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What changed in Eastern Bankshares, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Eastern Bankshares, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+597 added−658 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-26)

Top changes in Eastern Bankshares, Inc.'s 2024 10-K

597 paragraphs added · 658 removed · 452 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

114 edited+26 added−63 removed194 unchanged
Biggest changeAs of December 31, 2023, our internal limits on loans-to-one borrower (and related entities), all of which are subject to industry-specific sub-limits, were: • $50.0 million for commercial real estate loans; • $125.0 million for commercial real estate relationships; • $50.0 million for commercial and industrial relationships, including loans to non-profit entities; • $75.0 million for loans to education entities with a risk rating between 1 and 7; • $50.0 million for loans to education entities with a risk rating of 8 and above; • $75.0 million for loans to healthcare entities with a risk rating between 1 and 4; and • $50.0 million for loans the healthcare entities with a risk rating of 5 and above; Aggregate exposure limits can be increased up to 10% on an exception basis with the approval of the Credit Committee, including the approval of the Chief Credit Officer and the Chief Commercial Banking Officer.
Biggest changeAggregate exposure limits can be increased up to 10% on an exception basis with the approval of the Credit Committee, including the approval of the Chief Credit Officer and the Chief Commercial Banking Officer.
Massachusetts-chartered banks may, in accordance with Massachusetts law, exercise any power and engage in any activity that has been authorized for national banks, federal thrifts or state banks in a state other than Massachusetts, provided that the activity is permissible under applicable federal law and not specifically prohibited by Massachusetts law.
Massachusetts-chartered banks may, in accordance with Massachusetts law, exercise any power and engage in any activity that has been authorized for national banks, federal thrifts or state banks in a state other than Massachusetts, provided that the activity is permissible under applicable federal law and is not specifically prohibited by Massachusetts law.
Loan operations are also subject to state and federal laws applicable to credit transactions, such as the: • Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; • Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies; 18 • Massachusetts Debt Collection Regulations, establishing standards, by defining unfair or deceptive acts or practices, for the collection of debts from persons within the Commonwealth of Massachusetts and the General Laws of Massachusetts, Chapter 167E, which governs Eastern Bank’s lending powers; and • Rules and regulations of the various federal and state agencies charged with the responsibility of implementing such federal and state laws.
Loan operations are also subject to state and federal laws applicable to credit transactions, such as the: • Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; 18 • Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies; • Massachusetts Debt Collection Regulations, establishing standards, by defining unfair or deceptive acts or practices, for the collection of debts from persons within the Commonwealth of Massachusetts and the General Laws of Massachusetts, Chapter 167E, which governs Eastern Bank’s lending powers; and • Rules and regulations of the various federal and state agencies charged with the responsibility of implementing such federal and state laws.
As a result of the conversion of Eastern Bank Corporation, the predecessor holding company of Eastern Bank, from a mutual into a stock holding company in connection with our IPO (the “Conversion”), Eastern Bankshares, Inc. may not declare or pay a cash dividend on, or repurchase any of its capital shares if 12 the effect thereof would cause its net worth to be reduced below (i) the amount required for the liquidation account established by Eastern Bankshares, Inc. in connection with the IPO (“Liquidation Account”) or (ii) the regulatory capital requirements of Eastern Bankshares, Inc.
As a result of the conversion of Eastern Bank Corporation, the predecessor holding company of Eastern Bank, from a mutual into a stock holding company in connection with our IPO (the “Conversion”), Eastern Bankshares, Inc. may not declare or pay a cash dividend on, or repurchase any of its capital shares if the effect thereof would cause its net worth to be reduced below (i) the amount required for the liquidation account established by Eastern Bankshares, Inc. in connection with the IPO (“Liquidation Account”) or (ii) the regulatory capital requirements of Eastern Bankshares, Inc.
Underwriting considerations include, among others, income sources and their reliability, willingness to repay as evidenced by credit repayment history, financial resources including cash reserves and the value of the collateral. We maintain policy standards for minimum credit score and cash reserves and maximum loan to value consistent with a “prime” portfolio. Collateral consists of mortgage liens on residential dwellings.
