30, 2021 primarily as a result of a less favorable mark-to-market adjustment on equity securities held in these accounts.

•Income from investments held in rabbi trust accounts increased $4.7 million, or 512.1% for the six months ended June 30, 2021 primarily as a result of a favorable mark-to-market adjustment on equity securities held in these accounts.

•Non-interest expense increased during the three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020 primarily due to ~~higher valuations~~costs associated with our proposed acquisition of ~~our assets under management.~~

Century and an aforementioned accrual for legal expenses associated with the anticipated settlement of the putative consumer class action litigation matters related to overdraft and non-sufficient funds fees.

Insurance Agency Segment

Noninterest income related to our insurance agency business decreased by $0.6 million, or 2.5%, to $23.9 million during the three months ended June 30, 2020 from $24.5 million during the three months ended June 30, 2019. The decrease was driven primarily by a decrease in negotiated commissions and profit sharing revenues of $1.5 million and $0.2 million, respectively, partially offset by an increase in income from investments held in rabbi trusts of $0.8 million and in increase in recurring commissions of $0.3 million due to organic growth.

•Noninterest income related to our insurance agency business increased by $0.3 million, or 1.17%, to $24.2 million during the three months ended June 30, 2021 from $23.9 million during the three months ended June 30, 2020. The slight increase was driven by recurring commissions and profit sharing revenues which increased by $0.6 million and $0.4 million, respectively. These increases were partially offset by a decrease in income from investments held in rabbi trusts of $0.7 million which was primarily attributable to a less favorable mark-to-market adjustment on equity securities held in these accounts during the three months ended June 30, 2021 compared to the three months ended June 30, 2020.

•Noninterest income related to our insurance agency business increased by $2.0 million, or ~~0.8 %,~~4.05%, to $52.5 million during the six months ended June 30, 2021 from $50.4 million during the six months ended June 30, ~~2020 from $50.0 million during the six months ended June 30, 2019.~~2020. The increase was driven primarily by ~~an increase in our combined negotiated commission~~recurring commissions and profit sharing ~~income of~~revenues which both increased by $0.8 ~~million, in~~million. In addition, ~~to an increase in our recurring commissions of $0.5 million due to organic growth, partially offset by a $0.9 million decrease in~~ income from investments held in rabbi ~~trusts.~~

trusts increased by $0.4 million which was primarily attributable to a favorable mark-to-market adjustment on equity securities held in these accounts.

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 contractual amount of the instruments. We use the same credit policies in making commitments as we do for on-balance sheet instruments.

Table of Contents

At June 30, ~~2020,~~2021, we had ~~$3.7~~$4.1 billion of commitments to originate loans, comprised of ~~$2.2~~$2.4 billion of commitments under commercial loans and lines of credit (including ~~$291.8~~$356.9 million of unadvanced portions of construction loans), ~~$1.2~~$1.4 billion of commitments under home equity loans and lines of credit, ~~$213.9~~$182.1 million in standard overdraft coverage commitments, ~~and $45.3~~$85.6 million of unfunded commitments related to residential real estate loans and ~~$20.0~~$60.1 million in other consumer loans and lines of credit. In addition, at June 30, ~~2020,~~2021, we had ~~$57.4~~$61.8 million in standby letters of credit outstanding. ~~Finally, we~~We also had ~~$67.7~~$45.3 million in forward commitments to sell loans.

Management of Market Risk

General. Market risk is the sensitivity of 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 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 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 ~~United States~~U.S. Treasury yield curve increases or decreases instantaneously by +200, +300, +400 and -100 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 interest rates prevalent at June 30, 2021 and December 31, 2020 precluded the modeling of certain falling rate ~~scenarios, including~~scenarios. We do not model negative interest ~~rates.~~

rate scenarios.

The tables below set forth, as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, 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 ~~United States~~U.S. Treasury yield ~~curve.~~

curve:

Table of Contents

Interest Rate Sensitivity

As of June 30, 2020
Change in
Interest Rates
(basis points) ⁽¹⁾ Net Interest
Income Year 1
Forecast Year 1
Change from
Level
(Dollars in thousands)
400 $526,813 34.0%
300   493,129 25.4%
200   459,940 17.0%
Flat   393,163   0.0%
-100   383,847 (2.4)%
As of December 31, 2019
Change in
Interest Rates
(basis points) ⁽¹⁾ Net Interest
Income Year 1
Forecast Year 1
Change from
Level
(Dollars in thousands)
400 $433,300 5.2%
300   428,186 4.0%
200   422,881 2.7%
Flat   411,704 —  %
-100   395,697 (3.9)%


	As of June 30, 2021
Change in Interest Rates (basis points) (1)	Net Interest Income Year 1 Forecast		Year 1 Change from Level
	(Dollars in thousands)
400	$	557,547	40.4	%
300	518,005		30.4	%
200	478,885		20.6	%
Flat	397,106		—	%
(100)	369,259		(7.0)	%

	As of December 31, 2020
Change in Interest Rates (basis points) (1)	Net Interest Income Year 1 Forecast		Year 1 Change from Level
	(Dollars in thousands)
400	$	571,842	50.0	%
300	524,847		37.7	%
200	478,307		25.5	%
Flat	381,259		—	%
(100)	362,186		(5.0)	%

(1)Assumes an immediate uniform change in interest rates at all maturities, except in the down 100 basis points scenario, where rates are floored at zero at all maturities.

The tables above indicate that at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, in the event of an instantaneous parallel 200 basis points increase in rates, we would have experienced a ~~17.0%~~20.6% and ~~2.7%~~25.5% 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 ~~2.4%~~7.0% and a ~~3.9%~~5.0% decrease at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, in net interest income, on an FTE basis. ~~We have the ability to~~Management may use 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. Without the derivatives, our FTE net interest income would decline by 2.8% with an instantaneous 100 basis point decrease in interest rates, rather than the 2.4% decrease shown in the table above at June 30, 2020.

