~~Table of Contents~~

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 March 31, ~~2021~~2022


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

Commission File Number 001-39610

___________________________

Eastern Bankshares, Inc.

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

___________________________


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

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

(800) 327-8376

(Registrant’s telephone number, including area code)

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


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

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

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

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

Large accelerated filer

☐☒

Accelerated filer

☐

Non-accelerated filer

☒☐

Smaller reporting company

☐

(Do not check if a smaller reporting company)

Emerging Growth Company

☒☐

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

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

~~186,758,154~~182,674,973 shares of the Registrant’s common stock, par value $0.01 per share, were ~~issued and~~ outstanding as of May ~~13, 2021.~~4, 2022.

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Index


		PAGE
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Consolidated Balance Sheets	24
	Unaudited Consolidated Statements of Income	25
	Unaudited Consolidated Statements of Comprehensive Income	36
	Unaudited Consolidated Statements of Changes in Shareholders’ Equity	47
	Unaudited Consolidated Statements of Cash Flows	58
	Notes to Unaudited Consolidated Financial Statements	69

Item~~Item~~ 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4857

Item~~Item~~ 3.	Quantitative and Qualitative Disclosures about Market Risk	8291

Item~~Item~~ 4.	Controls and Procedures	8391

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	8491

Item~~Item~~ 1A.	Risk Factors	8492

Item~~Item~~ 2.	Unregistered Sales of Equity Securities and Use of Proceeds	8792

Item~~Item~~ 3.	Defaults Upon Senior Securities	8793

Item~~Item~~ 4.	Mine Safety Disclosures	8793

Item~~Item~~ 5.	Other Information	8793

Item~~Item~~ 6.	Exhibits	8794

EXHIBIT INDEX		8894

SIGNATURES		8995

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PART I — FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements

EASTERN BANKSHARES, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

March 31, 2021 December 31, 2020
(In thousands, except share data)
ASSETS
Cash and due from banks $ 79,497 $ 116,591
Short-term investments 1,780,835 1,937,479
Cash and cash equivalents 1,860,332 2,054,070
Available for sale securities 3,986,253 3,183,861
Loans held for sale 2,022 1,140
Loans:
Commercial and industrial 1,986,366 1,995,016
Commercial real estate 3,676,941 3,573,630
Commercial construction 249,416 305,708
Business banking 1,513,051 1,339,164
Residential real estate 1,406,510 1,370,957
Consumer home equity 832,466 868,270
Other consumer 251,725 277,780
Total loans 9,916,475 9,730,525
Less: allowance for loan losses (111,080) (113,031)
Less: unamortized premiums, net of unearned discounts and deferred fees (32,673) (23,536)
Net loans 9,772,722 9,593,958
Federal Home Loan Bank stock, at cost 8,805 8,805
Premises and equipment 46,619 49,398
Bank-owned life insurance 79,110 78,561
Goodwill and other intangibles, net 376,002 376,534
Deferred income taxes, net 31,508 13,229
Prepaid expenses 150,453 148,680
Other assets 412,969 455,954
Total assets $ 16,726,795 $ 15,964,190
LIABILITIES AND EQUITY
Deposits:
Demand $ 5,369,164 $ 4,910,794
Interest checking accounts 2,482,731 2,380,497
Savings accounts 1,362,463 1,256,736
Money market investment 3,522,990 3,348,898
Certificates of deposit 243,527 258,859
Total deposits 12,980,875 12,155,784
Borrowed funds:
Federal Home Loan Bank advances 14,473 14,624
Escrow deposits of borrowers 14,878 13,425
Total borrowed funds 29,351 28,049
Other liabilities 329,524 352,305
Total liabilities 13,339,750 12,536,138
Commitments and contingencies (see footnote 11) 0 0
Shareholders’ equity
Common shares, $0.01 par value, 1,000,000,000 shares authorized, 186,758,154 and 186,758,154 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively 1,868 1,868
Additional paid in capital 1,854,895 1,854,068
Unallocated common shares held by the Employee Stock Ownership Plan (146,472) (147,725)
Retained earnings 1,702,946 1,665,607
Accumulated other comprehensive income, net of tax (26,192) 54,234
Total shareholders’ equity 3,387,045 3,428,052
Total liabilities and shareholders’ equity $ 16,726,795 $ 15,964,190


(In thousands, except per share data)	March 31, 2022		December 31, 2021
ASSETS
Cash and due from banks	$	118,362	$	144,634
Short-term investments	712,132		1,087,158
Cash and cash equivalents	830,494		1,231,792
Securities:
Available for sale (amortized cost $8,456,620 and $8,587,179, respectively)	7,917,305		8,511,224
Held to maturity (fair value $392,123 and $0, respectively)	395,434		—
Total securities	8,312,739		8,511,224
Loans held for sale	1,166		1,206
Loans:
Commercial and industrial	2,886,560		2,960,527
Commercial real estate	4,609,824		4,522,513
Commercial construction	246,093		222,328
Business banking	1,201,007		1,334,694
Residential real estate	1,936,182		1,926,810
Consumer home equity	1,099,211		1,100,153
Other consumer	203,326		214,485
Total loans	12,182,203		12,281,510
Less: allowance for loan losses	(124,166)		(97,787)
Less: unamortized premiums, net of unearned discounts and deferred fees	(24,434)		(26,442)
Net loans	12,033,603		12,157,281
Federal Home Loan Bank stock, at cost	10,904		10,904
Premises and equipment	73,180		80,984
Bank-owned life insurance	157,954		157,091
Goodwill and other intangibles, net	654,759		649,703
Deferred income taxes, net	183,137		76,535
Prepaid expenses	188,704		179,330
Other assets	389,432		456,078
Total assets	$	22,836,072	$	23,512,128
LIABILITIES AND EQUITY
Deposits:
Demand	$	6,788,742	$	7,020,864
Interest checking accounts	4,662,134		4,478,566
Savings accounts	2,089,427		2,077,495
Money market investment	5,406,198		5,525,005
Certificates of deposit	446,315		526,381
Total deposits	19,392,816		19,628,311
Borrowed funds:
Federal Home Loan Bank advances	13,689		14,020
Escrow deposits of borrowers	21,233		20,258
Total borrowed funds	34,922		34,278
Other liabilities	399,942		443,187
Total liabilities	19,827,680		20,105,776
Commitments and contingencies (see footnote 12)	0		0
Shareholders’ equity
Common shares, $0.01 par value, 1,000,000,000 shares authorized, 183,438,711 and 186,305,332 shares issued and outstanding at, March 31, 2022 and December 31, 2021, respectively	1,834		1,863
Additional paid in capital	1,777,670		1,835,241
Unallocated common shares held by the Employee Stock Ownership Plan	(141,455)		(142,709)
Retained earnings	1,782,997		1,768,653
Accumulated other comprehensive loss, net of tax	(412,654)		(56,696)
Total shareholders’ equity	3,008,392		3,406,352
Total liabilities and shareholders’ equity	$	22,836,072	$	23,512,128

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

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EASTERN BANKSHARES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME


		For the Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
		(In thousands, except per share data)					(In thousands, except per share data)
Interest and dividend income:	Interest and dividend income:					Interest and dividend income:
Interest and fees on loans	Interest and fees on loans	$	88,639	$	95,538	Interest and fees on loans	$	101,367	$	88,639
Taxable interest and dividends on available for sale securities		10,206		8,178
Non-taxable interest and dividends on available for sale securities		1,856		1,921
Taxable interest and dividends on securities						Taxable interest and dividends on securities	27,876		10,206
Non-taxable interest and dividends on securities						Non-taxable interest and dividends on securities	1,806		1,856
Interest on federal funds sold and other short-term investments	Interest on federal funds sold and other short-term investments	432		517		Interest on federal funds sold and other short-term investments	436		432
Interest and dividends on trading securities		0		5
Total interest and dividend income	Total interest and dividend income	101,133		106,159		Total interest and dividend income	131,485		101,133
Interest expense:	Interest expense:					Interest expense:
Interest on deposits	Interest on deposits	1,002		5,414		Interest on deposits	3,322		1,002
Interest on borrowings	Interest on borrowings	40		599		Interest on borrowings	39		40
Total interest expense	Total interest expense	1,042		6,013		Total interest expense	3,361		1,042
Net interest income	Net interest income	100,091		100,146		Net interest income	128,124		100,091
(Release of) provision for allowance for loan losses		(580)		28,600
Release of allowance for loan losses						Release of allowance for loan losses	(485)		(580)
Net interest income after provision for loan losses	Net interest income after provision for loan losses	100,671		71,546		Net interest income after provision for loan losses	128,609		100,671
Noninterest income:	Noninterest income:					Noninterest income:
Insurance commissions	Insurance commissions	28,147		27,477		Insurance commissions	28,713		28,147
Service charges on deposit accounts	Service charges on deposit accounts	5,367		6,098		Service charges on deposit accounts	8,537		5,367
Trust and investment advisory fees	Trust and investment advisory fees	5,663		5,095		Trust and investment advisory fees	6,141		5,663
Debit card processing fees	Debit card processing fees	2,749		2,470		Debit card processing fees	2,945		2,749
Interest rate swap income (losses)		5,405		(6,009)
Income (losses) from investments held in rabbi trusts		1,846		(6,743)
Losses on trading securities, net		0		(2)
Interest rate swap income						Interest rate swap income	2,932		5,405
(Losses) income from investments held in rabbi trusts						(Losses) income from investments held in rabbi trusts	(4,433)		1,846
Gains on sales of mortgage loans held for sale, net	Gains on sales of mortgage loans held for sale, net	1,479		93		Gains on sales of mortgage loans held for sale, net	169		1,479
Gains on sales of securities available for sale, net		1,164		122
(Losses) gains on sales of securities available for sale, net						(Losses) gains on sales of securities available for sale, net	(2,172)		1,164
Other	Other	3,392		4,768		Other	3,583		3,392
Total noninterest income	Total noninterest income	55,212		33,369		Total noninterest income	46,415		55,212
Noninterest expense:	Noninterest expense:					Noninterest expense:
Salaries and employee benefits	Salaries and employee benefits	64,040		61,589		Salaries and employee benefits	69,526		64,040
Office occupancy and equipment	Office occupancy and equipment	8,217		8,689		Office occupancy and equipment	11,614		8,217
Data processing	Data processing	12,129		10,004		Data processing	15,320		12,129
Professional services	Professional services	4,148		3,689		Professional services	4,701		4,148
Charitable contributions		0		1,187
Marketing	Marketing	1,691		2,468		Marketing	1,574		1,691
Loan expenses	Loan expenses	1,847		1,112		Loan expenses	1,168		1,847
FDIC insurance	FDIC insurance	948		906		FDIC insurance	1,412		948
Amortization of intangible assets	Amortization of intangible assets	532		702		Amortization of intangible assets	827		532
Other	Other	497		4,826		Other	2,724		497
Total noninterest expense	Total noninterest expense	94,049		95,172		Total noninterest expense	108,866		94,049
Income before income tax expense	Income before income tax expense	61,834		9,743		Income before income tax expense	66,158		61,834
Income tax expense	Income tax expense	14,171		1,298		Income tax expense	14,642		14,171
Net income	Net income	$	47,663	$	8,445	Net income	$	51,516	$	47,663
Basic earnings per share	Basic earnings per share	$	0.28	$	0	Basic earnings per share	$	0.30	$	0.28
Diluted earnings per share	Diluted earnings per share	$	0.28	$	0	Diluted earnings per share	$	0.30	$	0.28

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

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EASTERN BANKSHARES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


		For the Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
		(In thousands)					(In thousands)
Net income	Net income	$	47,663	$	8,445	Net income	$	51,516	$	47,663
Other comprehensive income, net of tax:
Other comprehensive loss, net of tax:						Other comprehensive loss, net of tax:
Net change in fair value of securities available for sale	Net change in fair value of securities available for sale	(74,904)		26,192		Net change in fair value of securities available for sale	(352,025)		(74,904)
Net change in fair value of cash flow hedges	Net change in fair value of cash flow hedges	(5,948)		29,075		Net change in fair value of cash flow hedges	(3,809)		(5,948)
Net change in other comprehensive income for defined benefit postretirement plans	Net change in other comprehensive income for defined benefit postretirement plans	426		0		Net change in other comprehensive income for defined benefit postretirement plans	(124)		426
Total other comprehensive (loss) income		(80,426)		55,267
Total comprehensive (loss) income		$	(32,763)	$	63,712
Total other comprehensive loss						Total other comprehensive loss	(355,958)		(80,426)
Total comprehensive loss						Total comprehensive loss	$	(304,442)	$	(32,763)

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

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EASTERN BANKSHARES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Shares of Common Stock Outstanding Common Stock Additional Paid In Capital Retained
Earnings Accumulated
Other
Comprehensive
Income 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 of 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 0 $ 0 $ 0 $ 1,651,314 $ 11,420 $ 0 $ 1,662,734
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) — — — (10,324) — — (10,324)
Net income — — — 47,663 — — 47,663
Other comprehensive income, net of tax — — — — (80,426) — (80,426)
ESOP shares committed to be released — — 827 — — 1,253 2,080
Balance at March 31, 2021 186,758,154 $ 1,868 $ 1,854,895 $ 1,702,946 $ (26,192) $ (146,472) $ 3,387,045
Three Months Ended March 31, 2022 and 2021


	Shares of Common Stock Outstanding	Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Unallocated Common Stock Held by ESOP		Total
	(In thousands, except share data)
Balance at 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	—	—		—		(10,324)		—		—		(10,324)
Net income	—	—		—		47,663		—		—		47,663
Other comprehensive loss, net of tax	—	—		—		—		(80,426)		—		(80,426)
ESOP shares committed to be released	—	—		827		—		—		1,253		2,080
Balance at March 31, 2021	186,758,154	$	1,868	$	1,854,895	$	1,702,946	$	(26,192)	$	(146,472)	$	3,387,045

Balance at December 31, 2021	186,305,332	$	1,863	$	1,835,241	$	1,768,653	$	(56,696)	$	(142,709)	$	3,406,352
Cumulative effect of accounting adjustment (1)	—	—		—		(20,098)		—		—		(20,098)
Dividends to common shareholders	—	—		—		(17,074)		—		—		(17,074)
Repurchased common stock	(2,866,621)	(29)		(60,566)		—		—		—		(60,595)
Share-based compensation	—	—		1,623		—		—		—		1,623
Net income	—	—		—		51,516		—		—		51,516
Other comprehensive loss, net of tax	—	—		—		—		(355,958)		—		(355,958)
ESOP shares committed to be released	—	—		1,372		—		—		1,254		2,626
Balance at March 31, 2022	183,438,711	$	1,834	$	1,777,670	$	1,782,997	$	(412,654)	$	(141,455)	$	3,008,392

(1)Represents gross transition adjustment amount of $28.0 million, net of taxes of $7.9 million, to reflect the cumulative impact on retained earnings pursuant to the Company’s ~~(as defined herein)~~ adoption of Accounting Standards Update ~~2016-02~~2016-13. Refer to Note 4, “Loans and Allowance for Credit Losses” ~~Leases~~for additional discussion.. 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 a quarterly cash dividend of $0.06 per share of common stock during the three months ended March 31, 2021.~~

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

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EASTERN BANKSHARES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS


		For the Three Months Ended March 31,					Three Months Ended March 31,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021

Operating activities	Operating activities					Operating activities
Net income	Net income	$	47,663	$	8,445	Net income	$	51,516	$	47,663
Adjustments to reconcile net income to net cash provided by operating activities	Adjustments to reconcile net income to net cash provided by operating activities					Adjustments to reconcile net income to net cash provided by operating activities
(Release of) provision for loan losses		(580)		28,600
Release of provision for loan losses						Release of provision for loan losses	(485)		(580)
Depreciation and amortization	Depreciation and amortization	3,283		4,318		Depreciation and amortization	3,803		3,283
(Accretion) amortization of net loan costs and premiums, net		(6,859)		795
Accretion of deferred loan fees and premiums, net						Accretion of deferred loan fees and premiums, net	(2,653)		(6,859)
Deferred income tax expense	Deferred income tax expense	5,118		4,641		Deferred income tax expense	14,129		5,118
Amortization of investment security premiums and discounts	Amortization of investment security premiums and discounts	3,277		791		Amortization of investment security premiums and discounts	4,669		3,277
Right-of-use asset amortization	Right-of-use asset amortization	2,862		3,615		Right-of-use asset amortization	3,272		2,862
Net gain on sale of securities available for sale		(1,164)		(122)
Share-based compensation						Share-based compensation	1,623		—
Increase in cash surrender value of bank-owned life insurance						Increase in cash surrender value of bank-owned life insurance	(863)		(549)
Loss (gain) on sale of securities available for sale, net						Loss (gain) on sale of securities available for sale, net	2,172		(1,164)
Amortization of gains from terminated interest rate swaps	Amortization of gains from terminated interest rate swaps	(8,274)		0		Amortization of gains from terminated interest rate swaps	(5,298)		(8,274)
Employee Stock Ownership Plan expense	Employee Stock Ownership Plan expense	2,080		0		Employee Stock Ownership Plan expense	2,626		2,080
Other	Other	(557)		(576)		Other	1,013		(8)
Change in:	Change in:					Change in:
Trading securities		0		309
Loans held for sale	Loans held for sale	(863)		(2,866)		Loans held for sale	40		(863)
Prepaid pension expense	Prepaid pension expense	838		(30,473)		Prepaid pension expense	(7,680)		838
Other assets	Other assets	43,683		(61,071)		Other assets	40,300		43,683
Other liabilities	Other liabilities	(25,597)		12,043		Other liabilities	(39,806)		(25,597)
Net cash provided by (used in) operating activities		64,910		(31,551)
Net cash provided by operating activities						Net cash provided by operating activities	68,378		64,910
Investing activities	Investing activities					Investing activities
Proceeds from sales of securities available for sale	Proceeds from sales of securities available for sale	23,236		5,600		Proceeds from sales of securities available for sale	232,561		23,236
Proceeds from maturities and principal paydowns of securities available for sale	Proceeds from maturities and principal paydowns of securities available for sale	214,085		56,021		Proceeds from maturities and principal paydowns of securities available for sale	362,680		214,085
Purchases of securities available for sale	Purchases of securities available for sale	(1,137,969)		(70,301)		Purchases of securities available for sale	(471,543)		(1,137,969)
Proceeds from sale of Federal Home Loan Bank stock		0		749
Purchases of Federal Home Loan Bank stock		0		(527)
Proceeds from maturities and principal paydowns of securities held to maturity						Proceeds from maturities and principal paydowns of securities held to maturity	421		—
Purchases of securities held to maturity						Purchases of securities held to maturity	(395,835)		—
Contributions to low income housing tax credit investments	Contributions to low income housing tax credit investments	(2,727)		(5,177)		Contributions to low income housing tax credit investments	(5,642)		(2,727)
Contributions to other equity investments		0		(137)
Distributions from equity investments		7		13
Net increase in outstanding loans		(171,325)		(101,856)
Distributions from other equity investments						Distributions from other equity investments	606		7
Net decrease (increase) in outstanding loans						Net decrease (increase) in outstanding loans	99,847		(171,325)
Proceeds from life insurance policies						Proceeds from life insurance policies	19,736		—
Acquisitions, net of cash and cash equivalents acquired						Acquisitions, net of cash and cash equivalents acquired	(5,200)		—
Purchased banking premises and equipment, net	Purchased banking premises and equipment, net	(719)		(1,029)		Purchased banking premises and equipment, net	(3,280)		(719)
Proceeds from sale of premises held for sale	Proceeds from sale of premises held for sale	736		0		Proceeds from sale of premises held for sale	8,390		736
Net cash used in investing activities	Net cash used in investing activities	(1,074,676)		(116,644)		Net cash used in investing activities	(157,259)		(1,074,676)
Financing activities	Financing activities					Financing activities
Net increase in demand, savings, interest checking, and money market investment deposit accounts		840,423		762,049
Net (decrease) increase in demand, savings, interest checking, and money market investment deposit accounts						Net (decrease) increase in demand, savings, interest checking, and money market investment deposit accounts	(155,429)		840,423
Net decrease in time deposits	Net decrease in time deposits	(15,332)		(4,430)		Net decrease in time deposits	(80,066)		(15,332)
Net decrease (increase) in borrowed funds		1,302		(203,968)
Net increase in borrowed funds						Net increase in borrowed funds	644		1,302
Contingent consideration paid	Contingent consideration paid	(41)		(92)		Contingent consideration paid	(63)		(41)
Payment of initial public offering costs		0		(1,517)
Payments for repurchases of common stock						Payments for repurchases of common stock	(60,595)		—
Dividends declared and paid to common shareholders	Dividends declared and paid to common shareholders	(10,324)		0		Dividends declared and paid to common shareholders	(16,908)		(10,324)
Net cash provided by financing activities	Net cash provided by financing activities	816,028		552,042		Net cash provided by financing activities	(312,417)		816,028
Net (decrease) increase in cash, cash equivalents, and restricted cash	Net (decrease) increase in cash, cash equivalents, and restricted cash	(193,738)		403,847		Net (decrease) increase in cash, cash equivalents, and restricted cash	(401,298)		(193,738)
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	2,054,070		362,602		Cash, cash equivalents, and restricted cash at beginning of period	1,231,792		2,054,070
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	1,860,332	$	766,449	Cash, cash equivalents, and restricted cash at end of period	$	830,494	$	1,860,332
Supplemental disclosure of cash flow information	Supplemental disclosure of cash flow information					Supplemental disclosure of cash flow information
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest paid	Interest paid	$	1,049	$	6,908	Interest paid	$	3,343	$	1,049
Income taxes	Income taxes	$	4,858	$	5,361	Income taxes	5,505		4,858
Non-cash activities	Non-cash activities					Non-cash activities
Net increase in capital commitments relating to low income housing tax credit projects	Net increase in capital commitments relating to low income housing tax credit projects	$	2,943	$	5,000	Net increase in capital commitments relating to low income housing tax credit projects	$	530	$	2,943
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.

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EASTERN BANKSHARES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

Corporate Structure and Nature of Operations

Eastern Bankshares, Inc., a Massachusetts corporation (the “Company”), is a bank holding company. Through its wholly-owned subsidiaries, Eastern Bank (the “Bank”) and Eastern Insurance Group LLC (“Eastern Insurance Group”), the Company provides a variety of banking, 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 System (“Federal Reserve”). The activities of the Bank are subject to the regulatory supervision of the Massachusetts Commissioner of Banks, the Federal Deposit Insurance Corporation (“FDIC”) and the Consumer Financial Protection Bureau. The Company and the activities of the Bank and Eastern Insurance Group are also subject to various Massachusetts, 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 ~~Update~~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 ~~year's~~period’s presentation.

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

2. Summary of Significant Accounting Policies

The following describes the Company’s use of estimates as well as relevant accounting pronouncements that were recently issued but not yet adopted as of March 31, ~~2021~~2022 and those that were adopted during the three months ended March 31, ~~2021.~~2022. For a full discussion of significant accounting policies, refer to the notes included within the Company’s ~~2020~~2021 Form 10-K.

Use of Estimates

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

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Recent Accounting Pronouncements

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

Relevant standards that were recently issued but not yet adopted as of March 31, ~~2021:~~2022:

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

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

Relevant standards that were adopted during the ~~nonpublic company effective date and is currently in the process of reviewing its contracts and existing processes in order to assess the risks and potential impact of the transition away from LIBOR.~~three months ended March 31, 2022:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses on Financial Instruments and relevant amendments (Topic 326) (“ASU 2016-13”). This update was created to replace the ~~current~~then-current GAAP method of calculating credit losses. Specifically, the standard replaces 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 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~~allows for a reversal of impairment loss when the credit of the issuer improves. The guidance requires a cumulative effect of the initial application to be recognized in retained earnings at the date of initial application.

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

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

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

To address the impact of ASU 2016-13, the Company has formed a committee, including the Chief Credit Officer, the Chief Financial Officer, and Chief Information Officer, to assist in identifying, implementing, and evaluating the impact of the required changes to loan loss estimation models and processes. The Company has evaluated portfolio segmentation, methodologies and economic forecasting inputs to the process and continues to design the control environment under the new standard. A third party has been engaged to assist the Company in project management, documentation, model governance and related internal controls implementation. The Company is currently assessing the impact of the new standard on its consolidated financial statements.

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

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~~postretirement benefit plans. The guidance eliminates requirements for certain disclosures that~~31, 2021 are ~~no longer considered cost beneficial and requires new ones that the FASB considers pertinent. For public companies,~~presented under ASU ~~2018-14 is effective for fiscal years ending after December 15, 2020. For nonpublic companies, ASU 2018-14 is effective for fiscal years ending after December 15, 2021. Early adoption is permitted.~~2016-13, while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company ~~will adopt this standard on~~recorded a net decrease to retained earnings of $20.1 million, net of deferred taxes of $7.9 million, as of January 1, 2022, for the ~~nonpublic company effective date.~~cumulative effect of adopting ASU 2016-13. The Company ~~expects~~adopted ASU 2016-13 using the ~~adoption of this standard will not have a material impact on its consolidated~~prospective transition approach for purchased credit-deteriorated (“PCD”) financial ~~statements.~~

~~Relevant standards~~assets that were ~~adopted during~~previously classified as purchased credit-impaired (“PCI”) financial assets and accounted for under ASC 310-30. In accordance with ASU 2016-13, the ~~period endedMarch 31, 2021:~~Company did not reassess whether its assets previously classified as PCI assets met the criteria of PCD assets as of the date of adoption. Rather, loans previously determined to be PCI loans are considered to be PCD loans as of January 1, 2022. On January 1, 2022, the amortized cost basis of the PCD assets was adjusted to reflect the addition of the allowance for loan losses on PCD loans. The remaining noncredit discount will be accreted into the Company’s interest income at the then-effective interest rate as of January 1, 2022. The amount of the adjustment for PCD assets was not material to the Company.

In ~~August 2018,~~March 2020, the FASB issued ASU ~~2018-15,~~2020-4, ~~Intangibles–Goodwill and Other–Internal-use software (Subtopic 350-40)~~Reference Rate Reform (Topic 848): ~~Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract~~ Facilitation of the Effects of Reference Rate Reform on Financial Reporting(“ (“ASU ~~2018-15”~~2020-04”). This update addresses ~~accounting~~optional expedients and exceptions for ~~fees paid by a customer for implementation, set-up~~applying GAAP to certain contracts, hedging relationships, and other ~~upfront costs incurred in a cloud computing arrangement that is hosted~~transactions affected by ~~the vendor (i.e., a service contract).~~reference rate reform if certain criteria are met. The new guidance ~~aligns treatment~~applies only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for ~~capitalization~~and that are retained through the end of ~~implementation costs with guidance on internal-use software.~~the hedging relationship. For public ~~entities, the guidance is effective for annual reporting periods beginning after December 15, 2019. For~~and nonpublic entities, the guidance is effective ~~for annual reporting periods beginning~~as of March 12, 2020 through December 31, 2022 and does not apply to contract modifications made after December ~~15, 2020,~~31, 2022. The Company performed a review its contracts and ~~for all interim periods beginning after December 15, 2021. The adoption~~existing processes to assess the risks and potential impact of ~~this standard on January 1, 2021 did not have a~~the transition away from LIBOR and noted no material impact onto the Company’s consolidated financial ~~statements.~~statements as of March 31, 2022.

Significant Accounting Policies

The adoption of the ASUs 2016-13, 2018-19 and 2019-11 resulted in changes in the Company’s accounting policies and estimates as it relates to available for sale securities, held to maturity securities, loans receivable and off-balance sheet commitments to lend. The following describes the changes to the Company’s significant accounting policies from December 31, 2021, that resulted from the adoption of the ASUs described above:

Allowance for Credit Losses - Available for Sale Securities

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

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

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

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

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

The Company’s AFS securities are carried at fair value. For AFS securities in an unrealized loss position, management will first evaluate whether there is intent to sell a security, or if it is more likely than not that the Company will be required to sell a security prior to anticipated recovery of its amortized cost basis. If either of these criteria are met, the Company will record a write-down of the security’s amortized cost basis to fair value through income. For those AFS securities which do not meet the intent or requirement to sell criteria, management will evaluate whether the decline in fair value is a result of credit related matters or other factors. In performing this assessment, management considers the creditworthiness of the issuer including whether the security is guaranteed by the U.S. federal government or other government agency, the extent to which fair value is less than amortized cost, and changes in credit rating during the period, among other factors. If this assessment indicates the existence of credit losses, the security will be written down to fair value, as determined by a discounted cash flow analysis. To the extent the estimated cash flows do not support the amortized cost, the deficiency is considered to be due to credit loss and is recognized in earnings.

Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Losses are charged against the allowance when the security is determined to be uncollectible, or when either of the aforementioned criteria surrounding intent or requirement to sell have been met. On January 1, 2022, the date on which the Company adopted ASU 2016-13, no allowance for credit losses was recorded for AFS securities.

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

Allowance for Credit Losses - Held to Maturity Securities

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

Allowance for Loan Losses - Loans Held for Investment

Loans Individually Assessed for Impairment

ASU 2016-13 indicates that a loan should be measured for impairment individually if that loan shares no similar risk characteristics with other loans. For the Company, loans which have been identified as those to be individually assessed for impairment under CECL include loans that do not share similar risk characteristics with other loans in the corresponding reserve segment. Characteristics of loans meeting this definition may include, but is not limited to:

•Loans previously restructured and determined to be TDR loans;

•Loans on non-accrual status; and

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

Collateral-Dependent Loans

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

Troubled Debt Restructured Loans

In cases where a borrower experiences financial difficulties and the Company makes certain concessionary modifications to contractual terms, the loan is classified as a TDR. Modifications may include adjustments to interest rates, extensions of maturity, consumer loans where the borrower’s obligations have been effectively discharged through Chapter 7 bankruptcy and the borrower has not reaffirmed the debt to the Company, and other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral. Prior to the Company’s adoption of ASU 2016-13, all TDR loans were subject to a specific review for impairment loss each period beginning in the period in which the modification was executed. Subsequent to the adoption of ASU 2016-13, management identifies loans as TDR loans when it has a reasonable expectation that it will execute a TDR modification with a borrower. In addition, subsequent to adoption of ASU 2016-13, management estimates expected credit losses on a collective basis if a group of TDR loans share similar risk characteristics. If a TDR loan’s risk characteristics are not similar to those of any of the Company’s other TDR loans, expected credit losses on the TDR loan are measured individually. The impairment analysis discounts the present value of the anticipated cash flows by the loan’s contractual rate of interest in effect prior to the loan’s modification or the fair value of collateral if the loan is collateral dependent. The amount of credit loss, if any, is recorded as a specific loss allocation to each individual loan or as a loss allocation to the pool of loans, for those loans for which credit loss is measured on a collective basis, in the allowance for credit losses. Any commercial (commercial and industrial, commercial real estate, commercial construction, and business banking loans) or residential loan that has been classified as a TDR and which subsequently defaults is reviewed to determine if the 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 retain any restructured loan, which is on non-accrual status prior to being modified, on non-accrual status for approximately six months subsequent to being modified before the Company considers its return to accrual status. If the restructured loan is on accrual status prior to being modified, the Company reviews it to determine if the modified loan should remain on accrual status.

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Purchased Credit-Deteriorated Loans

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

Allowance for Credit Losses

Through December 31, 2021, the ~~FASB issued~~allowance for loan losses represented management’s best estimate of incurred probable losses in the Company’s loan portfolios based upon management’s assessment of various factors, including the risk characteristics of its loan portfolio, current economic conditions, and trends in loan delinquencies and charge-offs. The Company’s methodology for determining the qualitative component through December 31, 2021 included an assessment of factors affecting the determination of incurred losses in the loan portfolio. Such factors included trends in economic conditions, loan growth, credit underwriting policy exceptions, regulatory and audit findings, and peer comparisons, among others. Upon adoption of ASU ~~2021-01,~~ 2016-13, effective January 1, 2022, the Company changed its reserve methodology to estimate expected credit losses over the contractual life of loans and leases.

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

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

The quantitative model estimates expected credit losses using loan level data over the estimated life of the exposure, considering the effect of prepayments. Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period, beyond which is a reversion to the Company’s historical loss average. Management has determined that a reasonable and supportable forecast period of eight quarters, and a straight-line reversion period of four quarters, are appropriate forecast periods for purposes of estimating expected credit losses. As described above, quantitative model results are adjusted for risk factors not considered within the model but which are relevant in estimating the expected credit losses within the loan portfolio. The qualitative risk factors impacting the expected risk of loss within the loan portfolio include the following:

•~~Reference Rate Reform (Topic 848)~~Lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices;

•Nature and volume of the portfolio;

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

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

•Concentrations of credit risk;

•Model and data limitations; and

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

Loans that do not share similar risk characteristics with any pools of assets are subject to individual evaluation and are removed from the collectively assessed pools. For loans that are individually evaluated, the Company uses either a discounted cash flow (“~~ASU 2021-01”~~DCF”) ~~which expands~~approach or, for loans deemed to be collateral dependent or when foreclosure is probable, a fair value of collateral approach.

Accrued interest receivable amounts are excluded from balances of loans held at amortized cost and are included within other assets on the ~~scope~~consolidated balance sheet. Management has elected not to measure an allowance for credit losses on these amounts as the Company employs a timely write-off policy. Consistent with the Company's policy for non-accrual loans, accrued interest receivable is typically written off when loans reach 90 days past due and are placed on non-accrual status.

In the ordinary course of ~~guidance~~business, the Company enters into commitments to extend credit and standby letters of credit. Such financial instruments are recorded in ~~ASC 848 so that companies can apply~~ the ~~optional expedients~~financial statements when they become payable. The credit risk associated with these commitments is evaluated in a manner similar to ~~derivative instruments affected by~~ the ~~clearing house changes. ASU 2021-01 also clarifies and updates several items~~reserving method for loans receivable previously described. The reserve for unfunded lending commitments is included in ~~ASU 2020-04~~other liabilities in the balance sheet.

Additionally, various regulatory agencies, as an integral part of the Board’s monitoring of global reference rate reform activities. ASU 2021-01 permits entities to elect certain optional expedients and exceptions to modifications of interest rate indexes used for computing when accounting derivative contracts and certain hedging relationships impacted by changes in interest rates used for discounting, margining, or contract price alignment. ASU 2021-01 clarifies other aspectsCompany’s examination process, periodically assess the appropriateness of the ~~guidance~~allowance for credit losses and may require the Company to increase its allowance for loan losses or recognize further loan charge-offs, in accordance with GAAP.

Refer to Note 4, “Loans and Allowance for Credit Losses” for additional information regarding the Company’s measurement of credit losses on loans receivable and off-balance sheet commitments to lend as of March 31, 2022. For comparative allowance for loan loss information for which ASC ~~848~~450, “Contingencies” and ~~provides new guidance on how~~ASC 310, “Receivables” were applied (i.e., prior to ~~address~~ the ~~effects~~Company’s adoption of the ~~cash compensation adjustment that is provided as part of the above change on certain aspects of hedge accounting. The guidance was effective upon issuance~~CECL methodology previously described), refer to Note 5, “Loans and ~~allows~~Allowance for retrospective or prospective application with certain conditions. The Company did not elect retrospective application. The adoption of this update did not have a material impact on the Company’s consolidated financial statements.Loan Losses.”