Underwriting considerations include, among others, income sources and their reliability, willingness to repay as evidenced by credit repayment history, financial resources including cash reserves and the value of the collateral. We maintain policy standards for minimum credit score and cash reserves and maximum loan to value consistent with a “prime” portfolio. 8 Collateral consists of mortgage liens on residential dwellings.
The amendments will change the ways that the agencies evaluate the engagement by Eastern Bank and other banks with assets of $2 billion or more with LMI individuals and communities, small businesses, and small farms, including conducting separate assessments of such banks’ activities using four tests: (1) retail lending, (2) retail services and products, (3) 17 community development financing, and (4) community development services.
The amendments will change the ways that the agencies evaluate the engagement by Eastern Bank and other banks with assets of $2 billion or more with LMI individuals and communities, small businesses, and small farms, including conducting separate assessments of such banks’ activities using four tests: (1) retail lending, (2) retail services and products, (3) community development financing, and (4) community development services.
Eastern Bank’s most recent 2022 CRA performance rating under Massachusetts law was “Outstanding.” On October 24, 2023, the FDIC, the Office of the Comptroller of the Currency (the “OCC”), and the Federal Reserve Board jointly issued a final rule that makes comprehensive amendments to the FDIC’s regulation implementing the CRA.
Eastern Bank’s most recent 2022 CRA performance rating under Massachusetts law was “Outstanding.” On October 24, 2023, the FDIC, the Office of the Comptroller of the Currency (the “OCC”), and the Federal Reserve Board jointly issued a final rule that makes comprehensive amendments to the FDIC’s regulation implementing the 17 CRA.
Under Section 22(h) of the Federal Reserve Act, loans to a director, an executive officer and to a greater than 10.0% shareholder of a financial institution, and certain affiliated interests of these, together with all other outstanding loans to such person and affiliated interests, may not exceed specified limits.
Under Section 22(h) of the Federal Reserve Act, loans to a director, an executive officer and to a greater than 10.0% shareholder of a financial institution, and certain affiliated interests of these, together with 15 all other outstanding loans to such person and affiliated interests, may not exceed specified limits.
We focus our commercial real estate lending on properties within our primary market area but will originate commercial real estate loans on properties located outside this area based on an established relationship with a strong borrower. We intend to continue to grow our commercial real estate loan portfolio while maintaining prudent underwriting standards.
We focus our commercial real estate lending on properties within our primary market area but will originate commercial real estate loans on properties located outside this area based on an established relationship with a strong borrower. We intend to continue to grow our commercial real estate loan portfolio while maintaining prudent underwriting 7 standards.
We believe we have been able to attract and maintain satisfactory levels of deposits based on the level of service 10 we provide to our customers, the convenience of our banking locations, our electronic banking options, and our interest rates, all of which are generally competitive with those of competing financial institutions.
We believe we have been able to attract and maintain satisfactory levels of deposits based on the level of service we provide to our customers, the convenience of our banking locations, our electronic banking options, and our interest rates, all of which are generally competitive with those of competing financial institutions.
In addition, a nonmember bank may control a subsidiary that engages in activities as principal that would only be permitted for a national bank to conduct in a “financial subsidiary” if a bank meets specified conditions and deducts its investment in the subsidiary for regulatory capital purposes. Interstate Banking and Branching.
In addition, a nonmember bank may control a subsidiary that engages in activities as principal that would only be permitted for a national bank to conduct in a “financial subsidiary” if a bank meets specified conditions and deducts its investment in the subsidiary for regulatory capital purposes. 14 Interstate Banking and Branching.
Through the Bank, we provide a variety of banking and trust and investment services. As of December 31, 2022, we had two reportable business segments: banking and insurance agency, which we conducted under the name Eastern Insurance Group LLC (“Eastern Insurance Group”).