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 ~~plan)~~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 basis points) at June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. 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 June 30, 2021 and December 31, 2020 precluded the modeling of certain falling rate scenarios, including negative interest rates.

~~EVE Interest Rate Sensitivity~~

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.

Change in Interest
Rate (basis points) ⁽¹⁾
      As of June 30, 2020

   Estimated EVE ⁽²⁾    Estimated Increase (Decrease in EVE) from
Level EVE as a
Percentage of
Total Assets ⁽³⁾
      Amount    Percent
   (Dollars in thousands)
400
   $ 2,769,212    $ 544,896    24.5 % 0.20 %
300
   2,666,631    442,316    19.9 % 0.19 %
200
   2,552,682    328,367    14.8 % 0.18 %
Flat
   2,224,315    —      —   % 0.16 %
-100
   2,051,131    (173,184 )    (7.8 )% 0.15 %

Change in Interest
Rate (basis points) ⁽¹⁾
      As of December 31, 2019

   Estimated EVE ⁽²⁾    Estimated Increase (Decrease in EVE) from
Level EVE as a
Percentage of
Total Assets ⁽³⁾
      Amount    Percent
   (Dollars in thousands)
400
   $ 2,446,754    $ 14,005    0.6 % 22.51 %
300
   2,453,287    20,538    0.8 % 22.11 %
200
   2,457,642    24,893    1.0 % 21.67 %
Flat
   2,432,749    —      —   % 20.52 %
-100
   2,364,175    (68,574 )    (2.8 )% 19.54 %

~~(1)~~

~~Assumes an immediate uniform change in interest rates 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.~~

Table of Contents

EVE Interest Rate Sensitivity


Change in Interest Rate (basis points) (1)			As of June 30, 2021
	Estimated EVE (2)		Estimated Increase (Decrease) in EVE from Level				EVE as a Percentage of Total Assets (3)
			Amount		Percent
	(Dollars in thousands)
400	$	4,483,593	$	319,567	7.7	%	28.18	%
300	4,426,492		262,466		6.3	%	27.31	%
200	4,361,352		197,326		4.7	%	26.40	%
Flat	4,164,026		—		—		24.23	%
(100)	3,895,942		(268,084)		(6.4)	%	22.43	%


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
	(Dollars in thousands)
400	$	4,385,795	$	452,022	11.5	%	29.09	%
300	4,297,682		363,909		9.3	%	28.06	%
200	4,205,867		272,094		6.9	%	27.00	%
Flat	3,933,773		—		—		24.38	%
(100)	3,663,432		(270,341)		(6.9)	%	22.65	%

(1)Assumes an immediate uniform change in 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.

Liquidity and Capital Resources

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 will be reduced as net proceeds from the IPO are used for general corporate purposes, including the funding of loans. Our financial condition and results of operations have been enhanced by the net proceeds from the IPO, resulting in increased net interest-earning assets and net interest and dividend income. In April 2021, we announced that we had executed the Merger Agreement with Century, under which we expect to acquire Century for $641.9 million in cash. The transaction, which we expect to close in the middle of the fourth quarter of 2021, will reduce the net proceeds from the IPO. However, we continue to expect that due to the increase in equity resulting from the net proceeds raised in our IPO, our return on equity has been and will continue to be adversely affected until we can effectively employ the 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. 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 cash and due from banks 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 ~~Promontory Interfinancial~~IntraFi Network ~~allowing~~(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 ~~Promontory network~~IntraFi Network banks depending on our funding needs. At June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had a total of ~~$409.0~~$464.7 million and ~~$270.0~~$364.8 million of ~~Promontory~~ IntraFi Network one-way sell

Table of Contents

deposits, respectively. These deposits could have been repurchased as reciprocal deposits and 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 ~~Federal Home Loan Bank of Boston.~~FHLBB. At June 30, ~~2020,~~2021, we had ~~$14.9~~$14.3 million in outstanding advances and the ability to borrow up to an additional ~~$1.4~~$1.6 billion. We also have the ability to borrow from the ~~Federal Reserve Bank of Boston~~FRBB as well as the Federal Reserve Paycheck Protection Program Liquidity Facility. At June 30, ~~2020,~~2021, we had a ~~$485.0~~$482.1 million collateralized line of credit from the ~~Federal Reserve Bank of Boston~~FRBB with no outstanding balance. Additionally, we had ~~$1.1 billion~~$825.8 million in ~~Paycheck Protection Program Loans~~PPP loans that could have been pledged to the Federal Reserve Paycheck Protection Program Liquidity Facility. We had a total of ~~$620.0~~$770.0 million of discretionary lines of credit at June 30, ~~2020.~~

2021.

Sources of Liquidity

   June 30, 2020 December 31, 2019
   Outstanding    Additional
Capacity Outstanding    Additional
Capacity
      (Dollars in thousands)
Promontory deposits
   $ —      $ 408,527 $ 93,539    $ 176,346
Federal Home Loan Bank
   14,922    1,424,505 ⁽¹⁾ 18,964    1,822,955 ⁽¹⁾
Federal Reserve Bank of Boston
   —      485,424 ⁽²⁾ —      636,960 ⁽²⁾
Federal Reserve Paycheck Protection Program Liquidity Facility
   —      1,100,181 —      —
Unsecured lines of credit
   —      620,000 —      555,000






Total deposits
   $ 14,922    $ 4,038,637 $ 112,503    $ 3,191,261

~~(1)~~

As of June 30, 2020, loans have been pledged to the Federal Home Loan Bank of Boston with a carrying value of $2.1 billion to secure additional borrowing capacity. As of December 31, 2019, loans and securities have been pledged to the Federal Home Loan Bank of Boston with a carrying value of $1.5 billion and $0.9 billion, respectively, to secure additional borrowing capacity