3. Securities

Available for Sale Securities

The amortized cost, gross unrealized gains and losses, allowance for credit losses and fair value of ~~available for sale~~AFS securities as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:


		As of March 31, 2021									As of March 31, 2022
		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value			Amortized Cost		Unrealized Gains		Unrealized Losses		Allowance for Credit Losses		Fair Value
		(In Thousands)									(In thousands)
Debt securities:	Debt securities:									Debt securities:
Government-sponsored residential mortgage-backed securities	Government-sponsored residential mortgage-backed securities	$	2,713,898	$	23,199	$	(45,395)	$	2,691,702	Government-sponsored residential mortgage-backed securities	$	5,329,748	$	264	$	(360,666)	$	—	$	4,969,346
Government-sponsored commercial mortgage-backed securities	Government-sponsored commercial mortgage-backed securities	119,064		0		(2,793)		116,271		Government-sponsored commercial mortgage-backed securities	1,707,131		—		(91,204)		—		1,615,927
U.S. Agency bonds	U.S. Agency bonds	860,554		0		(28,882)		831,672		U.S. Agency bonds	1,099,916		—		(86,017)		—		1,013,899
U.S. Treasury securities	U.S. Treasury securities	69,385		30		(325)		69,090		U.S. Treasury securities	59,458		—		(3,223)		—		56,235
State and municipal bonds and obligations	State and municipal bonds and obligations	260,818		16,700		0		277,518		State and municipal bonds and obligations	258,769		2,792		(1,245)		—		260,316
Other debt securities										Other debt securities	1,598		—		(16)		—		1,582
		$	4,023,719	$	39,929	$	(77,395)	$	3,986,253		$	8,456,620	$	3,056	$	(542,371)	$	—	$	7,917,305

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		As of December 31, 2020									As of December 31, 2021
		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value			Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
		(In Thousands)									(In thousands)
Debt securities:	Debt securities:									Debt securities:
Government-sponsored residential mortgage-backed securities	Government-sponsored residential mortgage-backed securities	$	2,106,658	$	42,142	$	0	$	2,148,800	Government-sponsored residential mortgage-backed securities	$	5,577,292	$	17,918	$	(70,502)	$	5,524,708
Government-sponsored commercial mortgage-backed securities	Government-sponsored commercial mortgage-backed securities	17,054		27		0		17,081		Government-sponsored commercial mortgage-backed securities	1,420,748		760		(12,640)		1,408,868
U.S. Agency bonds	U.S. Agency bonds	670,468		113		(3,872)		666,709		U.S. Agency bonds	1,202,377		1,067		(28,430)		1,175,014
U.S. Treasury securities	U.S. Treasury securities	70,106		263		0		70,369		U.S. Treasury securities	89,434		5		(834)		88,605
State and municipal bonds and obligations	State and municipal bonds and obligations	260,898		20,004		0		280,902		State and municipal bonds and obligations	263,910		16,460		(41)		280,329
Small business administration pooled securities										Small business administration pooled securities	31,821		282		—		32,103
Other debt securities										Other debt securities	1,597		—		—		1,597
		$	3,125,184	$	62,549	$	(3,872)	$	3,183,861		$	8,587,179	$	36,492	$	(112,447)	$	8,511,224

The ~~amortized cost~~Company did 0t record a provision for credit losses on any AFS securities for the three months ended March 31, 2022. Accrued interest receivable on AFS securities totaled $13.8 million and ~~estimated fair value of available for sale securities by contractual maturities~~$14.3 million as of March 31, ~~2021~~2022 and December 31, ~~2020 are shown below. Actual maturities may differ from contractual maturities because borrowers may have~~2021, respectively, and is included within other assets on the ~~right to call or prepay obligations with or without prepayment penalties.~~

consolidated balance sheets. The ~~scheduled contractual maturities~~Company did not record any write-offs of ~~available for sale securities as of the dates indicated were as follows:~~

As of March 31, 2021
Due in one year or less Due after one year to five years Due after five to ten years Due after ten years Total
Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value
(In Thousands)
Government-sponsored residential mortgage-backed securities $ 0 $ 0 $ 20,503 $ 21,777 $ 87,383 $ 91,340 $ 2,606,012 $ 2,578,585 $ 2,713,898 $ 2,691,702
Government-sponsored commercial mortgage-backed securities 0 0 24,090 23,771 94,974 92,500 0 0 119,064 116,271
U.S. Agency bonds 0 0 99,784 98,111 760,770 733,561 0 0 860,554 831,672
U.S. Treasury securities 10,065 10,095 59,320 58,995 0 0 0 0 69,385 69,090
State and municipal bonds and obligations 405 406 25,244 26,220 72,587 76,077 162,582 174,815 260,818 277,518
Total $ 10,470 $ 10,501 $ 228,941 $ 228,874 $ 1,015,714 $ 993,478 $ 2,768,594 $ 2,753,400 $ 4,023,719 $ 3,986,253

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As of December 31, 2020
Due in one year or less Due after one year to five years Due after five to ten years Due after ten years Total
Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value
(In Thousands)
Government-sponsored residential mortgage-backed securities $ 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~~accrued interest income on AFS securities during the three months ended March 31, 2022. No securities held by the Company were delinquent on contractual payments as of March 31, 2022, nor were any securities placed on non-accrual status for the period then ended.

Gross realized gains from sales of AFS securities during the three months ended March 31, 2022 and 2021 were $1.0 million and ~~2020 were~~ $1.2 million, ~~and $0.1 million,~~ respectively. ~~There~~Gross realized losses from sales of AFS securities during the three months ended March 31, 2022 were $3.2 million. The Company had 0 significant gross realized losses from sales of AFS securities ~~available for sale~~ during the three months ended March 31, ~~2021 and 2020.~~2021. There was 0 ~~other-than-temporary impairment (“OTTI”)~~OTTI recorded during the three months ended March 31, ~~2021 and 2020.~~2021.

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

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

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

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		As of March 31, 2021														As of March 31, 2022
			Less than 12 Months				12 Months or Longer				Total						Less than 12 Months				12 Months or Longer				Total
		# of Holdings	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value			# of Holdings	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
		(Dollars in thousands)														(Dollars in thousands)
Government-sponsored residential mortgage-backed securities	Government-sponsored residential mortgage-backed securities	18	$	45,395	$	2,004,883	$	0	$	0	$	45,395	$	2,004,883	Government-sponsored residential mortgage-backed securities	322	$	223,347	$	3,513,073	$	137,319	$	1,403,234	$	360,666	$	4,916,307
Government-sponsored commercial mortgage-backed securities	Government-sponsored commercial mortgage-backed securities	7	2,793		116,271		0		0		2,793		116,271		Government-sponsored commercial mortgage-backed securities	205	85,425		1,548,080		5,779		67,847		91,204		1,615,927
U.S. Agency bonds	U.S. Agency bonds	13	28,882		831,672		0		0		28,882		831,672		U.S. Agency bonds	37	12,573		226,708		73,444		787,191		86,017		1,013,899
U.S. Treasury securities	U.S. Treasury securities	2	325		58,995		0		0		325		58,995		U.S. Treasury securities	2	3,223		56,235		—		—		3,223		56,235
State and municipal bonds and obligations															State and municipal bonds and obligations	103	1,245		82,709		—		—		1,245		82,709
Other debt securities															Other debt securities	3	16		1,582		—		—		16		1,582
		40	$	77,395	$	3,011,821	$	0	$	0	$	77,395	$	3,011,821		672	$	325,829	$	5,428,387	$	216,542	$	2,258,272	$	542,371	$	7,686,659

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


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

The Company does not intend to sell these investments and has determined based upon available evidence that it is more likely than not that the Company will not be required to sell each security before the expected recovery of its amortized cost basis. As a result, the Company ~~does~~did not recognize a provision for credit losses on these investments as of March 31, 2022. As it relates to securities with gross unrealized losses as of December 31, 2021, the Company did not consider these investments ~~with gross unrealized losses~~ to be ~~OTTI.~~OTTI under its prior methodology. The Company made this determination by reviewing various qualitative and quantitative factors regarding each investment category, such as current market conditions, extent and nature of changes in fair value, issuer rating changes and trends, and volatility of earnings.

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

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

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

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

•U.S. Agency bonds – The securities with unrealized losses in this portfolio have contractual terms that generally do not permit the issuer to settle the security at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. ~~The securities in a loss position as of December 31, 2020 remain in a loss position as of March 31, 2021 but have not yet been held for a period of 12 months or longer as of March 31, 2021.~~ 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 ~~securities~~security at a price less than the current par value of the ~~investments.~~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~~government.

•State and municipal bonds and obligations – The securities with unrealized losses in this portfolio have contractual terms that generally do not permit the issuer to settle the security at a price less than the current par value of ~~its agencies.~~the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality.

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

Held to Maturity Securities

The amortized cost, gross unrealized gains and losses, and fair value of HTM securities as of March 31, 2022 were as follows:


	As of March 31, 2022
	Amortized Cost		Unrealized Gains		Unrealized Losses		Allowance for Credit Losses		Fair Value
	(In thousands)
Debt securities:
Government-sponsored residential mortgage-backed securities	$	192,231	$	—	$	(3,318)	$	—	$	188,913
Government-sponsored commercial mortgage-backed securities	203,203		17		(10)		—		203,210
	$	395,434	$	17	$	(3,328)	$	—	$	392,123

The Company held 0 HTM securities as of December 31, 2021.

The Company did 0t record a provision for estimated credit losses on any HTM securities for the three months ended March 31, 2022. Accrued interest receivable on HTM securities totaled $0.8 million as of March 31, 2022 and is included within other assets on the consolidated balance sheets. The Company did not record any write-offs of accrued interest income on HTM securities during the three months ended March 31, 2022. No securities held by the Company were delinquent on contractual payments as of March 31, 2022, nor were any securities placed on non-accrual status for the period then ended.

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Available for Sale and Held to Maturity Securities Contractual Maturity

The amortized cost and estimated fair value of AFS and HTM securities by contractual maturities as of March 31, 2022 and December 31, 2021 are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without prepayment penalties.

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


	As of March 31, 2022
	Due in one year or less				Due after one year to five years				Due after five to ten years				Due after ten years				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Available for sale securities
Government-sponsored residential mortgage-backed securities	$	1	$	1	$	20,992	$	21,143	$	832,510	$	790,125	$	4,476,245	$	4,158,077	$	5,329,748	$	4,969,346
Government-sponsored commercial mortgage-backed securities	—		—		190,509		182,639		700,994		658,732		815,628		774,556		1,707,131		1,615,927
U.S. Agency bonds	—		—		578,810		537,301		521,106		476,598		—		—		1,099,916		1,013,899
U.S. Treasury securities	10,000		9,955		49,458		46,280		—		—		—		—		59,458		56,235
State and municipal bonds and obligations	4,659		4,653		36,766		36,723		68,574		68,850		148,770		150,090		258,769		260,316
Other debt securities	300		299		1,298		1,283		—		—		—		—		1,598		1,582
Total available for sale securities	14,960		14,908		877,833		825,369		2,123,184		1,994,305		5,440,643		5,082,723		8,456,620		7,917,305
Held to maturity securities
Government-sponsored residential mortgage-backed securities	—		—		—		—		—		—		192,231		188,913		192,231		188,913
Government-sponsored commercial mortgage-backed securities	—		—		—		—		203,203		203,210		—		—		203,203		203,210
Total held to maturity securities	—		—		—		—		203,203		203,210		192,231		188,913		395,434		392,123
Total	$	14,960	$	14,908	$	877,833	$	825,369	$	2,326,387	$	2,197,515	$	5,632,874	$	5,271,636	$	8,852,054	$	8,309,428

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

Securities Pledged as Collateral

As of March 31, 2022 and December 31, 2021, securities with a carrying value of $491.2 million and $2.2 billion, respectively, were pledged to secure public deposits and for other purposes required by law. As of March 31, 2022 and December 31, 2021, deposits with associated pledged collateral included Eastern Wealth Management cash accounts and municipal accounts. At March 31, 2022 and December 31, 2021, the carrying value of securities pledged as collateral with respect to municipal accounts acquired from Century Bancorp, Inc. (“Century”) was approximately $461.9 million and $2.1 billion, respectively. During the first quarter of 2022, the Company eliminated certain pledging arrangements acquired from Century which resulted in the decrease in securities pledged at March 31, 2022 compared to December 31, 2021.

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

Loans

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


		As of March 31,		As of December 31,			At March 31,		At December 31,
		2021		2020			2022		2021
		(In thousands)					(In thousands)
Commercial and industrial	Commercial and industrial	$	1,986,366	$	1,995,016	Commercial and industrial	$	2,886,560	$	2,960,527
Commercial real estate	Commercial real estate	3,676,941		3,573,630		Commercial real estate	4,609,824		4,522,513
Commercial construction	Commercial construction	249,416		305,708		Commercial construction	246,093		222,328
Business banking	Business banking	1,513,051		1,339,164		Business banking	1,201,007		1,334,694
Residential real estate	Residential real estate	1,406,510		1,370,957		Residential real estate	1,936,182		1,926,810
Consumer home equity	Consumer home equity	832,466		868,270		Consumer home equity	1,099,211		1,100,153
Other consumer	Other consumer	251,725		277,780		Other consumer	203,326		214,485
Gross loans before unamortized premiums, unearned discounts and deferred fees	Gross loans before unamortized premiums, unearned discounts and deferred fees	9,916,475		9,730,525		Gross loans before unamortized premiums, unearned discounts and deferred fees	12,182,203		12,281,510
Allowance for credit losses		(111,080)		(113,031)
Allowance for loan losses (1)						Allowance for loan losses (1)	(124,166)		(97,787)
Unamortized premiums, net of unearned discounts and deferred fees	Unamortized premiums, net of unearned discounts and deferred fees	(32,673)		(23,536)		Unamortized premiums, net of unearned discounts and deferred fees	(24,434)		(26,442)
Loans after the allowance for credit losses, unamortized premiums, unearned discounts and deferred fees		$	9,772,722	$	9,593,958
Loans after the allowance for loan losses, unamortized premiums, unearned discounts and deferred fees						Loans after the allowance for loan losses, unamortized premiums, unearned discounts and deferred fees	$	12,033,603	$	12,157,281

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

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

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

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

Loans Pledged as Collateral

The carrying value of loans pledged to secure advances from the Federal Home Loan Bank (“FHLB”) of Boston (“FHLBB”) were ~~$2.4~~$3.0 billion ~~at both~~and $2.6 billion March 31, ~~2021~~2022 and December 31, ~~2020.~~2021, respectively. The balance of funds borrowed from the FHLBB were ~~$14.5~~$13.7 million and ~~$14.6~~$14.0 million at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

The carrying value of loans pledged to secure advances from the Federal Reserve Bank (“FRB”) were ~~$832.4~~$799.9 million and ~~$884.1~~$784.0 million at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. There were 0no funds borrowed from the FRB outstanding at March 31, ~~2021~~2022 and December 31, ~~2020.~~2021.

Serviced Loans

At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, mortgage loans partially or wholly-owned by others and serviced by the Company amounted to approximately ~~$12.9~~$91.2 million and ~~$13.5~~$95.8 million, respectively.

Allowance for Loan Losses

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~~Allowance for Loan Losses~~

The allowance for loan losses is established to provide for ~~probable~~management’s estimate of expected lifetime credit losses ~~incurred in the Company’s loan portfolio~~on loans measured at amortized cost at the balance sheet date and is established through a provision for loan losses charged to net income. Charge-offs, net of recoveries, are charged directly to the allowance. 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 March 31,
2021 2020
(In thousands)
Balance at the beginning of period $ 113,031 $ 82,297
Loans charged off (1,982) (2,343)
Recoveries 611 584
(Release of) provision for loan losses (580) 28,600
Balance at end of period $ 111,080 $ 109,138

~~The following tables summarize changes~~change in the allowance for loan losses by loan category for the three months ended March 31, 2022:


	Three Months Ended March 31, 2022
	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, prior to adoption of ASU 2016-13	$	18,018	$	52,373	$	2,585	$	10,983	$	6,556	$	3,722	$	3,308	$	242	$	97,787
Cumulative effect of change in accounting principle (1)	11,533		(6,655)		1,485		6,160		13,489		1,857		(541)		(242)		27,086
Charge-offs	(1)		—		—		(945)		—		—		(661)		—		(1,607)
Recoveries	250		14		—		928		10		4		179		—		1,385
(Release of) provision	(2,959)		(1,120)		344		143		2,188		435		484		—		(485)
Ending balance (2)	$	26,841	$	44,612	$	4,414	$	17,269	$	22,243	$	6,018	$	2,769	$	—	$	124,166

(1)Represents the adjustment needed to reflect the cumulative day one impact pursuant to the Company’s adoption of ASU 2016-13 (i.e., cumulative effect adjustment related the adoption of ASU 2016-13 as of January 1, 2022). The adjustment represents a $27.1 million increase to the allowance attributable to the change in accounting methodology for estimating the allowance for loan losses resulting from the Company’s adoption of the standard. The adjustment also includes the adjustment needed to reflect the day one reclassification of the Company’s PCI loan balances to PCD and ~~bifurcates~~ the ~~amount~~associated gross-up of ~~allowance allocated~~$0.1 million, pursuant to ~~each loan category based on collective impairment analysis and loans evaluated individually for impairment:~~

For the Three Months Ended March 31, 2021
Commercial
and
Industrial Commercial
Real Estate Commercial
Construction Business
Banking Residential
Real Estate Consumer
Home Equity Other
Consumer Other Total
(In thousands)
Allowance for loan losses:
Beginning balance $ 26,617 $ 54,569 $ 4,553 $ 13,152 $ 6,435 $ 3,744 $ 3,467 $ 494 $ 113,031
Charge-offs 0 (234) 0 (1,384) 0 0 (364) 0 (1,982)
Recoveries 9 0 0 365 10 71 156 0 611
(Release of) provision (1,220) 803 (1,203) 1,371 (210) (239) 239 (121) (580)
Ending balance $ 25,406 $ 55,138 $ 3,350 $ 13,504 $ 6,235 $ 3,576 $ 3,498 $ 373 $ 111,080
Ending balance: individually evaluated for impairment $ 4,761 $ 210 $ 0 $ 1,387 $ 1,516 $ 263 $ 0 $ 0 $ 8,137
Ending balance: acquired with deteriorated credit quality $ 1,283 $ 822 $ 0 $ 0 $ 327 $ 0 $ 0 $ 0 $ 2,432
Ending balance: collectively evaluated for impairment $ 19,362 $ 54,106 $ 3,350 $ 12,117 $ 4,392 $ 3,313 $ 3,498 $ 373 $ 100,511
Loans ending balance:
Individually evaluated for impairment $ 17,907 $ 4,536 $ 0 $ 21,001 $ 26,459 $ 4,461 $ 26 $ 0 $ 74,390
Acquired with deteriorated credit quality 2,944 1,554 0 0 3,119 0 0 0 7,617
Collectively evaluated for impairment 1,965,515 3,670,851 249,416 1,492,050 1,376,932 828,005 251,699 0 9,834,468
Total loans by group $ 1,986,366 $ 3,676,941 $ 249,416 $ 1,513,051 $ 1,406,510 $ 832,466 $ 251,725 $ 0 $ 9,916,475

~~Table~~the Company’s adoption of ~~Contents~~ASU 2016-13.

(2)The balance of accrued interest receivable excluded from amortized cost and the calculation of the allowance for loan losses amounted to $31.4 million at March 31, 2022.

Reserve for Unfunded Commitments

For the Three Months Ended March 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:
Beginning balance $ 20,919 $ 34,730 $ 3,424 $ 8,260 $ 6,380 $ 4,027 $ 4,173 $ 384 $ 82,297
Charge-offs 0 0 0 (1,337) 0 (473) (533) 0 (2,343)
Recoveries 322 1 0 127 60 14 60 0 584
Provision (release of) 9,290 14,496 1,288 3,131 (212) 345 319 (57) 28,600
Ending balance $ 30,531 $ 49,227 $ 4,712 $ 10,181 $ 6,228 $ 3,913 $ 4,019 $ 327 $ 109,138
Ending balance: individually evaluated for impairment $ 4,037 $ 270 $ 0 $ 453 $ 1,275 $ 221 $ 0 $ 0 $ 6,256
Ending balance: acquired with deteriorated credit quality $ 0 $ 936 $ 0 $ 0 $ 256 $ 0 $ 0 $ 0 $ 1,192
Ending balance: collectively evaluated for impairment $ 26,494 $ 48,021 $ 4,712 $ 9,728 $ 4,697 $ 3,692 $ 4,019 $ 327 $ 101,690
Loans ending balance:
Individually evaluated for impairment $ 32,423 $ 8,054 $ 0 $ 10,258 $ 29,393 $ 6,280 $ 23 $ 0 $ 86,431
Acquired with deteriorated credit quality 3,939 5,780 0 0 3,424 0 0 0 13,143
Collectively evaluated for impairment 1,734,760 3,509,887 293,135 769,658 1,387,186 923,274 369,629 0 8,987,529
Total loans by group $ 1,771,122 $ 3,523,721 $ 293,135 $ 779,916 $ 1,420,003 $ 929,554 $ 369,652 $ 0 $ 9,087,103
Management evaluates the need for a reserve on unfunded lending commitments in a manner consistent with loans held for investment. Upon adoption of ASU 2016-13 on January 1, 2022, the Company recorded a transition adjustment related to the reserve for unfunded lending commitments of $1.0 million, resulting in a total reserve for unfunded lending commitments of $11.1 million as of January 1, 2022. As of March 31, 2022, the Company’s reserve for unfunded commitments was $10.4 million which is recorded within other liabilities.

Portfolio Segmentation

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

Commercial Lending

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

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

~~Table~~entity when the loan-to-value of ~~Contents~~a commercial real estate loan is in excess of a specified threshold.

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

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, automobile loans and ~~automobile~~aircraft loans, include the following factors, among others: income sources and reliability, credit histories, term of repayment, and collateral value, as applicable. These are typically granted on an unsecured basis, with the exception of ~~airplane~~aircraft and automobile loans.

Credit Quality

Commercial Lending Credit Quality

The credit quality of the Company’s commercial loan portfolio is actively monitored and supported by a comprehensive credit approval process and all large dollar transactions are sent for approval to a committee of seasoned business line and credit professionals. The Company maintains an independent credit risk review function that reports directly

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to the Risk Management Committee of the Board of Directors. Credits that demonstrate significant deterioration in credit quality are transferred to a specialized group of experienced officers for individual attention.

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

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

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

~~Table of Contents~~

0 Risk Rating - Unrated

Certain segments of the portfolios are not rated. These segments include ~~airplane~~aircraft loans, business banking scored loan products, and other commercial loans managed by exception. Loans within this unrated loan segment are monitored by delinquency status; and for lines of credit greater than $100,000 in exposure, an annual review is ~~conducted.~~conducted which includes the review of the business score and loan and deposit account performance. The Company supplements performance data with current business credit scores for the business banking portfolio on a quarterly basis. Unrated commercial and business banking loans are generally restricted to commercial exposure of less than $1 million. Loans included in this category ~~have qualification requirements that include risk rating of 10~~generally are not required to provide regular financial reporting or ~~better at time of recommendation for unrated status, acceptable management of deposit accounts, and no known negative changes in management, operations or financial performance.~~regular covenant monitoring.

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

1-10 Risk Rating – Pass

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

11 Risk Rating – Special Mention (Potential Weakness)

Loans to borrowers in this category exhibit potential weaknesses or downward trends deserving management’s close attention. While potentially weak, no loss of principal or interest is envisioned. Included in this category are borrowers who are performing as agreed, are weak when compared to industry standards, may be experiencing an interim loss and may be in declining industries. An element of asset quality, financial flexibility or management is below average. The Company does not consider borrowers within this category as new business prospects. Borrowers rated special mention may find it difficult to obtain alternative financing from traditional bank sources.

12 Risk Rating – Substandard (Well-Defined Weakness)

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

13 Risk Rating – Doubtful (Loss Probable)

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

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14 Risk Rating – Loss

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

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

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

As of March 31, 2021
Category Commercial and
Industrial Commercial
Real Estate Commercial
Construction Business
Banking Total
(In thousands)
Unrated $ 684,938 $ 6,318 $ 0 $ 1,079,605 $ 1,770,861
Pass 1,171,994 3,353,758 232,981 347,867 5,106,600
Special mention 68,826 127,751 10,345 57,387 264,309
Substandard 45,573 186,707 6,090 26,492 264,862
Doubtful 15,035 2,407 0 1,700 19,142
Loss 0 0 0 0 0
Total $ 1,986,366 $ 3,676,941 $ 249,416 $ 1,513,051 $ 7,425,774

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

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.

The following table details the amortized cost balances of the Company’s loan portfolios, presented by credit quality indicator and origination year as of March 31, 2022:


	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term Loans (1)		Total
	(In thousands)
Commercial and industrial
Pass	$	117,534	$	566,764	$	498,791	$	231,968	$	142,428	$	689,728	$	504,127	$	686	$	2,752,026
Special Mention	—		886		—		514		278		4,459		51,581		—		57,718
Substandard	—		11,302		3,756		340		23,031		8,275		790		346		47,840
Doubtful	—��		4,996		—		—		—		114		3,384		—		8,494
Loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	117,534		583,948		502,547		232,822		165,737		702,576		559,882		1,032		2,866,078

Commercial real estate
Pass	378,744		845,405		641,300		676,903		495,084		1,304,769		43,970		3,478		4,389,653
Special Mention	26,613		—		16,142		3,796		19,562		19,776		—		—		85,889
Substandard	29,903		58		4,663		1,654		38,038		49,327		8,000		—		131,643
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial real estate	435,260		845,463		662,105		682,353		552,684		1,373,872		51,970		3,478		4,607,185

Commercial construction
Pass	3,623		124,777		59,181		32,857		—		—		15,760		—		236,198
Special Mention	—		—		2,097		—		—		—		—		—		2,097
Substandard	—		—		—		6,743		—		—		—		—		6,743
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial construction	3,623		124,777		61,278		39,600		—		—		15,760		—		245,038

Business banking
Pass	54,881		309,961		200,726		141,974		69,341		285,849		77,782		3,436		1,143,950
Special Mention	2,174		2,176		3,219		9,152		7,181		14,498		1,908		—		40,308
Substandard	—		464		1,617		4,993		564		9,542		1,244		680		19,104
Doubtful	—		—		—		203		—		103		—		—		306
Loss	—		—		—		—		—		—		—		—		—
Total business banking	57,055		312,601		205,562		156,322		77,086		309,992		80,934		4,116		1,203,668

Residential real estate
Current and accruing	81,889		740,106		406,401		112,976		78,320		505,432		—		—		1,925,124
30-89 days past due and accruing	—		2,553		1,387		201		1,513		6,808		—		—		12,462
Accruing loans past 90 days due	—		—		—		—		—		—		—		—		—

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~~Asset Quality~~


Non-accrual	—		—		129		582		784		6,761		—		—		8,256
Total residential real estate	81,889		742,659		407,917		113,759		80,617		519,001		—		—		1,945,842

Consumer home equity
Current and accruing	15,321		12,792		6,903		6,448		26,582		91,599		929,383		1,788		1,090,816
30-89 days past due and accruing	—		33		31		—		170		1,490		2,004		67		3,795
Accruing loans past 90 days due	—		—		—		—		—		—		—		—		—
Non-accrual	—		—		74		679		1,293		1,948		3,147		—		7,141
Total consumer home equity	15,321		12,825		7,008		7,127		28,045		95,037		934,534		1,855		1,101,752

Other consumer
Current and accruing	15,652		39,868		22,534		25,531		33,967		33,664		15,295		—		186,511
30-89 days past due and accruing	12		107		76		117		449		429		—		—		1,190
Accruing loans past 90 days due	—		—		—		—		—		—		—		—		—
Non-accrual	—		95		27		37		174		172		—		—		505
Total other consumer	15,664		40,070		22,637		25,685		34,590		34,265		15,295		—		188,206

Total	$	726,346	$	2,662,343	$	1,869,054	$	1,257,668	$	938,759	$	3,034,743	$	1,658,375	$	10,481	$	12,157,769

~~In response to~~(1)The amounts presented represent 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 paymentamortized cost as of March 31, ~~2021~~2022 of revolving loans that were converted to term loans during the three months ended March 31, 2022.

Paycheck Protection Program (“PPP”) loans are included within the unrated category of the commercial and industrial and business banking portfolios in the tables above. Commercial and industrial PPP loans and business banking PPP loans amounted to $51.7 million and $89.5 million, respectively, at March 31, 2022 and $112.8 million and $218.6 million, respectively, at December 31, ~~2020 was $178.4 million and $332.7 million, respectively.~~2021 on a recorded investment basis. The Company ~~defines a modified~~does not have an allowance for 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 Reportinglosses for ~~Financial Institutions Working with Customers Affected~~PPP loans as they are 100% guaranteed 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 past due and therefore are not impacting non-accrual or delinquency totals as of March 31, 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 March 31, 2021 and December 31, 2020.SBA.

Asset Quality

The Company manages its loan portfolio with careful monitoring. As a general rule, loans more than 90 days past due with respect to principal and interest are classified as non-accrual loans. Exceptions may be made if management believes that collateral held by the Company is clearly sufficient and in full satisfaction of both principal and interest, or the loan is accounted for as a purchased credit impaired (“PCI”) loan. 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. Non-accrual loans and loans that are more than 90 days past due but still accruing interest are considered non-performing loans.

Non-accrual loans may be returned to an accrual status when principal and interest payments are no longer delinquent, and the risk characteristics of the loan have improved to the extent that there no longer exists a concern as to the collectability of principal and interest. Loans are considered past due based upon the number of days delinquent according to their contractual terms. ~~Specifically, non-accrual 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 non-accrual status until it becomes current with respect to principal and interest, the loan is liquidated, or the loan is determined to be uncollectible and is charged-off against the allowance for loan losses.

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

As of March 31, As of December 31,
2021 2020
(In Thousands)
Commercial and industrial $ 12,266 $ 11,714
Commercial real estate 1,016 915
Business banking 16,993 17,430
Residential real estate 8,127 6,815
Consumer home equity 3,524 3,602
Other consumer 349 529
Total non-accrual loans $ 42,275 $ 41,005

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

As of March 31, 2021
30-59
Days Past
Due 60-89
Days Past
Due 90 or More
Days Past
Due Total Past
Due Current Total
Loans Recorded
Investment
> 90 Days
and Accruing
(In thousands)
Commercial and industrial $ 9,460 $ 3 $ 1,174 $ 10,637 $ 1,975,729 $ 1,986,366 $ 252
Commercial real estate 3,225 0 1,403 4,628 3,672,313 3,676,941 1,138
Commercial construction 0 0 0 0 249,416 249,416 0
Business banking 13,299 1,404 8,513 23,216 1,489,835 1,513,051 0
Residential real estate 5,738 857 6,271 12,866 1,393,644 1,406,510 280
Consumer home equity 1,416 496 3,006 4,918 827,548 832,466 9
Other consumer 975 419 349 1,743 249,982 251,725 0
Total $ 34,113 $ 3,179 $ 20,716 $ 58,008 $ 9,858,467 $ 9,916,475 $ 1,679

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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


	As of March 31, 2022
	30-59 Days Past Due		60-89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans
	(In thousands)
Commercial and industrial	$	146	$	—	$	1,994	$	2,140	$	2,863,938	$	2,866,078
Commercial real estate	600		—		501		1,101		4,606,084		4,607,185
Commercial construction	6,743		—		—		6,743		238,295		245,038
Business banking	4,599		875		3,294		8,768		1,194,900		1,203,668
Residential real estate	10,384		2,162		6,379		18,925		1,926,917		1,945,842
Consumer home equity	2,517		1,348		6,726		10,591		1,091,161		1,101,752
Other consumer	971		219		505		1,695		186,511		188,206
Total	$	25,960	$	4,604	$	19,399	$	49,963	$	12,107,806	$	12,157,769


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

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

The following table presents information regarding non-accrual loans as of the dates indicated:


	As of and for the Three Months Ended March 31, 2022								As of December 31, 2021
	Non-Accrual Loans With ACL		Non-Accrual Loans Without ACL (4)		Total Non-Accrual Loans		Amortized Cost of Loans >90 DPD and Still Accruing (2)		Total Non-Accrual Loans (1)		Recorded Investment >90 DPD and Still Accruing
	(In thousands)
Commercial and industrial	$	3,496	$	6,990	$	10,486	$	—	$	12,400	$	—
Commercial real estate	—		501		501		—		—		1,196
Commercial construction	—		—		—		—		—		—
Business banking	6,410		522		6,932		—		8,230		—
Residential real estate	8,256		—		8,256		—		6,681		769
Consumer home equity	7,141		—		7,141		—		4,732		25
Other consumer	505		—		505		—		950		—
Total non-accrual loans	$	25,808	$	8,013	$	33,821	$	—	$	32,993	$	1,990

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

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

(3)The amount of interest income recognized on non-accrual loans during the three months ended March 31, 2022 was not significant.

(4)The loans on non-accrual status and without an ACL as of March 31, 2022, were primarily comprised of collateral dependent loans for which the fair value of the underlying loan collateral exceeded the loan carrying value.

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It is the Company’s policy to reverse any accrued interest when a loan is put on non-accrual status, and, as such, the Company did not record any interest income on non-accrual loans during the three months ended March 31, 2022. Accrued interest reversed against interest income for the three months ended March 31, 2022 was insignificant.

For collateral values for residential mortgage and home equity loans, the Company relies primarily upon third-party valuation information from certified appraisers and values are generally based upon recent appraisals of the underlying collateral, brokers’ opinions based upon recent sales of comparable properties, estimated equipment auction or liquidation values less estimated costs to sell. As of March 31, 2022 and December 31, 2021, the Company had collateral-dependent residential mortgage and home equity loans totaling $0.8 million and $0.6 million, respectively.

For collateral-dependent commercial loans, the amount of the allowance for loan losses is individually assessed based upon the fair value of the collateral. Various types of collateral are used, including real estate, inventory, equipment, accounts receivable, securities and cash, among others. For commercial real estate loans, the Company relies primarily upon third-party valuation information from certified appraisers and values are generally based upon recent appraisals of the underlying collateral, brokers’ opinions based upon recent sales of comparable properties, estimated equipment auction or liquidation values, income capitalization, or a combination of income capitalization and comparable sales. As of March 31, 2022 and December 31, 2021, the Company had collateral-dependent commercial loans totaling $11.6 million and $13.1 million, respectively.

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

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

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

Troubled Debt Restructurings ~~(“TDR”)~~

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

~~All~~as TDR loans, ~~are considered impaired~~the methodology employed to record any loan losses, and the calculation of any shortfall on collateral dependent loans, is also described above.

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 March 31, 2022 and December 31, 2021 was $49.0 million and $106.7 million, respectively. The Company defines a modified loan to have resumed payment if it is one month past the modification end date and not more than 30 days past due. These modifications with active deferrals met the criteria of either Section 4013 of the 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 ~~subject~~not deemed troubled debt restructurings, or TDRs. Additionally, loans that are performing in accordance with the contractual terms of the modification are not reflected as being past due and therefore are not impacting non-accrual or delinquency totals as of March 31, 2022 and December 31, 2021. The Company continued to ~~a specific review~~accrue interest on these COVID-19 modified loans and evaluated the deferred interest for ~~impairment loss.~~ collectability as of March 31, 2022 and December 31, 2021.

The ~~amount of impairment loss, if any, is recorded as a specific loss allocation~~Consolidated Appropriations Act, which was enacted on December 27, 2020, extended certain provisions related to ~~each individual loan~~the COVID-19 pandemic in the ~~allowance for loan losses. Commercial loans~~United States (which were due to expire) and ~~residential~~provided additional emergency relief to individuals and businesses. Included within the provisions of the Consolidated Appropriations Act is the extension to January 1, 2022 of Section 4013 of the CARES Act, which provides relief from a requirement to evaluate loans that ~~have been classified as TDRs and which subsequently default are reviewed~~had received a COVID-19 modification to determine if the loans required TDR treatment, provided certain criteria were met. As such, the

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Company applied the TDR relief granted pursuant to such section to any qualifying loan ~~should be deemed collateral dependent. In such an instance, any shortfall between~~modification executed during the ~~value of the collateral and the book value of the loan is determined by measuring the recorded investment in the loan against the fair value of the collateral less costs to sell.~~allowable time period.

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

~~Table~~TDR loan information as of ~~Contents~~

December 31, 2021 and the period then ended was prepared in accordance with U.S. GAAP effective for the Company as of December 31, 2021, or prior to our adoption of ASU 2016-13.

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


		As of March 31, 2021										As of March 31, 2022
		TDRs on Accrual Status			TDRs on Nonaccrual Status			Total TDRs				TDRs on Accrual Status			TDRs on Non-Accrual Status			Total TDRs
		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans			Number of Loans	Balance of Loans		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans
		(Dollars in thousands)										(Dollars in thousands)
Commercial and industrial	Commercial and industrial	1	$	5,641	6	$	7,583	7	$	13,224	Commercial and industrial	1	$	3,894	7	$	8,381	8	$	12,275
Commercial real estate	Commercial real estate	1	3,520		1	468		2	3,988		Commercial real estate	1	3,520		—	—		1	3,520
Business banking	Business banking	5	4,008		6	1,075		11	5,083		Business banking	5	3,771		8	814		13	4,585
Residential real estate	Residential real estate	140	22,565		30	3,557		170	26,122		Residential real estate	116	17,786		29	3,583		145	21,369
Consumer home equity	Consumer home equity	79	3,607		14	854		93	4,461		Consumer home equity	66	3,028		15	859		81	3,887
Other consumer	Other consumer	3	26		0	0		3	26		Other consumer	2	17		—	—		2	17
Total	Total	229	$	39,367	57	$	13,537	286	$	52,904	Total	191	$	32,016	59	$	13,637	250	$	45,653


		As of December 31, 2020										As of December 31, 2021
		TDRs on Accrual Status			TDRs on Nonaccrual Status			Total TDRs				TDRs on Accrual Status			TDRs on Non-Accrual Status			Total TDRs
		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans		Loans	Balance of Loans			Number of Loans	Balance of Loans		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans
		(Dollars in thousands)										(Dollars in thousands)
Commercial and industrial	Commercial and industrial	1	$	5,628	7	$	6,819	8	$	12,447	Commercial and industrial	1	$	3,745	6	$	9,983	7	$	13,728
Commercial real estate	Commercial real estate	1	3,521		1	480		2	4,001		Commercial real estate	1	3,520		—	—		1	3,520

Business banking	Business banking	6	4,471		6	722		12	5,193		Business banking	5	3,830		3	383		8	4,213
Residential real estate	Residential real estate	146	23,416		27	3,273		173	26,689		Residential real estate	121	19,119		27	3,015		148	22,134
Consumer home equity	Consumer home equity	91	4,030		12	815		103	4,845		Consumer home equity	67	3,104		16	818		83	3,922
Other consumer	Other consumer	3	29		0	0		3	29		Other consumer	2	18		—	—		2	18
Total		248	$	41,095	53	$	12,109	301	$	53,204
Total (1)											Total (1)	197	$	33,336	52	$	14,199	249	$	47,535

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

The amount of ~~specific reserves~~allowance for loan losses associated with the ~~TDRs~~TDR loans was ~~$4.1~~$2.5 million and ~~$3.5~~$3.4 million at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. There were 0no additional commitments to lend to borrowers who have been a party to a TDR loan as of both March 31, ~~2021~~2022 and December 31, ~~2020.~~2021.