Through the Bank, we provide a variety of banking and trust and investment services. As of December 31, 2022, we had two reportable business segments: the banking segment and the insurance agency segment, which we conducted under the name Eastern Insurance Group LLC (“Eastern Insurance Group”).
In the third quarter of 2023, we announced the sale of substantially all of the assets and transfer of substantially all of the liabilities of our insurance agency business. We completed the sale on October 31, 2023. Accordingly, as of December 31, 2023, we had one reportable segment: our banking business.
In the third quarter of 2023, we announced the sale of substantially all of the assets and the transfer of substantially all of the liabilities of our insurance agency business. We completed the sale on October 31, 2023. Accordingly, as of December 31, 2024, we had one reportable segment: our banking business.
In addition, upon finding that a bank has engaged in an unfair or 13 deceptive act or practice, the Massachusetts Commissioner of Banks may issue an order to cease and desist and impose a fine on the bank concerned.
In addition, upon finding that a bank has engaged in an unfair or deceptive act or practice, the Massachusetts Commissioner of Banks may issue an order to cease and desist and impose a fine on the bank concerned.
Eastern Bankshares, Inc. is also subject to examination 11 by the Massachusetts Commissioner of Banks. In addition, Eastern Bankshares, Inc. is subject to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) under the federal securities laws.
Eastern Bankshares, Inc. is also subject to examination by the Massachusetts Commissioner of Banks. In addition, Eastern Bankshares, Inc. is subject to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) under the federal securities laws.
If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard. 14 Investment Activities.
If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard. Investment Activities.
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. The only entity controlled directly by Eastern Bankshares, Inc. is Eastern Bank, which is a wholly owned subsidiary. Eastern Bank controls five active subsidiaries as follows: 1.
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. The only entity controlled directly by Eastern Bankshares, Inc. is Eastern Bank, which is a wholly owned subsidiary. Eastern Bank controls six active subsidiaries as follows: 1.
Federal Reserve System Historically, the Federal Reserve Board regulations required depository institutions to maintain interest-earning reserves against their transaction accounts. However, in March of 2020, the Federal Reserve Board eliminated reserve requirements and therefore there was no minimum reserve requirement as of December 31, 2023. The Federal Reserve Board has stated that it has no plans to re-impose reserve requirements.
Federal Reserve System Historically, the Federal Reserve Board regulations required depository institutions to maintain interest-earning reserves against their transaction accounts. However, in March of 2020, the Federal Reserve Board eliminated reserve requirements and therefore there was no minimum reserve requirement as of December 31, 2024. The Federal Reserve Board has stated that it has no plans to re-impose reserve requirements.
An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%. As of December 31, 2023, Eastern Bank was a “well capitalized” institution under FDIC regulations.
An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%. As of December 31, 2024, Eastern Bank was a “well capitalized” institution under FDIC regulations.
An affiliate of a bank is any company or entity that controls, is 15 controlled by or is under common control with the bank.
An affiliate of a bank is any company or entity that controls, is controlled by or is under common control with the bank.
Based on redemption provisions of the FHLBB, the shares have no quoted market value and are carried at cost. Eastern Bank reviews for impairment based on the ultimate recoverability of the cost basis of the FHLBB shares. As of December 31, 2023, no impairment had been recognized. At its discretion, the FHLBB may declare dividends on the shares.
Based on redemption provisions of the FHLBB, the shares have no quoted market value and are carried at cost. Eastern Bank reviews for impairment based on the ultimate recoverability of the cost basis of the FHLBB shares. As of December 31, 2024, no impairment had been recognized. At its discretion, the FHLBB may declare dividends on the shares.
However, they may adjust reserve requirement ratios in the future if conditions warrant. The annual interest rate on reserve balances was 5.4% as of December 31, 2023. Federal Home Loan Bank System Eastern Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks.
However, they may adjust reserve requirement ratios in the future if conditions warrant. The annual interest rate on reserve balances was 4.4% as of December 31, 2024. Federal Home Loan Bank System Eastern Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks.