~~(2)~~

Loans with a carrying value of $0.9 billion and $1.0 billion at June 30, 2020 and December 31, 2019, respectively, have been pledged to the Federal Reserve Bank of Boston resulting in this additional unused borrowing capacity


	As of June 30, 2021				As of December 31, 2020
	Outstanding		Additional Capacity		Outstanding		Additional Capacity
			(In thousands)
IntraFi Network deposits	$	—	$	464,671	$	—	$	364,794
Federal Home Loan Bank (1)	14,323		1,627,016		14,624		1,581,016
Federal Reserve Bank of Boston (2)	—		482,107		—		503,512
Federal Reserve Paycheck Protection Program Liquidity Facility	—		825,784		—		1,026,117
Unsecured lines of credit	—		770,000		—		620,000
Total deposits	$	14,323	$	4,169,578	$	14,624	$	4,095,439

(1)As of June 30, 2021 and December 31, 2020, loans have been pledged to the FHLBB with a carrying value of $2.3 billion and $2.4 billion, respectively, to secure additional borrowing capacity.

(2)Loans with a carrying value of $812.6 million and $884.1 million at June 30, 2021 and December 31, 2020, 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 in place to establish methods for assessing and monitoring risk levels, as well as potential responses during unanticipated stress events. As part of its 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 June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we exceeded all applicable regulatory capital requirements, and were considered “well capitalized” under regulatory guidelines.

Contractual Obligations, Commitments and 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. ~~There~~At June 30, 2021 there were no material changes in our contractual obligations, other commitments and contingencies ~~at June 30, 2020.~~

from those disclosed in our 2020 Form 10-K.

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.”

Table of Contents

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(e)~~15d-15(c) promulgated under the ~~Securities~~ Exchange Act of ~~1934, as amended.~~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 June 30, ~~2020,~~2021, the end of the period covered by this Quarterly ~~Report.~~

Report on Form 10-Q.

Internal Controls over Financial Reporting

There were no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended June 30, ~~2020~~2021 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~~COVID-19 pandemic. The Company is continually monitoring and assessing the impact of the ~~Covid-19~~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 ~~Company’s prospectus, filed with the Securities and Exchange Commission pursuant to Rule 424(b)(3) on August 18, 2020.~~

2020 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 ~~other than routine legal proceedings occurring in the ordinary course of business, and we are not involved in any legal proceeding~~ 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, “Commitments and Contingencies” within the Notes to the 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 ~~the Company’s prospectus, filed with the Securities and Exchange Commission pursuant to Rule 424(b)(3) on August 18, 2020.~~our 2020 Form 10-K, as updated by Part II, Item 1A “Risk Factors” of Q1 Form 10-Q. 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 Form 10-K, as updated by the ~~prospectus.~~

~~ITEM 2.~~

~~UNREGISTERED SALES OF EQUITY SECURITIES~~

Q1 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 Form 10-K and updated in the Q1 Form 10-Q. The risk factors disclosure in our 2020 Form 10-K and our Q1 Form 10-Q is therefore qualified by the information relating to COVID-19 that is described in this Quarterly Report on Form 10-Q.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES

None.

~~ITEM 3.~~

~~DEFAULTS UPON SENIOR SECURITIES~~

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None.

~~ITEM 4.~~

~~MINE SAFETY DISCLOSURES~~

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.

~~ITEM 5.~~

~~OTHER INFORMATION~~

ITEM 5.OTHER INFORMATION

None.

~~ITEM 6.~~

~~EXHIBITS~~

Table of Contents

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 June 30, ~~2020~~2021 (and are numbered in accordance with Item 601 of Regulation S-K):


Exhibit No.		Description

22.1		Agreement and Plan of ~~Conversion~~ 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 ~~the Registrant’s Registration Statement on~~exhibit 2.1 to Form ~~S-1~~ ~~(file number~~ ~~333-239251)~~8-K filed with the Securities and Exchange Commission on ~~June 18, 2020)~~April 8, 2021)

~~3.1~~	~~Form of Amended and Restated Articles of Organization of Eastern Bankshares, Inc.~~ ~~(incorporated by reference to Amendment No. 1 to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on July 24, 2020)~~

3.2*	~~Bylaws of Eastern Bankshares, Inc.~~

4	~~Form of Common Stock Certificate of Eastern Bankshares, Inc.~~ ~~(incorporated by reference to Amendment No. 2 to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on August 5, 2020)~~

~~10.1†~~	~~Eastern Bank Employee Stock Ownership Plan~~ ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~

~~10.2†~~	~~Executive Severance Benefits Agreement with Robert F. Rivers~~ ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~

~~10.3†~~	~~Executive Retention and Severance Benefits Agreement with Quincy L. Miller~~ ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~

~~10.4†~~	~~Change in Control Agreement with Robert F. Rivers, dated June 15, 2020~~ ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~

~~10.5†~~	~~Change in Control Agreement with Quincy L. Miller, dated June 15, 2020~~ ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~

~~10.6†~~	~~Form of Change in Control Agreement with other executive officers~~ ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~

~~10.7†~~	~~Supplemental Executive Retirement Plan~~ ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~

~~10.8†~~	~~Benefit Equalization Plan~~ ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~

10.9*	~~Outside Directors’ Retainer Continuance Plan, as amended~~

~~10.10†~~	~~409A Long Term Incentive Plan, as amended~~ ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~

~~10.11†~~	~~409A Deferred Compensation Plan, as amended~~ ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~

~~10.12†~~	~~Eastern Insurance Group LLC Supplemental Executive Retirement Plan~~ ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~

~~10.13†~~	~~The Eastern Bank Deferred Compensation Plan, as amended~~ ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~