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


		For the Three Months Ended March 31, 2021					For the Three Months Ended March 31, 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)
													For the Three Months Ended March 31, 2022					For the Three Months Ended March 31, 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	Business banking	0	$	0	$	0	1	$	244	$	244	Business banking	5	$	440	$	448	—	$	—	$	—
Residential real estate	Residential real estate	1	295		295		8	414		419		Residential real estate	1	134		134		1	295		295
Consumer home equity	Consumer home equity	0	0		0		1	24		24		Consumer home equity	1	210		210		—	—		—

Total	Total	1	$	295	$	295	10	$	682	$	687	Total	7	$	784	$	792	1	$	295	$	295

(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 March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the outstanding recorded investment of loans that were new ~~TDRs were $0.3 million~~TDR loans during both the three months ended March 31, 2022 and ~~$3.9 million, respectively.~~

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the year ended December 31, 2021 was $0.8 million.

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 March 31,					For the Three Months Ended March 31,
		2021		2020			2022		2021
		(In thousands)					(In thousands)

Extended maturity and interest only/principal deferred		$	0	$	46

Extended maturity						Extended maturity	$	402	$	—
Adjusted interest rate and extended maturity						Adjusted interest rate and extended maturity	390		—
Court-ordered concession	Court-ordered concession	295		0		Court-ordered concession	—		295

Other		0		641
Total	Total	$	295	$	687	Total	$	792	$	295

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:~~non-accrual:


		For the Three Months Ended March 31,							For the Three Months Ended March 31,
		2021			2020				2022			2021
		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment			Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
		(Dollars in thousands)							(Dollars in thousands)
Troubled debt restructurings that subsequently defaulted (1):	Troubled debt restructurings that subsequently defaulted (1):							Troubled debt restructurings that subsequently defaulted (1):
Commercial and industrial		0	$	0	2	$	4,613

Business banking	Business banking	1	419		0	0		Business banking	—	$	—	1	$	419

Consumer home equity	Consumer home equity	1	59		1	1,335		Consumer home equity	—	—		1	59
Total	Total	2	$	478	3	$	5,948	Total	—	$	—	2	$	478

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

During both the three months ended March 31, 2022 and 2021, ~~and 2020 the~~no amounts were charged-off on ~~TDRs~~TDR loans modified in the prior 12 ~~months were $0 and $0.4 million, respectively.~~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 non-accrual loans, TDR loans, and residential and home equity loans that have been partially charged off.

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

As of March 31, 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 $ 10,071 $ 11,312 $ — $ 9,182 $ 11,212 $ —
Commercial real estate 4,068 4,113 — 3,955 3,974 —
Business banking 4,961 7,260 — 5,250 7,659 —
Residential real estate 14,408 16,714 — 14,730 17,010 —
Consumer home equity 2,370 2,370 — 2,571 2,571 —
Other consumer 26 26 — 29 29 —
Sub-total 35,904 41,795 — 35,717 42,455 —
With an allowance recorded:
Commercial and industrial 7,836 8,147 4,761 8,161 8,432 4,555
Commercial real estate 468 489 210 480 497 210
Business banking 16,040 20,925 1,387 16,651 21,146 1,435
Residential real estate 12,051 12,051 1,516 12,326 12,326 1,565
Consumer home equity 2,091 2,091 263 2,274 2,274 289
Sub-total 38,486 43,703 8,137 39,892 44,675 8,054
Total $ 74,390 $ 85,498 $ 8,137 $ 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 March 31,
2021 2020
Average
Recorded
Investment Total
Interest
Recognized Average
Recorded
Investment Total
Interest
Recognized
(In thousands)
With no related allowance recorded:
Commercial and industrial $ 9,899 $ 46 $ 20,880 $ 70
Commercial real estate 4,176 44 7,491 44
Business banking 5,024 26 2,286 17
Residential real estate 14,648 144 14,801 173
Consumer home equity 2,438 20 3,606 40
Other consumer 27 0 23 0
Sub-total 36,212 280 49,087 344
With an allowance recorded:
Commercial and industrial 7,965 0 11,730 0
Commercial real estate 657 0 348 0
Business banking 16,325 14 8,782 15
Residential real estate 12,248 127 11,727 137
Consumer home equity 2,150 18 2,857 31
Sub-total 39,345 159 35,444 183
Total $ 75,557 $ 439 $ 84,531 $ 527

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~~Purchased Credit Impaired Loans~~

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

As of March 31, 2021 As of December 31, 2020
(In Thousands)
Outstanding balance $ 8,662 $ 9,982
Carrying amount 7,617 $ 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 March 31,
2021 2020
(In thousands)
Balance at beginning of period $ 2,495 $ 3,923
Accretion (216) (422)
Other change in expected cash flows (248) (155)
Balance at end of period $ 2,031 $ 3,346

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 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, or participates in syndications through the SNC Program. These participations meet the same underwriting, credit and portfolio management standards as the Company’s other loans and are applied against the same criteria to determine the allowance for loan losses as other loans. ~~As of March 31, 2021 and December 31, 2020, the Company held commercial loan participation interests totaling $1.0 billion and $1.0 billion, respectively.~~

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

As of and for the three months ended March 31, 2021 As of and for the year ended December 31, 2020
Balance Nonperforming
Loan Rate
(%) Impaired
(%) Gross
Charge-offs Balance Nonperforming
Loan Rate
(%) Impaired
(%) Gross
Charge-offs
(Dollars in thousands)
Commercial and industrial $ 579,812 1.31 % 1.31 % $ 0 $ 598,873 1.11 % 1.11 % $ 0
Commercial real estate 345,261 0.00 % 0.00 % 0 306,202 0.00 % 0.00 % 0
Commercial construction 86,447 0.00 % 0.00 % 0 119,600 0.00 % 0.00 % 0
Business banking 31 0.00 % 0.00 % 0 34 0.00 % 0.00 % 0
Total loan participations $ 1,011,551 0.75 % 0.75 % $ 0 $ 1,024,709 0.65 % 0.65 % $ 0

2329

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The following table summarizes the Company’s loan participations:


	As of and for the Three Months Ended March 31, 2022						As of and for the Year Ended December 31, 2021
	Balance (1)		Non-performing Loan Rate (%)		Gross Charge-offs		Balance (1)		Non-performing Loan Rate (%)		Gross Charge-offs
	(Dollars in thousands)
Commercial and industrial	$	744,231	1.13	%	$	—	$	732,425	1.36	%	$	—
Commercial real estate	390,540		0.00	%	—		362,898		0.00	%	—
Commercial construction	42,661		0.00	%	—		37,081		0.00	%	—
Business banking	143		0.00	%	—		98		0.00	%	—
Total loan participations	$	1,177,575	0.71	%	$	—	$	1,132,502	0.88	%	$	—

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

5. Loans and Allowance for Loan Losses

Allowance for Loan Losses

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

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

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

The following tables summarize the changes in the allowance for loan losses by loan category for the three months ended March 31, 2021:

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	For the Three Months Ended March 31, 2021
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Business Banking		Residential Real Estate		Consumer Home Equity		Other Consumer		Other		Total
	(In thousands)
Allowance for loan losses:
Beginning balance	$	26,617	$	54,569	$	4,553	$	13,152	$	6,435	$	3,744	$	3,467	$	494	$	113,031
Charge-offs	—		(234)		—		(1,384)		—		—		(364)		—		(1,982)
Recoveries	9		—		—		365		10		71		156		—		611
(Release of) Provision	(1,220)		803		(1,203)		1,371		(210)		(239)		239		(121)		(580)
Ending balance	$	25,406	$	55,138	$	3,350	$	13,504	$	6,235	$	3,576	$	3,498	$	373	$	111,080

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


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

Credit Quality

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

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

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

Impaired Loans

Under previous accounting guidance, impaired loans consisted of all loans for which management had determined it was probable that the Company would be unable to collect all amounts due according to the contractual terms of the loan agreements. Factors considered by management in determining impairment included payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.

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

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


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

The following table displays information regarding interest income recognized on impaired loans, by portfolio, for the three months ended March 31, 2021:


	For the Three Months Ended March 31, 2021
	Average Recorded Investment		Total Interest Recognized
	(In thousands)
With no related allowance recorded:
Commercial and industrial	$	9,899	$	46
Commercial real estate	4,176		44
Business banking	5,024		26
Residential real estate	14,648		144
Consumer home equity	2,438		20
Other consumer	27		—
Sub-total	36,212		280
With an allowance recorded:
Commercial and industrial	7,965		—
Commercial real estate	657		—
Business banking	16,325		14
Residential real estate	12,248		127
Consumer home equity	2,150		18
Sub-total	39,345		159
Total	$	75,557	$	439

Purchased Credit Impaired Loans

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

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

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


	For the Three Months Ended March 31, 2021
	(In thousands)
Balance at beginning of period	$	2,495
Accretion	(216)
Other change in expected cash flows	(248)
Balance at end of period	$	2,031

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

6. Leases

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

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


		As of March 31, 2021		As of December 31, 2020			As of March 31, 2022		As of December 31, 2021
		(In thousands)					(In thousands)
Right-of-use assets	Right-of-use assets	$	79,163	$	81,596	Right-of-use assets	$	80,408	$	83,821
Lease liabilities	Lease liabilities	82,910		85,330		Lease liabilities	85,573		89,296

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

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


		For the Three Months Ended March 31,					For the Three Months Ended March 31,
		2021		2020			2022		2021
		(In thousands)					(In thousands)
Operating lease cost	Operating lease cost	$	3,561	$	3,613	Operating lease cost	$	3,694	$	3,561
Finance lease cost	Finance lease cost	31		2		Finance lease cost	88		31
Variable lease cost	Variable lease cost	490		522		Variable lease cost	829		490
Total lease cost	Total lease cost	$	4,082	$	4,137	Total lease cost	$	4,611	$	4,082

During the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021 the Company made ~~$3.6~~$4.7 million and ~~$3.5~~$3.6 million, respectively, in cash payments for operating and finance lease payments.

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


		As of March 31, 2021		As of	As of December 31, 2020			As of March 31, 2022		As of December 31, 2021
Weighted-average remaining lease term (in years)	Weighted-average remaining lease term (in years)	8.33			8.50		Weighted-average remaining lease term (in years)	7.65		7.83
Weighted-average discount rate	Weighted-average discount rate	2.63	%		2.65	%	Weighted-average discount rate	2.54	%	2.52	%

6.7. Goodwill and Other Intangibles

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


		As of March 31, 2021							As of March 31, 2022
		Banking Business		Insurance Agency Business		Net Carrying Amount			Banking Business		Insurance Agency Business		Net Carrying Amount
		(In Thousands)							(In thousands)
Balances not subject to amortization	Balances not subject to amortization							Balances not subject to amortization
Goodwill	Goodwill	$	298,611	$	70,866	$	369,477	Goodwill	$	557,635	$	77,144	$	634,779
Balances subject to amortization	Balances subject to amortization							Balances subject to amortization
Insurance agency(1)	Insurance agency(1)	0		6,398		6,398		Insurance agency(1)	—		8,708		8,708
Core deposits		127		0		127
Core deposit intangible								Core deposit intangible	11,272		—		11,272
Total other intangible assets	Total other intangible assets	127		6,398		6,525		Total other intangible assets	11,272		8,708		19,980
Total goodwill and other intangible assets	Total goodwill and other intangible assets	$	298,738	$	77,264	$	376,002	Total goodwill and other intangible assets	$	568,907	$	85,852	$	654,759

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


	As of December 31, 2021
	Banking Business		Insurance Agency Business		Net Carrying Amount
	(In thousands)
Balances not subject to amortization
Goodwill	$	557,635	$	73,861	$	631,496
Balances subject to amortization
Insurance agency (1)	—		6,635		6,635
Core deposit intangible	11,572		—		11,572
Total other intangible assets	11,572		6,635		18,207
Total goodwill and other intangible assets	$	569,207	$	80,496	$	649,703

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

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 1 insurance agency during the three months ended March 31, 2022. The purchase price and goodwill recorded as a result of the acquisition were not material.

The Company quantitatively assesses goodwill for impairment at the reporting unit level on an annual basis or sooner if an event occurs or circumstances change which might indicate that the fair value of a reporting unit is below its carrying amount. The Company has identified and assigned goodwill to 2 reporting units - the banking business and insurance agency business. The quantitative ~~assessment was~~assessments for both the banking business and insurance agency business were most recently performed as of September 30, ~~2020. During~~2021. The assessment for the ~~three months ended December 31, 2020~~banking business included a market capitalization analysis, as well as a comparison of the banking business’ book value to the implied fair value using a pricing multiple of the Company’s tangible book value. The assessment for insurance agency business included a price-to-earnings analysis, as well as an earnings before interest, taxes, depreciation, and ~~the three months ended March 31, 2021 there were no events or changes in circumstances not already considered in the Company's annual assessment.~~amortization ("EBITDA") multiplier valuation based upon recent and observed agency mergers and acquisitions. The Company considered the economic conditions for the period, including the potential impact of the COVID-19 pandemic, as it pertains to the goodwill above and determined that there was no indication of impairment related to goodwill as of March 31, ~~2021~~2022 or December 31, ~~2020.~~2021.

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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 March 31, ~~2021~~2022 or December 31, ~~2020.~~

2021.

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7.8. Earnings Per Share (“EPS”)

Basic EPS represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the ~~period.~~year. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares (such as stock options) were exercised or converted into additional common shares that would then share in the earnings of the ~~entity.~~Company. Diluted EPS is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding for the ~~period,~~year, plus the effect of potential dilutive common share equivalents computed using the treasury stock method. There were no securities that had a dilutive effect during the ~~quarter~~three months ended March 31, ~~2021, and therefore the weighted-average common shares outstanding used to calculate both basic and diluted EPS are the same.~~2021. Shares held by the Employee Stock Ownership Plan (“ESOP”) that have not been allocated to employees in accordance with the terms of the ESOP, referred to as “unallocated ESOP shares,” are not deemed outstanding for earnings per share calculations. ~~Earnings per share data is not applicable for the quarter ended March 31, 2020 as the Company had 0 shares outstanding.~~


	~~For the Three Months Ended March 31, 2021~~
	~~(Dollars in thousands, except per share data)~~
~~Net income applicable to common shares~~	$	~~47,663~~

~~Average number of common shares outstanding~~	~~186,758,154~~
~~Less: Average unallocated ESOP shares~~	~~(14,709,110)~~
~~Average number of common shares outstanding used to calculate basic earnings per common share~~	~~172,049,044~~
~~Common stock equivalents~~	0
~~Average number of common shares outstanding used to calculate diluted earnings per common share~~	~~172,049,044~~
~~Earnings per common share~~
~~Basic and diluted~~	$	~~0.28~~

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

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~~8. Income Taxes~~

~~The following table sets forth information regarding the Company’s tax provision and applicable tax rates for the periods indicated:~~

For the Three Months Ended March 31,
2021 2020
(Dollars in thousands)
Combined federal and state income tax provisions $ 14,171 $ 1,298
Effective income tax rates 22.9 % 13.3 %

The Company’s provision for income taxes was $14.2 million and $1.3 million for the three months ended March 31, 2021 and 2020, respectively. The increase in income tax expense was due primarily to higher pre-tax income during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, decreasing the impact on the effective rate related to net favorable permanent differences, including investment tax credits and tax exempt income.

The Company assesses the realizability of deferred tax assets and whether it is more likely than not that all or a portion of the deferred tax assets will be realized. The Company considers projections of future taxable income during the periods in which deferred tax assets and liabilities are scheduled to reverse. Additionally, in determining the availability of operating loss carrybacks and other tax attributes, both projected future taxable income and tax planning strategies are considered in making this assessment. As of March 31, 2021 and December 31, 2020, the Company had a valuation allowance of $12.0 million related to the 2020 stock donation of $91.3 million and cash contribution of $3.7 million to the Eastern Bank Charitable Foundation (the “Foundation”). Based upon the level of available historical taxable income and projections for future taxable income over the periods which the deferred tax assets are realizable, the Company believes it is more likely than not that the Company will realize the remainder of the net deferred tax assets as of March 31, 2021.

The Company files tax returns in the U.S. federal jurisdiction and various states. As of March 31, 2021, the Company is no longer subject to exam for tax years before 2017 by the Internal Revenue Service (“IRS”) and state tax authorities. The Company believes that its income tax returns have been filed based upon applicable statutes, regulations and case law in effect at the time of filing, however the IRS and/or state jurisdiction, upon examination, could disagree with the Company’s interpretation.

~~Management has performed an evaluation of the Company’s tax positions and determined that a reserve for unrecognized tax benefits at March 31, 2021 and December 31, 2020 was not needed.~~


	For the Three Months Ended March 31,
	2022		2021
	(Dollars in thousands, except per share data)
Net income applicable to common shares	$	51,516	$	47,663

Average number of common shares outstanding	184,066,326		186,758,154
Less: Average unallocated ESOP shares	(14,208,376)		(14,709,110)
Average number of common shares outstanding used to calculate basic earnings per common share	169,857,950		172,049,044
Common stock equivalents - share-based compensation	110,206		—
Average number of common shares outstanding used to calculate diluted earnings per common share	169,968,156		172,049,044
Earnings per common share
Basic	$	0.30	$	0.28
Diluted	$	0.30	$	0.28

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

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

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had ~~$64.1~~$82.5 million and ~~$59.8~~$83.8 million, respectively, in tax credit investments that were included in other assets in the consolidated balance sheets.

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

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


		Three Months Ended March 31, 2021		Year Ended December 31, 2020			As of March 31, 2022		As of December 31, 2021
		(In thousands)					(In thousands)
Current recorded investment included in other assets	Current recorded investment included in other assets	$	62,904	$	58,504	Current recorded investment included in other assets	$	79,722	$	81,035
Commitments to fund qualified affordable housing projects included in recorded investment noted above	Commitments to fund qualified affordable housing projects included in recorded investment noted above	34,430		31,487		Commitments to fund qualified affordable housing projects included in recorded investment noted above	43,287		48,399

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


		For the Three Months Ended March 31,					For the Three Months Ended March 31,
		2021		2020			2022		2021
		(In thousands)					(In thousands)
Tax credits and benefits recognized	Tax credits and benefits recognized	$	1,464	$	1,519	Tax credits and benefits recognized	$	2,321	$	1,464
Amortization expense included in income tax expense	Amortization expense included in income tax expense	1,264		1,191		Amortization expense included in income tax expense	1,843		1,264

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 ~~$1.2~~$2.8 million as of both March 31, ~~2021~~2022 and December 31, ~~2020.~~2021. There ~~was $1.7 million in~~were no outstanding commitments ~~relating~~related to these investments as of both March 31, ~~2021~~2022 and December 31, ~~2020.~~2021.

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10. ~~Employee Benefits~~Shareholders’ Equity

~~Conversion~~Share Repurchases

On November 12, 2021, the Company announced receipt of ~~Defined Benefit Pension Plan~~a notice of non-objection from the Board of Governors of the Federal Reserve System to its previously announced share repurchase program which was approved by the Company’s Board of Directors on October 1, 2021. The program authorizes the purchase of up to 9,337,900 shares, or 5% of the Company’s then-outstanding shares of common stock over a 12-month period. Repurchases are made at management’s discretion from time to time at prices management considers to be attractive and ~~Benefit Equalization Plan~~in the best interests of both the Company and its shareholders, subject to ~~Cash Balance Plan Design~~

~~Effective November 1, 2020,~~ the ~~Qualified Defined Benefit Pension Plan (“Defined Benefit Plan”)~~availability of shares, general market conditions, the trading price of the shares, alternative uses for capital, and the ~~Non-Qualified Benefit Equalization Plan (“BEP”) sponsored~~Company’s financial performance. Repurchases may be suspended, terminated or modified by the Company ~~were amended~~at any time for any reason. The program is limited to ~~convert~~$225.0 million through November 30, 2022.

Information regarding the ~~plans from a traditional final average earnings plan design to a cash balance plan design. Benefits earned~~shares repurchased under the ~~final average earnings~~ plan ~~design were frozen at October 31, 2020. Starting November 1, 2020, future benefits are earned under~~is presented in 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 percentagefollowing table:


Period	Total Number of Shares Repurchased	Average Price Paid per Share		Total Number of Shares Repurchased as Part of the Share Repurchase Program at the end of Each Respective Period	Maximum Number of Shares That May Yet Be Purchased Under the Share Repurchase Program at the end of Each Respective Period
January 1, 2022 – January 31, 2022	987,526	$	21.02	2,123,404	7,214,496
February 1, 2022 – February 28, 2022	1,109,697	$	21.08	3,233,101	6,104,799
March 1, 2022 – March 31, 2022	769,398	$	21.31	4,002,499	5,335,401

The Company repurchased 0 shares of ~~a participant’s annual compensation (if the participant works at least 1,000 hours~~its common stock during the ~~year)~~three months ended March 31, 2021.

Dividends

During the three months ended March 31, 2022, the Company declared and ~~interest credits equal to~~paid aggregate dividends of $16.9 million at a dividend per share of $0.10. During the ~~greater~~three months ended March 31, 2021, the Company declared and paid aggregate dividends of ~~the 30-Year Treasury rate for September preceding the current plan year or 3.5% are added to~~$10.3 million at a participant’s account each year. For employees hired prior to November 1, 2020, annual contribution credits will generally increase as the participant remains employed with the Company. Employees hired on and after November 1, 2020 will receive annual contribution credits equal to 5%dividend per share 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.$0.06.

11. Employee Benefits

Pension Plans

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

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

In addition, the Company has an unfunded Benefit Equalization Plan (“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:

For the Three Months Ended March 31,
2021 2020
(In Thousands)
Components of net periodic benefit cost:
Service cost $ 7,896 $ 6,232
Interest cost 1,269 2,616
Expected return on plan assets (8,141) (7,425)
Prior service (credit) cost (2,946) 6
Recognized net actuarial loss 3,538 2,361
Net periodic benefit cost $ 1,616 $ 3,790

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	Three Months Ended March 31,
	2022		2021
	(In thousands)
Components of net periodic benefit cost:
Service cost	$	8,092	$	7,896
Interest cost	2,430		1,269
Expected return on plan assets	(9,281)		(8,141)
Past service credit	(2,970)		(2,946)
Recognized net actuarial loss	2,798		3,538
Net periodic benefit cost	$	1,069	$	1,616

Service costs for the Defined Benefit Plan, the BEP, and the DB SERP are recognized within salaries and employee benefits in the consolidated statement of income. Service costs for the ODRCP are recognized within professional services in the ~~statement~~consolidated statements of income. The remaining components of net periodic benefit cost are recognized in other noninterest expense in the ~~statement~~consolidated statements of income. The Company's non-service cost expenses for the Defined Benefit Plan and the BEP decreased by $3.8 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. This was primarily due to the conversion of the Company's Defined Benefit Plan and BEP from a traditional final average earnings plan design to a cash balance plan design.

In accordance with the Pension Protection Act, the Company was not required to make any contributions to the Defined Benefit Plan for the plan year beginning November 1, ~~2020, and did~~2021. The Company chose to make contributions to the Defined Benefit Plan of $7.2 million during the three months ended March 31, 2022. In accordance with the Pension Protection Act, the Company was not required to make any contributions to the Defined Benefit Plan for the plan year beginning November 1, 2020. Accordingly, during the three months ended March 31, ~~2021. During the three months ended March 31, 2020, the Company~~2021, there were no contributions made ~~contributions~~ to the Defined Benefit ~~Plan of $32.5 million.~~Plan.

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 onin the Company's consolidated

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balance sheet. Changes in fair value are recorded in noninterest income. At March 31, ~~2021~~2022 and December 31, ~~2020~~2021 the amount of rabbi trust investments at fair value were ~~$94.0~~$87.3 million and ~~$91.7~~$104.4 million, respectively.

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


		As of March 31, 2021						As of December 31, 2020							As of March 31, 2022						As of December 31, 2021
		Book Value		Mark-to-Market		Fair Value		Book Value		Mark-to-Market		Fair Value			Book Value		Mark-to-Market		Fair Value		Book Value		Mark-to-Market		Fair Value
Asset Type	Asset Type	(In thousands)												Asset Type	(In thousands)
Cash and cash equivalents	Cash and cash equivalents	$	5,230	$	—	$	5,230	$	5,157	$	—	$	5,157	Cash and cash equivalents	$	5,445	$	—	$	5,445	$	4,494	$	—	$	4,494
Equities(1)	Equities(1)	61,662		18,828		80,490		59,235		19,492		78,727		Equities(1)	59,487		14,257		73,744		67,401		24,295		91,696
Fixed income	Fixed income	8,110		175		8,285		7,441		358		7,799		Fixed income	8,466		(363)		8,103		8,126		56		8,182
Total assets	Total assets	$	75,002	$	19,003	$	94,005	$	71,833	$	19,850	$	91,683	Total assets	$	73,398	$	13,894	$	87,292	$	80,021	$	24,351	$	104,372

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

Share-Based Compensation Plan

On November 29, 2021, the shareholders of the Company approved the Eastern Bankshares, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan provides for the issuance of up to 26,146,141 shares of common stock pursuant to grants of restricted stock, restricted stock units (“RSUs”), non-qualified stock options and incentive stock options, any or all of which can be granted with performance-based vesting conditions. Under the 2021 Plan, 7,470,326 shares may be issued as restricted stock or RSUs and 18,675,815 shares may be issued upon the exercise of stock options. These shares may be awarded from the Company’s authorized but unissued shares. However, the 2021 Plan permits the grant of additional awards of restricted stock or RSUs above the aforementioned limit, provided that, for each additional share of restricted stock or RSU awarded in excess of such limit, the pool of shares available to be issued upon the exercise of stock options will be reduced by 3 shares. Pursuant to the terms of the 2021 Plan, each of the Company’s non-employee directors were automatically granted awards of restricted stock on November 30, 2021. Such restricted stock awards vest pro-rata on an annual basis over a five-year period. The maximum term for stock options is ten years. On March 1, 2022, the Company granted to all of the Company’s executive officers and certain other employees a total of 978,364 RSUs, which vest pro-rata on an annual basis over a period of three or five years, and a total of 533,676 performance stock units (“PSUs”), for which vesting is contingent upon the Compensation Committee of the Board of Director’s certification that the Company has attained a threshold level of certain performance criteria over a three-year period. As of March 31, 2022 and December 31, 2021, there were 5,275,230 and 6,787,270 shares available for issuance as restricted stock or RSU awards and 18,675,815 shares that remain available for issuance upon the exercise of stock options, respectively. As of both March 31, 2022 and December 31, 2021, 0 stock options had been awarded under the 2021 Plan.

The following table summarizes the Company’s restricted stock award activity for the three months ended March 31, 2022:


	Number of Shares	Weighted-Average Grant Price Per Share
Non-vested restricted stock as of December 31, 2021	683,056	$	20.13
Granted	—	—
Non-vested restricted stock as of March 31, 2022	683,056	$	20.13

The following table summarizes the Company’s restricted stock unit activity for the three months ended March 31, 2022:


	Number of Shares	Weighted-Average Grant Price Per Share
Non-vested restricted stock units as of December 31, 2021	—	$	—
Granted	978,364	21.08
Non-vested restricted stock units as of March 31, 2022	978,364	$	21.08

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~~11.~~The following table summarizes the Company’s performance stock unit activity for the three months ended March 31, 2022:


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

As of both March 31, 2022 and December 31, 2021, 0 awards had vested.

For the three months ended March 31, 2022, share-based compensation expense under the 2021 Plan and the related tax benefit totaled $1.6 million and $0.4 million, respectively. NaN share-based compensation expense was incurred for the three months ended March 31, 2021 as the Company began issuing awards in November 2021.

As of March 31, 2022 and December 31, 2021, there was $44.0 million and $13.5 million, respectively, of total unrecognized compensation expense related to non-vested restricted stock awards, restricted stock units and performance stock units granted and issued under the 2021 Plan. This cost is expected to be recognized over a weighted average remaining period of approximately 4.1 years.

12. Commitments and Contingencies

Financial Instruments with Off-Balance Sheet Risk

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

Substantially all of the Company’s commitments to extend credit, which normally have fixed expiration dates or termination clauses, are contingent upon customers maintaining specific credit standards at the time of loan funding. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. In the event the customer does not perform in accordance with the terms of agreement with the third party, the Company would be required to fund the commitment. The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount of the commitment. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. For forward loan sale commitments, the contract or notional amount does not represent exposure to credit loss. The Company does not sell loans with recourse.

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


		As of March 31, 2021		As of December 31, 2020			As of March 31, 2022		As of December 31, 2021
		(In Thousands)					(In thousands)
Commitments to extend credit	Commitments to extend credit	$	3,959,011	$	3,818,952	Commitments to extend credit	$	5,306,596	$	5,175,521
Standby letters of credit	Standby letters of credit	63,986		60,221		Standby letters of credit	65,687		65,602
Forward commitments to sell loans	Forward commitments to sell loans	35,564		41,160		Forward commitments to sell loans	12,917		24,440

Other Contingencies

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

In the second quarter of 2021, the Company entered into a preliminary settlement of 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 were consolidated into one matter for final settlement purposes. The matters were settled during the quarter ended March 31, 2022 and the total settlement expense, including related costs, was $3.3

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million. The Company incurred no costs in 2022 related to these matters as the total settlement expense had been accrued in 2021 when management determined the loss contingency to be both probable and estimable. The Company’s regulators conducted inquiries and reviewed data related to one of these class action matters and, in February 2022, made an additional request for data and notified management that they may require additional restitution for certain matters associated with the nonsufficient funds fees matter. Based on this discussion, management believed that a loss contingency for this restitution was probable but was not able to determine a reasonable estimate for the loss. However, later during the quarter ended March 31, 2022, the Company was informed by its regulators that no additional remediation on this issue would be required. As a result, as of March 31, 2022, management no longer believes that a loss contingency for restitution associated with this issue is probable.

As a member of the Federal Reserve System, the Bank is required to maintain certain reserves of vault cash and/or deposits with the Federal Reserve Bank of Boston (the “FRBB”). However, in response to the COVID-19 pandemic, the Federal Reserve temporarily eliminated reserve requirements and therefore there was 0no minimum reserve requirement as of either March 31, ~~2021~~2022 or December 31, ~~2020.~~2021.

~~12.~~13. 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. The Company also enters into residential mortgage loan commitments to fund mortgage loans at specified rates and times in the future and enters into forward sale commitments to sell such residential mortgage loans at specified prices and times in the future, both of which are considered derivative instruments. Derivative instruments are carried at fair value in the Company’s financial statements. The accounting for changes in the fair value of a derivative instrument is dependent upon whether or not the instrument qualifies as a hedge for accounting purposes, and further, by the type of hedging relationship.

By using derivatives, the Company is exposed to credit risk to the extent that counterparties to the derivative contracts do not perform as required. Should a counterparty fail to perform under the terms of a derivative contract, the Company’s credit exposure on interest rate swaps is limited to the net positive fair value and accrued interest of all swaps with each counterparty plus any initial margin collateral posted. The Company seeks to minimize counterparty credit risk through credit approvals, limits, monitoring procedures, and obtaining collateral, where appropriate. As such, management believes the risk of incurring credit losses on derivative contracts with those counterparties is remote.

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Interest Rate Positions

An interest rate swap is an agreement whereby one party agrees to pay a floating rate of interest on a notional principal amount in exchange for receiving a fixed rate of interest on the same notional amount, for a predetermined period of time, from a second party. The amounts relating to the notional principal amount are not actually exchanged. The Company may enter 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. For interest rate swaps that are accounted for as cash flow hedges, changes in fair value are included in other comprehensive income and reclassified into net income in the same period or periods during which the hedged forecasted transaction affects net income. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company did not have any active interest rate swaps which qualify as cash flow hedges for accounting purposes.

Due to the phase-out, and eventual discontinuation, of ~~the~~ LIBOR, central clearinghouses have begun to transition to alternative rates for valuation purposes. As of October 16, 2020, the Company changed its valuation methodology to reflect changes made by the Chicago Mercantile Exchange (“CME”), through which the Company clears derivative financial instruments that are eligible for clearing. The changes from the CME changed the discounting methodology and interest calculation of cash margin from ~~overnight index swap~~Overnight Index Swap to ~~secured overnight financing rate (also known as SOFR)~~the Secured Overnight Financing Rate, or SOFR, for U.S. dollar cleared interest rate swaps. The Company believes that ~~its~~the 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~~are applied prospectively as a change in accounting estimate and are immaterial to the Company’s financial statements.

The following table presents the pre-tax impact of terminated cash flow hedges on accumulated other comprehensive income (“AOCI”) for the three months ended March 31, ~~2021:~~


	For the Three Months Ended March 31, 2021
	~~(In thousands)~~
~~Unrealized gains on terminated hedges included in AOCI - January 1~~	$	~~41,473~~
~~Unrealized gains on terminated hedges arising during the period~~	0
~~Reclassification adjustments for amortization of unrealized (gains) into net income~~	~~(8,274)~~
~~Unrealized gains on terminated hedges included in AOCI - March 31~~	$	~~33,199~~

~~There were no unrealized gains or losses on terminated hedges during the three months ended~~2022 and March 31, ~~2020.~~2021:

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	For the Three Months Ended March 31,
	2022		2021
	(In thousands)
Unrealized gains on terminated hedges included in AOCI – beginning of respective period	$	10,239	$	41,473
Unrealized gains on terminated hedges arising during the period	—		—
Reclassification adjustments for amortization of unrealized (gains) into net income	(5,298)		(8,274)
Unrealized gains on terminated hedges included in AOCI – end of respective period	$	4,941	$	33,199

The balance of terminated cash flow hedges in AOCI will be amortized into earnings through January 2023. The Company expects ~~approximately $28.3~~the remaining $4.9 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 March 31, ~~2021.~~2022.

Customer-Related Positions

Interest rate swaps offered to commercial customers do not qualify as hedges for accounting purposes. These swaps allow the Company to retain variable rate commercial loans while allowing the commercial customer to synthetically fix the loan rate by entering into a variable-to-fixed rate interest rate swap. The Company believes that its exposure to commercial customer derivatives is limited to non-performance 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 ~~allows~~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.

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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 non-performance by either the customer or the other counterparty. Neither the Company nor the correspondent-bank counterparty are required to post collateral but each has established foreign-currency transaction limits to manage the exposure risk. The Company requires its customers to post collateral to minimize risk exposure.

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


		As of March 31, 2021				March 31, 2022
		Number of Positions	Total Notional			Number of Positions	Total Notional
		(Dollars in Thousands)				(Dollars in thousands)
Interest rate swaps	Interest rate swaps	562	$	3,571,918	Interest rate swaps	468	$	2,867,637
Risk participation agreements	Risk participation agreements	70	288,803		Risk participation agreements	63	263,496
Foreign exchange contracts:	Foreign exchange contracts:				Foreign exchange contracts:
Matched commercial customer book	Matched commercial customer book	74	8,428		Matched commercial customer book	70	10,343
Foreign currency loan	Foreign currency loan	3	7,988		Foreign currency loan	5	11,586


		As of December 31, 2020				December 31, 2021
		Number of Positions	Total Notional			Number of Positions	Total Notional
		(Dollars in Thousands)				(Dollars in thousands)
Interest rate swaps	Interest rate swaps	576	$	3,652,385	Interest rate swaps	494	$	3,009,150
Risk participation agreements	Risk participation agreements	70	287,732		Risk participation agreements	64	238,772
Foreign exchange contracts:	Foreign exchange contracts:				Foreign exchange contracts:
Matched commercial customer book	Matched commercial customer book	40	4,242		Matched commercial customer book	72	7,922
Foreign currency loan	Foreign currency loan	3	10,798		Foreign currency loan	6	10,830

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

The table below presents the fair value of the Company’s derivative financial instruments, as well as their classification on the consolidated balance sheet for the periods indicated. There were no derivatives designated as hedging instruments at March 31, ~~2021~~2022 or December 31, ~~2020.~~2021.