Dividend income from the FHLB during the year ended December 31, 2023 was $2.0 million. There can be no assurance that such dividends will continue in the future. Holding Company Regulation Eastern Bankshares, Inc. is subject to examination, regulation, and periodic reporting under the Bank Holding Company Act of 1956, as amended, as administered by the Federal Reserve Board.
Dividend income from the FHLB during the year ended December 31, 2024 was $0.9 million. There can be no assurance that such dividends will continue in the future. Holding Company Regulation Eastern Bankshares, Inc. is subject to examination, regulation, and periodic reporting under the Bank Holding Company Act of 1956, as amended, as administered by the Federal Reserve Board.
Paper copies of all such filings are available free of charge by request via email (investor.relations@easternbank.com), telephone (781-598-7920) or mail (Eastern Bankshares, Inc. Investor Relations at 265 Franklin Street, Boston, MA 02110). The information contained or incorporated on our website is not a part of this Annual Report on Form 10-K.
Paper copies of all such filings are available free of charge by request via email (investor.relations@easternbank.com), telephone (781-598-7920) or mail (Eastern Bankshares, Inc. Investor Relations at 125 High Street, Boston, MA 02110). The information contained or incorporated on our website is not a part of this Annual Report on Form 10-K.
The FHLB provides a central credit facility primarily for member institutions. Members of the FHLB are required to acquire and hold shares of capital shares in the FHLB bank of which they are a member. Eastern Bank acquired capital shares in the FHLBB and was in compliance with this requirement at December 31, 2023.
The FHLB provides a central credit facility primarily for member institutions. Members of the FHLB are required to acquire and hold shares of capital stock in the FHLB bank of which they are a member. Eastern Bank acquired capital shares in the FHLBB and was in compliance with this requirement at December 31, 2024.
Accordingly, investors should monitor these portions of our website, in addition to following the Company’s press releases, SEC filings, public conference calls and webcasts. 26
Accordingly, investors should monitor these portions of our website, in addition to following the Company’s press releases, SEC filings, public conference calls and webcasts. 23
In managing the commercial and industrial loan portfolio, we focus on the size of the customer’s lending relationship, which we view as the aggregate amount of all loans and loan commitments outstanding to a commercial borrower and any related borrowers or guarantors. The average commercial and industrial lending relationship by balance at December 31, 2023 was $3.7 million.
In managing the commercial and industrial loan portfolio, we focus on the size of the customer’s lending relationship, which we view as the aggregate amount of all loans and loan commitments outstanding to a commercial borrower and any related borrowers or guarantors. The average commercial and industrial lending relationship by balance at December 31, 2024 was $3.4 million.
We had $2.9 billion of borrowing capacity remaining with the FHLBB at December 31, 2023. See Note 9, “Borrowed Funds” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K for more information regarding borrowings.
We had $2.4 billion of borrowing capacity remaining with the FHLBB at December 31, 2024. See Note 10, “Borrowed Funds” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K for more information regarding borrowings.
Based on data from the FDIC as of June 30, 2023 (the latest date for which information is available), we had a weighted average deposit market share of 5.4% for the seven separate banking markets tracked by the Federal Reserve Board in which we have at least one branch.
Based on data from the FDIC as of June 30, 2024 (the latest date for which information is available), we had a weighted average deposit market share of 6.5% for the seven separate banking markets tracked by the Federal Reserve Board in which we have at least one branch.
We will look to opportunistically hire talented bankers and employees with a continued emphasis on recruiting highly motivated, diverse managers and employees who can establish and maintain long-term customer relationships that are key to our business, brand and culture. Manage risk to navigate a range of economic environments.
We will look to opportunistically hire talented employees with a continued emphasis on recruiting highly motivated, growth-oriented managers and employees who can establish and maintain long-term customer relationships that are key to our business, brand and culture. Manage risk to navigate a range of economic environments.
As of December 31, 2023, we had total consumer home equity loans of $1.2 billion, representing 8.7% 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.