~~10.14†~~10.1*		Eastern Bankshares, Inc. Management Incentive Plan ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~adopted as of May 3, 2021 for Eastern Bank Participants

~~10.15†~~10.2*		Eastern Bankshares, Inc. Management Incentive Plan adopted as of May 3, 2021 for Eastern Insurance Group LLC ~~Management Incentive Plan~~ ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~Participants

~~23.1~~	~~Consent of Nutter, McClennen & Fish, LLP~~ ~~(incorporated by reference to the Registrant’s Registration Statement on Form~~ ~~S-1~~ ~~(file number~~ ~~333-239251)~~ ~~filed with the Securities and Exchange Commission on June 18, 2020)~~

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 June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, (ii) the Unaudited Consolidated Statements of Income for the three and six months ended June 30, ~~2020~~2021 and ~~2019~~2020 (iii) the Unaudited Consolidated Statements of Comprehensive Income for the three and six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, (iv) the Unaudited Consolidated Statements of Changes in Equity for the three and six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, (v) the Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, and (vi) the Notes to the Unaudited Consolidated Financial Statements.

†

~~Management contract or compensation plan or arrangement~~

*104

~~Filed herewith~~

~~Furnished herewith~~

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

Table of Contents

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 : August 13, 2021

/s/ Robert F. Rivers

By:

Robert F. Rivers

~~Date: September 24, 2020~~

~~/s/ Robert F. Rivers~~

~~By:~~

~~Robert F. Rivers~~

Chief Executive Officer and Chair of the Board

~~(Principal Executive Officer)~~

(Principal Executive Officer)

~~Date: September 24, 2020~~

Date : August 13, 2021

~~/s/~~/s/ James B. Fitzgerald

By:

~~By:~~

James B. Fitzgerald

Chief Financial Officer

(Principal Financial Officer)


	As of June 30,			As of December 31,
	2020			2019
	(In Thousands)
ASSETS
Cash and due from banks	$	67,264		$	135,503
Short-term investments		1,365,297			227,099

Cash and cash equivalents		1,432,561			362,602

Securities:
Trading		—			961
Available for sale		1,600,354			1,508,236

Total securities		1,600,354			1,509,197

Loans held for sale		2,972			26
Loans:
Commercial and industrial		2,271,700			1,642,184
Commercial real estate		3,584,358			3,535,441
Commercial construction		282,246			273,774
Business banking		1,234,961			771,498
Residential real estate		1,400,855			1,428,630
Consumer home equity		905,484			933,088
Other consumer		334,734			402,431

Total Loans		10,014,338			8,987,046
Less: allowance for loan losses		(116,636	)		(82,297	)
Less: unamortized premiums, net of unearned discounts and deferred fees		(34,722	)		(5,565	)

Net Loans		9,862,980			8,899,184

Federal Home Loan Bank stock, at cost		8,805			9,027
Premises and equipment		52,475			57,453
Bank-owned life insurance		77,528			77,546
Goodwill and other intangibles, net		376,331			377,734
Deferred income taxes, net		7,663			28,207
Prepaid expenses		92,517			61,336
Other assets		482,337			246,463

Total Assets	$	13,996,523		$	11,628,775


	Retained Earnings			Accumulated Other Comprehensive Income			Total
	(In Thousands)
Balance at December 31, 2019	$	1,644,000		$	(43,847	)	$	1,600,153
Cumulative effect accounting adjustment ⁽¹⁾		(1,131	)					(1,131	)
Net income		8,445			—			8,445
Other comprehensive income, net of tax		—			55,267			55,267

Balance at March 31, 2020	$	1,651,314		$	11,420		$	1,662,734

Net income		29,850			—			29,850
Other comprehensive income, net of tax		—			1,046			1,046

Balance at June 30, 2020	$	1,681,164		$	12,466		$	1,693,630


Balance at December 31, 2018	$	1,508,902		$	(75,761	)	$	1,433,141
Net income		32,965			—			32,965
Other comprehensive income, net of tax		—			28,992			28,992

Balance at March 31, 2019	$	1,541,867		$	(46,769	)	$	1,495,098

Net income		35,053			—			35,053
Other comprehensive income, net of tax		—			21,509			21,509

Balance at June 30, 2019	$	1,576,920		$	(25,260	)	$	1,551,660


Contingent consideration paid		(158	)		(447	)
Payment of initial public offering costs		(4,153	)		—

Net cash provided by financing activities		2,084,822			26,450

Net increase in cash, cash equivalents, and restricted cash		1,069,959			31,901
Cash, cash equivalents, and restricted cash at beginning of period		362,602			259,708

Cash, cash equivalents, and restricted cash at end of period	$	1,432,561		$	291,609


Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest paid	$	10,533		$	17,697
Income taxes		14,976			20,335
Non-cash activities
Net increase in capital commitments relating to low income housing tax credit projects	$	13,214		$	—
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			—


	As of and for the six months ended June 30, 2020
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(In Thousands)
Debt securities:
Government-sponsored residential mortgage-backed securities	$	1,207,274	$	44,750	$	(225	)	$	1,251,799
U.S. Treasury securities		60,189		747		—			60,936
State and municipal bonds and obligations		264,615		16,725		—			281,340
Qualified zone academy bond		6,209		70		—			6,279

	$	1,538,287	$	62,292	$	(225	)	$	1,600,354


	As of June 30, 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		Fair Value		Amortized			Fair Value		Amortized		Fair Value		Amortized		Fair Value		Amortized		Fair Value
	(In Thousands)
Available for sale securities:
Government-sponsored residential mortgage-backed securities	$	—	$	—	$	24,413	��	$	25,733	$	150,726	$	157,290	$	1,032,135	$	1,068,776	$	1,207,274	$	1,251,799
U.S. Treasury securities		50,070		50,778		10,119			10,158		—		—		—		—		60,189		60,936
State and municipal bonds and obligations		407		411		18,205			18,966		73,890		77,868		172,113		184,095		264,615		281,340
Qualified zone academy bond		6,209		6,279		—			—		—		—		—		—		6,209		6,279