Asset Derivatives Liability Derivatives
Balance
Sheet
Location Fair Value at March 31,
2021 Fair Value at December 31, 2020 Balance Sheet
Location Fair Value at March 31,
2021 Fair Value at December 31, 2020
(Dollars in thousands)
Derivatives not designated as hedging instruments
Customer-related positions:
Interest rate swaps Other assets $ 90,748 $ 141,822 Other liabilities $ 33,620 $ 42,600
Risk participation agreements Other assets 391 722 Other liabilities 530 1,230
Foreign currency exchange contracts - matched customer book Other assets 81 90 Other liabilities 61 77
Foreign currency exchange contracts - foreign currency loan Other assets 18 9 Other liabilities 5 69
Total $ 91,238 $ 142,643 $ 34,216 $ 43,976

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	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	Fair Value at March 31, 2022		Fair Value at December 31, 2021		Balance Sheet Location	Fair Value at March 31, 2022		Fair Value at December 31, 2021
	(In thousands)
Derivatives not designated as hedging instruments
Customer-related positions:
Interest rate swaps	Other assets	$	23,725	$	64,338	Other liabilities	$	24,988	$	17,880
Risk participation agreements	Other assets	196		315		Other liabilities	401		580
Foreign currency exchange contracts - matched customer book	Other assets	91		61		Other liabilities	78		46
Foreign currency exchange contracts - foreign currency loan	Other assets	7		—		Other liabilities	16		87
Total		$	24,019	$	64,714		$	25,483	$	18,593

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


		For the Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
		(Dollars in Thousands)					(In thousands)
Derivatives designated as hedges:	Derivatives designated as hedges:					Derivatives designated as hedges:
Gain in OCI on derivatives		$	0	$	43,556
(Loss) gain in OCI on derivatives						(Loss) gain in OCI on derivatives	$	—	$	—
Gain reclassified from OCI into interest income (effective portion)	Gain reclassified from OCI into interest income (effective portion)	$	8,274	$	3,112	Gain reclassified from OCI into interest income (effective portion)	$	5,298	$	8,274
Gain recognized in income on derivatives (ineffective portion and amount excluded from effectiveness test)	Gain recognized in income on derivatives (ineffective portion and amount excluded from effectiveness test)					Gain recognized in income on derivatives (ineffective portion and amount excluded from effectiveness test)
Interest income	Interest income	$	0	$	0	Interest income	—		—
Other income	Other income	0		0		Other income	—		—
Total	Total	$	0	$	0	Total	$	—	$	—
Derivatives not designated as hedges:	Derivatives not designated as hedges:					Derivatives not designated as hedges:
Customer-related positions:	Customer-related positions:					Customer-related positions:
Gain (loss) recognized in interest rate swap income		$	4,851	$	(6,280)
Gain (loss) recognized in interest rate swap income for risk participation agreements		369		(301)
Gain (loss) recognized in other income for foreign currency exchange contracts:
Gain recognized in interest rate swap income						Gain recognized in interest rate swap income	$	2,298	$	4,851
Gain recognized in interest rate swap income for risk participation agreements						Gain recognized in interest rate swap income for risk participation agreements	60		369
(Loss) gain recognized in other income for foreign currency exchange contracts:						(Loss) gain recognized in other income for foreign currency exchange contracts:
Matched commercial customer book	Matched commercial customer book	6		(26)		Matched commercial customer book	(2)		6
Foreign currency loan	Foreign currency loan	73		397		Foreign currency loan	78		73
Total gain (loss) for derivatives not designated as hedges		$	5,299	$	(6,210)
Total gain for derivatives not designated as hedges						Total gain for derivatives not designated as hedges	$	2,434	$	5,299

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

The Company also has agreements with certain of its customer-related interest rate swap derivative correspondent-bank counterparties that contain a provision whereby if the Company fails to maintain its status as a well-capitalized institution,

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

Cleared derivative transactions are with the Chicago Mercantile Exchange, or CME, and exposure is settled to market daily, with additional credit exposure related to initial-margin collateral pledged to CME at trade execution. At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company’s exposure to CME for settled variation margin in excess of the customer-related interest rate swap termination values was ~~$0,~~$1.4 million and ~~less than $0.1~~$0.4 million, respectively. In addition, at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had posted initial-margin collateral in the form of a U.S. Treasury ~~note~~notes amounting to ~~$49.3~~$37.0 million and ~~$60.4~~$48.9 million, respectively, to CME for these derivatives. The ~~cash and~~ U.S. Treasury ~~note~~notes were considered restricted assets and were included in ~~cash and due from banks and in available for sale securities, respectively.~~AFS securities.

At March 31, ~~2021~~2022 and December 31, ~~2020~~2021 the fair value of all customer-related interest rate swap derivatives with credit-risk related contingent features that were in a net liability position, which includes accrued interest but excludes any adjustment for non-performance risk, ~~totaled $28.3~~was $0.2 million and ~~$42.6~~$13.7 million, respectively. The Company has minimum collateral posting thresholds with its customer-related interest rate swap derivative correspondent-bank counterparties to the extent that the Company has a liability position with the correspondent-bank counterparties. At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had posted collateral in the form of cash amounting to ~~$35.9~~$5.5 million and ~~$49.2~~$21.3 million, respectively, which was considered to be a restricted asset and was included in other short-term investments. If the Company had breached any of these provisions at March 31, ~~2021~~2022 or December 31, ~~2020,~~2021, 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.

Mortgage Banking Derivatives

The Company enters into residential mortgage loan commitments in connection with its consumer mortgage banking activities to fund mortgage loans at specified rates and times in the future. In addition, the Company enters into forward sale commitments to sell such residential mortgage loans at specified prices and times in the future. These commitments are short-term in nature and generally expire in 30 to 60 days. The residential mortgage loan commitments that relate to the origination of mortgage loans that will be held for sale and the related forward sale commitments are considered derivative instruments under ASC Topic 815, “Derivatives and Hedging” and are reported at fair value. Changes in fair value are reported in earnings and included in other non-interest income on the consolidated statements of income. As of March 31, 2022 and December 31, 2021, the Company had an outstanding notional balance of residential mortgage loan origination commitments of $22.8 million and $31.9 million, respectively and forward sale commitments of $12.9 million and $24.4 million, respectively. During both the three months ended March 31, 2022 and 2021, the Company recorded $0.2 million of net losses related to the change in fair value of commitments to originate and sell mortgage loans. The aggregate fair value of the Company’s mortgage banking derivative asset and liability as of March 31, 2022 was $0.2 million and $0.2 million, respectively. The aggregate fair value of the Company’s mortgage banking derivative asset and liability as of December 31, 2021 was $0.3 million and $0.1 million, respectively. Mortgage banking derivative assets and liabilities are included in other assets and other liabilities, respectively, on the consolidated balance sheet. Residential mortgages sold are generally sold with servicing rights released. Mortgage banking derivatives do not qualify as hedges for accounting purposes.

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~~13.~~14. Balance Sheet Offsetting

Certain financial instruments, including derivatives, may be eligible for offset in the consolidated balance sheets and/or subject to master netting arrangements or similar agreements. The Company’s derivative transactions with upstream financial institution counterparties are generally executed under International Swaps and Derivative Association master agreements which include “right of set-off” provisions. In such cases there is generally a legally enforceable right to offset recognized amounts. However, the Company does not offset fair value amounts recognized for derivative instruments. The Company nets the amount recognized for the right to reclaim cash collateral against the obligation to return cash collateral arising from derivative instruments executed with the same counterparty under a master netting arrangement. Collateral legally required to be maintained at dealer banks by the Company is monitored and adjusted as necessary. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, it was determined that no additional collateral would have to be posted to immediately settle these instruments.

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


		As of March 31, 2021													As of March 31, 2022
		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			Gross Amounts Recognized		Gross Amounts Offset in the Consolidated Balance Sheet				Net Amounts Presented in the Consolidated Balance Sheet				Gross Amounts Not Offset in the Consolidated Balance Sheet								Net Amount
Description	Description							Financial Instruments		Collateral Pledged (Received)				Description									Financial Instruments				Collateral Pledged (Received)
		(In thousands)													(In thousands)

Derivative Assets	Derivative Assets													Derivative Assets
Interest rate swaps		$	0	$	0	$	0	$	0	$	0	$	0
Customer-related positions:	Customer-related positions:													Customer-related positions:
Interest rate swaps	Interest rate swaps	90,748		0		90,748		1,426		0		89,322		Interest rate swaps	$	23,725			$	—			$	23,725			$	3,470			$	—			$	20,255
Risk participation agreements	Risk participation agreements	391		0		391		0		0		391		Risk participation agreements	196		—				196				—				—				196
Foreign currency exchange contracts – matched customer book	Foreign currency exchange contracts – matched customer book	81		0		81		0		0		81		Foreign currency exchange contracts – matched customer book	91		—				91				—				—				91
Foreign currency exchange contracts – foreign currency loan	Foreign currency exchange contracts – foreign currency loan	18		0		18		0		0		18		Foreign currency exchange contracts – foreign currency loan	7		—				7				—				—				7
		$	91,238	$	0	$	91,238	$	1,426	$	0	$	89,812		$	24,019	$	—			$	24,019			$	3,470			$	—			$	20,549
Derivative Liabilities	Derivative Liabilities													Derivative Liabilities
Interest rate swaps		$	0	$	0	$	0	$	0	$	0	$	0
Customer-related positions:	Customer-related positions:													Customer-related positions:
Interest rate swaps	Interest rate swaps	33,620		0		33,620		1,426		32,194		0		Interest rate swaps	$	24,988	$	—			$	24,988			$	3,470			$	21,518			$	—
Risk participation agreements	Risk participation agreements	530		0		530		0		0		530		Risk participation agreements	401		—				401				—				—				401
Foreign currency exchange contracts – matched customer book	Foreign currency exchange contracts – matched customer book	61		0		61		0		0		61		Foreign currency exchange contracts – matched customer book	78		—				78				—				—				78
Foreign currency exchange contracts – foreign currency loan	Foreign currency exchange contracts – foreign currency loan	5		0		5		0		0		5		Foreign currency exchange contracts – foreign currency loan	16		—				16				—				—				16
		$	34,216	$	0	$	34,216	$	1,426	$	32,194	$	596		$	25,483	$	—			$	25,483			$	3,470			$	21,518			$	495

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		As of December 31, 2020																					As of December 31, 2021
		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			Gross Amounts Recognized				Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts Presented in the Consolidated Balance Sheet			Gross Amounts Not Offset in the Consolidated Balance Sheet				Net Amount
Description	Description									Financial Instruments				Collateral Pledged (Received)				Description								Financial Instruments					Collateral Pledged (Received)
		(In thousands)																								(In thousands)
Derivative Assets	Derivative Assets																					Derivative Assets
Interest rate swaps		$	0			$	0			$	0			$	0			$	0					$	0
Customer-related positions:	Customer-related positions:																					Customer-related positions:
Interest rate swaps	Interest rate swaps	141,822		0				141,822				48				0				141,774		Interest rate swaps	$	64,338			$	—	$	64,338		$	1,440	$	—	$	62,898
Risk participation agreements	Risk participation agreements	722		0				722				0				0				722		Risk participation agreements	315				—		315			—		—		315
Foreign currency exchange contracts – matched customer book	Foreign currency exchange contracts – matched customer book	90		0				90				0				(1)				89		Foreign currency exchange contracts – matched customer book	61				—		61			—		—		61
Foreign currency exchange contracts – foreign currency loan	Foreign currency exchange contracts – foreign currency loan	9		0				9				0				0				9		Foreign currency exchange contracts – foreign currency loan	—				—		—			—		—		—
		$	142,643	$	0			$	142,643			$	48			$	(1)			$	142,594		$	64,714			$	—	$	64,714		$	1,440	$	—	$	63,274
Derivative Liabilities	Derivative Liabilities																					Derivative Liabilities
Interest rate swaps		$	0	$	0			$	0			$	0			$	0			$	0
Customer-related positions:	Customer-related positions:																					Customer-related positions:
Interest rate swaps	Interest rate swaps	42,600		0				42,600				48				42,552				0		Interest rate swaps	$	17,880			$	—	$	17,880		$	1,440	$	16,440	$	—
Risk participation agreements	Risk participation agreements	1,230		0				1,230				0				0				1,230		Risk participation agreements	580				—		580			—		—		580
Foreign currency exchange contracts – matched customer book	Foreign currency exchange contracts – matched customer book	77		0				77				0				0				77		Foreign currency exchange contracts – matched customer book	46				—		46			—		—		46
Foreign currency exchange contracts – foreign currency loan	Foreign currency exchange contracts – foreign currency loan	69		0				69				0				0				69		Foreign currency exchange contracts – foreign currency loan	87				—		87			—		—		87
		$	43,976	$	0			$	43,976			$	48			$	42,552			$	1,376		$	18,593			$	—	$	18,593		$	1,440	$	16,440	$	713

~~14.~~15. Fair Value of Assets and Liabilities

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

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that the Company believes market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including during periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified from Level 1 to Level 2 or from Level 2 to Level 3.

~~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.

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

Cash and Cash Equivalents

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

~~Available for Sale~~ Securities

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

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

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

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

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

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

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

Loans Held for Sale

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

Loans

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

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

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

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

~~Table of Contents~~

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

FHLB Stock

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

Rabbi Trust Investments

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

The fair value of other U.S. government agency obligations was estimated using either a matrix or benchmarks. The inputs used include benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. These securities were categorized as Level 2 given the use of observable inputs. The equity securities, mutual funds and other exchange-traded funds were valued based on quoted prices from the market. The ~~equity securities,~~equities, mutual funds and exchange-traded funds ~~are~~ traded in an active market ~~and therefore~~ 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 ~~$52.0~~$45.8 million at March 31, ~~2021~~2022 and ~~$53.9~~$58.1 million at December 31, ~~2020.~~2021. There were 0no redemption restrictions on these mutual funds at the end of any period presented.

Bank-Owned Life Insurance

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

Deposits

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

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

FHLB Advances

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

Escrow Deposits of Borrowers

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

Interest Rate Swaps

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

~~Table of Contents~~

of the Level 3 inputs on the overall valuation of the interest rate swaps was deemed insignificant to the overall valuation. As a result, the interest rate swaps were categorized as Level 2 within the fair value hierarchy.

Risk Participations

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

Foreign Currency Forward Contracts

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

Mortgage Derivatives

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

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Fair Value of Assets and Liabilities Measured on a Recurring Basis

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


				Fair Value Measurements at Reporting Date Using																Fair Value Measurements at Reporting Date Using
		Balance as of March 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)			Balance as of March 31, 2022					Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description	Description									Description
		(Dollars in thousands)																(In thousands)
Assets	Assets													Assets
Securities available for sale	Securities available for sale													Securities available for sale
Government-sponsored residential mortgage-backed securities	Government-sponsored residential mortgage-backed securities	$	2,691,702			$	0			$	2,691,702					$	0		Government-sponsored residential mortgage-backed securities	$	4,969,346	$	—	$	4,969,346	$	—
Government-sponsored commercial mortgage-backed securities	Government-sponsored commercial mortgage-backed securities	116,271		0				116,271				0		Government-sponsored commercial mortgage-backed securities	1,615,927					—		1,615,927		—
U.S. Agency bonds	U.S. Agency bonds	831,672		0				831,672				0		U.S. Agency bonds	1,013,899					—		1,013,899		—
U.S. Treasury securities	U.S. Treasury securities	69,090		69,090				0				0		U.S. Treasury securities	56,235					56,235		—		—
State and municipal bonds and obligations	State and municipal bonds and obligations	277,518		0				277,518				0		State and municipal bonds and obligations	260,316					—		260,316		—
Other debt securities														Other debt securities	1,582					—		1,582		—
Rabbi trust investments	Rabbi trust investments	94,005		85,720				8,285				0		Rabbi trust investments	87,292					79,189		8,103		—
Loans held for sale	Loans held for sale	2,022		0				2,022				0		Loans held for sale	1,166					—		1,166		—
Interest rate swap contracts	Interest rate swap contracts													Interest rate swap contracts
Customer-related positions	Customer-related positions	90,748		0				90,748				0		Customer-related positions	23,725					—		23,725		—
Risk participation agreements	Risk participation agreements	391		0				391				0		Risk participation agreements	196					—		196		—
Foreign currency forward contracts	Foreign currency forward contracts													Foreign currency forward contracts
Matched customer book	Matched customer book	81		0				81				0		Matched customer book	91					—		91		—
Foreign currency loan	Foreign currency loan	18		0				18				0		Foreign currency loan	7					—		7		—
Mortgage derivatives														Mortgage derivatives	239					—		239		—
Total	Total	$	4,173,518	$	154,810			$	4,018,708			$	0	Total	$	8,030,021				$	135,424	$	7,894,597	$	—
Liabilities	Liabilities													Liabilities
Interest rate swap contracts	Interest rate swap contracts													Interest rate swap contracts
Customer-related positions	Customer-related positions	$	33,620	$	0			$	33,620			$	0	Customer-related positions	$	24,988				$	—	$	24,988	$	—
Risk participation agreements	Risk participation agreements	530		0				530				0		Risk participation agreements	401					—		401		—
Foreign currency forward contracts	Foreign currency forward contracts													Foreign currency forward contracts
Matched customer book	Matched customer book	61		0				61				0		Matched customer book	78					—		78		—
Foreign currency loan	Foreign currency loan	5		0				5				0		Foreign currency loan	16					—		16		—
Mortgage derivatives														Mortgage derivatives	168					—		168		—
Total	Total	$	34,216	$	0			$	34,216			$	0	Total	$	25,651				$	—	$	25,651	$	—

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				Fair Value Measurements at Reporting Date Using									Fair Value Measurements at Reporting Date Using
Description	Description	Balance as of December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Description	Balance as of December 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(In thousands)									(In thousands)
Assets	Assets									Assets
Securities available for sale	Securities available for sale									Securities available for sale
Government-sponsored residential mortgage-backed securities	Government-sponsored residential mortgage-backed securities	$	2,148,800	$	0	$	2,148,800	$	0	Government-sponsored residential mortgage-backed securities	$	5,524,708	$	—	$	5,524,708	$	—
Government-sponsored commercial mortgage-backed securities	Government-sponsored commercial mortgage-backed securities	17,081		0		17,081		0		Government-sponsored commercial mortgage-backed securities	1,408,868		—		1,408,868		—
U.S. Agency bonds	U.S. Agency bonds	666,709		0		666,709		0		U.S. Agency bonds	1,175,014		—		1,175,014		—
U.S. Treasury securities	U.S. Treasury securities	70,369		70,369		0		0		U.S. Treasury securities	88,605		88,605		—		—
State and municipal bonds and obligations	State and municipal bonds and obligations	280,902		0		280,902		0		State and municipal bonds and obligations	280,329		—		280,329		—
Small Business Administration pooled securities										Small Business Administration pooled securities	32,103		—		32,103		—
Other debt securities										Other debt securities	1,597		—		1,597		—
Rabbi trust investments	Rabbi trust investments	91,683		83,884		7,799		0		Rabbi trust investments	104,372		96,190		8,182		—
Loans held for sale	Loans held for sale	1,140		0		1,140		0		Loans held for sale	1,206		—		1,206		—
Interest rate swap contracts	Interest rate swap contracts									Interest rate swap contracts
Customer-related positions	Customer-related positions	141,822		0		141,822		0		Customer-related positions	64,338		—		64,338		—
Risk participation agreements	Risk participation agreements	722		0		722		0		Risk participation agreements	315		—		315		—
Foreign currency forward contracts	Foreign currency forward contracts									Foreign currency forward contracts
Matched customer book	Matched customer book	90		0		90		0		Matched customer book	61		—		61		—
Foreign currency loan		9		0		9		0
Mortgage derivatives										Mortgage derivatives	256		—		256		—
Total	Total	$	3,419,327	$	154,253	$	3,265,074	$	0	Total	$	8,681,772	$	184,795	$	8,496,977	$	—
Liabilities	Liabilities									Liabilities
Interest rate swap contracts	Interest rate swap contracts									Interest rate swap contracts
Customer-related positions	Customer-related positions	$	42,600	$	0	$	42,600	$	0	Customer-related positions	$	17,880	$	—	$	17,880	$	—
Risk participation agreements	Risk participation agreements	1,230		0		1,230		0		Risk participation agreements	580		—		580		—
Foreign currency forward contracts	Foreign currency forward contracts									Foreign currency forward contracts
Matched customer book	Matched customer book	77		0		77		0		Matched customer book	46		—		46		—
Foreign currency loan	Foreign currency loan	69		0		69		0		Foreign currency loan	87		—		87		—
Mortgage derivatives										Mortgage derivatives	16		—		16		—
Total	Total	$	43,976	$	0	$	43,976	$	0	Total	$	18,609	$	—	$	18,609	$	—

There were 0no transfers to or from Level 1, 2 and 3 during the three months ended March 31, ~~2021~~2022 and ~~year~~twelve months ended December 31, ~~2020.~~2021.

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, the Company uses third-party valuation information. Management determined that 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 Company held no assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of March 31, ~~2021.~~

~~Table of Contents~~

~~The table below presents a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March~~2022 or December 31, ~~2020:~~


	Securities Available for Sale
~~Qualified Zone Academy Bond~~	~~(In thousands)~~
~~Balance at January 1, 2020:~~	$	~~6,310~~
~~Gains and losses (realized/unrealized):~~
~~Included in net income~~	27
~~Included in other comprehensive income~~	~~(88)~~
~~Balance at March 31, 2020~~	$	~~6,249~~

2021.

Fair Value of Assets and Liabilities Measured on a Nonrecurring Basis

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

Fair Value Measurements at Reporting Date Using
Description Balance as of March 31, 2021 Quoted Prices
in Active
Markets for
Identical Assets
(Level 1) Significant
Other
Observable
Inputs (Level 2) Significant
Unobservable
Inputs (Level 3)
(Dollars in thousands)
Assets
Collateral-dependent impaired loans whose fair value is based upon appraisals $ 11,685 $ 0 $ 0 $ 11,685

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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)
(Dollars in thousands)
Assets
Collateral-dependent impaired loans whose fair value is based upon appraisals $ 11,036 $ 0 $ 0 11,036


			Fair Value Measurements at Reporting Date Using
Description	Balance as of March 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets
Individually assessed collateral-dependent loans whose fair value is based upon appraisals	$	11,879	$	—	$	—	$	11,879


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

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

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

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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
Carrying Value as of March 31, 2021 Fair Value as of March 31, 2021 Quoted Prices
in Active
Markets for
Identical Assets
(Level 1) Significant
Other
Observable
Inputs (Level 2) Significant
Unobservable
Inputs (Level 3)
(In thousands)
Assets
Loans, net of allowance for loan losses $ 9,772,722 $ 9,870,710 $ 0 $ 0 $ 9,870,710
FHLB stock 8,805 8,805 0 8,805 0
Bank-owned life insurance 79,110 79,110 0 79,110 0
Liabilities
Deposits $ 12,980,875 $ 12,980,753 $ 0 $ 12,980,753 $ 0
FHLB advances 14,473 14,299 0 14,299 0
Escrow deposits from borrowers 14,878 14,878 0 14,878 0

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Fair Value Measurements at Reporting Date Using
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


					Fair Value Measurements at Reporting Date Using
Description	Carrying Value as of March 31, 2022		Fair Value as of March 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets
Held to maturity securities:
Government-sponsored residential mortgage-backed securities	$	192,231	$	188,913	$	—	$	188,913	$	—
Government-sponsored commercial mortgage-backed securities	203,203		203,210		—		203,210		—
Loans, net of allowance for loan losses	12,033,603		11,817,706		—		—		11,817,706
FHLB stock	10,904		10,904		—		10,904		—
Bank-owned life insurance	157,954		157,954		—		157,954		—
Liabilities
Deposits	$	19,392,816	$	19,387,023	$	—	$	19,387,023	$	—
FHLB advances	13,689		12,767		—		12,767		—
Escrow deposits from borrowers	21,233		21,233		—		21,233		—


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

This summary excludes certain financial assets and liabilities for which the carrying value approximates fair value. For financial assets, these may include cash and due from banks, federal funds sold and short-term investments. For financial liabilities, these may include federal funds purchased. These instruments would all be considered to be classified as Level 1 within the fair value hierarchy. Also excluded from the summary are financial instruments measured at fair value on a recurring and nonrecurring basis, as previously described.

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~~15.~~16. Revenue from Contracts with Customers

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

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

2.Identify the performance ~~obligations~~obligations.

3.Determine the transaction ~~price~~price.

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

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

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


		For the Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
		(Dollars In Thousands)					(In thousands)
Insurance commissions	Insurance commissions	$	28,147	$	27,477	Insurance commissions	$	28,713	$	28,147
Service charges on deposit accounts	Service charges on deposit accounts	5,367		6,098		Service charges on deposit accounts	8,537		5,367
Trust and investment advisory fees	Trust and investment advisory fees	5,663		5,095		Trust and investment advisory fees	6,141		5,663
Debit card processing fees	Debit card processing fees	2,749		2,470		Debit card processing fees	2,945		2,749
Other non-interest income		1,792		2,052
Other noninterest income						Other noninterest income	2,361		1,792
Total noninterest income in-scope of ASC 606	Total noninterest income in-scope of ASC 606	43,718		43,192		Total noninterest income in-scope of ASC 606	48,697		43,718
Total noninterest income out-of-scope of ASC 606		11,494		(9,823)
Total noninterest (loss) income out-of-scope of ASC 606						Total noninterest (loss) income out-of-scope of ASC 606	(2,282)		11,494
Total noninterest income	Total noninterest income	$	55,212	$	33,369	Total noninterest income	$	46,415	$	55,212

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

Insurance Commissions

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

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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 ~~$12.9~~$11.9 million as of March 31, ~~2021,~~2022, and ~~$15.8~~$15.6 million as of December 31, ~~2020,~~2021 and were included in other assets.

Deposit Service Charges

The Company offers various deposit account products to its customers governed by specific deposit agreements applicable to either personal customers or business customers. These agreements identify the general conditions and obligations of both parties and include standard information regarding deposit account-related fees.

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

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considers that its performance obligations are fulfilled when customers are provided deposit account access or when the requested deposit transaction is completed.

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 ~~$0.9~~$2.3 million and ~~$1.0~~$1.8 million as of March 31, ~~2021~~2022 and December 31, ~~2020, respectively,~~2021 and were included in other assets.

Trust and Investment Advisory Fees

The Company offers investment management and trust services to individuals, institutions, small businesses and charitable institutions. Each investment management product is governed by its own contract along with a separate identifiable fee schedule unique to that product. The Company also offers additional services, such as estate settlement, financial planning, tax services, and other special services quoted at the customer’s request.

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

Debit Card Processing Fees

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

Other Noninterest Income

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

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~~16.~~17. Other Comprehensive Income

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


		Three Months Ended March 31, 2021						Three Months Ended March 31, 2020							Three Months Ended March 31, 2022						Three Months Ended March 31, 2021
		Pre-Tax Amount		Tax (Expense) Benefit		After Tax Amount		Pre-Tax Amount		Tax (Expense) Benefit		After Tax Amount			Pre Tax Amount		Tax Benefit (Expense)		After Tax Amount		Pre Tax Amount		Tax Benefit (Expense)		After Tax Amount
		(Dollars In Thousands)													(In thousands)
Unrealized (losses) gains on securities available for sale:
Unrealized losses on securities available for sale:														Unrealized losses on securities available for sale:
Change in fair value of securities available for sale	Change in fair value of securities available for sale	$	(94,979)	$	20,982	$	(73,997)	$	33,802	$	(7,515)	$	26,287	Change in fair value of securities available for sale	$	(465,532)	$	112,008	$	(353,524)	$	(94,979)	$	20,982	$	(73,997)
Less: reclassification adjustment for gains included in net income	Less: reclassification adjustment for gains included in net income	1,164		(257)		907		122		(27)		95		Less: reclassification adjustment for gains included in net income	(2,172)		673		(1,499)		1,164		(257)		907
Net change in fair value of securities available for sale	Net change in fair value of securities available for sale	(96,143)		21,239		(74,904)		33,680		(7,488)		26,192		Net change in fair value of securities available for sale	(463,360)		111,335		(352,025)		(96,143)		21,239		(74,904)
Unrealized gains (losses) on cash flow hedges:	Unrealized gains (losses) on cash flow hedges:													Unrealized gains (losses) on cash flow hedges:
Change in fair value of cash flow hedges	Change in fair value of cash flow hedges	0		0		0		43,556		(12,244)		31,312		Change in fair value of cash flow hedges	—		—		—		—		—		—
Less: net cash flow hedge losses reclassified into interest income(1)		8,274		(2,326)		5,948		3,112		(875)		2,237
Less: net cash flow hedge gains reclassified into interest income(1)														Less: net cash flow hedge gains reclassified into interest income(1)	5,298		(1,489)		3,809		8,274		(2,326)		5,948
Net change in fair value of cash flow hedges	Net change in fair value of cash flow hedges	(8,274)		2,326		(5,948)		40,444		(11,369)		29,075		Net change in fair value of cash flow hedges	(5,298)		1,489		(3,809)		(8,274)		2,326		(5,948)
Defined benefit pension plans:	Defined benefit pension plans:													Defined benefit pension plans:
Change in actuarial net loss	Change in actuarial net loss	0		0		0		0		0		0		Change in actuarial net loss	—		—		—		—		—		—
Less: amortization of actuarial net loss	Less: amortization of actuarial net loss	(3,537)		994		(2,543)		0		0		0		Less: amortization of actuarial net loss	(2,798)		787		(2,011)		(3,537)		994		(2,543)
Less: net accretion of prior service cost		2,945		(828)		2,117		0		0		0
Less: accretion of prior service credit														Less: accretion of prior service credit	2,970		(835)		2,135		2,945		(828)		2,117
Net change in other comprehensive income for defined benefit postretirement plans	Net change in other comprehensive income for defined benefit postretirement plans	592		(166)		426		0		0		0		Net change in other comprehensive income for defined benefit postretirement plans	(172)		48		(124)		592		(166)		426
Total other comprehensive income		$	(103,825)	$	23,399	$	(80,426)	$	74,124	$	(18,857)	$	55,267
Total other comprehensive loss														Total other comprehensive loss	$	(468,830)	$	112,872	$	(355,958)	$	(103,825)	$	23,399	$	(80,426)

(1)Represents amortization of realized gains on terminated cash flow hedges for the three months ended March 31, 2022 and 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 ~~$23.9~~$3.6 million and $7.4 million, net of tax, at March 31, ~~2021.~~2022 and December 31, 2021, respectively.

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

Unrealized
Gains and
(Losses) on
Available for
Sale Securities Unrealized
Gains and
(Losses) on
Cash Flow
Hedges Defined Benefit
Pension Plans Total
(In Thousands)
Beginning Balance: January 1, 2021 $ 45,672 $ 29,815 $ (21,253) $ 54,234
Other comprehensive (loss) income before reclassifications (73,997) 0 0 (73,997)
Less: Amounts reclassified from accumulated other comprehensive income 907 5,948 (426) 6,429
Net current-period other comprehensive income (74,904) (5,948) 426 (80,426)
Ending Balance: March 31, 2021 $ (29,232) $ 23,867 $ (20,827) $ (26,192)
Beginning Balance: January 1, 2020 $ 21,798 $ 15,624 $ (81,269) $ (43,847)
Other comprehensive income (loss) before reclassifications 26,287 31,312 0 57,599
Less: Amounts reclassified from accumulated other comprehensive income 95 2,237 0 2,332
Net current-period other comprehensive income 26,192 29,075 0 55,267
Ending Balance: March 31, 2020 $ 47,990 $ 44,699 $ (81,269) $ 11,420


	Unrealized Gains and (Losses) on Available for Sale Securities		Unrealized Gains and (Losses) on Cash Flow Hedges		Defined Benefit Pension Plans		Total
	(In thousands)
Beginning Balance: January 1, 2022	$	(58,586)	$	7,361	$	(5,471)	$	(56,696)
Other comprehensive loss before reclassifications	(353,524)		—		—		(353,524)
Less: Amounts reclassified from accumulated other comprehensive (loss) income	(1,499)		3,809		124		2,434
Net current-period other comprehensive loss	(352,025)		(3,809)		(124)		(355,958)
Ending Balance: March 31, 2022	$	(410,611)	$	3,552	$	(5,595)	$	(412,654)
Beginning Balance: January 1, 2021	$	45,672	$	29,815	$	(21,253)	$	54,234
Other comprehensive loss before reclassifications	(73,997)		—		—		(73,997)
Less: Amounts reclassified from accumulated other comprehensive income (loss)	907		5,948		(426)		6,429
Net current-period other comprehensive (loss) income	(74,904)		(5,948)		426		(80,426)
Ending Balance: March 31, 2021	$	(29,232)	$	23,867	$	(20,827)	$	(26,192)

~~17.~~18. Segment Reporting

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

Results of operations and selected financial information by segment and reconciliation to the consolidated financial statements as of and for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021 was as follows:

As of and for the Three Months Ended March 31,
2021 2020
Banking
Business Insurance
Agency
Business Other /
Eliminations Total Banking
Business Insurance
Agency
Business Other /
Eliminations Total
(In thousands)
Net interest income $ 100,091 $ 0 $ 0 $ 100,091 $ 100,146 $ 0 $ 0 $ 100,146
(Release of) provision for allowance for loan losses (580) 0 0 (580) 28,600 0 0 28,600
Net interest income after provision for loan losses 100,671 0 0 100,671 71,546 0 0 71,546
Noninterest income 26,960 28,284 (32) 55,212 6,868 26,523 (22) 33,369
Noninterest expense 75,274 19,811 (1,036) 94,049 78,465 17,642 (935) 95,172
Income before provision for income taxes 52,357 8,473 1,004 61,834 (51) 8,881 913 9,743
Income tax provision 11,793 2,378 0 14,171 (1,214) 2,512 0 1,298
Net income $ 40,564 $ 6,095 $ 1,004 $ 47,663 $ 1,163 $ 6,369 $ 913 $ 8,445
Total assets $ 16,595,311 $ 194,664 $ (63,180) $ 16,726,795 $ 12,221,799 $ 182,564 $ (60,609) $ 12,343,754
Total liabilities $ 13,359,075 $ 43,855 $ (63,180) $ 13,339,750 $ 10,696,509 $ 45,120 $ (60,609) $ 10,681,020


	As of and for the three months ended March 31,
	2022								2021
	Banking Business		Insurance Agency Business		Other / Eliminations		Total		Banking Business		Insurance Agency Business		Other / Eliminations		Total
	(In thousands)
Net interest income	$	128,124	$	—	$	—	$	128,124	$	100,091	$	—	$	—	$	100,091
(Release of) provision for loan losses	(485)		—		—		(485)		(580)		—		—		(580)
Net interest income after provision for loan losses	128,609		—		—		128,609		100,671		—		—		100,671
Noninterest income	18,137		28,449		(171)		46,415		26,960		28,284		(32)		55,212
Noninterest expense	90,446		19,473		(1,053)		108,866		75,274		19,811		(1,036)		94,049
Income before provision for income taxes	56,300		8,976		882		66,158		52,357		8,473		1,004		61,834
Income tax provision	12,108		2,534		—		14,642		11,793		2,378		—		14,171
Net income	$	44,192	$	6,442	$	882	$	51,516	$	40,564	$	6,095	$	1,004	$	47,663
Total assets	$	22,695,895	$	211,401	$	(71,224)	$	22,836,072	$	16,595,311	$	194,664	$	(63,180)	$	16,726,795
Total liabilities	$	19,848,995	$	49,909	$	(71,224)	$	19,827,680	$	13,359,075	$	43,855	$	(63,180)	$	13,339,750

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~~18.~~19. Subsequent Events

On ~~April 7, 2021,~~January 14, 2022, the Company announced it had entered into ~~a definitive merger~~an asset purchase agreement ~~with~~for the transfer of the Company’s cannabis-related and money service business deposits relationships, which it had acquired from Century, ~~Bancorp, Inc. (“Century”) under which~~to Needham Bank. On April 1, 2022, the Company ~~will acquire Century for $641.9 million~~completed the transfer of such deposits which amounted to $297.7 million. The Company did not recognize a material gain or loss in ~~cash (the “Merger Agreement”). Century is the stock holding company of Century Bank and Trust Company, a Massachusetts-chartered stock bank headquartered in Medford, Massachusetts~~connection 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~~this transaction. The terms of the ~~Merger Agreement, Century Bank and Trust Company will merge with and into~~transfer included a post-transfer settlement period of 60 days from the ~~Bank upon completion~~date of the ~~transaction. The transaction is subject to customary closing conditions, including the receipt~~initial transfer of regulatory approval and Century shareholder approval. The Company currently expects the merger to be completed during the fourth quarter of 2021. The Merger Agreement has been unanimously approved by the Boards of Directors of each of the Company and Century.April 1, 2022.