As of December 31, 2024, we had total consumer home equity loans of $1.4 billion, representing 7.8% 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.
We maintain policy standards for minimum credit score and cash reserves and maximum loan-to-value ratios consistent with a “prime” portfolio. For home equity loans and lines of credit originated in 2023, the average Fair Isaac Corporation (“FICO”) score was 761.
We maintain policy standards for minimum credit score and cash reserves and maximum loan-to-value ratios consistent with a “prime” portfolio. For home equity loans and lines of credit originated in 2024, the average Fair Isaac Corporation (“FICO”) score was 763.
We are subject to comprehensive regulation and examination by the Massachusetts Commissioner of Banks, the Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve Board and the Consumer Financial Protection Bureau. Our diversified products and services include lending, deposit, and wealth management.
We are subject to comprehensive regulation and examination by the Massachusetts Commissioner of Banks, the Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve Board, the Consumer Financial Protection Bureau and the New Hampshire Banking Department. Our diversified products and services include lending, deposit, and wealth management.
Loan Sales and Purchases We generally originate commercial loans for our portfolio, although we sell participation interests in commercial and industrial loans and commercial real estate loans to local financial institutions, primarily on the portion of loans exceeding our borrowing limits.
Loan Sales and Purchases We generally originate commercial loans for our portfolio, although we sell participation interests in commercial and industrial loans and commercial real estate loans to local financial institutions, primarily on the portion of loans exceeding our borrowing limits. We purchase loan participations from other financial institutions.
The average tenure of our commercial and industrial portfolio varies according to market conditions but at December 31, 2023 it was approximately 6 years.
The average tenure of our commercial and industrial portfolio varies according to market conditions but at December 31, 2024 it was approximately 6.3 years.
Our lending focuses on the following loan categories: commercial and industrial, including our Asset Based Lending Portfolio, commercial real estate, commercial construction, small business banking, residential real estate and home equity loans. Through Eastern Bank’s wealth management offering, we provide a wide range of trust services.
Our lending focuses on the following loan categories: commercial and industrial, including our Asset Based Lending Portfolio, commercial real estate, commercial construction, small business banking, residential real estate and home equity loans. Through Cambridge Trust Wealth Management, a division of Eastern Bank, we provide a wide range of wealth management and trust services.
At December 31, 2023, total deposits were $17.6 billion. Deposits originating through our branch banking network have traditionally been the principal source of our funds for use in lending and for other general business purposes. We offer a range of demand deposits, interest checking, money market accounts, savings accounts and time certificates of deposit.
At December 31, 2024, total deposits were $21.3 billion. Deposits originating through our branch banking network have traditionally been the principal source of our funds for use in lending and for other general business purposes. We offer a range of demand deposits, interest checking, money market accounts, savings accounts and time certificates of deposit.
To the extent that we acquire other companies, including Cambridge Bancorp and its subsidiary Cambridge Trust Company, our business may be negatively impacted by certain risks inherent with such acquisitions, including assumption of or potential exposure to significant liabilities of the acquired business, some of which may be unknown or contingent at the time of acquisition, including, without limitation, liabilities for regulatory and compliance issues.
To the extent that we acquire other companies, our business may be negatively impacted by certain risks inherent with such acquisitions, including assumption of or potential exposure to significant liabilities of the acquired business, some of which may be unknown or contingent at the time of acquisition, including, without limitation, liabilities for regulatory and compliance issues.
Approximately 65.2% of our commercial and industrial loan exposure at December 31, 2023 was to customers headquartered within our primary lending market, which consists of eastern and central Massachusetts, southern New Hampshire, including the seacoast region, and northern Rhode Island, although we participate in the syndicated loan market and the SNC Program.
Approximately 63.9% of our commercial and industrial loan exposure at December 31, 2024 was to customers headquartered within our primary lending market, which consists of eastern and central Massachusetts, southern New Hampshire, including the seacoast region, and northern Rhode Island, although we participate in the syndicated loan market and the SNC Program.