Total available for sale securities	$	56,686	$	57,468	$	52,737		$	54,857	$	224,616	$	235,158	$	1,204,248	$	1,252,871	$	1,538,287	$	1,600,354


	As of December 31, 2019
	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		Fair Value		Amortized			Fair Value		Amortized		Fair Value		Amortized		Fair Value		Amortized		Fair Value
	(In Thousands)
Available for sale securities:
Government-sponsored residential mortgage-backed securities	$	—	$	—	$	8,139		$	8,464	$	199,428	$	203,706	$	943,738	$	955,798	$	1,151,305	$	1,167,968
U.S. Treasury securities		40		40		50,115			50,380		—		—		—		—		50,155		50,420
State and municipal bonds and obligations		381		381		8,889			9,109		77,227		79,504		186,085		194,544		272,582		283,538
Qualified zone academy bond		6,155		6,310		—			—		—		—		—		—		6,155		6,310

Total available for sale securities	$	6,576	$	6,731	$	67,143		$	67,953	$	276,655	$	283,210	$	1,129,823	$	1,150,342	$	1,480,197	$	1,508,236


	At June 30,			At December 31,
	2020			2019
	(In thousands)
Commercial and industrial	$	2,271,700		$	1,642,184
Commercial real estate		3,584,358			3,535,441
Commercial construction		282,246			273,774
Business banking		1,234,961			771,498
Residential real estate		1,400,855			1,428,630
Consumer home equity		905,484			933,088
Other consumer		334,734			402,431

Gross loans before unamortized premiums, unearned discounts and deferred fees		10,014,338			8,987,046

Allowance for credit losses		(116,636	)		(82,297	)
Unamortized premiums, net of unearned discounts and deferred fees		(34,722	)		(5,565	)

Loans after the allowance for credit losses, unamortized premiums, unearned discounts and deferred fees	$	9,862,980		$	8,899,184


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
	(In thousands)
Balance at the beginning of period	$	109,138		$	82,493		$	82,297		$	80,655
Loans charged off		(1,264	)		(2,563	)		(3,607	)		(4,487	)
Recoveries		162			1,232			746			1,994
Provision charged to expense		8,600			1,500			37,200			4,500

Balance at end of period	$	116,636		$	82,662		$	116,636		$	82,662


	For the Three Months Ended June 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	$	30,531		$	49,227		$	4,712	$	10,181		$	6,228		$	3,913		$	4,019		$	327		$	109,138
Charge-offs		(27	)		(24	)		—		(1,198	)		—			—			(15	)		—			(1,264	)
Recoveries		58			5			—		27			13			8			51			—			162
Provision (benefit)		2,667			5,020			104		795			328			(46	)		(293	)		25			8,600

Ending balance	$	33,229		$	54,228		$	4,816	$	9,805		$	6,569		$	3,875		$	3,762		$	352		$	116,636


	For the Three Months Ended June 30, 2019
	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	$	20,844		$	33,170		$	4,225	$	8,175		$	7,169		$	4,105		$	4,390		$	415		$	82,493
Charge-offs		(272	)		(169	)		—		(1,371	)		(46	)		(124	)		(581	)		—			(2,563	)
Recoveries		908			2			—		193			12			20			97			—			1,232
Provision (benefit)		(651	)		583			537		1,057			(335	)		96			418			(205	)		1,500

Ending balance	$	20,829		$	33,586		$	4,762	$	8,054		$	6,800		$	4,097		$	4,324		$	210		$	82,662


	For the Six Months Ended June, 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		(27	)		(24	)		—		(2,535	)		—		(473	)		(548	)		—			(3,607	)
Recoveries		380			6			—		154			73		22			111			—			746
Provision (benefit)		11,957			19,516			1,392		3,926			116		299			26			(32	)		37,200

Ending balance	$	33,229		$	54,228		$	4,816	$	9,805		$	6,569	$	3,875		$	3,762		$	352		$	116,636

Ending balance: individually evaluated for impairment	$	3,028		$	230		$	22	$	578		$	1,639	$	277		$	—		$	—		$	5,774

Ending balance: acquired with deteriorated credit quality	$	1,732		$	1,066		$	—	$	—		$	293	$	—		$	—		$	—		$	3,091

Ending balance: collectively evaluated for impairment	$	28,469		$	52,932		$	4,794	$	9,227		$	4,637	$	3,598		$	3,762		$	352		$	107,771

Loans ending balance:
Individually evaluated for impairment	$	18,864		$	4,920		$	280	$	20,301		$	28,301	$	5,947		$	22		$	—		$	78,635
Acquired with deteriorated credit quality		3,572			5,413			—		—			3,426		—			—			—			12,411
Collectively evaluated for impairment		2,249,264			3,574,025			281,966		1,214,660			1,369,128		899,537			334,712			—			9,923,292

Total loans by group	$	2,271,700		$	3,584,358		$	282,246	$	1,234,961		$	1,400,855	$	905,484		$	334,734		$	—		$	10,014,338


	For the Six Months Ended June 30, 2019
	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	$	19,321		$	32,400		$	4,606	$	8,167		$	7,059		$	4,113		$	4,600		$	389		$	80,655
Charge-offs		(272	)		(169	)		—		(2,810	)		(63	)		(124	)		(1,049	)		—			(4,487	)
Recoveries		1,368			4			—		320			71			28			203			—			1,994
Provision (benefit)		412			1,351			156		2,377			(267	)		80			570			(179	)		4,500

Ending balance	$	20,829		$	33,586			4,762	$	8,054		$	6,800		$	4,097		$	4,324		$	210		$	82,662