~~Under the terms of the Merger Agreement, at the effective time of the merger, each holder of Century Class A and Class B common stock will receive a cash payment of $115.28 per share.~~

Additional information about the Merger Agreement and the merger can be found in the Company's Current Report on Form 8-K filed with the SEC on April 8, 2021. The merger is subject to certain risks and uncertainties, and there can be no assurance that the Company will be able to complete the merger on the expected timeline or at all. See “Risk Factors” included in Part II, Item 1A of this Quarterly Report on Form 10-Q.

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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 March 31, ~~2021,~~2022, and our results of operations for the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021. This section should be read in conjunction with the unaudited interim condensed consolidated financial statements and notes thereto of the Company appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q and the Company’s ~~2020~~2021 Form 10-K.

Forward-Looking Statements

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

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

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“may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions.

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

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

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

•changes in customer behavior;

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

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

•turbulence in the capital and debt markets;

•~~changes in interest rates;~~

•decreases in the value of securities and other assets;

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

•competitive pressures from other financial institutions;

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

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

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

•changes in accounting standards and practices;

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

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

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

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

•other risks and uncertainties detailed in Part I, Item 1A of our ~~2020~~2021 Form ~~10-K, as updated by Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, and as may be further updated in our filings with the SEC from time to time.~~10-K.

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.

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Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results could differ from these estimates. Our significant accounting policies are discussed in detail in our ~~2020~~2021 Form ~~10-K.~~10-K, as updated by the notes to our unaudited interim condensed consolidated financial statements accompanying this Quarterly Report on Form 10-Q. Effective January 1, 2022, we adopted ASU 2016-13 (“CECL”), the accounting policy for which is described in Note 2, “Summary of Significant Accounting Policies,”Note 3, “Securities,” and Note 4, “Loans and Allowance for Credit Losses” within the Notes to the Consolidated Financial Statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q. There have been no other material changes in critical accounting policies during the three months ended March 31, ~~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 March 31, 2021 As of December 31, 2020
(Dollars in thousands, except per share data)
Selected Financial Position Data:
Total assets $ 16,726,795 $ 15,964,190
Cash and cash equivalents 1,860,332 2,054,070
Securities available for sale 3,986,253 3,183,861
Loans, net of allowance for loan losses and unamortized premiums, net of unearned discounts and deferred fees 9,772,722 9,593,958
Federal Home Loan Bank stock, at cost 8,805 8,805
Goodwill and other intangibles, net 376,002 376,534
Total liabilities 13,339,750 12,536,138
Total deposits 12,980,875 12,155,784
Total borrowings 29,351 28,049
Total shareholders' equity 3,387,045 3,428,052
Nonperforming loans 43,954 43,252
Nonperforming assets 43,954 43,252
Per Share Data:
Book value $ 18.14 $ 18.36
Tangible book value (1)
$ 16.12 $ 16.34

~~(1)Represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” in this Part 1, Item 2.~~2022.

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For the Three Months Ended March 31,
2021 2020
(Dollars in thousands, except per share data)
Selected Operating Data:
Interest and dividend income $ 101,133 $ 106,159
Interest expense 1,042 6,013
Net interest income 100,091 100,146
(Release of) provision for loan losses (580) 28,600
Net interest income after provision for loan losses 100,671 71,546
Noninterest income 55,212 33,369
Noninterest expense 94,049 95,172
Income before income taxes 61,834 9,743
Provision for income taxes 14,171 1,298
Net income $ 47,663 $ 8,445
Per Share Data:
Basic earnings per share $ 0.28 $ —
Diluted earnings per share 0.28 —

As of and for the Three Months Ended March 31,
2021 2020
Performance Ratios:
Return on average assets (1) (6)
1.19 % 0.29 %
Return on average equity (2) (6)
5.66 % 2.08 %
Interest rate spread (FTE) (3) (6)
2.67 % 3.64 %
Net interest margin (FTE) (4) (6)
2.71 % 3.80 %
Noninterest expenses to average assets (6)
2.34 % 3.25 %
Efficiency ratio (5)
60.56 % 71.28 %
Average interest-earning assets to average interest-bearing liabilities 205.03 % 169.37 %
Capital Ratios:
Average equity to average assets 20.95 % 13.86 %
Total capital to risk weighted assets 29.80 % 13.57 %
Tier 1 capital to risk weighted assets 28.67 % 12.42 %
Common equity tier 1 capital to risk weighted assets 28.67 % 12.42 %
Tier 1 capital to average assets 19.18 % 11.28 %
Asset Quality Ratios:
Allowance for loan losses as a percentage of total loans 1.12 % 1.20 %
Allowance for loan losses as a percentage of nonperforming loans 252.72 % 222.34 %
Net charge-offs (recoveries) to average outstanding loans during the period 0.01 % 0.02 %
Nonperforming loans as a percentage of total loans 0.44 % 0.54 %
Nonperforming loans as a percentage of total assets 0.26 % 0.40 %
Total nonperforming assets as a percentage of total assets 0.26 % 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.~~

5158

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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 ~~$16.7~~$22.8 billion and ~~$16.0~~$23.5 billion at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, 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 ~~$127.1~~$146.3 million, or ~~81.8%~~83.7%, of our total income (pre-provision net interest and dividend income and noninterest income) for the three months ended March 31, ~~2021,~~2022, and our insurance agency business, which contributed ~~$28.3~~$28.4 million, or ~~18.2%~~16.3%, of our total income for the three months ended March 31, ~~2021.~~2022. Our banking business consists of a full range of banking, lending (commercial, residential and consumer), savings and small business offerings, including our wealth management and trust operations that we conduct through our Eastern Wealth 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 months ended March 31, ~~2021~~2022 computed in accordance with GAAP was ~~$47.7~~$51.5 million, as compared to ~~$8.4~~$47.7 million for the three months ended March 31, ~~2020,~~2021, representing ~~a 464.4%~~an 8.1% increase. This increase was ~~largely driven by a decrease~~primarily due to an increase in average interest earning assets, which primarily was the ~~provision for the allowance for loan losses~~result of ~~$29.2 million as we released reserves~~our 2021 acquisition of $0.6 million for the three months ended March 31, 2021. In addition, interest rate swap income and income from investments held in rabbi trusts increased by $11.4 million and $8.6 million, respectively, for the three months ended March 31, 2021 comparedCentury. Refer to the ~~three months ended March 31, 2020. These items are discussed further in the “Results~~“Results of Operations” section ~~below.~~below for additional discussion. Net income for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 included items that our management considers ~~noncore,~~non-core, which management excludes for purposes of assessing our operating net income, a non-GAAP financial measure. Operating net income for the three months ended March 31, ~~2021~~2022 was ~~$46.5~~$55.1 million compared to operating net income ~~of $10.9 million~~ for the three months ended March 31, ~~2020,~~2021 of $46.5 million, representing ~~a 328.6% increase.~~an increase of 18.4%. This increase was largely driven by the aforementioned change in ~~the provision for the allowance for loan losses.~~average interest-earning assets. See ~~“Non-GAAP~~“Non-GAAP Financial Measures” below for a reconciliation of operating net income to GAAP net income.

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

Earnings per share increased from $0.28 for the three months ended March 31, 2021 to $0.30 for the three months ended March 31, 2022, a 9.5% increase. This increase was due to an increase in net income and a decrease in average number of common shares outstanding, which was caused by our previously announced share repurchase program.

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

The GAAP efficiency ratio for the three months ended March 31, 2022 remained consistent with the three months ended March 31, 2021 and decreased quarter-over-quarter. The decrease in the GAAP efficiency ratio from the prior quarter was primarily attributable to higher prior period noninterest expenses associated with our acquisition of Century which were primarily incurred during the fourth quarter of 2021. The decrease in the operating efficiency ratio from the prior quarter is primarily attributable to increased noninterest 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 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 March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had total commercial and industrial loans of ~~$2.0~~$2.9 billion and $3.0 billion, representing ~~20.1%~~23.7% and ~~20.6%~~24.2%, respectively, of our total loans. The primary risk associated with commercial and industrial loans is the ability of borrowers to achieve business results consistent with those projected at origination. Our primary focus for commercial and industrial loans is middle-market companies located in the markets we serve. In addition, we participate in the syndicated loan market and the ~~Shared National Credit Program (“~~SNC ~~Program”).~~Program. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, our SNC Program portfolio totaled ~~$402.6~~$499.7 million and ~~$425.1~~$480.9 million, or ~~20.3%~~17.3% and ~~21.3%~~16.2%, respectively, of our commercial and industrial portfolio, and ~~42.0%~~37.9% and ~~46.4%~~40.3%, respectively, of our SNC Program portfolio were

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loans to borrowers headquartered in our primary lending market. Our commercial and

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industrial portfolio also includes our Asset Based Lending Portfolio (“ABL Portfolio”). As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, our ABL Portfolio totaled ~~$142.8~~$225.2 million and ~~$134.5~~$224.8 million, or ~~7.2%~~7.8% and ~~6.7%~~7.6%, respectively, of our commercial and industrial portfolio. Our commercial and industrial portfolio also includes a portion of our PPP loans. As of March 31, 2022 and December 31, 2021, the amount of PPP loans included in our commercial and industrial portfolio was $51.7 million and $112.8 million, respectively. Our commercial and industrial portfolio also includes industrial revenue bonds (“IRBs”), which are municipal bonds issued to finance major capital projects. As of both March 31, 2022 and December 31, 2021, our commercial and industrial IRB portfolio totaled $1.0 billion.

•Commercial real estate: Loans in this category include mortgage loans on commercial real estate, both investment and owner occupied. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had total commercial real estate loans of ~~$3.7~~$4.6 billion and ~~$3.6~~$4.5 billion, representing ~~37.2%~~37.9% and ~~36.8%~~36.9%, respectively, of our total loans. As of March 31, ~~2021,~~2022, and December 31, ~~2020, owner-occupied~~2021, owner occupied loans totaled ~~$696.7~~$966.8 million and ~~$694.6~~$958.5 million, representing ~~18.9%~~21.0% and ~~19.4%~~21.2%, respectively, of our commercial real estate loans. In connection with our adoption of ASU 2016-13, we revised our methodology for determining owner occupied commercial real estate loans in order to conform with our corresponding pools for CECL reserve modeling purposes, and our totals as of March 31, 2022 reflect such revision. Accordingly, the amount of our owner occupied commercial real estate loans as of December 31, 2021 was also revised from the amount disclosed in our 2021 Form 10-K to accommodate comparability. Collateral values are established by independent third-party appraisals and evaluations. The primary repayment sources include operating income generated by the real estate, permanent debt refinancing and/or the sale of the real estate. Our commercial real estate loan portfolio also includes IRB loans of $601.5 million and $629.6 million as of March 31, 2022 and December 31, 2021, respectively.

•Commercial construction: Loans in this category include construction project financing and are comprised of commercial real estate, business banking and residential loans for the purpose of constructing and developing real estate. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had total commercial construction loans of ~~$249.4~~$246.1 million and ~~$305.7~~$222.3 million, representing ~~2.5%~~2.0% and ~~3.1%~~1.8%, respectively, of our total loans.

•Business banking: Loans in this category are comprised of loans to small businesses with exposures of under $1 million and small investment real estate projects with exposures of under $3 million. These loans are separate and distinct from our commercial and industrial and commercial real estate portfolios described above due to the size of the loans. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had total business banking loans of ~~$1.5~~$1.2 billion and $1.3 billion, respectively, representing ~~15.3%~~9.9% and ~~13.8%~~10.9% of our total loans for each period end, respectively. In this category, commercial and industrial loans and commercial real estate loans totaled ~~$833.8~~$304.3 million and ~~$679.2~~$896.7 million, respectively, as of March 31, ~~2021,~~2022, and ~~$675.1~~$440.6 million and ~~$664.1~~$894.1 million, respectively, as of December 31, ~~2020.~~2021. Business banking originations include traditionally underwritten loans as well as partially automated scored loans. Our proprietary decision matrix, which includes a number of quantitative factors including, but not limited to, a guarantor’s credit score, industry risk, and time in business, is used to determine whether to make business banking loans. We also engage in ~~Small Business Association (“SBA”)~~SBA lending. SBA guarantees reduce our risk of loss when default occurs and are considered a credit enhancement to the loan structure. Our business banking portfolio also includes a portion of our PPP loans which are included in the aforementioned commercial and industrial business banking total. As of March 31, 2022 and December 31, 2021, the amount of PPP loans included in our business banking portfolio was $89.5 million and $218.6 million, respectively.

Residential Lending

•Residential real estate: Loans in this category consist of mortgage loans on residential real estate. As of both March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had total residential loans of ~~$1.4~~$1.9 billion, representing ~~14.2%~~15.9% and ~~14.1%~~15.7%, respectively, of our total ~~loans.~~loans for such periods. 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~~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.

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During the three months ended March 31, ~~2021 and~~2022, residential real estate mortgage originations were $118.3 million of which $29.2 million were sold on the secondary markets. Comparatively, during the three months ended March 31, ~~2020,~~2021, residential real estate mortgage originations were $260.1 million ~~and $60.8 million, respectively,~~ of which $57.2 million ~~and $49.7 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 both March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had total consumer home equity loans of ~~$832.5 million~~$1.1 billion, representing 9.0% and ~~$868.3 million, representing 8.4% and 8.9%~~9.0%, respectively, of our total loans. Home equity lines of credit are granted for ten years with monthly interest-only repayment requirements. 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.

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•Other consumer: Loans in this category consist of unsecured personal lines of credit, overdraft protection, automobile and aircraft loans, home improvement loans and other personal loans. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had total other consumer loans of ~~$251.7~~$203.3 million and ~~$277.8~~$214.5 million, representing ~~2.5%~~1.7% and ~~2.9%~~1.8%, 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 $103.4 million and $126.7 million of automobile loans, respectively, at March 31, 2021 and December 31, 2020.~~

Other Banking Products and Services

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

Other Commercial Banking Products

•We offer a variety of deposit, treasury management, electronic banking, interest rate protection and foreign exchange products to our customers. In addition, we offer automated lock box collection services, cash management services and account reconciliation services to our corporate and institutional customers, as well as cash management services to our municipal clients. Deposit products include checking products, both interest-bearing and noninterest-bearing, as well as money market deposits, savings deposits and certificates of deposits. Our treasury management products include a variety of cash management and payment products. Our interest rate protection and foreign exchange products include interest rate swaps and currency related transactions. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, our total commercial deposits were ~~$4.7~~$7.9 billion and ~~$4.4~~$8.1 billion, ~~respectively, and our commercial noninterest income during~~respectively. During the three months ended March 31, ~~2021 and~~2022 our commercial noninterest income was $5.8 million compared to $5.1 million for the three months ended March 31, ~~2020 was $5.1 million and $4.9 million, respectively.~~2021.

Other Consumer Deposit Products

•We offer a wide variety of deposit products and services to our consumer customers. We service these customers through our 8896 branches located in eastern Massachusetts and New Hampshire, through our call center in our facility in Lynn, MAMassachusetts 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 March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we held ~~$3.0~~$3.2 billion and ~~$2.9~~$3.4 billion, respectively, of assets in a fiduciary, custodial or agency capacity for customers, which are not our assets and therefore not included on the consolidated balance sheets included in this Quarterly Report on Form 10-Q. For the three months ended March 31, ~~2021 and~~2022, we had noninterest income of $6.1 million from providing these services compared to $5.7 million for the three months ended March 31, ~~2020, we had noninterest income of $5.7 million and $5.1 million, respectively, from providing these services.~~2021.

Insurance Agency Business

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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~~wholly-owned agency, Eastern Insurance ~~Group LLC (“Eastern Insurance Group”).~~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 $28.7 million and $28.1 million, respectively, or 61.9% and ~~$27.5 million, or~~ 51.0% ~~and 82.3%~~, respectively, of our noninterest income during the three months ended March 31, ~~2021 and the three months ended March 31, 2020.~~2022. Our insurance business operates through 2422 non-branch offices located primarily in eastern Massachusetts and had ~~405~~399 full-time equivalent employees as of March 31, ~~2021.~~2022.

Acquisitions

~~Proposed Acquisition~~

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On April 7, 2021, we entered into a definitive merger agreement with Century Bancorp, Inc. under which we will acquire Century for $641.9 million in cash (the “Merger Agreement”). Century is the stock holding company of Century Bank and Trust Company, a Massachusetts-chartered stock bank headquartered in Medford, Massachusetts with $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 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 transaction is subject to customary closing conditions, including the receipt of regulatory approval and Century shareholder approval. We currently expect the merger to be completed during the fourth quarter of 2021. For additional information about the Merger Agreement and the proposed transaction, please see our Current Report on Form 8-K filed with the SEC on April 8, 2021. See also “Risk Factors” included in Part II, Item 1A of this Quarterly Report on Form 10-Q.

~~Outlook and Trends~~

~~COVID-19 Pandemic~~

The COVID-19 pandemic has had and continues to have an adverse effect on our business and the markets in which we operate. We expect the short-term 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.

~~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 Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) or the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) and therefore are not deemed troubled debt restructurings (“TDRs”). We have deemed these modified loans, “COVID-19 modifications.”

The Consolidated Appropriations Act (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.

As of March 31, 2021, the balance of loans that had received a COVID-19 modification since the inception of the modification programs in 2020 was $985.7 million, of which $20.0 million were executed duringDuring the three months ended March 31, ~~2021. Approximately 47%~~2022, Eastern Insurance Group completed one insurance agency acquisition. The purchase price and goodwill recorded as a result of the aggregate $985.7 million balance of modified loans at March 31, 2021 were modified to permit for full payment deferrals (both interest and principal) and 53% were modified to permit for deferral of principal payments. Modified loans at March 31, 2021 included $625.0 million of commercial real estate loans, including construction loans, $118.7 million of commercial and industrial loans, $127.2 million of business banking loans, $88.5 million of residential real estate loans and $26.3 million of consumer loans, including home equity loans. As of March 31, 2021, $807.3 million, or 82%, of the balance of total modified loans had resumed payments andacquisition were not ~~30 days or more past due. The loans remaining~~material.

Outlook and Trends

Interest Rates

We expect additional increases in ~~a modified status as of March 31, 2021 compared~~the federal funds rate in 2022 which is anticipated to ~~remaining modifications executed through December 31, 2020 are presented by portfolio below.~~

Remaining COVID-19 Modifications
as of March 31, 2021 (1)
Remaining COVID-19 Modifications
as of December 31, 2020 (1)
Balance % of Total Portfolio Balance % of Total Portfolio
(Dollars in thousands)
Commercial and industrial $ 22,776 1.1 % $ 34,076 1.7 %
Commercial real estate 127,683 3.5 % 231,794 6.5 %
Commercial construction — — % 10,987 3.6 %
Business banking 11,681 0.8 % 23,434 1.7 %
Residential real estate 13,754 1.0 % 26,772 2.0 %
Consumer home equity 1,274 0.2 % 3,432 0.4 %
Other consumer 1,262 0.5 % 2,187 0.8 %
Total $ 178,430 1.8 % $ 332,682 3.4 %

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~~(1)~~Remaining COVID-19 modifications reflect only those loans which underwent a modification and have not yet resumed payment. 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. The following table shows certain data, as of March 31, 2021, related to loansbe beneficial to our ~~borrowers in industry categories~~net interest income and net interest margin. On March 16, 2022, the Federal Open Market Committee (the “Committee”) voted to increase interest rates by a quarter of a percentage point to a range of 0.25% to 0.50%. The Committee then further raised the target range on May 4, 2022 to a range of 0.75% to 1.00% and stated that ~~we believe have experienced and will likely continue to experience the most adverse effects of the COVID-19 pandemic. Loans included~~it anticipates that ongoing increases in the ~~table that had been modified as of March 31, 2021 represented approximately 1.8%~~target range will be appropriate. Approximately 40% of our ~~aggregate outstanding loan balances as of March 31, 2021.~~

Loan Balance Balance (%)
COVID-19
Modification % (1)
(Dollars in thousands)
High Risk Industries
Retail (2)
$ 491,210 5.0 % 1.0 %
Restaurants 199,239 2.0 % 10.7 %
Hotels 178,094 1.8 % 51.6 %
Construction contractors financing 83,112 0.8 % 0.9 %
Auto dealerships 77,658 0.8 % — %
Other high risk 81,529 0.8 % 0.8 %
All impacted industries total 1,110,842 11.2 % 10.8 %
Remaining commercial and business banking 6,314,932 63.7 % 0.7 %
Total commercial and business banking 7,425,774 74.9 % 2.2 %
All other loans 2,490,701 25.1 % 0.7 %
Total $ 9,916,475 100.0 % 1.8 %

~~(1)The percentage of~~ loans ~~in each category, calculated as~~are indexed to a ~~percentage of aggregate outstanding loan balances for each such category as of March 31, 2021,~~market rate that ~~we modified primarily due~~is expected to reprice along with the federal funds rate. Refer to the ~~effects on borrowers~~section titled “Management of Market Risk” within this Item 2 for additional discussion including the ~~COVID-19 pandemic~~estimated change to our net interest income which assumes a variety of immediate and ~~related economic slowdown beginning~~parallel changes in ~~late March 2020.~~the U.S. Treasury yield curve.

~~(2)The retail segment includes all retail commercial real estate loans and non-essential commercial and industrial retail loans.~~

Paycheck Protection Program ~~Loans.~~ Loans

We are a participating lender in the SBA’s Paycheck Protection Program, ~~(“PPP”).~~or PPP. We concluded PPP loan originations in the second quarter of 2021 as the SBA announced in May 2021 that PPP funds were exhausted. The ~~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.~~

•~~During the three months ended~~Group. As of March 31, 2022 and December 31, 2021, ~~we originated approximately 4,700~~the remaining balance of our PPP loans ~~totaling $452.6 million. These loans have a maturity of five years. Fees received from the SBA~~was $141.2 million and ~~direct loan origination costs are being deferred over the five-year term. Through March 31, 2021, we had received $19.9~~$331.4 million, ~~in fees from the SBA and had deferred $2.8 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 three months ended March 31, 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 the remaining 2020 originations will be forgiven during the year ended December 31, 2021.

•respectively. Net PPP loan fee accretion (fee accretion less cost amortization) for all PPP loans for the three months ended March 31, 2022 and 2021 was $5.8 million and $8.3 ~~million.~~

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

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

PPP Loans Originated During the Total
Three Months Ended March 31, 2021 Year ended December 31, 2020
(Dollars in thousands)
Number of loans originated 4,693 8,902 13,595
Original balance of loans originated $ 452,596 $ 1,167,137 $ 1,619,733
Current balance of loans originated in respective periods(1)
452,619 785,434 1,238,053
Total SBA fees received(2)
19,942 37,180 57,122
SBA fees recognized in interest income related to loans originated in respective periods(3)
686 24,672 25,358
Unaccreted SBA fees related to loans originated in respective periods 19,256 12,508 31,764

~~(1)Current loan balance for 2021 originations exceeds the original balance of loans originated in 2021 as certain loans had additional funds advanced subsequent to origination.~~

~~(2)Total SBA fees received on 2020 originations includes additional fees received from the SBA in 2021 for originations that were modified in 2021.~~

~~(3)Reflects life-to-date accretion.~~

~~The following table shows certain data related to our remaining PPP loans~~$3.4 million as of March 31, ~~2021:~~2022 during the remainder of the year ended December 31, 2022 resulting in total recognized net fee accretion of $9.2 million for the year ended December 31, 2022 compared to $34.3 million recognized during the year ended December 31, 2021. Our net interest margin is expected to be adversely affected as a result of the decline in net fee accretion, which is associated with the decreased volume of PPP loan payoffs. The impact to our net interest margin resulting from the decline in net PPP loan fee accretion is estimated to be 0.25% (change computed based upon average total loans for the year ended December 31, 2021).

Loan Size Loan Balance Number of Loans
(Dollars in thousands)
$0 to $50 thousand $ 126,812 6,992
$50 thousand to $150 thousand 190,590 2,212
$150 thousand to $1 million 471,623 1,409
$1 million to $2 million 169,582 119
$2 million to $5 million 213,143 76
Over $5 million 66,303 11
Total $ 1,238,053 10,819

~~The following table shows the balance of our PPP loans by industry as of March 31, 2021:~~

Industry Loan Balance Number of Loans
(Dollars in thousands)
Construction $ 200,670 1,432
Professional, scientific, & technical services 170,461 1,749
Health care & social assistance 166,199 961
Accommodation & food services 153,197 1,130
Other services 108,471 1,568
Manufacturing 91,184 458
Administrative & support 82,669 577
Wholesale trade 66,734 307
Retail trade 55,742 988
Transportation & warehousing 32,123 319
Real estate, rental, & leasing 30,672 434
All other 79,931 896
Total $ 1,238,053 10,819

Non-GAAP Financial Measures

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We present certain non-GAAP financial measures, which management uses to evaluate our performance and which exclude the effects of certain transactions, non-cash items and GAAP adjustments that we believe are unrelated to our core business and are therefore not necessarily indicative of our current performance or financial position. Management believes excluding these items facilitates greater visibility for investors into our core businesses as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding GAAP financial measures.

There are items in our financial statements that impact our results but which we believe are unrelated to our core business. Accordingly, we present operating net income, noninterest income on an operating basis, noninterest expense on an operating basis, total operating revenue, operating earnings per share, and the operating efficiency ratio, each of which excludes the impact of such items because we believe such exclusion can provide greater visibility into our core business and underlying trends. Such items that we do not consider to be core to our business include (i) income and expenses from investments held in rabbi trusts, (ii) gains and losses on sales of securities available for sale, net, (iii) gains and losses on the sale of other assets, (iv) rabbi trust employee benefits, (v) impairment charges on tax credit investments and associated tax credit benefits, (vi)

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expenses indirectly associated with our initial public offering (“IPO”), (vii) ~~other real estate owned (“OREO”)~~OREO gains and losses, (viii) merger and acquisition expenses, ~~and~~ (ix) the stock donation to the Eastern Bank ~~Charitable~~ Foundation (the “Foundation”) in connection with our mutual-to-stock conversion and ~~IPO.~~IPO, and (x) settlement of putative consumer class action litigation matters related to overdraft and non-sufficient funds fees, and associated settlement expenses. There were no expenses indirectly associated with our IPO, stock donations to the Foundation, OREO gains or losses, impairment charges on tax credit investments ~~other real estate owned gains,~~and associated tax credit benefits, or ~~stock donations to~~expenses associated with the ~~Foundation~~settlement for putative consumer class action matters during the three-month 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 book value per share, each of which excludes the impact of goodwill and other intangible assets, as we believe these financial measures provide investors with the ability to further assess our performance, identify trends in our core business and provide a comparison of our capital adequacy to other companies. We have included the tangible ratios because management believes that investors may find it useful to have access to the same analytical tools used by management to assess performance and identify trends.

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

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


		For the Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
		(Dollars in thousands, except per share data)					(Dollars in thousands, except per share data)
Net income (GAAP)	Net income (GAAP)	$	47,663	$	8,445	Net income (GAAP)	$	51,516	$	47,663
Non-GAAP adjustments:	Non-GAAP adjustments:					Non-GAAP adjustments:
Add:	Add:					Add:
Noninterest income components:	Noninterest income components:					Noninterest income components:
(Income) loss from investments held in rabbi trusts		(1,846)		6,743
(Gain) loss on sales of securities available for sale, net		(1,164)		(122)
(Gain) loss on sale of other assets		(18)		(29)
Losses (income) from investments held in rabbi trusts						Losses (income) from investments held in rabbi trusts	4,433		(1,846)
Losses (gains) on sales of securities available for sale, net						Losses (gains) on sales of securities available for sale, net	2,172		(1,164)
Losses (gains) on sales of other assets						Losses (gains) on sales of other assets	274		(18)
Noninterest expense components:	Noninterest expense components:					Noninterest expense components:
Rabbi trust employee benefit expenses (income)		986		(3,479)
Indirect initial public offering costs (1)		—		270
Rabbi trust employee (income) benefit expense						Rabbi trust employee (income) benefit expense	(2,087)		986
Merger and acquisition expenses	Merger and acquisition expenses	589		—		Merger and acquisition expenses	34		589
Total impact of non-GAAP adjustments	Total impact of non-GAAP adjustments	(1,453)		3,383		Total impact of non-GAAP adjustments	4,826		(1,453)
Less net tax (expense) benefit associated with non-GAAP adjustment (2)		(327)		970
Less net tax benefit (expense) associated with non-GAAP adjustment (2)						Less net tax benefit (expense) associated with non-GAAP adjustment (2)	1,235		(327)
Non-GAAP adjustments, net of tax	Non-GAAP adjustments, net of tax	$	(1,126)	$	2,413	Non-GAAP adjustments, net of tax	$	3,591	$	(1,126)
Operating net income (non-GAAP)	Operating net income (non-GAAP)	$	46,537	$	10,858	Operating net income (non-GAAP)	$	55,107	$	46,537

Weighted average common shares outstanding during the period:	Weighted average common shares outstanding during the period:					Weighted average common shares outstanding during the period:
Basic	Basic	172,049,044		n.a		Basic	169,857,950		172,049,044
Diluted	Diluted	172,049,044		n.a		Diluted	169,968,156		172,049,044

Earnings per share, basic	Earnings per share, basic	$	0.28	n.a		Earnings per share, basic	$	0.30	$	0.28
Earnings per share, diluted	Earnings per share, diluted	$	0.28	n.a		Earnings per share, diluted	$	0.30	$	0.28

Operating earnings per share, basic (non-GAAP)	Operating earnings per share, basic (non-GAAP)	$	0.27	n.a		Operating earnings per share, basic (non-GAAP)	$	0.32	$	0.27
Operating earnings per share, diluted (non-GAAP)	Operating earnings per share, diluted (non-GAAP)	$	0.27	n.a		Operating earnings per share, diluted (non-GAAP)	$	0.32	$	0.27

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

~~(2)~~The net tax benefit (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.

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The following table summarizes the impact of 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:

For the Three Months Ended March 31,
2021 2020
(Dollars in thousands)
Net interest income (GAAP) $ 100,091 $ 100,146
Add:
Tax-equivalent adjustment (non-GAAP) 1,297 1,368
Fully-taxable equivalent net interest income (non-GAAP) 101,388 101,514
Noninterest income (GAAP) 55,212 33,369
Less:
Income (losses) from investments held in rabbi trusts 1,846 (6,743)
Gains (losses) on sales of securities available for sale, net 1,164 122
Gains (losses) on sale of other assets 18 29
Noninterest income on an operating basis (non-GAAP) 52,184 39,961
Noninterest expense (GAAP) $ 94,049 $ 95,172
Less:
Rabbi trust benefit expense (income) 986 (3,479)
Merger and acquisition expenses 589 —
Indirect IPO costs (1) — 270
Noninterest expense on an operating basis (non-GAAP) $ 92,474 $ 98,381
Total revenue (GAAP) $ 155,303 $ 133,515
Total operating revenue (non-GAAP) $ 153,572 $ 141,475
Ratios
Efficiency ratio (GAAP) 60.56 % 71.28 %
Operating efficiency ratio (non-GAAP) 60.22 % 69.54 %

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


	Three Months Ended March 31,
	2022			2021
	(Dollars in thousands)
Net interest income (GAAP)	$	128,124		$	100,091
Add:
Tax-equivalent adjustment (non-GAAP)	2,261			1,297
Fully-taxable equivalent net interest income (non-GAAP)	130,385			101,388
Noninterest income (GAAP)	46,415			55,212
Less:
(Loss) income from investments held in rabbi trusts	(4,433)			1,846
Gains (losses) on sales of securities available for sale, net	(2,172)			1,164
Gains (losses) on sales of other assets	(274)			18
Noninterest income on an operating basis (non-GAAP)	53,294			52,184
Noninterest expense (GAAP)	$	108,866		$	94,049
Less:
Rabbi trust (income) benefit expense	(2,087)			986
Merger and acquisition expenses	34			589
Noninterest expense on an operating basis (non- GAAP)	$	110,919		$	92,474
Total revenue (GAAP)	$	174,539		$	155,303
Total operating revenue (non-GAAP)	$	183,679		$	153,572
Ratios:
Efficiency ratio (GAAP)	62.37		%	60.56		%
Operating efficiency ratio (non-GAAP)	60.39		%	60.22		%

6065

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

As of March 31, 2021 As of As of December 31, 2020
(Dollars in thousands)
Tangible shareholders’ equity:
Total shareholders’ equity (GAAP) $ 3,387,045 $ 3,428,052
Less: Goodwill and other intangibles 376,002 376,534
Tangible shareholders’ equity (non-GAAP) 3,011,043 3,051,518
Tangible assets:
Total assets (GAAP) 16,726,795 15,964,190
Less: Goodwill and other intangibles 376,002 376,534
Tangible assets (non-GAAP) $ 16,350,793 $ 15,587,656
Shareholders’ equity to assets ratio (GAAP) 20.2 % 21.5 %
Tangible shareholders’ equity to tangible assets ratio (non-GAAP) 18.4 % 19.6 %
Book value per share:
Common shares issued and outstanding 186,758,154 186,758,154
Book value per share (GAAP) $ 18.14 $ 18.36
Tangible book value per share (non-GAAP) $ 16.12 $ 16.34


	As of March 31,			As of December 31,
	2022			2021
	(Dollars in thousands, except per share data)
Tangible shareholders’ equity:
Total shareholders’ equity (GAAP)	$	3,008,392		$	3,406,352
Less: Goodwill and other intangibles	654,759			649,703
Tangible shareholders’ equity (non-GAAP)	2,353,633			2,756,649
Tangible assets:
Total assets (GAAP)	22,836,072			23,512,128
Less: Goodwill and other intangibles	654,759			649,703
Tangible assets (Non-GAAP)	$	22,181,313		$	22,862,425
Shareholders’ equity to assets ratio (GAAP)	13.2		%	14.5		%
Tangible shareholders’ equity to tangible assets ratio (Non-GAAP)	10.6		%	12.1		%
Book value per share:
Common shares issued and outstanding	183,438,711			186,305,332
Book value per share (GAAP)	$	16.40		$	18.28
Tangible book value per share (non-GAAP)	$	12.83		$	14.80

Financial Position

Summary of Financial Position


							Change					As of March 31, 2022		As of December 31, 2021		Change
		As of March 31, 2021		As of	As of December 31, 2020		Amount ($)		Percentage (%)							Amount ($)		Percentage (%)
		(Dollars in thousands)										(Dollars in thousands)
Cash and cash equivalents	Cash and cash equivalents	$	1,860,332		$	2,054,070	$	(193,738)	(9.4)	%	Cash and cash equivalents	$	830,494	$	1,231,792	$	(401,298)	(32.6)	%
Securities available for sale	Securities available for sale	3,986,253			3,183,861		802,392		25.2	%	Securities available for sale	7,917,305		8,511,224		(593,919)		(7.0)	%
Loans, net of allowance for credit losses		9,772,722			9,593,958		178,764		1.9	%
Securities held to maturity											Securities held to maturity	395,434		—		395,434		100.0	%
Loans, net of allowance for loan losses											Loans, net of allowance for loan losses	12,033,603		12,157,281		(123,678)		(1.0)	%
Federal Home Loan Bank Stock	Federal Home Loan Bank Stock	8,805			8,805		—		—	%	Federal Home Loan Bank Stock	10,904		10,904		—		—	%
Goodwill and other intangible assets	Goodwill and other intangible assets	376,002			376,534		(532)		(0.1)	%	Goodwill and other intangible assets	654,759		649,703		5,056		0.8	%
Deposits	Deposits	12,980,875			12,155,784		825,091		6.8	%	Deposits	19,392,816		19,628,311		(235,495)		(1.2)	%
Borrowed funds	Borrowed funds	29,351			28,049		1,302		4.6	%	Borrowed funds	34,922		34,278		644		1.9	%

Cash and cash equivalents

Total cash and cash equivalents decreased by ~~$193.7 million,~~$0.4 billion, or ~~9.4%~~32.6%, to ~~$1.9~~$0.8 billion at March 31, ~~2021~~2022 from ~~$2.1~~$1.2 billion at December 31, ~~2020.~~2021. This decrease was primarily due to ~~available for sale~~ security purchases and ~~funding of new loan originations.~~

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a decrease in total customer 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 securities: At March 31, ~~2021 and December 31, 2020~~2022, our U.S. government securities consisted of U.S. Agency bonds and U.S. Treasury securities. At December 31, 2021, our U.S. government securities consisted of U.S. Agency bonds, U.S.