At December 31, 2023, Eastern Bank exceeded the regulatory requirement for the capital conservation buffer.
At December 31, 2024, Eastern Bank exceeded the regulatory requirement for the capital conservation buffer.
This policy dictates that investment decisions be made based on the safety of the investment, liquidity requirements, potential returns and market risk considerations. At December 31, 2023, our securities portfolio totaled $4.9 billion, and generated interest and dividends of 13.4% of total interest income for the year ended December 31, 2023.
This policy dictates that investment decisions be made based on the safety of the investment, liquidity requirements, potential returns and market risk considerations. At December 31, 2024, our securities portfolio totaled $4.4 billion, and generated interest and dividends of 10.2% of total interest income for the year ended December 31, 2024.
In the Boston market, which accounted for 94.5% of our deposits as of June 30, 2023, our market share was 3.5%, representing the fifth largest deposit share in that market. We also face competition for deposits from other financial services companies such as securities brokerage firms, credit unions, insurance companies and money market funds.
In the Boston market, which accounted for 93.3% of our deposits as of June 30, 2024, our market share was 4.0%, representing the fifth largest deposit share in that market. We also face competition for deposits from other financial services companies such as securities brokerage firms, credit unions, insurance companies and money market funds.
As of December 31, 2023, we had total commercial construction loans of $387.0 million, representing 2.8% of our total loans. The majority of the loans in this category, measured by the outstanding loan balance as of December 31, 2023, are secured by properties located in our primary lending area.
As of December 31, 2024, we had total commercial construction loans of $491.6 million, representing 2.8% of our total loans. The majority of the loans in this category, measured by the outstanding loan balance as of December 31, 2024, are secured by properties located in our primary lending area.
Loans in this category consist of lines of credit and term loans extended to businesses and corporate enterprises for the purpose of financing working capital, facilitating equipment purchases and facilitating acquisitions. As of December 31, 2023, we had total commercial and industrial loans of $3.0 billion, representing 21.8% of our total loans.
Loans in this category consist of lines of credit and term loans extended to businesses and corporate enterprises for the purpose of financing working capital, facilitating equipment purchases and facilitating acquisitions. As of December 31, 2024, we had total commercial and industrial loans of $3.3 billion, representing 18.4% of our total loans.
We were named among the top 10 most charitable organizations in Massachusetts for the 11th year by the Boston Business Journal. We also strive to engage employees during their most difficult times. In 2023, we continued to support a fund that provides cash grants to eligible employees experiencing an unexpected financial hardship.
In recognition of our community support, we were named among the top 10 most charitable organizations in Massachusetts for the 12th year by the Boston Business Journal. We also strive to engage employees during their most difficult times. In 2024, we continued to support a fund that provides cash grants to eligible employees experiencing an unexpected financial hardship.
As a member of the FHLBB, we are required to purchase shares in the FHLBB. Accordingly, we had invested $5.9 million in shares of the FHLBB and had $17.7 million outstanding in FHLBB borrowings with original maturities ranging from 1 week to 20 years at December 31, 2023.
As a member of the FHLBB, we are required to purchase shares in the FHLBB. Accordingly, we had invested $5.9 million in shares of the FHLBB and had $17.6 million outstanding in FHLBB borrowings with original maturities ranging from 3 years to 20 years at December 31, 2024.
We believe that as a result of our initial public offering (“IPO”), which was completed in October 2020, we are well-positioned as a consolidator in the banking market because of our financial strength, reputation and culture as evidenced by our acquisition of Century in November 2021 and our proposed acquisition of Cambridge.
We believe that as a result of our initial public offering (“IPO”), which was completed in October 2020, we are well-positioned as a consolidator in the banking market because of our financial strength, reputation and culture as evidenced by our acquisitions of Century Bancorp, Inc. (“Century”) in November 2021 and Cambridge in July 2024.