Ending balance: individually evaluated for impairment	$	1,918		$	40		$	—	$	198		$	1,663		$	296		$	—		$	—		$	4,115

Ending balance: acquired with deteriorated credit quality	$	227		$	85		$	—	$	—		$	213		$	—		$	—		$	—		$	525

Ending balance: collectively evaluated for impairment	$	18,684		$	33,461		$	4,762	$	7,856		$	4,924		$	3,801		$	4,324		$	210		$	78,022

Loans ending balance:
Individually evaluated for impairment	$	21,098		$	10,421		$	—	$	9,043		$	27,287		$	4,642		$	—		$	—		$	72,491
Acquired with deteriorated credit quality		4,109			7,591			—		—			3,405			—			—			—			15,105
Collectively evaluated for impairment		1,726,510			3,331,951			310,860		736,417			1,414,741			950,713			470,858			—			8,942,050

Total loans by group	$	1,751,717		$	3,349,963		$	310,860	$	745,460		$	1,445,433		$	955,355		$	470,858		$	—		$	9,029,646


			As of June 30, 2020
Category	Risk Rating		Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Total
	(In thousands)
Unrated		0	$	753,943	$	42,919	$	332	$	900,296	$	1,697,490
Pass		1-6W		1,269,284		3,211,054		248,400		291,751		5,020,489
Special mention		7		180,485		297,016		29,671		32,406		539,578
Substandard		8		51,338		30,654		3,843		10,508		96,343
Doubtful		9		16,650		2,715		—		—		19,365
Loss		10		—		—		—		—		—

Total			$	2,271,700	$	3,584,358	$	282,246	$	1,234,961	$	7,373,265


			As of December 31, 2019
Category	Risk Rating		Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Total
	(In thousands)
Unrated		0	$	150,226	$	48,266	$	331	$	445,201	$	644,024
Pass		1-6W		1,405,902		3,436,267		260,615		315,194		5,417,978
Special mention		7		24,171		28,606		9,438		2,006		64,221
Substandard		8		42,894		21,635		3,390		8,207		76,126
Doubtful		9		18,991		667		—		890		20,548
Loss		10		—		—		—		—		—

Total			$	1,642,184	$	3,535,441	$	273,774	$	771,498	$	6,222,897


	As of June 30, 2020
	TDRs on Accrual Status				TDRs on Nonaccrual Status				Total TDRs
			Balance of		Number of		Balance of		Number of		Balance of
	Number of Loans		Loans		Loans		Loans		Loans		Loans
	(Dollars in thousands)
Commercial and industrial		2	$	5,429		10	$	11,259		12	$	16,688
Commercial real estate		1		3,521		2		707		3		4,228
Business banking		5		4,143		2		224		7		4,367
Residential real estate		149		23,714		28		4,172		177		27,886
Consumer home equity		86		3,862		12		2,085		98		5,947
Other consumer		1		22		—		—		1		22

Total		244	$	40,691		54	$	18,447		298	$	59,138


	As of December 31, 2019
	TDRs on Accrual Status				TDRs on Nonaccrual Status				Total TDRs
			Balance of		Number of		Balance of		Number of		Balance of
	Number of Loans		Loans		Loans		Loans		Loans		Loans
	(Dollars in thousands)
Commercial and industrial		4	$	10,899		14	$	19,781		18	$	30,680
Commercial real estate		1		3,520		3		3,338		4		6,858
Business banking		2		3,156		1		204		3		3,360
Residential real estate		152		25,093		27		3,977		179		29,070
Consumer home equity		89		5,955		5		600		94		6,555

Total		248	$	48,623		50	$	27,900		298	$	76,523


	For the Three Months Ended June 30, 2019						For the Six Months Ended June 30, 2019
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Modification Outstanding Recorded Investment (1)		Number of Contracts		Pre-Modification Modification Outstanding Recorded Investment		Post- Modification Modification Outstanding Recorded Investment (1)
	(Dollars in thousands)
Commercial and industrial		5	$	7,141	$	7,441		7	$	7,462	$	7,762
Commercial real estate		2		3,277		3,277		2		3,277		3,277
Residential real estate		3		433		445		3		433		445
Consumer home equity		3		154		156		3		154		156

Total		13	$	11,005	$	11,319		15	$	11,326	$	11,640


	For the Three Months Ended				For the Six Months Ended
	June 30, 2019				June 30, 2019
	Average Recorded Investment		Total Interest Recognized		Average Recorded Investment		Total Interest Recognized
	(In Thousands)
With no related allowance recorded:
Commercial and industrial	$	12,022	$	108	$	11,343	$	177
Commercial real estate		11,443		74		11,176		148
Business banking		1,465		—		1,332		—
Residential real estate		11,935		131		11,978		259
Consumer home equity		1,989		26		2,034		51

Sub-total		38,854		339		37,863		635

With an allowance recorded:
Commercial and industrial	$	4,386	$	—	$	3,629	$	—
Commercial real estate		1,179		—		634		—
Business banking		7,314		—		6,937		—
Residential real estate		12,606		153		12,625		302
Consumer home equity		2,320		30		2,373		59

Sub-total		27,805		183		26,198		361

Total	$	66,659	$	522	$	64,061	$	996


	As of June 30, 2020
	(in thousands)
Right-of-use assets	$	87,573
Lease liabilities	$	91,221


	Three months ended June 30, 2020		Six months ended June 30, 2020
	(in thousands)		(in thousands)
Operating lease cost	$	3,601	$	7,215
Finance lease cost		17		20
Variable lease cost		448		970

Total lease cost	$	4,066	$	8,205


	(in thousands)
Remainder of 2020	$	7,098
2021		13,746
2022		12,746
2023		12,206
2024		11,402
Thereafter		45,534

Total minimum lease payments	$	102,732
Less: amount representing interest		11,511