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Treasury securities and Small Business Administration pooled securities. We maintain these investments, to the extent appropriate, for liquidity purposes, at zero risk weighting for capital purposes, and as collateral for interest rate derivative positions. U.S. Agency bonds include securities issued by Fannie Mae, Freddie Mac, the FHLB, and the Federal Farm Credit Bureau.

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

Investments in residential mortgage-backed securities involve a risk that actual payments will be greater or less than the prepayment rate estimated at the time of purchase, which may require adjustments to the amortization of any premium or acceleration of any discount relating to such interests, thereby affecting the net yield on our securities. We periodically review current prepayment speeds to determine whether prepayment estimates require modification that could cause 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 March 31, 2021		As of	As of December 31, 2020			As of March 31, 2022		As of December 31, 2021
		(In thousands)						(In thousands)
Available for sale securities:
Available for sale securities, at fair value:							Available for sale securities, at fair value:
Government-sponsored residential mortgage-backed securities	Government-sponsored residential mortgage-backed securities	$	2,691,702		$	2,148,800	Government-sponsored residential mortgage-backed securities	$	4,969,346	$	5,524,708
Government-sponsored commercial mortgage-backed securities	Government-sponsored commercial mortgage-backed securities	116,271			17,081		Government-sponsored commercial mortgage-backed securities	1,615,927		1,408,868
U.S. Agency bonds	U.S. Agency bonds	831,672			666,709		U.S. Agency bonds	1,013,899		1,175,014
U.S. Treasury securities	U.S. Treasury securities	69,090			70,369		U.S. Treasury securities	56,235		88,605
State and municipal bonds and obligations	State and municipal bonds and obligations	277,518			280,902		State and municipal bonds and obligations	260,316		280,329
Small Business Administration pooled securities							Small Business Administration pooled securities	—		32,103
Other debt securities							Other debt securities	1,582		1,597
Total available for sale securities, at fair value							Total available for sale securities, at fair value	7,917,305		8,511,224
Held to maturity securities, at amortized cost:							Held to maturity securities, at amortized cost:
Government-sponsored residential mortgage-backed securities							Government-sponsored residential mortgage-backed securities	192,231		—
Government-sponsored commercial mortgage-backed securities							Government-sponsored commercial mortgage-backed securities	203,203		—
Total held to maturity securities, at amortized cost							Total held to maturity securities, at amortized cost	395,434		—
Total	Total	$	3,986,253		$	3,183,861	Total	$	8,312,739	$	8,511,224

Our securities portfolio has ~~increased~~decreased year-to-date. Available for sale (“AFS”) securities ~~increased $802.4 million,~~decreased $0.6 billion, or ~~25.2%~~7.0%, to ~~$4.0~~$7.9 billion at March 31, ~~2021~~2022 from ~~$3.2~~$8.5 billion at December 31, ~~2020.~~2021. This ~~increase~~decrease is primarily due to ~~investment purchases~~a decrease in the fair value of AFS securities. At March 31, 2022, the unrealized loss was $539.3 million compared to an unrealized loss of $76.0 million at December 31, 2021, representing a $463.4 million decrease in the fair value of AFS securities. The change from December 31, 2021 to March 31, 2022 is primarily driven by rising market rates of interest. In addition, AFS securities sales, maturities and principal paydowns totaled $595.2 million during the three months ended March 31, ~~2021.~~2022 which also contributed to the overall decline. Partially offsetting the decrease in the securities portfolio from December 31, 2021 to March 31, 2022 were purchases of available for sale securities of $471.5 million. In addition, at during the three months ended

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March 31, ~~2021 the unrealized loss was $37.5~~2022, we purchased $395.8 million ~~compared~~of securities classified as held to ~~an unrealized gain of $58.7 million~~maturity (“HTM”). We did not have any securities classified as HTM at December 31, ~~2020, representing a $96.1 million decrease.~~2021.

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

A portion of our securities portfolio continues to be tax-exempt. Investments in federally tax-exempt securities totaled ~~$277.5~~$259.9 million at March 31, ~~2021~~2022 compared to ~~$280.9~~$279.8 million at December 31, ~~2020.~~

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2021.

Our ~~available for sale~~AFS securities are carried at fair value and are categorized within the fair value hierarchy based on the observability of model inputs. Securities which require inputs that are both significant to the fair value measurement and unobservable are classified as Level 3 within the fair value hierarchy. As of both March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had no securities categorized as 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.

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

Securities Portfolio, ~~Amounts Maturing~~Weighted-Average Yield


		Securities Maturing as of March 31, 2021
		Within One Year			After One Year But Within Five Years			After Five Years But Within Ten Years			After Ten Years			Total				Securities Maturing as of March 31, 2022
		(Dollars in thousands)																Within One Year	After One Year But Within Five Years	After Five Years But Within Ten Years	After Ten Years	Total
Available for sale securities:	Available for sale securities:																Available for sale securities:
Government-sponsored residential mortgage-backed securities	Government-sponsored residential mortgage-backed securities	$	—		$	21,777		$	91,340		$	2,578,585		$	2,691,702		Government-sponsored residential mortgage-backed securities	2.74%	2.64%	0.96%	1.48%	1.41%
Government-sponsored commercial mortgage-backed securities	Government-sponsored commercial mortgage-backed securities	—			23,771			92,500			—			116,271			Government-sponsored commercial mortgage-backed securities	—	1.34	1.23	1.94	1.58
U.S. Agency bonds	U.S. Agency bonds	—			98,111			733,561			—			831,672			U.S. Agency bonds	—	0.72	0.93	—	0.82
U.S. Treasury securities	U.S. Treasury securities	10,095			58,995			—			—			69,090			U.S. Treasury securities	0.13	0.78	—	—	0.67
State and municipal bonds and obligations	State and municipal bonds and obligations	406			26,220			76,077			174,815			277,518			State and municipal bonds and obligations	0.75	2.50	3.19	4.04	3.54
Other debt securities																	Other debt securities	1.01	0.84	—	—	0.87
Total available for sale securities																	Total available for sale securities	0.34	0.98	1.11	1.62	1.43
Held to maturity securities:																	Held to maturity securities:
Government-sponsored residential mortgage-backed securities																	Government-sponsored residential mortgage-backed securities	—	—	—	2.64	2.64
Government-sponsored commercial mortgage-backed securities																	Government-sponsored commercial mortgage-backed securities	—	—	2.23	—	2.23
Total held to maturity securities																	Total held to maturity securities	—	—	2.23	2.64	2.43
Total	Total	$	10,501		$	228,874		$	993,478		$	2,753,400		$	3,986,253		Total	0.34%	0.98%	1.21%	1.66%	1.47%
Weighted-average yield		0.46		%	0.96		%	1.07		%	1.61		%	1.43		%

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
(Dollars 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 %

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	Securities Maturing as of December 31, 2021
	Within One Year	After One Year But Within Five Years	After Five Years But Within Ten Years	After Ten Years	Total
Available for sale securities:
Government-sponsored residential mortgage-backed securities	—%	2.64%	1.01%	1.44%	1.38%
Government-sponsored commercial mortgage-backed securities	—	1.14	1.20	1.95	1.67
U.S. Agency bonds	1.11	0.73	1.00	—	0.88
U.S. Treasury securities	0.15	0.78	—	—	0.50
State and municipal bonds and obligations (2)	(1.24)	2.46	3.17	4.04	3.48
Small Business Administration pooled securities	—	1.72	—	1.93	1.90
Other debt securities	1.01	0.84	—	—	0.87
Total	0.10%	0.95%	1.12%	1.60%	1.42%

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

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

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

Net unrealized ~~(losses) gains~~losses on ~~available for sale~~AFS securities as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 totaled ~~$(37.5)~~$539.3 million and ~~$58.7~~$76.0 million, respectively. The change from December 31, ~~2020~~2021 to March 31, ~~2021~~2022 is primarily ~~rate driven.~~

~~Table~~driven by rising market rates of ~~Contents~~

interest.

Loans

We consider our loan portfolio to be relatively diversified by borrower and industry. Our loans ~~increased $186.0~~decreased $99.3 million, or ~~1.9%~~0.8%, to ~~$9.9~~$12.2 billion at March 31, ~~2021~~2022 from ~~$9.7~~$12.3 billion at December 31, ~~2020.~~2021. The ~~increase~~decrease as of March 31, ~~2021~~2022 was primarily due to ~~an increase~~a decrease in our PPP loan balances within the C&I and business banking portfolios, as further noted below.

•Our business banking portfolio decreased by $133.7 million primarily as a result of a $129.1 million decrease in business banking ~~and commercial real estate~~PPP loan ~~balances.~~balances during the three months ended March 31, 2022 as such loans were paid off or forgiven by the SBA.

•~~The $173.9~~Similarly, our commercial and industrial portfolio decreased by $74.0 million ~~increase in our business banking loans from December 31, 2020 to March 31, 2021 was~~ primarily as a result of a decrease of $61.1 million in commercial and industrial PPP loan balances during the three months ended March 31, 2022.

•Our retail portfolio decreased slightly by $2.7 million which was primarily attributable to our other consumer portfolio which decreased by $11.2 million and was partially offset by an increase of ~~$170.8~~$9.4 million in ~~PPP~~our residential real estate loans during the three months ended March 31, ~~2021.~~2022.

•~~The $103.3 million~~Partially offsetting the above balance declines was an increase in our commercial real estate loans of $87.3 million from December 31, 2021 to March 31, 2022 which was primarily ~~a result of~~attributable to an increase of ~~$87.6~~$81.1 million in ~~the investment~~ commercial real estate ~~category during the three months ended March 31, 2021.~~

•~~The $26.3 million decrease in our retail portfolio was primarily a result of a decrease in the auto lending portfolio of $23.3 million during the three months ended March 31, 2021.~~investment loan balances. Such loans represent loans secured by commercial real estate that are non-owner-occupied.

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

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Loan Portfolio Composition


		As of March 31, 2021		As of December 31, 2020			As of March 31, 2022		As of December 31, 2021
		(In thousands)					(In thousands)
Commercial and industrial	Commercial and industrial	$	1,986,366	$	1,995,016	Commercial and industrial	$	2,886,560	$	2,960,527
Commercial real estate	Commercial real estate	3,676,941		3,573,630		Commercial real estate	4,609,824		4,522,513
Commercial construction	Commercial construction	249,416		305,708		Commercial construction	246,093		222,328
Business banking	Business banking	1,513,051		1,339,164		Business banking	1,201,007		1,334,694
Residential real estate	Residential real estate	1,406,510		1,370,957		Residential real estate	1,936,182		1,926,810
Consumer home equity	Consumer home equity	832,466		868,270		Consumer home equity	1,099,211		1,100,153
Other consumer	Other consumer	251,725		277,780		Other consumer	203,326		214,485
Total loans	Total loans	9,916,475		9,730,525		Total loans	12,182,203		12,281,510
Less:
Allowance for loan losses	Allowance for loan losses	(111,080)		(113,031)		Allowance for loan losses	(124,166)		(97,787)
Unamortized premiums, net of unearned discounts and deferred fees	Unamortized premiums, net of unearned discounts and deferred fees	(32,673)		(23,536)		Unamortized premiums, net of unearned discounts and deferred fees	(24,434)		(26,442)
Total loans receivable, net	Total loans receivable, net	$	9,772,722	$	9,593,958	Total loans receivable, net	$	12,033,603	$	12,157,281

We believe that our commercial loan portfolio composition is relatively diversified in terms of industry sectors, property types and various lending specialties, and is concentrated in the New England geographical area, with ~~90.9%~~83.3% of our commercial loans in Massachusetts and New Hampshire as of March 31, ~~2021.~~2022.

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

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

Risk rating assignment is determined using one of 14 separate scorecards developed for distinctive portfolio segments based on common attributes. Key factors include: industry and market conditions, position within the industry, earnings trends, operating cash flow, asset/liability values, debt capacity, guarantor strength, management and controls, financial reporting, collateral and other considerations. The new risk rating methodology, inclusive of the expanded grade levels and the scorecard tools, has increased, and is expected to continue to increase, the granularity and distribution of risk rating assignment with more precision and effectiveness; provide customized and enhanced templates to incorporate more risk factors

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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 ~~7.4%~~4.5% and ~~7.7%~~5.8% of total commercial loans outstanding at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. This decrease was driven by risk rating upgrades in the construction and commercial and industrial portfolios.

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

The delinquency rate of our total loan portfolio ~~increased~~decreased to ~~0.58%~~0.41% at March 31, ~~2021~~2022 from ~~0.49%~~0.65% at December 31, ~~2020, primarily due to an increase in our commercial and industrial and commercial real estate portfolios.~~2021.

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

Loan Delinquency Rates


		Delinquency Rate as of (1)					Delinquency Rate as of (1)(2)
		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Portfolio						Portfolio
Commercial and industrial	Commercial and industrial	0.54	%	0.11	%	Commercial and industrial	0.07	%	0.06	%
Commercial real estate	Commercial real estate	0.13	%	0.06	%	Commercial real estate	0.02	%	0.60	%
Commercial construction	Commercial construction	—	%	—	%	Commercial construction	2.74	%	—	%
Business banking	Business banking	1.53	%	1.40	%	Business banking	0.73	%	0.86	%
Residential real estate	Residential real estate	0.91	%	1.21	%	Residential real estate	0.98	%	1.38	%
Consumer home equity	Consumer home equity	0.59	%	0.60	%	Consumer home equity	0.96	%	0.90	%
Other consumer	Other consumer	0.69	%	0.98	%	Other consumer	0.83	%	1.23	%
Total	Total	0.58	%	0.49	%	Total	0.41	%	0.65	%

(1)In the calculation of the delinquency rate as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the total amount of loans outstanding includes ~~$1.2~~$0.1 billion and ~~$1.0~~$0.3 billion, respectively, of PPP loans.

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

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

As of March 31, 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 $ 9,460 $ 3 $ 1,174 $ 4 $ 268 $ 1,924
Commercial real estate 3,225 — 1,403 — 556 1,545
Commercial construction — — — — — —
Business banking 13,299 1,404 8,513 5,279 3,311 10,196
Residential real estate 5,738 857 6,271 9,184 2,517 4,904
Consumer home equity 1,416 496 3,006 1,806 364 3,035
Other Consumer 975 419 349 1,978 234 517
Total $ 34,113 $ 3,179 $ 20,716 $ 18,251 $ 7,250 $ 22,121
the difference in methodology is not significant.

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.

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Non-performing assets (“NPAs”) are comprised of non-performing loans (“NPLs”), OREO and non-performing 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 or acceptance of a deed in lieu of~~ foreclosure. These properties are recorded at the ~~lower of cost or~~ fair value less estimated costs to sell on the date we obtain control.

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

~~Non-performing Assets~~

As of March 31, 2021 As of December 31, 2020
(In thousands)
Non-accrual loans:
Commercial $ 30,275 $ 30,059
Residential 8,127 6,815
Consumer 3,873 4,131
Total non-accrual loans 42,275 41,005
Accruing loans past due 90 days or more:
Commercial 1,390 1,959
Residential 280 279
Consumer 9 9
Total accruing loans past due 90 days or more 1,679 2,247
Total non-performing loans 43,954 43,252
Other real estate owned — —
Other non-performing assets: — —
Total non-performing assets $ 43,954 $ 43,252
Total accruing troubled debt restructured loans $ 39,367 $ 41,095
Total non-performing loans to total loans 0.44 % 0.45 %
Total non-performing assets to total assets 0.26 % 0.27 %

NPLs ~~increased $0.7~~decreased $1.2 million, or ~~1.6%~~3.3%, to ~~$44.0~~$33.8 million at March 31, ~~2021~~2022 from ~~$43.3~~$35.0 million at December 31, ~~2020.~~2021. NPLs as a percentage of total loans decreased to ~~0.44%~~0.28% at March 31, ~~2021~~2022 from ~~0.45%~~0.29% at December 31, ~~2020~~2021 primarily due to a decrease in business banking non-accrual loans, commercial and industrial non-accrual loans, and commercial real estate nonperforming loans. Loans that were past due 90 days or more and still accruing at December 31, 2021 were comprised solely of purchased credit impaired (PCI) loans. PCI loans were not subject to classification as ~~a result~~non-accrual in the same manner as originated loans as their interest income related to the accretable yield recognized and not to contractual interest payments at the loan level. In connection with our adoption of ~~an increase~~ASU 2016-13 on January 1, 2022, all PCI loans are now considered purchased credit deteriorated (PCD) loans. Interest income recognition for PCD loans is consistent with originated loans and, therefore, PCD loans cease accruing interest at 90 days past due unless management believes that the applicable collateral held by the Company is clearly sufficient and in ~~performing~~full satisfaction of both principal and interest. There were no PCD or originated loans ~~driven by PPP loans, slightly offset by an increase in NPLs in our residential portfolio.~~

~~Non-accrual loans increased $1.3 million, or 3.1%, to $42.3 million~~ at March 31, ~~2021 from $41.0 million at December 31, 2020, primarily~~2022 that were past due 90 days or more and still accruing. For additional discussion of non-accrual loans, refer to ~~increases~~the later “Credit Ratios” section in ~~our residential real estate and commercial and industrial portfolios, partially offset by a decline in the consumer portfolio.~~this Item 2.

The total amount of interest recorded on NPLs ~~was $0.1 million for~~during both the three months ended March 31, ~~2021.~~2022 and 2021 was not significant. The gross interest income that would have been recorded under the original terms of those loans if they had been performing amounted to $0.5 million and $0.8 million for the three months ended March 31, ~~2021. The total amount~~2022 and 2021, respectively.

Table of interest recorded on NPLs was $0.1 million for the three months ended March 31, 2020. The gross interest income that would have been recorded under the original terms of those loans if they had been performing amounted to $0.9 million for the three months ended March 31, 2020.Contents

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 ~~any loans~~each loan that ~~are~~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,~~within Note 4, “Loans and Allowance for Credit Losses” within the Notes to the Consolidated Financial Statements included in Part I, Item I in this Quarterly Report on Form 10-Q, loan modifications made in response to the COVID-19 pandemic that met the criteria of either Section 4013 of the CARES Act or the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) ~~and therefore~~ are not deemed TDRs.

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

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

~~TDR loans~~TDR. Loans modified during the three months ended March 31, 2022 and 2021 ~~and 2020~~which were ~~$0.3~~determined to be TDRs were $0.8 million (post modification balance) and ~~$0.7~~$0.3 million, respectively. The overall ~~decrease~~increase in TDR loans modified during the aforementioned periods consisted of ~~a decrease~~an increase of ~~$0.3~~$0.5 million in commercial loan ~~TDRs and a decrease of $0.1 million in consumer loan TDRs. Two~~TDR modifications. No loans ~~totaling $0.5 million~~ were modified during the preceding 12 months, which subsequently defaulted during the three months ended March 31, 2022 or 2021.

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

~~Purchase credit impaired (“PCI”)~~PCD loans are loans that we acquired that have shown evidence of deterioration of credit quality since origination and, therefore, it was deemed unlikely that all contractually required payments would be collected upon the acquisition date. We consider factors such as payment history, collateral values and accrual status when determining whether there was evidence of deterioration at the acquisition date. ~~The carrying value and prospective income recognition of PCI loans are predicated on future cash flows expected to be collected.~~ As of March 31, ~~2021 and~~2022, the carrying amount of PCD loans was $67.6 million. As discussed further below, we adopted ASU 2016-13, which is commonly referred to as CECL, on January 1, 2022. Prior to such adoption, our acquired loans that exhibited evidence of deterioration of credit quality since origination were designated as PCI loans. As of December 31, ~~2020~~2021, the carrying amount of PCI loans was ~~$7.6 million~~$69.6 million.

COVID-19 Modifications. In light of the COVID-19 pandemic, we implemented loan modification programs for our borrowers that allowed for either full payment deferrals (both interest and ~~$9.3 million, respectively.~~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, extended certain expiring tax provisions related to the COVID-19 pandemic in the United States and provided additional emergency relief to individuals and businesses. Included within the provisions of the Appropriations Act is the extension of Section 4013 of the CARES Act to January 1, 2022. As such, we applied CARES Act TDR relief to any qualifying loan modifications executed during the allowable time period.

The following table ~~provides additional details related to our loan portfolio~~presents the balance of loans that received a COVID-19 modification and ~~the distribution of NPLs~~have not yet resumed repayment as of ~~the dates indicated:~~

~~Distribution of Nonperforming Loans~~

As of March 31, 2021
Gross Loans Outstanding (1) 90+ Days Due
Still Accruing Non-accruing
Loans TDR Loans, but Accruing NPLs NPLs as a % of Gross Loans Outstanding
(Dollars in thousands)
Loans:
Commercial $ 7,425,774 $ 1,390 $ 30,275 $ 13,169 $ 31,665 0.43 %
Residential 1,406,510 280 8,127 22,565 8,407 0.60 %
Consumer 1,084,191 9 3,873 3,633 3,882 0.36 %
Total $ 9,916,475 $ 1,679 $ 42,275 $ 39,367 $ 43,954 0.44 %

~~(1) Total loans outstanding includes $1.2 billion of PPP loans.~~

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

~~(1) Total loans outstanding includes $1.0 billion of PPP loans.~~March 31, 2022 and December 31, 2021:

6772

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	Remaining COVID-19 Modifications as of March 31, 2022 (1)				Remaining COVID-19 Modifications as of December 31, 2021 (1)
	Balance		% of Total Portfolio		Balance		% of Total Portfolio
	(Dollars in thousands)
Portfolio
Commercial and industrial	$	—	—	%	$	4,548	0.2	%
Commercial real estate	39,438		0.9	%	93,519		2.1	%
Commercial construction	—		—	%	—		—	%
Business banking	882		0.1	%	649		0.1	%
Residential real estate	6,660		0.3	%	5,870		0.3	%
Consumer home equity	1,521		0.1	%	1,365		0.1	%
Other consumer	532		0.3	%	706		0.3	%
Total	$	49,033	0.4	%	$	106,657	0.9	%

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

As of March 31, 2022 and December 31, 2021, the aggregate amount of loans that received a COVID-19 modification and have become a non-performing loan after the respective deferral period is $4.6 million and $4.7 million, respectively.

COVID-19 Pandemic-Impacted Industries. As of March 31, 2022, we believe loans to our borrowers in office, 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 March 31, 2022, the aggregate outstanding loan balance of loans to our borrowers in office, retail, restaurant, and hotel industry categories was $1.1 billion, $586.6 million, $197.1 million and $170.6 million, respectively, representing 8.9%, 4.8%, 1.6% and 1.4% of total loans, respectively. As of December 31, 2021, the aggregate outstanding loan balance of loans to our borrowers in retail, restaurant, and hotel industry categories was $1.1 billion, $549.0 million, $188.9 million and $189.0 million, respectively, representing 8.8%, 4.5%, 1.5% and 1.5% of total loans, respectively.

As of March 31, 2022, the percentage of loans to our borrowers in the hotel industry category that we modified primarily due to the effects on borrowers of the COVID-19 pandemic and related economic slowdown beginning in late March 2020 and which have not yet resumed repayment was 23.1%. As of December 31, 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 and which had not yet resumed repayment were less than 0.1%, 2.9% and 37.6%, respectively. As of March 31, 2022 there were no loans to our borrowers in office, retail or restaurant industries that had been modified primarily due to the effects on borrowers of the COVID-19 pandemic and related economic slowdown beginning in late March 2020 and which had not yet resumed repayment. As of December 31, 2021, there were no loans to our borrowers in office industries that were modified primarily due to the effects on borrowers of the COVID-19 pandemic and related economic slowdown beginning in late March 2020 and which had not yet resumed repayment.

In the normal course of business, we become aware of possible credit problems in which borrowers exhibit potential for the inability to comply with the contractual terms of their loans, but which currently do not yet meet the criteria for classification as NPLs. In response to the COVID-19 pandemic, we reviewed all of our credit exposures in industries that were expected to experience significant problems due to the pandemic and resulting economic contraction. As part of that review, we downgraded our hotel loans, restaurant loans and other loans that we expected to have associated challenges as a result of the economic impact of the COVID-19 pandemic. These loans ~~were~~are neither delinquent nor on non-accrual status. At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, 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 ~~$551.6~~$382.7 million and ~~$563.3~~$470.9 million, respectively. Of these potential problem loans, $266.6 million and $335.9 million at March 31, 2022 and December 31, 2021, respectively, are loans in COVID-19 impacted industries.

Allowance for ~~loan~~credit losses. ~~Due~~Because we continued to ~~our~~qualify for emerging growth company (“EGC”) status under the ~~JOBS~~Jumpstart Our Business (“JOBS”) Act until December 31, 2021, we ~~still follow~~were permitted to delay adoption of the CECL standard until the earlier of the date at which non-public business entities are required to adopt the standard and the date that we ceased to be an EGC. Included in the Appropriations Act was an extension of the adoption date to the earlier of January 1, 2022 or 60 days after the date on which the COVID-19 national emergency terminates. We elected this extension and, accordingly, adopted

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the CECL standard on January 1, 2022. As of December 31, 2021, we followed the incurred loss allowance GAAP accounting model. For additional information, see “Risk Factors—We may be required to increase our allowance for loan losses as a result of our adoption as of January 1, 2022 of the new accounting standard for determining the amount of the allowance for loan losses” in Part I, Item 1A of our 2020 Form 10-K.

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

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~~possesses unique risk characteristics that are considered when determining the appropriate level of allowance for loan losses, including:

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

•known increases in concentrations within each category;

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

•historical loan loss experience within each category;

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

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

•volume and trends in delinquencies and non-accruals;

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

•corporate goals and objectives;

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

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

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

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

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

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

The allowance for loan losses increased by $26.4 million, or 27.0%, to $124.2 million, or 1.02% of total loans, at March 31, 2022 from $97.8 million, or 0.80% of total loans at December 31, 2021. The increase in the allowance for loan losses was primarily a result of our adoption of CECL, as previously described above. The additional reserves required as a result of our adoption of CECL were primarily attributable to the loans we acquired in connection with our acquisition of Century which were recorded at fair value at the time of acquisition. Under ASU 2016-13, the credit mark that is a component of the day-one fair value adjustment on acquired loans cannot be considered in the allowance computation, whereas under the incurred loss

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~~The specific component consists~~model, the credit mark could be considered for reserve determination purposes. In connection with our adoption of ~~reserves for impaired loans (defined as those where~~this standard, 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, tailoredrecorded an increase to the ~~specific~~allowance for loan ~~category.~~losses of $27.1 million.

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

~~The allowance~~ For discussion of our previous methodology for ~~loan losses decreased by $1.9 million, or 1.7%, to $111.1 million, or 1.12% of total loans, at March 31, 2021 from $113.0 million, or 1.16% of total loans at December 31, 2020. The decrease in~~estimating the allowance for loan losses, ~~was primarily a result~~refer to Note 5, “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 and Note 2, “Summary of ~~improved macroeconomic conditions and risk rating upgrades~~Significant Accounting Policies” included in ~~the commercial portfolios. The current environment is being assisted by government stimulus and the impacts~~Part II, Item 8 of the ~~loan deferral programs. This, along with other factors, resulted in a release in the allowance for loan loss of $0.6 million~~2021 Form 10-K.

The following table summarizes credit ratios for the ~~three months ended March 31, 2021.~~periods presented:

Credit Ratios


	Three Months Ended March 31,
	2022			2021
	(Dollars in thousands)
Net loan charge-offs (recoveries):
Commercial and industrial	$	(249)		$	(9)
Commercial real estate	(14)			234
Commercial construction	—			—
Business banking	17			1,019
Residential real estate	(10)			(10)
Consumer home equity	(4)			(71)
Other consumer	482			208
Total net loan charge-offs	222			1,371
Average loans:
Commercial and industrial	2,963,414			2,029,252
Commercial real estate	4,735,257			3,761,767
Commercial construction	169,608			206,315
Business banking	1,104,815			1,320,617
Residential real estate	1,936,629			1,391,935
Consumer home equity	1,088,487			843,120
Other consumer	205,002			262,578
Average total loans (1)	$	12,203,212		$	9,815,584
Net charge-offs (recoveries) to average loans outstanding during the period:
Commercial and industrial	(0.01)		%	0.00		%
Commercial real estate	—			0.01
Commercial construction	—			—
Business banking	—			0.08
Residential real estate	—			—
Consumer home equity	—			(0.01)
Other consumer	0.24			0.08
Total net charge-offs (recoveries) to average loans outstanding during the period:	0.00		%	0.01		%
Total loans	$	12,157,769		$	9,883,802
Total non-accrual loans	33,821			42,275
Allowance for loan losses	124,166			109,138
Allowance for loan losses as a percent of total loans	1.02		%	1.10		%
Non-accrual loans as a percent of total loans	0.28		%	0.43		%
Allowance for loan losses as a percent of non-accrual loans	367.13		%	258.16		%

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~~The following table summarizes changes~~(1)Average loan balances exclude loans held for sale.

Non-accrual loans decreased $8.5 million, or 20.0%, to $33.8 million at March 31, 2022 from $42.3 million at March 31, 2021, primarily due to a decrease in ~~the allowance for loan losses~~non-accrual loans in our business banking portfolio which was partially offset by an increase in non-accrual loans in our consumer home equity portfolio. Non-accrual business banking loans decreased $10.1 million, or 59.2%, to $6.9 million at March 31, 2022 from $17.0 million at March 31, 2021 primarily due to payoffs and ~~other selected statistics for the periods presented:~~

~~Summary~~curing of ~~Changes~~delinquency of such loans. Non-accrual consumer home equity loans increased $3.6 million, or 102.6%, to $7.1 million at March 31, 2022 from $3.5 million at March 31, 2021 primarily due to several loans moving to non-accrual status which had been acquired in ~~the Allowance for Loan Losses~~

For the Three Months Ended March 31,
2021 2020
(Dollars in thousands)
Average total loans $ 9,816,788 $ 9,016,223
Allowance for loan losses, beginning of the period $ 113,031 $ 82,297
Charged-off loans:
Commercial and industrial — —
Commercial real estate 234 —
Commercial construction — —
Business banking 1,384 1,337
Residential real estate — —
Consumer home equity — 473
Other consumer 364 533
Total charged-off loans 1,982 2,343
Recoveries on loans previously charged-off:
Commercial and industrial 9 322
Commercial real estate — 1
Commercial construction — —
Business banking 365 127
Residential real estate 10 60
Consumer home equity 71 14
Other consumer 156 60
Total recoveries 611 584
Net loans charged-off (recoveries):
Commercial and industrial (9) (322)
Commercial real estate 234 (1)
Commercial construction — —
Business banking 1,019 1,210
Residential real estate (10) (60)
Consumer home equity (71) 459
Other consumer 208 473
Total net loans charged-off 1,371 1,759
(Release of) provision for loan losses (580) 28,600
Total allowance for loan losses, end of period $ 111,080 $ 109,138
Net charge-offs to average total loans outstanding during this period 0.01 % 0.02 %
Allowance for loan losses as a percent of total loans 1.12 % 1.20 %
Allowance for loan losses as a percent of nonperforming loans 252.72 % 222.34 %

~~Table~~connection with our acquisition of ~~Contents~~

Century.

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

Summary of Allocation of Allowance for Loan Losses

As of March 31, 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)
$ 25,406 22.87 % 20.03 % $ 26,617 23.54 % 20.51 %
Commercial real estate 55,138 49.64 % 37.08 % 54,569 48.28 % 36.73 %
Commercial construction 3,350 3.02 % 2.52 % 4,553 4.03 % 3.14 %
Business banking (1)
13,504 12.16 % 15.26 % 13,152 11.64 % 13.76 %
Residential real estate 6,235 5.61 % 14.18 % 6,435 5.69 % 14.09 %
Consumer home equity 3,576 3.22 % 8.39 % 3,744 3.31 % 8.92 %
Other consumer 3,498 3.15 % 2.54 % 3,467 3.07 % 2.85 %
Other 373 0.33 % — % 494 0.44 % — %
Total $ 111,080 100.00 % 100.00 % $ 113,031 100.00 % 100.00 %


	As of March 31, 2022						As of December 31, 2021
	Allowance for Loan Losses		Percent of Allowance in Category to Total Allocated Allowance		Percent of Loans in Category to Total Loans		Allowance for Loan Losses		Percent of Allowance in Category to Total Allocated Allowance		Percent of Loans in Category to Total Loans
	(Dollars in thousands)
Commercial and industrial (1)	$	26,841	21.62	%	23.57	%	$	18,018	18.43	%	24.10	%
Commercial real estate	44,612		35.93	%	37.90	%	52,373		53.56	%	36.82	%
Commercial construction	4,414		3.55	%	2.02	%	2,585		2.64	%	1.81	%
Business banking (1)	17,269		13.91	%	9.90	%	10,983		11.23	%	10.87	%
Residential real estate	22,243		17.91	%	16.00	%	6,556		6.70	%	15.69	%
Consumer home equity	6,018		4.85	%	9.06	%	3,722		3.81	%	8.96	%
Other consumer	2,769		2.23	%	1.55	%	3,308		3.38	%	1.75	%
Other	—		—	%	—	%	242		0.25	%	—	%
Total	$	124,166	100.00	%	100.00	%	$	97,787	100.00	%	100.00	%

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

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

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

For additional information regarding our allowance for loan losses, see Note 4, “Loans and Allowance for ~~Loan~~Credit Losses” within the Notes to the 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.

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We held an investment in the FHLBB of ~~$8.8~~$10.9 million at both March 31, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021.

Goodwill and other intangible assets

Goodwill and other intangible assets were ~~$376.0~~$654.8 million and ~~$376.5~~$649.7 million at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The ~~decrease~~increase in goodwill and other intangibles assets was due to the ~~amortization~~purchase of ~~definite-lived intangibles~~one insurance agency during the three months ended March 31, ~~2021.~~2022. We did not record any impairment to our goodwill or other intangible assets during the three months ended March 31, ~~2021.~~2022. We ~~will continue to~~regularly assess our goodwill and other intangible assets to determine if impairments are ~~necessary as it relates to the COVID-19 pandemic.~~

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necessary.

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


						Change					As of March 31, 2022		As of December 31, 2021		Change
		As of March 31, 2021		As of December 31, 2020		Amount ($)		Percentage (%)							Amount ($)		Percentage (%)
		(Dollars in thousands)									(Dollars in thousands)
Demand	Demand	$	5,369,164	$	4,910,794	$	458,370	9.3	%	Demand	$	6,788,742	$	7,020,864	$	(232,122)	(3.3)	%
Interest checking	Interest checking	2,482,731		2,380,497		102,234		4.3	%	Interest checking	4,662,134		4,478,566		183,568		4.1	%
Savings	Savings	1,362,463		1,256,736		105,727		8.4	%	Savings	2,089,427		2,077,495		11,932		0.6	%
Money market investments	Money market investments	3,522,990		3,348,898		174,092		5.2	%	Money market investments	5,406,198��		5,525,005		(118,807)		(2.2)	%
Certificate of deposits	Certificate of deposits	243,527		258,859		(15,332)		(5.9)	%	Certificate of deposits	446,315		526,381		(80,066)		(15.2)	%
Total deposits	Total deposits	$	12,980,875	$	12,155,784	$	825,091	6.8	%	Total deposits	$	19,392,816	$	19,628,311	$	(235,495)	(1.2)	%

~~Deposits increased by $825.1 million, or 6.8%, to $13.0~~(1)The Bank’s estimate of total uninsured deposits was $10.6 billion and $11.0 billion at March 31, 2022 and December 31, 2021, respectively.

Deposits decreased by $0.2 billion, or 1.2%, to $19.4 billion at March 31, 2022 from ~~$12.2~~$19.6 billion at December 31, ~~2020.~~2021. This ~~increase~~decrease was primarily the result of ~~an increase~~a decrease in demand deposits of ~~$458.4~~$232.1 million, ~~an increase~~a decrease in money market deposits of ~~$174.1~~$118.8 million ~~an increase~~and a decrease in ~~savings~~certificate of deposits of ~~$105.7 million, and a~~$80.1 million. These decreases were partially offset by an increase in interest checking deposits of ~~$102.2 million.~~$183.6 million and reflected normal deposit activity during the three months ended March 31, 2022.