Present value of future minimum lease payments	$	91,221


	Six Months Ended June 30, 2020		Year Ended December 31, 2019
	(In Thousands)
Current recorded investment included in other assets	$	46,552	$	37,665
Commitments to fund qualified affordable housing projects included in recorded investment noted above		23,821		18,042
Tax credits and benefits ⁽¹⁾		3,058		5,962
Amortization of investments included in current tax expense ⁽²⁾		2,452		4,782


June 30, 2020
					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		900,000		1.27		0.18	%		2.57	%		(38	)

Total	$	900,000									$	(38	)


	Asset Derivatives						Liability Derivatives
	Balance Sheet Location		Fair Value at June 30, 2020		Fair Value at December 31, 2019		Balance Sheet Location		Fair Value at June 30, 2020		Fair Value at December 31, 2019
	(In Thousands)
Derivatives designated as hedging instruments
Interest rate swaps		Other assets	$	—	$	—		Other liabilities	$	38	$	321

Derivatives not designated as hedging instruments
Customer-related positions:
Interest rate swaps		Other assets	$	171,433	$	64,463		Other liabilities	$	51,319	$	18,057
Risk participation agreements		Other assets		995		482		Other liabilities		1,500		606
Foreign currency exchange contracts - matched customer book		Other assets		151		469		Other liabilities		40		428
Foreign currency exchange contracts - foreign currency loan		Other assets		—		—		Other liabilities		173		203

			$	172,579	$	65,414			$	53,032	$	19,294

Total			$	172,579	$	65,414			$	53,070	$	19,615


	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	Fair Value at June 30, 2021		Fair Value at December 31, 2020		Balance Sheet Location	Fair Value at June 30, 2021		Fair Value at December 31, 2020
	(In thousands)
Derivatives not designated as hedging instruments
Customer-related positions:
Interest rate swaps	Other assets	$	92,980	$	141,822	Other liabilities	$	28,498	$	42,600
Risk participation agreements	Other assets	432		722		Other liabilities	675		1,230
Foreign currency exchange contracts - matched customer book	Other assets	94		90		Other liabilities	89		77
Foreign currency exchange contracts - foreign currency loan	Other assets	48		9		Other liabilities	0		69
Total		$	93,554	$	142,643		$	29,262	$	43,976


	As of June 30, 2020				As of December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In Thousands)
Assets
Cash and cash equivalents	$	1,432,561	$	1,432,561	$	362,602	$	362,602
Trading securities		—		—		961		961
Securities available for sale		1,600,354		1,600,354		1,508,236		1,508,236
Loans held for sale		2,972		2,972		26		26
Loans, net of allowance for loan losses		9,862,980		10,191,776		8,889,184		9,116,018
Accrued interest receivable		28,017		28,017		26,835		26,835
FHLB stock		8,805		8,805		9,027		9,027
Rabbi trust investments		78,808		78,808		78,012		78,012
Bank-owned life insurance		77,528		77,528		77,546		77,546
Interest rate swap contracts
Customer-related positions		171,433		171,433		64,463		64,463
Risk participation agreements		995		995		482		482
Foreign currency forward contracts
Matched customer book		151		151		469		469

Liabilities
Deposits	$	11,846,765	$	11,847,001	$	9,551,392	$	9,548,889
Other borrowed funds		—		—		201,082		201,082
FHLB advances		14,922		14,847		18,964		18,188
Escrow deposits of borrowers		14,233		14,233		15,349		15,349
Accrued interest payable		370		370		1,712		1,712
Interest rate swap contracts
Cash flow hedges - interest rate positions		38		38		321		321
Customer-related positions		51,319		51,319		18,057		18,057
Risk participation agreements		1,500		1,500		606		606
Foreign currency forward contracts
Matched customer book		40		40		428		428
Foreign currency loan		173		173		203		203


	Securities Available for Sale
	(Dollars In Thousands)
Balance at January 1, 2019	$	6,045
Gains and losses (realized/unrealized):
Included in earnings		55

Balance at June 30, 2019	$	6,100


Balance at January 1, 2020	$	6,310
Gains and losses (realized/unrealized):
Included in net income		55
Included in other comprehensive income		(86	)

Balance at June 30, 2020	$	6,279


Balance at April 1, 2019	$	6,073
Gains and losses (realized/unrealized):
Included in earnings		27

Balance at June 30, 2019	$	6,100


Balance at April 1, 2020	$	6,249
Gains and losses (realized/unrealized):
Included in earnings		27
Included in other comprehensive income		3

Balance at June 30, 2020	$	6,279


			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active		Significant
Description			Markets for		Other		Significant
	Balance as of June 30, 2020		Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
	(Dollars in thousands)
Assets
Other real estate owned	$	40	$	—	$	—	$	40
Collateral-dependent impaired loans whose fair value is based upon appraisals		13,011		—		—		13,011

Total	$	13,051	$	—	$	—	$	13,051


	Three months ended June 30, 2020									Six months ended June 30, 2020
	Pre Tax Amount			Tax (Expense) Benefit			After Tax Amount			Pre Tax Amount		Tax (Expense) Benefit			After Tax Amount
	Pre Tax Amount			Tax (Expense) Benefit			After Tax Amount			Pre Tax Amount		Tax (Expense) Benefit			After Tax Amount
	(Dollars In Thousands)
Unrealized gains (losses) on securities available for sale:
Change in fair value of securities available for sale	$	511		$	(97	)	$	414		$	34,313	$	(7,612	)	$	26,701
Less: reclassification adjustment for gains included in net income		163			(36	)		127			285		(63	)		222

Net change in fair value of securities available for sale		348			(61	)		287			34,028		(7,549	)		26,479
Unrealized gains (losses) on cash flow hedges:

Change in fair value of cash flow hedges		3,455			(971	)		2,484			47,011		(13,215	)		33,796
Less: net cash flow hedge losses reclassified into interest income		7,134			(2,005	)		5,129			10,246		(2,880	)		7,366

Net change in fair value of cash flow hedges		(3,679	)		1,034			(2,645	)		36,765		(10,335	)		26,430
Defined benefit pension plans:

Amortization of actuarial net loss		4,721			(1,326	)		3,395			4,721		(1,326	)		3,395

Amortization of prior service cost		12			(3	)		9			12		(3	)		9

Net change in other comprehensive income for defined benefit postretirement plans		4,733			(1,329	)		3,404			4,733		(1,329	)		3,404

Total other comprehensive income	$	1,402		$	(356	)	$	1,046		$	75,526	$	(19,213	)	$	56,313


	Three months ended June 30, 2019							Six months ended June 30, 2019
	Pre Tax Amount		Tax (Expense) Benefit			After Tax Amount		Pre Tax Amount		Tax (Expense) Benefit			After Tax Amount
	Pre Tax Amount		Tax (Expense) Benefit			After Tax Amount		Pre Tax Amount		Tax (Expense) Benefit			After Tax Amount
	(Dollars In Thousands)
Unrealized gains (losses) on securities available for sale:
Change in fair value of securities available for sale	$	15,006	$	(3,354	)	$	11,652	$	47,135	$	(10,454	)	$	36,681
Less: reclassification adjustment for gains included in net income		1,966		(448	)		1,518		2,016		(459	)		1,557

Net change in fair value of securities available for sale		13,040		(2,906	)		10,134		45,119		(9,995	)		35,124
Unrealized gains (losses) on cash flow hedges:
Change in fair value of cash flow hedges		16,054		(4,513	)		11,541		21,914		(6,160	)		15,754
Less: net cash flow hedge losses reclassified into interest income		231		(65	)		166		524		(147	)		377

Net change in fair value of cash flow hedges		15,823		(4,448	)		11,375		21,390		(6,013	)		15,377

Total other comprehensive income	$	28,863	$	(7,354	)	$	21,509	$	66,509	$	(16,008	)	$	50,501


	As of June 30, 2020		As of December 31, 2019
	(Dollars in thousands)
Selected Financial Condition Data:
Total assets	$	13,996,523	$	11,628,775
Cash and cash equivalents		1,432,561		362,602
Trading securities		—		961
Securities available for sale		1,600,354		1,508,236
Loans, net of allowance for loan losses and unamortized premiums, net of unearned discounts and deferred fees		9,862,980		8,899,184
Federal Home Loan Bank stock, at cost		8,805		9,027
Goodwill and other intangibles, net		376,331		377,734
Total liabilities		12,302,893		10,028,622
Total deposits		11,846,765		9,551,392
Total borrowings		29,155		235,395
Total equity		1,693,630		1,600,153
Nonperforming loans		55,395		43,775
Nonperforming assets		55,435		43,775

	Six months ended June 30,
	2020		2019
	(Dollars in thousands)
Selected Operating Data:
Interest and dividend income	$	208,092	$	224,321
Interest expense		9,191		18,126

Net interest income		198,901		206,195
Provision for loan losses		37,200		4,500

Net interest income after provision for loan losses		161,701		201,695
Noninterest income		81,026		93,432
Noninterest expense		195,937		206,399

Income before income taxes		46,790		88,728
Provision for income taxes		8,495		20,710

Net income	$	38,295	$	68,018


	Loan Balance		Credit Exposure ⁽¹⁾		Number of Borrowers⁽²⁾		COVID-19 Modification % ⁽³⁾
			(Dollars in thousands)
Commercial and Industrial: Commercial and Business Banking
Restaurants	$	148,373	$	156,747		420		60.6	%
Construction contractors		105,127		281,435		1,036		11.0	%
Non-essential retail		41,859		101,736		436		2.5	%
Entertainment and recreation		34,368		49,664		158		31.1	%
Educational and child care services		16,219		50,948		196		5.3	%
Private medical and dental offices		16,299		34,602		294		20.2	%
Water and air passenger transportation		19,811		30,557		12		0.1	%
Auto and other vehicle dealerships		7,557		10,138		21		—	%
Hotels		377		527		12		37.3	%
Commercial Real Estate: Commercial and Business Banking
Retail		437,267		458,839		298		26.7	%
Hotels		179,577		181,076		45		37.6	%
Auto dealerships		78,152		80,361		36		2.8	%
Restaurants		51,566		52,766		67		48.5	%

Total	$	1,136,552	$	1,489,396		3,031		28.9	%


Loan Size	Loan Balance		Number of Loans		Fees Collected
	(Dollars in thousands)
$0 to $50 thousand	$	95,528		4,987	$	4,826
$50 thousand to $150 thousand		148,994		1,731		7,419
$150 thousand to $1 million		410,872		1,176		15,374
$1 million to $2 million		190,254		137		5,618
$2 million to $5 million		176,277		59		1,744
Over $5 million		78,256		13		785

Total	$	1,100,181		8,103	$	35,766


	As of June 30, 2020		As of December 31, 2019		Change
	As of June 30, 2020		As of December 31, 2019		Amount ($)			Percentage (%)
			(Dollars in thousands)
Cash and cash equivalents	$	1,432,561	$	362,602	$	1,069,959			295.1	%
Securities available for sale		1,600,354		1,508,236		92,118			6.1	%
Loans, net of allowance for credit losses		9,862,980		8,899,184		963,796			10.8	%
Federal Home Loan Bank Stock		8,805		9,027		(222	)		(2.5	)%
Goodwill and other intangible assets		376,331		377,734		(1,403	)		(0.4	)%
Deposits		11,846,765		9,551,392		2,295,373			24.0	%
Borrowed funds		29,155		235,395		(206,240	)		(87.6	)%