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

Classification of Deposits on an Average Basis

For the Three Months Ended March 31, 2021 For the Year Ended December 31, 2020
Average
Amount Average
Rate Average
Amount Average
Rate
(Dollars in thousands)
Demand $ 5,125,831 — % $ 4,535,066 — %
Interest checking 2,391,025 0.04 % 2,227,185 0.09 %
Savings 1,300,057 0.02 % 1,123,584 0.02 %
Money market investments 3,440,214 0.07 % 3,212,752 0.23 %
Certificate of deposits 251,115 0.19 % 300,381 0.52 %
Total deposits $ 12,508,242 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:~~

~~Maturities of Time Certificates of Deposits $100,000 and over~~

As of March 31, 2021 As of December 31, 2020
Maturing in (In thousands)
Three months or less $ 42,818 $ 49,740
Over three months through six months 27,954 24,608
Over six months through 12 months 23,659 31,009
Over 12 months 9,989 9,956
Total $ 104,420 $ 115,313


	For the Three Months Ended March 31, 2022				For the Year Ended December 31, 2021
	Average Amount		Average Rate		Average Amount		Average Rate
	(Dollars in thousands)
Demand	$	6,821,811	—	%	$	5,547,615	—	%
Interest checking	4,596,026		0.18	%	2,866,091		0.07	%
Savings	2,076,754		0.01	%	1,483,271		0.02	%
Money market investments	5,568,264		0.07	%	3,870,712		0.06	%
Certificate of deposits	481,833		0.27	%	280,141		0.21	%
Total deposits	$	19,544,688	0.07	%	$	14,047,830	0.04	%

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

Maturities of Time Certificates of Deposit $250,000 and Over


	As of March 31, 2022		As of December 31, 2021
Maturing in	(In thousands)
Three months or less	$	61,465	$	113,019
Over three months through six months	51,411		53,899
Over six months through 12 months	28,945		33,295
Over 12 months	23,368		23,827
Total	$	165,189	$	224,040

Borrowings

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

Our total borrowings increased by ~~$1.3~~$0.6 million, or ~~4.6%~~1.9%, to ~~$29.4~~$34.9 million at March 31, ~~2021~~2022 compared to ~~$28.0~~$34.3 million at December 31, ~~2020.~~2021. The increase was primarily due to an increase in escrow deposits of our borrowers.

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

Borrowings by Category


						Change									Change
		As of March 31, 2021		As of December 31, 2020		Amount ($)		Percentage (%)			As of March 31, 2022		As of December 31, 2021		Amount ($)		Percentage (%)
		(Dollars in thousands)									(In thousands)
Federal Home Loan Bank advances		$	14,473	$	14,624	$	(151)	(1.0)	%
FHLB advances										FHLB advances	$	13,689	$	14,020	$	(331)	(2.4)	%
Escrow deposits of borrowers	Escrow deposits of borrowers	14,878		13,425		1,453		10.8	%	Escrow deposits of borrowers	21,233		20,258		975		4.8	%
Total	Total	$	29,351	$	28,049	$	1,302	4.6	%	Total	$	34,922	$	34,278	$	644	1.9	%

Results of Operations

Summary of Results of Operations


										Three Months Ended March 31,
		For the Three Months Ended March 31,				Change								Change
		2021		2020		Amount ($)	Percentage (%)			2022		2021		Amount ($)		Percentage
		(Dollars in thousands)								(Dollars in thousands)
Interest and dividend income	Interest and dividend income	$	101,133	$	106,159	(5,026)	(4.7)	%	Interest and dividend income	$	131,485	$	101,133	$	30,352	30.0	%
Interest expense	Interest expense	1,042		6,013		(4,971)	(82.7)	%	Interest expense	3,361		1,042		2,319		222.6	%
Net interest income	Net interest income	100,091		100,146		(55)	(0.1)	%	Net interest income	128,124		100,091		28,033		28.0	%
(Release of) provision for loan losses		(580)		28,600		(29,180)	(102.0)	%
Release of allowance for loan losses									Release of allowance for loan losses	(485)		(580)		95		(16.4)	%
Noninterest income	Noninterest income	55,212		33,369		21,843	65.5	%	Noninterest income	46,415		55,212		(8,797)		(15.9)	%
Noninterest expense	Noninterest expense	94,049		95,172		(1,123)	(1.2)	%	Noninterest expense	108,866		94,049		14,817		15.8	%
Income tax expense	Income tax expense	14,171		1,298		12,873	991.8	%	Income tax expense	14,642		14,171		471		3.3	%
Net income	Net income	47,663		8,445		39,218	464.4	%	Net income	51,516		47,663		3,853		8.1	%

Comparison of the three months ended March 31, ~~2021~~2022 and ~~2020~~2021

Interest and Dividend Income

Interest and dividend income decreased by $5.0 million, or 4.7%, to $101.1 million during the three months ended March 31, 2021 from $106.2 million during the three months ended March 31, 2020. The decrease was a result of the negative impact of a lower interest rate environment.

•Interest income on loans decreased by $6.9 million, or 7.2%, to $88.6 million during the three months ended March 31, 2021 from $95.5 million during the three months ended March 31, 2020. The decrease in interest income on our loans was primarily due to the decrease in the 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 average balance of loans increased primarily due to PPP loan originations, partially offsetting the decline in interest rates. The FTE yield on average loans decrease 61 basis points to 3.7% during the three months ended March 31, 2021. The average balance of our loans increased by $800.6 million, or 8.9%, to $9.8 billion as of March 31, 2021 compared to $9.0 billion as of March 31, 2020.

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•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 three months ended March 31, 2021 we recognized $8.3Interest and dividend income increased by $30.4 million, ~~in net PPP loan fee accretion. We did not begin originating PPP loans until the second quarter of 2020, therefore, we did not recognize any net PPP loan fee accretion~~or 30.0%, to $131.5 million during the three months ended March 31, ~~2020.~~

•~~Interest income on securities increased $1.9~~2022 from $101.1 million or 17.6% to $12.5 million for the three months ended March 31, 2021 compared to $10.6 million for the three months ended March 31, 2020. The increase in interest income on securities was due to security purchases between March 31, 2020 and March 31, 2021, partially offset by lower overall market rates. The FTE yield on average securities and other interest-earning assets decreased 160 basis points to 0.98% during the three months ended March 31, 2021. The increase was primarily a result of our acquisition of Century on November 12, 2021, which added approximately $6.6 billion in interest-earning assets. Overall, the average balance of ~~securities and other-interest earning~~our interest-earning assets increased ~~by $3.6~~$6.7 billion, or ~~208.6%~~43.9%, to ~~$5.4~~$21.9 billion as of March 31, 2022 compared to $15.2 billion as of March 31, 2021, reflecting the addition of Century assets. Partially offsetting this increase was a decrease in the yield on average interest-earning assets which decreased by 25 basis points compared ~~to $1.7 billion as of~~with the three months ended March 31, ~~2020.~~

~~The overall decrease in interest and dividend income was primarily a result of lower yields on both our loans and securities, partially offset by an increase in investment security volume.~~2021. Our yields on loans and securities are generally presented on an FTE basis where the embedded tax benefit on loans or securities are calculated and added to the yield. ~~This~~Management believes that this presentation allows for better comparability between institutions with different tax structures. ~~The yield~~

•Interest income on ~~average interest-earning assets decreased 129 basis points~~securities and federal funds sold and other short-term investments increased $17.6 million, or 141.1%, to ~~2.73%~~$30.1 million during the three months ended March 31, ~~2021 compared to~~2022 from $12.5 million during the three months ended March 31, ~~2020. Our~~2021. The increase in interest income on our securities was primarily due to an increase in the average ~~interest-earning assets increased by $4.4~~balance of such securities of $4.3 billion, or ~~41.2%~~79.6%, to ~~$15.2~~$9.7 billion ~~as of~~for the three months ended March 31, 2022 from $5.4 billion for the three months ended March 31, 2021, ~~compared~~which was primarily due to ~~$10.8~~securities acquired in connection with our acquisition of Century of $3.1 billion ~~as of~~combined with security purchases.

•Interest income on loans increased $12.7 million, or 14.4%, to $101.4 million during the three months ended March 31, ~~2020.~~2022 from $88.6 million during the three months ended March 31, 2021. The increase in interest income on our loans was primarily due to a $2.4 billion, or 24%, increase in average totals loans. Average loans increased to $12.2 billion during the three months ended March 31, 2022 from $9.8 billion during the three months ended March 31, 2021. The increase in interest income on our loans was partially offset by a decrease in net accretion of PPP loan deferred fees and costs of $2.5 million, or 30.1%, to $5.8 million during the three months ended March 31, 2022 from $8.3 million during three months ended March 31, 2021.

Interest Expense

Interest expense ~~decreased $5.0~~increased $2.3 million, or ~~82.7%~~222.6%, to $3.4 million during the three months ended March 31, 2022 from $1.0 million during the three months ended March 31, ~~2021 from $6.0~~2021. The increase was attributable to an increase in deposit interest expense.

Interest expense on our interest-bearing deposits increased by $2.3 million, or 231.5%, to $3.3 million during the three months ended March 31, ~~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 $4.4 million, or 81.5%, to~~2022 from $1.0 million during the three months ended March 31, 2021. This increase was primarily due to an increase in average interest-bearing deposits which increased $5.3 billion, or 72.3%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily due to the Century acquisition. An increase in rates paid on deposits also contributed to the overall increase in deposit interest expense. Rates paid on deposits increased by 5 basis points to 0.11% during the three months ended March 31, 2022 from ~~$5.4~~0.06% during the three months ended March 31, 2021.

Net Interest Income

Net interest income increased by $28.0 million, or 28.0%, to $128.1 million during the three months ended March 31, ~~2020.~~

•~~Interest expense on borrowed funds decreased by $0.6 million, or 93.3%, to less than $0.1~~2022 from $100.1 million during the three months ended March 31, ~~2021 from $0.6 million~~2021. Net interest income increased primarily due to an increase in net interest-earning assets of $1.3 billion, or 17.0%, to $9.1 billion during the three months ended March 31, ~~2020.~~

~~Average interest-bearing deposits increased $1.2~~2022 from $7.8 billion ~~or 19.3%, at March 31, 2021 compared to March 31, 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 three months ended March 31, ~~2021 compared to~~2021.

The following chart shows our net interest margin over the ~~three months ended March 31, 2020.~~past five quarters including and excluding net PPP loan fee accretion:

~~Net Interest Income~~

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Net interest income was $100.1 million for both the three months ended March 31, 2021 and the three months ended March 31, 2020. Net interest income remained stable between the two periods as the reduction in interest income resulting from the lower interest rate environment was offset by a corresponding reduction in interest expense coupled with a substantial increase in average balances of interest-earning assets during the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

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 ~~21.2%~~21.5% for the three months ended March 31, ~~2021~~2022 and ~~2020.~~21.0% for the three months ended March 31, 2021. Net interest margin, including PPP loan interest income, decreased ~~109~~29 basis points to 2.42% during the three months ended March 31, 2022, from 2.71% during the three months ended March 31, 2021, ~~from 3.80% during~~which was primarily due to the ~~three months ended~~downward repricing of our commercial loans and investment securities since March 31, ~~2020.~~2021. Refer to the above “Interest and Dividend Income” and “Interest Expense” sections for a description of the primary causes of the decline in net interest margin.

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

Average Balances, Interest Earned/Paid, & Average Yields


		As of and for the Three Months Ended March 31,															As of and for the three months ended March 31,
		2021							2020								2022							2021
		Average Outstanding Balance			Interest		Average Yield/Cost (5)		Average Outstanding Balance			Interest		Average Yield /Cost (5)			Average Outstanding Balance			Interest		Average Yield/Cost (5)		Average Outstanding Balance			Interest		Average Yield /Cost (5)
		(Dollars in thousands)															(Dollars in thousands)
Interest-earning assets:	Interest-earning assets:															Interest-earning assets:
Loans (1)	Loans (1)															Loans (1)
Residential	Residential	$	1,393,139		$	11,274	3.28	%	$	1,429,994		$	13,303	3.74	%	Residential	$	1,937,494		$	14,471	3.03	%	$	1,393,139		$	11,274	3.28	%
Commercial	Commercial	7,317,951			69,210		3.84	%	6,275,057			69,615		4.46	%	Commercial	8,973,094			78,226		3.54	%	7,317,951			69,210		3.84	%
Consumer	Consumer	1,105,698			8,937		3.28	%	1,311,172			13,407		4.11	%	Consumer	1,293,489			10,450		3.28	%	1,105,698			8,937		3.28	%
Total loans	Total loans	9,816,788			89,421		3.69	%	9,016,223			96,325		4.30	%	Total loans	12,204,077			103,147		3.43	%	9,816,788			89,421		3.69	%
Investment securities		3,631,530			12,577		1.40	%	1,500,413			10,685		2.86	%
Non-taxable investment securities																Non-taxable investment securities	259,908			2,287		3.57	%	260,870			2,371		3.69	%
Taxable investment securities																Taxable investment securities	8,387,292			27,876		1.35	%	3,370,660			10,206		1.23	%
Federal funds sold and other short-term investments	Federal funds sold and other short-term investments	1,740,561			432		0.10	%	240,440			517		0.86	%	Federal funds sold and other short-term investments	1,003,416			436		0.18	%	1,740,561			432		0.10	%
Total interest-earning assets	Total interest-earning assets	15,188,879			102,430		2.73	%	10,757,076			107,527		4.02	%	Total interest-earning assets	21,854,693			133,746		2.48	%	15,188,879			102,430		2.73	%
Non-interest-earning assets	Non-interest-earning assets	1,120,603							1,022,216							Non-interest-earning assets	1,436,702							1,120,603
Total assets	Total assets	$	16,309,482						$	11,779,292						Total assets	$	23,291,395						$	16,309,482
Interest-bearing liabilities:	Interest-bearing liabilities:															Interest-bearing liabilities:
Deposits:	Deposits:															Deposits:
Savings accounts		$	1,300,057		$	64	0.02	%	$	976,881		$	54	0.02	%
Interest checking accounts		2,391,025			234		0.04	%	1,902,128			819		0.17	%
Money market		3,440,214			587		0.07	%	2,981,427			3,904		0.53	%
Time deposits		251,115			117		0.19	%	327,144			638		0.78	%
Savings account																Savings account	$	2,076,754		$	51	0.01	%	$	1,300,057		$	64	0.02	%
Interest checking account																Interest checking account	4,596,026			2,032		0.18	%	2,391,025			234		0.04	%
Money market investment																Money market investment	5,568,264			920		0.07	%	3,440,214			587		0.07	%
Time account																Time account	481,833			319		0.27	%	251,115			117		0.19	%
Total interest-bearing deposits	Total interest-bearing deposits	7,382,411			1,002		0.06	%	6,187,580			5,415		0.35	%	Total interest-bearing deposits	12,722,877			3,322		0.11	%	7,382,411			1,002		0.06	%
Borrowings	Borrowings	25,625			40		0.63	%	163,463			599		1.47	%	Borrowings	30,669			39		0.52	%	25,625			40		0.63	%
Total interest-bearing liabilities	Total interest-bearing liabilities	7,408,036			1,042		0.06	%	6,351,043			6,014		0.38	%	Total interest-bearing liabilities	12,753,546			3,361		0.11	%	7,408,036			1,042		0.06	%
Demand accounts	Demand accounts	5,125,831							3,477,377							Demand accounts	6,821,811							5,125,831
Other noninterest-bearing liabilities	Other noninterest-bearing liabilities	358,087							318,656							Other noninterest-bearing liabilities	442,591							358,087
Total liabilities	Total liabilities	12,891,954							10,147,076							Total liabilities	20,017,948							12,891,954
Total net worth		3,417,528							1,632,216
Total liabilities and retained earnings		$	16,309,482						$	11,779,292
Shareholders’ equity																Shareholders’ equity	3,273,447							3,417,528
Total liabilities and shareholders’ equity																Total liabilities and shareholders’ equity	$	23,291,395						$	16,309,482
Net interest income – FTE	Net interest income – FTE				$	101,388						$	101,513			Net interest income – FTE				$	130,385						$	101,388
Net interest rate spread (2)	Net interest rate spread (2)						2.67	%						3.64	%	Net interest rate spread (2)						2.37	%						2.67	%
Net interest-earning assets (3)	Net interest-earning assets (3)	$	7,780,843						$	4,406,033						Net interest-earning assets (3)	$	9,101,147						$	7,780,843
Net interest margin – FTE (4)	Net interest margin – FTE (4)						2.71	%						3.80	%	Net interest margin – FTE (4)						2.42	%						2.71	%
Average interest-earning assets to interest-bearing liabilities	Average interest-earning assets to interest-bearing liabilities	205.03		%					169.37		%					Average interest-earning assets to interest-bearing liabilities	171.36		%					205.03		%
Return on average assets (5)																Return on average assets (5)	0.90		%					1.19		%
Return on average equity (6)																Return on average equity (6)	6.38		%					5.66		%
Noninterest expenses to average assets																Noninterest expenses to average assets	1.90		%					2.34		%

(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.~~

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

(6)Represents net income divided by average equity.

The following chart shows the composition of our interest-earning assets as of the end of the past five quarters:

Provision for Loan Losses

The provision for loan losses represents the charge to expense that is required to maintain an appropriate level of allowance for loan losses. ~~We currently follow the incurred loss model for determining the provision for loan losses and anticipate adopting what is commonly referred to as the “CECL model” on January 1, 2022.~~

We recorded a release of ~~provision~~the allowance for loan losses of $0.5 million for the three months ended March 31, 2022, compared to a release of provision of $0.6 million for the three months ended March 31, ~~2021, compared to a provision of $28.6 million for the three months ended March 31, 2020.~~2021. Given ~~improved~~relatively consistent economic and credit conditions during the three months ended March 31, 2022 compared with three months ended March 31, 2021, we determined that a slight release of the ~~provision~~allowance was necessary. In March 2020, in response to the COVID-19 pandemic, we downgraded the risk ratings for all commercial loans we expected to be significantly impacted by the pandemic, including our hotel and restaurant loan portfolios. Along with other activity during the three months ended March 31, 2020, these adjustments resulted in the provision for loan losses of $28.6 million.

Our periodic evaluation of the appropriate allowance for loan losses considers, among other criteria, the risk characteristics of the loan portfolio, current and expected future 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

For the Three Months Ended March 31, Change
2021 2020 Amount ($) Percentage (%)
(Dollars in thousands)
Insurance commissions $ 28,147 $ 27,477 $ 670 2.4 %
Service charges on deposit accounts 5,367 6,098 (731) (12.0) %
Trust and investment advisory fees 5,663 5,095 568 11.1 %
Debit card processing fees 2,749 2,470 279 11.3 %
Interest swap income (losses) 5,405 (6,009) 11,414 (189.9) %
Income (losses) from investments held in rabbi trusts 1,846 (6,743) 8,589 (127.4) %
Losses on trading securities, net — (2) 2 (100.0) %
Gains on sales of mortgage loans held for sale, net 1,479 93 1,386 1,490.3 %
Gains on sales of securities available for sale, net 1,164 122 1,042 854.1 %
Other 3,392 4,768 (1,376) (28.9) %
Total noninterest income $ 55,212 $ 33,369 $ 21,843 65.5 %

Noninterest income increased by $21.8 million, or 65.5%, to $55.2 million for the three months ended March 31, 2021 from $33.4 million for the three months ended March 31, 2020. This increase was primarily due to an $11.4 million increase in interest rate swap income, an $8.6 million increase in income from investments held in rabbi trusts, a $1.4 million increase in net gains on sales of mortgage loans held for sale, and a $1.0 million increase in net gains on sales of securities available for sale. These items were partially offset by a decrease in other noninterest income of $1.4 million and a decrease in service charges on deposit accounts of $0.7 million.

•Loan-level interest rate swap income increased primarily as a result of a favorable mark-to-market adjustment on these transactions due to higher longer term interest rates. We recognized an unfavorable mark-to-market adjustment for the three months ended March 31, 2020 primarily as a result of the decline in longer term interest rates resulting from the initial economic impacts of the COVID-19 pandemic.

•Income from investments held in rabbi trust accounts increased primarily as a result of a favorable mark-to-market adjustment on equity securities held in these accounts. We recognized an unfavorable mark-to-market adjustment for the three months ended March 31, 2020 primarily as a result of the decline in asset values resulting from the initial economic impacts of the COVID-19 pandemic.

•Net gains on sales of mortgage loans held for sale increased primarily due to the low interest rate environment which resulted in increased volume for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. This increase was partially offset by a decrease in the mark-to-market adjustment on mortgage loan-related derivatives, which is included within other noninterest income.

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•~~Net gains on securities available~~


	Three Months Ended March 31,
					Change
	2022		2021		Amount		%
	(Dollars in thousands)
Insurance commissions	$	28,713	$	28,147	$	566	2.0	%
Service charges on deposit accounts	8,537		5,367		3,170		59.1	%
Trust and investment advisory fees	6,141		5,663		478		8.4	%
Debit card processing fees	2,945		2,749		196		7.1	%
Interest swap income	2,932		5,405		(2,473)		(45.8)	%
(Losses) income from investments held in rabbi trusts	(4,433)		1,846		(6,279)		(340.1)	%
Gains on sales of mortgage loans held for sale, net	169		1,479		(1,310)		(88.6)	%
(Losses) gains on sales of securities available for sale, net	(2,172)		1,164		(3,336)		(286.6)	%
Other	3,583		3,392		191		5.6	%
Total noninterest income	$	46,415	$	55,212	$	(8,797)	(15.9)	%

Noninterest income decreased by $8.8 million, or 15.9%, to $46.4 million for ~~sale increased primarily due to volume and the composition of security sales. During~~ the three months ended March 31, ~~2021 we sold certain government-sponsored residential mortgage backed securities. During~~2022 from $55.2 million for the three months ended March 31, ~~2020 we sold some municipal bonds.~~2021. This decrease was primarily due to a $6.3 million decrease in income from investments held in rabbi trusts which resulted from a current period net loss, a $3.3 million decrease in gain on sales of securities available for sale which resulted from a current period net loss on sale, and a $2.5 million decrease in interest swap income. The decreases in these line items were partially offset by a $3.2 million increase in service charges on deposit accounts.

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

•Gains on sales of securities available for sale, net, decreased to a net loss due to ~~reduced transactional volume~~the decision by management to sell certain available for sale securities during the three months ended March 31, ~~2021~~2022, the majority of which were acquired in connection with our acquisition of Century and were in a net unrealized loss position at the time of sale.

•Interest rate swap income decreased primarily as a result of a less favorable mark-to-market adjustment during the three months ended March 31, 2022 compared to the three months ended March 31, ~~2020.~~2021.

•Service charges on deposit accounts increased primarily as a result of increased corporate account analysis charges as a result of greater commercial deposit customer activity and increased overdraft fees as a result of greater customer deposit activity. The increased customer deposit activity is primarily attributable to our acquisition of Century.

Noninterest Expense

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

~~Noninterest Expense~~

For the Three Months Ended March 31, Change
2021 2020 Amount ($) Percentage (%)
(Dollars in thousands)
Salaries and employee benefits $ 64,040 $ 61,589 $ 2,451 4.0 %
Office occupancy and equipment 8,217 8,689 (472) (5.4) %
Data processing 12,129 10,004 2,125 21.2 %
Professional services 4,148 3,689 459 12.4 %
Charitable contributions — 1,187 (1,187) (100.0) %
Marketing 1,691 2,468 (777) (31.5) %
Loan expenses 1,847 1,112 735 66.1 %
FDIC insurance 948 906 42 4.6 %
Amortization of intangible assets 532 702 (170) (24.2) %
Other 497 4,826 (4,329) (89.7) %
Total noninterest expense $ 94,049 $ 95,172 $ (1,123) (1.2) %

Noninterest expense decreased by $1.1 million, or 1.2%, to $94.0 million during the three months ended March 31, 2021 from $95.2 million during the three months ended March 31, 2020. This decrease was primarily due to a $4.3 million decrease in other noninterest expenses as well as a reduction in charitable contributions of $1.2 million. Partially offsetting these favorable items were increases in salaries and employee benefits and data processing expenses of $2.5 million and $2.1 million, respectively.

•Other noninterest expenses decreased primarily due to the 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 benefit equalization plan decreased by $3.2 million and $0.6 million, respectively, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

•Salaries and employee benefits increased due to an increase in rabbi trust employee benefits of $4.5 million primarily as a result of the favorable equity securities valuations, ESOP expense of $2.1 million, an increase in salaries and wages of $2.1 million, and an increase in pension service cost of $2.0 million. Partially offsetting these unfavorable items were a $5.0 million decrease in incentive compensation expense that was, in part, due to the decline in total shareholders’ equity due to higher market interest rates, and an increase in salary expense deferrals of $4.1 million primarily due to PPP loan originations. We established the ESOP in October 2020 when we completed our IPO. Accordingly, we did not have any ESOP expense during the three months ended March 31, 2020.

•Data processing expenses increased due to an increase in software service and support expenses (including depreciation expense) of $1.5 million and an increase in core data processing expenses of $0.7 million. Core data processing expenses increased primarily as a result of increased costs due to PPP loan originations.

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Noninterest Expense


	Three Months Ended March 31,
					Change
	2022		2021		Amount		%
	(Dollars in thousands)
Salaries and employee benefits	$	69,526	$	64,040	$	5,486	8.6	%
Office occupancy and equipment	11,614		8,217		3,397		41.3	%
Data processing	15,320		12,129		3,191		26.3	%
Professional services	4,701		4,148		553		13.3	%
Marketing	1,574		1,691		(117)		(6.9)	%
Loan expenses	1,168		1,847		(679)		(36.8)	%
FDIC insurance	1,412		948		464		48.9	%
Amortization of intangible assets	827		532		295		55.5	%
Other	2,724		497		2,227		448.1	%
Total noninterest expense	$	108,866	$	94,049	$	14,817	15.8	%

Noninterest expense increased by $14.8 million, or 15.8%, to $108.9 million during the three months ended March 31, 2022 from $94.0 million during the three months ended March 31, 2021. This increase was primarily due to an $5.5 million increase in salaries and employee benefits, a $3.4 million increase in office occupancy and equipment expenses, a $3.2 million increase in data processing, and a $2.2 million increase in other noninterest expenses.

•Salaries and employee benefits increased primarily due to salaries and wages for former employees of Century who were retained subsequent to the acquisition. In addition, we incurred $1.6 million in share-based compensation expense related to restricted stock awards granted in the fourth quarter of 2021 and awards of restricted stock units and performance stock units granted in the first quarter of 2022. No related expenses were incurred during the three months ended March 31, 2021 as no such awards had been granted.

•Office occupancy and equipment increased during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 primarily due to a $0.8 million increase in depreciation expense, which was related to fixed assets acquired from Century, lease impairment charges of $0.6 million, which were due to an early termination of a lease acquired from Century, and a $0.6 million increase in outsourced facilities maintenance expenses, which was primarily due to janitorial services at properties acquired from Century.

•Data processing expenses are primarily comprised of costs associated with the processing of customer transactions including loans and deposits and are partially impacted by fluctuations in related transaction volume. Such expenses increased during the three months ended March 31, 2022 from the three months ended March 31, 2021 primarily due to our acquisition of Century in the fourth quarter of 2022 which resulted in the acquisition of additional loan and deposit customers.

•Other noninterest expenses increased primarily due to a $1.1 million increase in customer bad check losses during the three months ended March 31, 2022 compared to during three months ended March 31, 2021, consistent with a nationwide increase in mail-based check fraud, and a $0.7 million increase in liability insurance expense, which was primarily due to regular insurance rate premium increases and our acquisition of Century, which increased the number of our properties and, therefore, our required insurance coverage.

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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


		For the Three Months Ended March 31,							Three Months Ended March 31,
		2021			2020				2022			2021
		(Dollars in thousands)							(Dollars in thousands)
Combined federal and state income tax provisions	Combined federal and state income tax provisions	$	14,171		$	1,298		Combined federal and state income tax provisions	$	14,642		$	14,171
Effective income tax rates	Effective income tax rates	22.9		%	13.3		%	Effective income tax rates	22.1		%	22.9		%
Blended statutory tax rate	Blended statutory tax rate	28.1		%	28.1		%	Blended statutory tax rate	28.1		%	28.1		%

Income tax expense increased by ~~$12.9~~$0.4 million, or ~~991.8%~~3.3%, to ~~$14.2~~$14.6 million induring the three months ended March 31, ~~2021~~2022 from ~~$1.3~~$14.2 million induring the three months ended March 31, ~~2020.~~2021. The effective tax rate was 22.1% for the three months ended March 31, 2022 as compared to 22.9% for the three months ended March 31, 2021. The increase in income tax expense was due primarily to higher pre-tax income during the three months ended March 31, ~~2021~~2022 compared to the three months ended March 31, ~~2020, decreasing the impact on~~2021. The decrease in the effective tax rate ~~related to~~primarily resulted from increases in favorable permanent differences, including investment tax credits and tax exempt income. For additional information related to the Company’s income taxes see Note 8,12, “Income Taxes” ~~and~~ ~~Note 9, “Low Income Housing Tax Credits and Other Tax Credit Investments”~~ within the Notes to the Consolidated Financial Statements included in Part I,II, Item 18 in ~~this Quarterly Report on Form 10-Q.~~the Company’s 2021 10-K.

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Financial Position and Results of Operations of our Business Segments

Comparison of the ~~Three Months Ended~~three months ended March 31, ~~2021~~2022 and ~~2020~~2021


		As of and for the Three Months Ended March 31,																	As of and for the three months ended March 31,
		2021								2020									2022								2021
		Banking Business		Insurance Agency Business		Other/ Eliminations		Total		Banking Business		Insurance Agency Business		Other/ Eliminations		Total			Banking Business		Insurance Agency Business		Other/ Eliminations		Total		Banking Business		Insurance Agency Business		Other/ Eliminations		Total
		(Dollars In Thousands)																	(In thousands)
Net interest income	Net interest income	$	100,091	$	—	$	—	$	100,091	$	100,146	$	—	$	—	$	100,146	Net interest income	$	128,124	$	—	$	—	$	128,124	$	100,091	$	—	$	—	$	100,091
(Release of) provision for loan losses	(Release of) provision for loan losses	(580)		—		—		(580)		28,600		—		—		28,600		(Release of) provision for loan losses	(485)		—		—		(485)		(580)		—		—		(580)
Net interest income after provision for loan losses	Net interest income after provision for loan losses	100,671		—		—		100,671		71,546		—		—		71,546		Net interest income after provision for loan losses	128,609		—		—		128,609		100,671		—		—		100,671
Noninterest income	Noninterest income	26,960		28,284		(32)		55,212		6,868		26,523		(22)		33,369		Noninterest income	18,137		28,449		(171)		46,415		26,960		28,284		(32)		55,212
Noninterest expense	Noninterest expense	75,274		19,811		(1,036)		94,049		78,465		17,642		(935)		95,172		Noninterest expense	90,446		19,473		(1,053)		108,866		75,274		19,811		(1,036)		94,049
Income before provision for income taxes	Income before provision for income taxes	52,357		8,473		1,004		61,834		(51)		8,881		913		9,743		Income before provision for income taxes	56,300		8,976		882		66,158		52,357		8,473		1,004		61,834
Income tax provision (benefit)		11,793		2,378		—		14,171		(1,214)		2,512		—		1,298
Income tax provision																		Income tax provision	12,108		2,534		—		14,642		11,793		2,378		—		14,171
Net income	Net income	$	40,564	$	6,095	$	1,004	$	47,663	$	1,163	$	6,369	$	913	$	8,445	Net income	$	44,192	$	6,442	$	882	$	51,516	$	40,564	$	6,095	$	1,004	$	47,663
Total assets	Total assets	$	16,595,311	$	194,664	$	(63,180)	$	16,726,795	$	12,221,799	$	182,564	$	(60,609)	$	12,343,754	Total assets	$	22,695,895	$	211,401	$	(71,224)	$	22,836,072	$	16,595,311	$	194,664	$	(63,180)	$	16,726,795
Total liabilities	Total liabilities	$	13,359,075	$	43,855	$	(63,180)	$	13,339,750	$	10,696,509	$	45,120	$	(60,609)	$	10,681,020	Total liabilities	$	19,848,995	$	49,909	$	(71,224)	$	19,827,680	$	13,359,075	$	43,855	$	(63,180)	$	13,339,750

Banking Segment

•Average interest-earning assets ~~grew $4.4~~increased $6.7 billion, or ~~41.2%~~43.9%, to $21.9 billion for the three months ended March 31, 2022 from $15.2 billion ~~as of~~for the three months ended March 31, 2021. The increase is primarily due the acquisition of Century, which closed on November 12, 2021 ~~from $10.8~~and added $6.6 billion ~~as of March 31, 2020, with average total loans, our largest category of~~in interest-earning assets. The increase in average interest-earning assets ~~growing $800.6 million, or 8.9%,~~resulted in an increase in interest income which was partially offset by a decline in yields on interest-earning assets. For additional discussion, refer to ~~$9.8 billion as of March 31, 2021 compared to $9.0 billion as of March 31, 2020.~~the earlier “Interest and Dividends” section.

•Average interest-bearing liabilities grew ~~$1.1~~$5.3 billion, or ~~16.6%~~72%, to $12.8 billion for the three months ended March 31, 2022 from $7.4 billion ~~as of~~for the three months ended March 31, 2021, ~~from $6.4 billion as of March 31, 2020,~~ with average total interest-bearing deposits, our largest category of average interest-bearing liabilities, growing ~~$1.2~~$5.3 billion, or ~~19.3%~~72%, to $12.7 billion for the three months ended March 31, 2022 compared to $7.4 billion ~~as of~~for the three months ended March 31, ~~2021~~2021. Average deposits increased due to our acquisition of Century, which added $4.4 billion in interest-bearing deposits. Also contributing to the increase in interest expense was an increase of 5 basis points in rates paid on deposits. For additional discussion, refer to the earlier “Interest and Dividends” section.

•Losses from investments held in rabbi trust accounts were $3.9 million for the three months ended March 31, 2022, which represents a decrease of $5.7 million, compared to ~~$6.2 billion as~~gains of $1.8 million during three months ended March 31, ~~2020.~~2021. The decrease was primarily a result of an unfavorable mark-to-market adjustment on equity securities held in these accounts during the three months ended March 31, 2022.

•Interest rate swap income decreased $2.5 million primarily as a result of a less favorable mark-to-market adjustment during the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

•Gains on sales of securities available for sale, net, decreased $3.2 million to a net loss due to the decision by management to sell certain AFS securities during the three months ended March 31, 2022, the majority of which were acquired in connection with our acquisition of Century and were in a net unrealized loss position at the time of sale.

•Service charges on deposit accounts increased $3.2 million primarily as a result of increased corporate account analysis charges as a result of greater commercial deposit customer activity and increased overdraft fees as a result of greater customer deposit activity.

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•~~As noted above:~~

◦~~Loan-level interest rate swap income~~Noninterest expense increased ~~$11.4~~$15.2 million, ~~primarily as a result of a favorable mark-to-market adjustment on these transactions due~~or 20.2%, to ~~higher longer term interest rates.~~

◦~~Net gains on sales of mortgage loans held for sale increased $1.4~~$90.4 million primarily due to the low interest rate environment which resulted in increased volume for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. This increase was partially offset by a decrease in the mark-to-market adjustment on mortgage loan-related derivatives, which is included within other noninterest income.

◦~~Net gains on securities available for sale increased $1.0 million primarily due to volume and the composition of security sales.~~

◦~~Deposit service charges decreased $0.7 million primarily as a result of reduced overdraft charges due to reduced transactional volume~~ during the three months ended March 31, ~~2021 compared to~~2022 from $75.3 million during the three months ended March 31, ~~2020.~~2021. This increase was driven primarily by a $4.5 million increase in salary and wages expenses, a $3.4 million increase in office occupancy and equipment expenses, a $3.2 million increase in data processing expenses, and a $1.8 million increase in operational losses, which was driven by a $1.1 million increase in bad check losses. Refer to the earlier “Noninterest Expense” section for additional discussion of this items.

•~~In addition, income from investments held in rabbi trust accounts increased $7.5 million primarily as a result of a favorable mark-to-market adjustment on equity securities held in these accounts.~~

Insurance Agency Segment

•Noninterest income related to our insurance agency business ~~increased by $1.8~~remained relatively consistent with a slight increase of $0.2 million, or ~~6.6%~~0.58%, to $28.4 million during the three months ended March 31, 2022 from $28.3 million during the three months ended March 31, ~~2021 from $26.5~~2021.

•Noninterest expense related to our insurance agency business decreased $0.3 million 1.7% to $19.5 million during ~~the~~ three months ended March 31, ~~2020. The increase was driven primarily by an increase in income~~2022 from ~~investments held in rabbi trusts of $1.1~~$19.8 million primarily as a result of a favorable mark-to-market adjustment on equity securities held in these accounts. In addition, profit sharing revenues and recurring commissions increased by $0.4 million and $0.3 million, respectively.

~~Off-Balance Sheet Arrangements~~

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. The financial instruments include commitments to originate loans, unused lines of credit, unadvanced portions of construction loans and standby letters of credit, all of which involve elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. Our exposure to credit loss is represented by the contractual amount of the instruments. We use the same credit policies in making commitments as we do for on-balance sheet instruments.

Atduring three months ended March 31, 2021, we had $4.0 billion of commitments to originate loans, comprised of $2.3 billion of commitments under commercial loans and lines of credit (including $284.1 million of unadvanced portions of construction loans), $1.3 billion of commitments under home equity loans and lines of credit, $179.1 million in standard overdraft coverage commitments, $96.9 million of unfunded commitments related to residential real estate loans and $60.8 million in other consumer loans and lines of credit. In addition, at March 31, 2021, we had $64.0 million in standby letters of credit outstanding. We also had $35.6 million in forward commitments to sell loans.2021.

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

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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 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 March 31, 2022 and December 31, 2021 precluded the modeling of certain falling rate scenarios. We do not model negative interest rate scenarios.

The tables below set forth, as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the calculation of the estimated changes in our net interest income on an FTE basis that would result from the designated immediate changes in the U.S. Treasury yield curve:

Interest Rate Sensitivity

As of March 31, 2021
Change in
Interest Rates
(basis points) (1) Net Interest
Income Year 1
Forecast Year 1
Change from
Level
(Dollars in thousands)
400 $ 568,519 44.1 %
300 524,891 33.0 %
200 481,564 22.1 %
Flat 394,511 — %
(100) 375,522 (4.8) %
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) %

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	As of March 31, 2022
Change in Interest Rates (basis points) (1)	Net Interest Income Year 1 Forecast		Year 1 Change from Flat
	(Dollars in thousands)
400	$	659,394	22.4	%
300	628,624		16.7	%
200	598,666		11.2	%
Flat	538,605		—	%
(100)	506,509		(6.0)	%

	As of December 31, 2021
Change in Interest Rates (basis points) (1)	Net Interest Income Year 1 Forecast		Year 1 Change from Flat
	(Dollars in thousands)
400	$	663,207	30.2	%
300	624,384		22.6	%
200	586,319		15.1	%
Flat	509,379		—	%
(100)	479,489		(5.9)	%

(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 March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, in the event of an instantaneous parallel 200 basis points increase in rates, we would have experienced ~~a 22.1%~~an 11.2% and ~~25.5%~~15.1% increase, respectively, in net interest income on an FTE basis, and in the event of an instantaneous 100 basis points decrease in interest rates, we would have experienced a ~~4.8%~~6.0% and a ~~5.0%~~5.9% decrease at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, in net interest income, on an FTE basis. 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.

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Economic Value of Equity ~~Analysis~~.Analysis. We also analyze the sensitivity of our financial condition in interest rates through our economic value of equity (“EVE”) model. This analysis calculates the difference between the present value of expected cash flows from assets and liabilities assuming various changes in current interest rates.

The table below represents an analysis of our interest rate risk (excluding the effect of our pension plans) as measured by the estimated changes in our EVE, resulting from an instantaneous and sustained parallel shift in the yield curve (+200, +300, +400 basis points and -100 basis points) at March 31, ~~2021~~2022 and December 31, ~~2020.~~2021. The model requires that interest rates remain positive for all points along the yield curve for each rate scenario which may preclude the modeling of certain falling rate scenarios during periods of lower market interest rates. The relatively low level of interest rates prevalent at March 31, 2022 and December 31, 2021 precluded the modeling of certain falling rate scenarios, including negative interest rates.

Our earnings are not directly or materially impacted by movements in foreign currency rates or commodity prices. Movements in equity prices may have a modest impact on earnings by affecting the volume of activity or the amount of fees from investment-related business lines.

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EVE Interest Rate Sensitivity


Change in Interest Rate (basis points) (1)	Change in Interest Rate (basis points) (1)	Estimated EVE (2)			As of March 31, 2021					EVE as a Percentage of Total Assets (3)		Change in Interest Rate (basis points) (1)						As of March 31, 2022
					Estimated Increase (Decrease) in EVE from Level										Estimated EVE (2)			Estimated Increase (Decrease) in��EVE from Flat							EVE as a Percentage of Total Assets (3)
				Amount			Percent						Amount					Percent
				(Dollars in thousands)												(Dollars in thousands)
400	400	$	4,477,682		$	349,568		8.5	%			28.68	%	400		$	4,383,545		$	(92,836)			(2.1)	%			21.61	%
300	300	4,402,223			274,109			6.6	%	27.74	%	300			4,398,598			(77,783)			(1.7)	%			21.20	%
200	200	4,324,403			196,289			4.8	%	26.77	%	200			4,438,315			(38,066)			(0.9)	%			20.88	%
Flat	Flat	4,128,114			—			—		24.60	%	Flat			4,476,381			—			—				20.02	%
(100)	(100)	3,919,926			(208,188)			(5.0)	%	23.05	%	(100)			4,409,709			(66,672)			(1.5)	%			19.22	%


Change in Interest Rate (basis points) (1)	Change in Interest Rate (basis points) (1)	Estimated EVE (2)			As of December 31, 2020					EVE as a Percentage of Total Assets (3)		Change in Interest Rate (basis points) (1)						As of December 31, 2021
					Estimated Increase (Decrease) in EVE from Level										Estimated EVE (2)			Estimated Increase (Decrease) in EVE from Flat							EVE as a Percentage of Total Assets (3)
				Amount			Percent						Amount					Percent
				(Dollars in thousands)												(Dollars in thousands)
400	400	$	4,385,795		$	452,022		11.5	%			29.09	%	400		$	4,573,359		$	27,408			0.6	%			21.30	%
300	300	4,297,682			363,909			9.3	%	28.06	%	300			4,565,019			19,068			0.4	%			20.80	%
200	200	4,205,867			272,094			6.9	%	27.00	%	200			4,589,035			43,084			0.9	%			20.39	%
Flat	Flat	3,933,773			—			—		24.38	%	Flat			4,545,951			—			—				17.06	%
(100)	(100)	3,663,432			(270,341)			(6.9)	%	22.65	%	(100)			4,270,433			(275,518)			(6.1)	%			17.75	%

(1)Assumes an immediate uniform change in 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, Contractual Obligations, Commitments and Contingencies

Liquidity. Liquidity describes our ability to meet the financial obligations that arise in the normal course of business. Liquidity is primarily needed to meet deposit withdrawals and anticipated loan fundings, as well as current and planned expenditures. We seek to maintain sources of liquidity that are deep and diversified and that may be used during the normal course of business as well as on a contingency basis.

The net proceeds from our IPO significantly increased our liquidity and capital resources at both Eastern Bankshares, Inc. and Eastern Bank. Over time, the initial level of liquidity has been and will continue to be reduced as net proceeds from the IPO are used for general corporate ~~purposes, including the funding of loans.~~purposes. Our financial condition and results of operations ~~will be~~were enhanced by the net proceeds from the ~~IPO, resulting~~stock offering and resulted in increased net interest-earning assets and net interest and dividend income. ~~However,~~On November 12, 2021, we completed our merger with Century for $641.9 million in cash. Although the transaction reduced the net proceeds from the IPO, we continue to expect that, due to the increase in equity resulting ~~form~~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~~deploy the remaining proceeds of the IPO.

Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from calls, maturities and sales of ~~securities.~~securities, subject to market conditions. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are unencumbered cash and ~~due from banks~~cash equivalents and securities classified as available for sale. In the future, our

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liquidity position will be affected by the level of customer deposits and payments, as well as acquisitions, dividends, and stock repurchases in which we may engage. We believe that our existing resources will be sufficient to meet the liquidity and capital requirements of our operations for the foreseeable future.

We participate in the IntraFi Network, ~~(formerly “Promontory”),~~ which allows us to provide access to multi-million dollar FDIC deposit insurance protection on customer deposits for consumers, businesses and public entities. We can elect to sell or repurchase this funding as reciprocal deposits from other IntraFi Network banks depending on our funding needs. At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had a total of ~~$384.7~~$656.3 million and ~~$364.8~~$520.5 million of IntraFi Network one-way sell deposits, respectively. ~~These deposits could have been~~At March 31, 2022, we had repurchased as$29.1 million of previously sold reciprocal ~~deposits~~deposits. At December 31, 2021, no

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amounts were repurchased of previously sold reciprocal deposits. The additional capacity of $656.3 million and $520.5 million at March 31, 2022 and December 31, 2021, respectively, should be considered a source of liquidity.

Although customer deposits remain our preferred source of funds, maintaining additional back up sources of liquidity is part of our prudent liquidity risk management practices. We have the ability to borrow from the FHLBB. At March 31, ~~2021,~~2022, we had ~~$14.5~~$13.7 million in outstanding advances and the ability to borrow up to an additional ~~$1.5~~$2.1 billion. ~~We also have the ability to borrow from the FRBB as well as the Paycheck Protection Program Liquidity Facility.~~ At March 31, ~~2021,~~2022, we had a ~~$492.3~~$412.9 million collateralized line of credit from the FRBB with no outstanding balance. ~~Additionally, we had $1.2 billion in PPP loans that could have been pledged to the Paycheck Protection Program Liquidity Facility.~~ We had a total of ~~$770.0~~$790.0 million of discretionary lines of credit at March 31, ~~2021.~~2022.

Sources of Liquidity


		As of March 31, 2021				As of December 31, 2020					As of March 31, 2022				As of December 31, 2021
		Outstanding		Additional Capacity		Outstanding		Additional Capacity			Outstanding		Additional Capacity		Outstanding		Additional Capacity
				(Dollars in thousands)									(In thousands)
IntraFi Network deposits	IntraFi Network deposits	$	—	$	384,730	$	—	$	364,794	IntraFi Network deposits	$	29,098	$	656,295	$	—	$	520,461
Federal Home Loan Bank (1)	Federal Home Loan Bank (1)	14,473		1,533,364		14,624		1,581,016		Federal Home Loan Bank (1)	13,689		2,138,705		14,020		1,839,540
Federal Reserve Bank of Boston (2)	Federal Reserve Bank of Boston (2)	—		492,333		—		503,512		Federal Reserve Bank of Boston (2)	—		412,902		—		456,148
Federal Reserve Paycheck Protection Program Liquidity Facility		—		1,238,053		—		1,026,117
Unsecured lines of credit	Unsecured lines of credit	—		770,000		—		620,000		Unsecured lines of credit	—		790,000		—		790,000
Total deposits	Total deposits	$	14,473	$	4,418,480	$	14,624	$	4,095,439	Total deposits	$	42,787	$	3,997,902	$	14,020	$	3,606,149

(1)As of ~~both~~ March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, loans have been pledged to the FHLBB with a carrying value of ~~$2.4~~$3.0 billion and $2.6 billion, respectively, to secure additional borrowing capacity.

(2)Loans with a carrying value of ~~$832.4~~$799.9 million and ~~$884.1~~$784.0 million at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, have been pledged to the FRBB resulting in this additional unused borrowing ~~capacity~~capacity.

We believe that advanced preparation, early detection, and prompt responses can avoid, minimize, or shorten potential liquidity crises. Our Board of Directors and our management's Asset Liability Committee have put a ~~Liquidity Contingency Plan~~liquidity contingency plan in place to establish methods for assessing and monitoring risk levels, as well as potential responses during unanticipated stress events. As part of ~~its~~our risk management framework, we perform periodic liquidity stress testing to assess its need for liquid assets as well as backup sources of liquidity.

Capital Resources. We are subject to various regulatory capital requirements administered by the Massachusetts Commissioner of Banks, the FDIC and the Federal Reserve (with respect to our consolidated capital requirements). At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we exceeded all applicable regulatory capital requirements, and were considered “well capitalized” under regulatory guidelines. To be categorized as well-capitalized, the Company must maintain (1) a minimum of total risk-based capital ratio of 10%; (2) a minimum of Tier 1 risk-based capital ratio of 8%; (3) a minimum of common equity Tier 1 capital ratio of 6.5%; and (4) a minimum of Tier 1 leverage ratio of 5%. Management believes that the Company met all capital adequacy requirements to which it is subject to as of March 31, 2022 and December 31, 2021. There have been no conditions or events that management believes would cause a change in the Company’s categorization.

The Company’s actual capital ratios are presented in the following table:


	As of March 31, 2022		As of December 31, 2021
Capital Ratios:
Average equity to average assets	14.05	%	19.17	%
Total regulatory capital (to risk-weighted assets)	19.42	%	19.77	%
Common equity Tier 1 capital (to risk-weighted assets)	18.53	%	19.04	%
Tier 1 capital (to risk-weighted assets)	18.53	%	19.04	%
Tier 1 capital (to average assets) leverage	12.18	%	13.96	%

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Contractual Obligations, Commitments and ~~Contingencies~~

Contingencies.In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities. At March 31, ~~2021~~2022, there were no material changes in our contractual obligations, other commitments and contingencies from those disclosed in our ~~2020~~2021 Form 10-K.

At March 31, 2022, we had $5.3 billion of commitments to originate loans, comprised of $3.1 billion of commitments under commercial loans and lines of credit (including $473.8 million of unadvanced portions of construction loans), $1.9 billion of commitments under home equity loans and lines of credit, $196.9 million in standard overdraft coverage commitments, $41.7 million of unfunded commitments related to residential real estate loans and $60.5 million in other consumer loans and lines of credit. In addition, at March 31, 2022, we had $65.7 million in standby letters of credit outstanding. We also had $12.9 million in forward commitments to sell loans.

Commitments to originate loans are agreements to lend to a customer provided there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments are expected to expire without being drawn upon, the total commitments do not necessarily represent future cash requirements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES

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The information required by this Item is included in Part I, Item 2 of this Quarterly Report on Form 10-Q under the heading “Management of Market Risk.”

ITEM 4. CONTROLS AND PROCEDURES

Effectiveness of Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(c) promulgated under the Exchange Act of 1934. Based upon that evaluation, the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, ~~2021,~~2022, the end of the period covered by this Quarterly 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 March 31, ~~2021~~2022 that have materially affected or are reasonably likely to materially affect the Company’s internal controls over financial reporting. The Company has not experienced any material impact to the Company’s internal controls over financial reporting due to the fact that most of the Company’s employees responsible for financial reporting are working remotely during the COVID-19 pandemic. The Company is continually monitoring and assessing the impact of the COVID-19 pandemic on the Company’s internal controls to minimize the impact to their design and operating effectiveness.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We operate in a legal and regulatory environment that exposes us to potentially significant risks. For more information regarding the Company’s exposure generally to legal and regulatory risks, see “Business—Legal and Regulatory Proceedings” in Part I, Item 1 of the ~~2020~~2021 Form 10-K.

As of the date of this Quarterly Report on Form 10-Q, we are not involved in any pending legal proceeding as a plaintiff or a defendant ~~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.

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For additional information related to the Company’s ongoing legal proceedings see Note 12, “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 our ~~2020~~2021 Form 10-K. Other than the ~~Risks Related to Our Acquisition Strategy~~additional risk factor set forth below, ~~including the revised risk factors below regarding “To the extent that we acquire other companies, our business may be negatively impacted by certain risks inherent with such acquisitions,”~~ as of the date of this Quarterly Report on Form 10-Q, the risk factors of the Company have not changed materially from those disclosed in our ~~2020~~2021 Form 10-K. The COVID-19 pandemic has led to general uncertainty and adverse changes in economic conditions and has heightened, and in some cases manifested, certain of the risks we normally face in operating our business, including those disclosed in our ~~2020~~2021 Form 10-K. The risk factors disclosure in our ~~2020~~2021 Form 10-K is therefore qualified by the information relating to COVID-19 that is described in this Quarterly Report on Form 10-Q.

~~To the extent that we acquire other companies,~~Regulatory developments could adversely affect our business by increasing our costs and thereby making our business less profitable.

Our profitability may be ~~negatively impacted~~adversely affected by ~~certain risks inherent with such acquisitions.~~

~~We have acquired~~current and ~~will continue~~future rulemaking and enforcement activity by the various federal, state and self-regulatory organizations to consider the acquisition of other financial services companies. A significant component of our business strategy is to grow through acquisitions of other financial institutions, including banks and insurance agencies, or business lines as opportunities arise. Although we have been successful with this strategy in the past, we may not be able to grow our business in the future through acquisitions for a number of reasons, including:

•~~Competition with other prospective buyers resulting in our inability to complete an acquisition or in our paying a substantial premium over the fair value of the net assets of the acquired business;~~

•~~Inability to obtain regulatory approvals or to obtain such approvals on a timely basis;~~

•Potential difficulties and/or unexpected expenses relating to the integration of the operations, technologies, products and the key employees of the acquired business, resulting in the diversion of resources from the operation of our existing business;

•~~Acquisitions of new lines of business may present risks that are different in kind or degree compared to those that~~which we are ~~accustomed~~subject. Regulations can adversely affect our compliance costs and other non-interest expenses, and failure to ~~managing, requiring~~comply with regulations could subject us to ~~implement new~~regulatory actions or ~~enhance existing procedures and controls and diverting resources from the operation of our existing business;~~

•~~Inability to maintain existing customers of the acquired business or to sell the products and services of the acquired business to our existing customers;~~

•~~Inability to retain key management of the acquired business;~~

•~~Assumption of or potential exposure to significant liabilities of the acquired business, some of~~litigation, which ~~may be unknown or contingent at the time of acquisition, including, without limitation, liabilities for regulatory and compliance issues;~~

•~~Exposure to potential asset quality issues of the acquired business;~~

•~~Failure to mitigate deposit erosion or loan quality deterioration at the acquired business;~~

•~~Potential changes in banking or tax laws or regulations that may affect the acquired business;~~

•~~Inability to improve the revenues and profitability or realize the cost savings and synergies expected of the acquired business;~~

•~~Potential future impairment of the value of goodwill and intangible assets acquired; and~~

•~~Identification of internal control deficiencies of the acquired business.~~

~~All of these and other potential risks may serve as a diversion of our management’s attention from other business concerns, and any of these factors~~ could have a material adverse effect on our ~~business. Acquisitions typically involve~~business, results of operations, or financial condition.

New laws, rules and regulations, or changes to the interpretation or enforcement of existing laws, rules or regulations, from time to time could increase our expenses, causing our recent historical expenses not to be indicative of future expenses, and could result in limitations on the lines of business we conduct or plan to conduct, modifications to our current or future business practices, and increased capital requirements. For example, in March 2022 the SEC proposed extensive rules to standardize climate-related disclosures for investors. In addition, regulators, including the FDIC, have also proposed principles for banks to manage exposures to climate-related financial risks. We expect that these developments could negatively impact our results, including by increasing our legal, compliance, and information technology expenditures and could result in other costs, as well as greater risks of lawsuits and enforcement activity by regulators. These changes may also affect the array of products and services we offer to our customers.

It is unclear how and whether our regulators, including the SEC, FDIC, other banking regulators and other state insurance regulators may respond to, or enforce elements of, these new regulations or develop their own similar laws and regulations. The impacts, degree and timing of the effect of applicable laws, future regulations and industry principles on our business cannot now be anticipated and may have further impacts on our products and services and the results of operations. Please consult the “Regulation” section within Part I, “Item 1. Business” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, for specific information about risks associated with various regulations and their potential impact on our operations.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES

The following table sets forth information regarding the Company’s repurchases of its common stock during the three months ended March 31, 2022:


Period	Total Number of Shares	Average Price Paid per Share		Total Number of Shares Purchased as Part of the Publicly Announced Share Repurchase Program	Maximum Number of Shares That May Yet Be Purchased Under the Share Repurchase Program (1)
January 1, 2022 – January 31, 2022	987,526	$	21.02	2,123,404	7,214,496
February 1, 2022 – February 28, 2022	1,109,697	$	21.08	3,233,101	6,104,799
March 1, 2022 – March 31, 2022	769,398	$	21.31	4,002,499	5,335,401
Total	2,866,621	$	21.12

(1)On October 28, 2021, the Company announced that its Board of Directors had approved a share repurchase program, subject to receipt of a notice of non-objection from the Board of Governors of the Federal Reserve System (“Non-Objection Notice”). On November 12, 2021, the Company announced it had received the Non-Objection Notice to the share repurchase program, which authorizes the purchase of up to 9,337,900 shares over a 12-month period. The program is limited to $225 million through November 30, 2022.

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~~payment of a premium over book and market values, and therefore, some dilution of our tangible book value and net income per share may occur in connection with any future transaction.~~

~~Our business may be negatively impacted by certain risks inherent with our pending acquisition of Century Bancorp, Inc.~~

~~In April 2021, we entered into a definitive merger agreement with Century Bancorp, Inc. under which we will acquire Century for $641.9 million in cash (the “Century Merger”). Century is~~See Note 10, Shareholders’ Equity, within the stock holding company of Century Bank and 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. PursuantNotes to the 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 transaction is subject to customary closing conditions, including the receipt of regulatory approval and Century shareholder approval. We currently expect the Century Merger to be completed during the fourth quarter of 2021.

The consummation of the Century Merger is contingent upon the satisfaction of a number of conditions, including regulatory approval, that may be outside of our or Century’s control and that we and Century may be unable to satisfy or obtain or which may delay the consummation of the Century Merger or result in the imposition of conditions that could reduce the anticipated benefits from the Century Merger or cause the parties to abandon the Century Merger.

Consummation of the Century Merger is contingent upon the satisfaction of a number of conditions, some of which are beyond our and Century’s control, including, among others, the receipt of required regulatory approval and approval of Century’s shareholders.

These conditions to the closing of the Century Merger may not be fulfilled in a timely manner or at all, and, accordingly, the Century Merger may be delayed substantially or may not be completed. In addition, the parties can mutually decide to terminate the Merger Agreement at any time, or we or Century may elect to terminate the Merger Agreement in certain other circumstances.

As a condition to granting required regulatory approvals, governmental entities may impose conditions, limitations or costs, require divestitures or place restrictions on our conduct after the closing of the Century Merger. Such conditions or changes and the process of obtaining regulatory approvals could, among other things, have the effect of delaying completion of the Century Merger or of imposing additional costs or limitations on us following the Century Merger, any of which may have an adverse effect on us following the Century Merger.

Our acquisition of new lines of business at Century may present risks that are different in kind or degree compared to those that we are accustomed to managing, requiring us to implement new or enhance existing procedures and controls and diverting resources from the operation of our existing business.

Our acquisition of new lines of business at Century will present risks that are different in kind or degree compared to those that we are accustomed to managing, requiring us to implement new or enhance existing procedures and controls.

Century Bank’s lines of business include two categories of cash-based businesses that are new to us and will necessitate robust compliance policies and procedures in order to comply with various laws and regulations. Century provides depository services to marijuana-related businesses, including marijuana retailers and marijuana dispensaries. Century also provides loans to various marijuana-related businesses that in the aggregate are not material to Century. We understand Century's customer due diligence process confirms each new marijuana-related customer is appropriately licensed under Massachusetts law and monitors that such customers continue to be licensed. Century also provides depository services to check cashers and other businesses, sometimes generally referred to as a “money services business,” that regularly engage in the transfer of funds domestically and internationally.

We expect that after the closing of the Century Merger, these lines of business will require proportionately greater compliance and risk management resources than our current businesses in order for us to comply with laws and regulations related to the prevention of financial crimes and combating terrorism, including the U.S. Patriot Act of 2001. These laws and regulations require us to, among other things, implement policies and procedures related to anti-money laundering, anti-bribery and corruption, fraud, compliance, suspicious activities, currency transaction reporting, and due diligence on new and existing customers.

With respect to marijuana-related businesses, the Controlled Substances Act makes it illegal under federal law to manufacture, distribute, or dispense marijuana, and therefore federal law, including the money laundering statutes and the Bank Secrecy Act, apply to marijuana-related conduct.Consolidated Financial ~~transactions involving proceeds generated by marijuana-related conduct can form the basis for prosecution under the money laundering statutes. Financial institutions must report currency~~

~~Table of Contents~~

~~transactions and conduct suspicious activity monitoring and reporting in connection with marijuana-related businesses to the Financial Crimes Enforcement Network (“FinCEN”).~~

Our ability to comply with anti-money laundering laws and our reporting obligations to FinCEN will depend on our ability to maintain robust customer due diligence, surveillance, detection, reporting and analytic capabilities. Although we believe that we will have policies and procedures designed to comply with these laws and regulations, to the extent our policies or procedures are not fully effective or do not meet heightened regulatory standards or expectations, we may be subject to fines, penalties, restrictions on certain activities including future acquisitions, reputational harm, or other adverse consequences from our federal bank regulators, the Department of Justice or FinCEN.

We intend to continue to evaluate, both prior to and after the closing of the Century Merger, the banking services that Century provides to marijuana-related businesses and money services businesses and to assess our competencies to manage those businesses in a manner that provides appropriate risk-adjusted returns.

We may fail to realize all of the anticipated benefits of the Century Merger, or those benefits may take longer to realize than expected. We may also encounter significant difficulties in integrating with Century.

We and Century have operated and, until the completion of the Century Merger, will continue to operate, independently. The success of the Century Merger, including anticipated benefits and cost savings, will depend, in part, on our ability to successfully integrate Century’s operations in a manner that results in various benefits and that does not materially disrupt existing customer relationships or result in decreased revenues due to loss of customers. The process of integrating operations could result in a loss of key personnel or cause an interruption of, or loss of momentum in, the activities of one or more of the combined company's businesses. Inconsistencies in standards, controls, procedures and policies could adversely affect the combined company. The diversion of management's attention and any delays or difficulties encountered in connection with the Century Merger and the integration of Century’s operations could have an adverse effect on the business, financial condition, operating results and prospects of the combined company.

If we experience difficulties in the integration process, including those listed above, we may fail to realize the anticipated benefits and synergies of the Century Merger in a timely manner or at all.

~~While the Century Merger is pending, we will be subject to business uncertainties and contractual restrictions that could adversely affect our business and operations.~~

Uncertainty about the effect of the Century Merger on employees, customers and other persons with whom we or Century have a business relationship may have an adverse effect on our business, operations and stock price. Our existing customers or existing customers of Century could decide to no longer do business with us, Century or the combined company, reducing the anticipated benefits of the Century Merger. In addition, Century is subject to certain restrictions on the conduct of its business while the Century Merger is pending. As a result, certain other projects may be delayed or abandoned, and business decisions could be deferred. Employee retention at our Company and Century may be challenging before or after completion of the Century Merger, as certain employees may experience uncertainty about their future roles with the combined company, and these retention challenges may require us to incur additional expenses in order to retain or replace key employees. If key officers or employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with us, Century or the combined company, the benefits of the Century Merger could be materially diminished and we could encounter difficulties in replacing them and successfully managing new lines of business with which we do not have management experience or expertise.

~~We expect to incur substantial expenses related to the Century Merger and the integration with Century.~~

We and Century will incur substantial expenses in connection with the Century Merger and integration. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated. While we have assumed that a certain level of expenses would be incurred, there are many factors beyond our control that could affect the total amount or the timing of the integration expenses. Moreover, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. These expenses could, particularly in the near term, exceed the savings that we expect to achieve from the elimination of duplicative expenses and the realization of economies of scale. We anticipated that some of the expenses we incur will not be deductible due to the application of Section 162(m) of the Internal Revenue Code of 1986, as amended, as discussedStatements included in Part I, Item 1A of our 2020 Form 10-K. See “—Due to Section 162(m) of the Internal Revenue Code, we may not be able to deduct all of the compensation of some executives, including executives of companies we may acquire in the future.”

~~Our future results will suffer if we do not effectively manage our expanded operations following the Century Merger.~~

Following the Century Merger, the size and operational scope of our business will increase significantly beyond its current size and scope. The Century Merger will increase our asset size and will further increase the breadth and complexity

~~Table of Contents~~

of our business with the addition of new business lines in which we have not previously engaged and with which we lack familiarity, and exposure to industry sectors, such as higher education, which we have not historically served. We expect that the size and scope of our commercial loan and lease portfolio will also increase in size as a result of the Century Merger. Century’s commercial loan portfolio includes loans that are concentrated in industry sectors (such as higher education and nonprofit organizations) that will be relatively new to us. Some such loans are of greater size than the typical size of commercial loans that we have made in recent years.

Our future success depends, in part, upon our ability to manage this expanded business, which will pose substantial challenges for our management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. There can be no assurances that we will be successful1 in this ~~regard or that we will realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the Century Merger.~~

Quarterly Report on Form 10-Q for additional information.

~~ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES~~

~~None.~~

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.OTHER INFORMATION

None.

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ITEM 6.EXHIBITS

The exhibits listed in the Exhibit Index (following the signatures section of this report) are included in, or incorporated by reference into, this Quarterly Report on Form 10-Q.

EXHIBIT INDEX

The following exhibits are included in this Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2021~~2022 (and are numbered in accordance with Item 601 of Regulation S-K):


Exhibit No.						Description

~~2.1~~10.1						Form of On e -Time RSU Award Agreement ~~and Plan of Merger by and among Eastern Bankshares, Inc., Clarion Acquisition Corp., Century Bancorp, Inc. and Century Bank and Trust Company, dated as of April 7, 2021~~ ~~(incorporated~~(incorporated by reference to ~~exhibit 2.1~~Exhibit 10.1 to Form 8-K filed with the Securities and Exchange Commission on ~~April 8, 2021)~~January 19, 2022)

10.2						Form of Annual RSU Award Agreement (incorporated by reference to Exhibit 10.2 to Form 8-K filed with the Securities and Exchange Commission on January 19, 2022)

10.3						Form of One-T ime PSU Award Agreement (incorporated by reference to Exhibit 10.3 to Form 8-K filed with the Securities and Exchange Commission on January 19, 2022)

10.4						Form of Annual PSU Award Agreement (incorporated by reference to Exhibit 10.4 to Form 8-K filed with the Securities and Exchange Commission on January 19, 2022)

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 March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, (ii) the Unaudited Consolidated Statements of Income for the three months ended March 31, 2022 and ~~2020~~2021 (iii) the Unaudited Consolidated Statements of Comprehensive Income for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, (iv) the Unaudited Consolidated Statements of Changes in Equity for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, (v) the Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and ~~2020,~~2021, and (vi) the Notes to the Unaudited Consolidated Financial Statements.

104						Cover page interactive data file (formatted as inline XBRL with applicable taxonomy extension information) contained in Exhibit 101 to this report+

*Filed herewith

+ Furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	EASTERN BANKSHARES, INC.

~~Date:~~Date : May ~~14, 2021~~10, 2022	/s/ Robert F. Rivers
	By:	Robert F. Rivers
		Chief Executive Officer and Chair of the Board
		(Principal Executive Officer)

~~Date:~~Date : May ~~14, 2021~~10, 2022	/s/ James B. Fitzgerald
	By:	James B. Fitzgerald
		Chief Financial Officer
		(Principal Financial Officer)

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			Page
Part I Financial Information

Item 1.I. Unaudited Consolidated Financial Statements

Unaudited Consolidated Balance Sheets as of March 3 1 ~~, 202~~1 31, 2022 and December 31, 20 202021			24
Unaudited Consolidated Statements of Income for the three months ended March 3 1 ~~, 202~~1 31, 2022 and 20 202021			25
Unaudited Consolidated Statements of Comprehensive Income for the three months ended March 3 1 ~~, 202~~1 31, 2022 and ~~2020~~2021			36
Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 3 1 ~~, 202~~1 31, 2022 and 20 202021			47
Unaudited Consolidated Statements of Cash Flows for the ~~three~~t hree months ended March 3 1 ~~, 202~~1 31, 2022 and 20 20 2021			58
Notes to the Unaudited Consolidated Financial Statements			69


					Fair Value Measurements at Reporting Date Using
	Carrying Value as of March 31, 2021		Fair Value as of March 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets
Loans, net of allowance for loan losses	$	9,772,722	$	9,870,710	$	0	$	0	$	9,870,710
FHLB stock	8,805		8,805		0		8,805		0
Bank-owned life insurance	79,110		79,110		0		79,110		0
Liabilities
Deposits	$	12,980,875	$	12,980,753	$	0	$	12,980,753	$	0
FHLB advances	14,473		14,299		0		14,299		0
Escrow deposits from borrowers	14,878		14,878		0		14,878		0


					Fair Value Measurements at Reporting Date Using
	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


	Remaining COVID-19 Modifications as of March 31, 2021 (1)				Remaining COVID-19 Modifications as of December 31, 2020 (1)
	Balance		% of Total Portfolio		Balance		% of Total Portfolio
	(Dollars in thousands)
Commercial and industrial	$	22,776	1.1	%	$	34,076	1.7	%
Commercial real estate	127,683		3.5	%	231,794		6.5	%
Commercial construction	—		—	%	10,987		3.6	%
Business banking	11,681		0.8	%	23,434		1.7	%
Residential real estate	13,754		1.0	%	26,772		2.0	%
Consumer home equity	1,274		0.2	%	3,432		0.4	%
Other consumer	1,262		0.5	%	2,187		0.8	%
Total	$	178,430	1.8	%	$	332,682	3.4	%


	Loan Balance		Balance (%)		COVID-19 Modification % (1)
	(Dollars in thousands)
High Risk Industries
Retail (2)	$	491,210	5.0	%	1.0	%
Restaurants	199,239		2.0	%	10.7	%
Hotels	178,094		1.8	%	51.6	%
Construction contractors financing	83,112		0.8	%	0.9	%
Auto dealerships	77,658		0.8	%	—	%
Other high risk	81,529		0.8	%	0.8	%
All impacted industries total	1,110,842		11.2	%	10.8	%
Remaining commercial and business banking	6,314,932		63.7	%	0.7	%
Total commercial and business banking	7,425,774		74.9	%	2.2	%
All other loans	2,490,701		25.1	%	0.7	%
Total	$	9,916,475	100.0	%	1.8	%


	PPP Loans Originated During the				Total
	Three Months Ended March 31, 2021		Year ended December 31, 2020
	(Dollars in thousands)
Number of loans originated	4,693		8,902		13,595
Original balance of loans originated	$	452,596	$	1,167,137	$	1,619,733
Current balance of loans originated in respective periods(1)	452,619		785,434		1,238,053
Total SBA fees received(2)	19,942		37,180		57,122
SBA fees recognized in interest income related to loans originated in respective periods(3)	686		24,672		25,358
Unaccreted SBA fees related to loans originated in respective periods	19,256		12,508		31,764


Loan Size	Loan Balance		Number of Loans
	(Dollars in thousands)
$0 to $50 thousand	$	126,812	6,992
$50 thousand to $150 thousand	190,590		2,212
$150 thousand to $1 million	471,623		1,409
$1 million to $2 million	169,582		119
$2 million to $5 million	213,143		76
Over $5 million	66,303		11
Total	$	1,238,053	10,819


Industry	Loan Balance		Number of Loans
	(Dollars in thousands)
Construction	$	200,670	1,432
Professional, scientific, & technical services	170,461		1,749
Health care & social assistance	166,199		961
Accommodation & food services	153,197		1,130
Other services	108,471		1,568
Manufacturing	91,184		458
Administrative & support	82,669		577
Wholesale trade	66,734		307
Retail trade	55,742		988
Transportation & warehousing	32,123		319
Real estate, rental, & leasing	30,672		434
All other	79,931		896
Total	$	1,238,053	10,819


	As of March 31, 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	$	9,460	$	3	$	1,174	$	4	$	268	$	1,924
Commercial real estate	3,225		—		1,403		—		556		1,545
Commercial construction	—		—		—		—		—		—
Business banking	13,299		1,404		8,513		5,279		3,311		10,196
Residential real estate	5,738		857		6,271		9,184		2,517		4,904
Consumer home equity	1,416		496		3,006		1,806		364		3,035
Other Consumer	975		419		349		1,978		234		517
Total	$	34,113	$	3,179	$	20,716	$	18,251	$	7,250	$	22,121


	As of March 31, 2021
	Gross Loans Outstanding (1)		90+ Days Due Still Accruing		Non-accruing Loans		TDR Loans, but Accruing		NPLs		NPLs as a % of Gross Loans Outstanding
					(Dollars in thousands)
Loans:
Commercial	$	7,425,774	$	1,390	$	30,275	$	13,169	$	31,665	0.43	%
Residential	1,406,510		280		8,127		22,565		8,407		0.60	%
Consumer	1,084,191		9		3,873		3,633		3,882		0.36	%
Total	$	9,916,475	$	1,679	$	42,275	$	39,367	$	43,954	0.44	%


	For the Three Months Ended March 31, 2021				For the Year Ended December 31, 2020
	Average Amount		Average Rate		Average Amount		Average Rate
	(Dollars in thousands)
Demand	$	5,125,831	—	%	$	4,535,066	—	%
Interest checking	2,391,025		0.04	%	2,227,185		0.09	%
Savings	1,300,057		0.02	%	1,123,584		0.02	%
Money market investments	3,440,214		0.07	%	3,212,752		0.23	%
Certificate of deposits	251,115		0.19	%	300,381		0.52	%
Total deposits	$	12,508,242	0.03	%	$	11,398,968	0.10	%