Since 2016, we have outsourced to an independent party the processing, underwriting (using our criteria) and closing of residential loans originated by our mortgage loan officers. During the year ended December 31, 2023, residential real estate mortgage originations were $341.7 million, of which $51.6 million were sold on the secondary markets.
Since 2016, we have outsourced to an independent third party the processing, underwriting (using our criteria) and closing of residential loans originated by our mortgage loan officers. During the year ended December 31, 2024, residential real estate mortgage originations were $348.7 million, of which $93.9 million were sold on the secondary markets.
Approximately 45.8% of the population in the Boston–Worcester–Providence CSA age 25 or older has at least a bachelor’s degree, compared to 35.7% for the United States as a whole as of December 31, 2023. Major employment sectors range from education, services, manufacturing and wholesale and retail trade, to finance, technology and health care.
Approximately 47.0% of the population in the Boston–Worcester–Providence CSA age 25 or older has at least a bachelor’s degree, compared to 36.2% for the United States as a whole as of December 31, 2024. Major employment sectors range from education, services, manufacturing and wholesale and retail trade, to finance, technology and health care.
As of December 31, 2023, we held loan participation interests, including SNCs, totaling $1.6 billion in loans originated by other lenders, consisting of $1.0 billion of commercial and industrial loan participations, $447.6 million of commercial real estate loan participations, $146.0 million of commercial construction loan participations, and less than $0.1 million of business banking loan participations.
As of December 31, 2024, we held loan participation interests, including SNCs, totaling $2.1 billion in loans originated by other lenders, consisting of $1.0 billion of commercial and industrial loan participations, $944.4 million of commercial real estate loan participations, $159.2 million of commercial construction loan participations, and less than $1.6 million of business banking loan participations.
The final rule set an effective date of April 1, 2024, with special assessments collected beginning with the first quarterly assessment period of 2024 (i.e., January 1 through March 31, 2024, with an invoice payment date of June 28, 2024). The FDIC has authority to further increase insurance assessments.
The final rule set an effective date of April 1, 2024, with special assessments collected beginning with the first quarterly assessment period of 2024 (i.e., January 1 through March 31, 2024, with an invoice payment date of June 28, 2024).
As of December 31, 2023, we had total other consumer loans of $235.5 million, representing 1.7% of our total loans. Our policy and underwriting considerations in this category include, among others: income sources and reliability, credit histories, term of repayment and collateral value, as applicable.
As of December 31, 2024, we had total other consumer loans of $227.2 million, representing 1.3% of our total loans. Our policy and underwriting considerations in this category include, among others: income sources and reliability, credit histories, term of repayment and collateral value, as applicable.
Loans-to-One Borrower Limit and Loan Category Concentration The maximum amount that we may lend to one borrower and its related entities generally is limited, by statute, to 20% of our capital, which is defined under Massachusetts law as the sum of our capital shares, surplus account and undivided profits.
Exceptions are reported to the Risk Management Committee of the Board of Directors quarterly. 9 Loans-to-One Borrower Limit and Loan Category Concentration The maximum amount that we may lend to one borrower and its related entities generally is limited, by statute, to 20% of our capital, which is defined under Massachusetts law as the sum of our capital shares, surplus account and undivided profits.
The requirements are similar to federal laws such as the Gramm-Leach-Bliley Act, discussed below under “—Federal Bank Regulation—Privacy Regulations.” They require organizations to establish written information security programs to prevent identity theft and other fraud.
Massachusetts has adopted statutory and regulatory requirements intended to protect personal information. The requirements are similar to federal laws such as the Gramm-Leach-Bliley Act, discussed below under “—Federal Bank Regulation—Privacy Regulations.” They require organizations to establish written information 12 security programs to prevent identity theft and other fraud.
The federal banking regulators have provided guidance designed to ensure that incentive compensation arrangements at banking organizations take into account risk and are consistent with safe and sound practices.
Compensation Practices. Our compensation practices are subject to oversight by the Federal Reserve Board and the FDIC. The federal banking regulators have provided guidance designed to ensure that incentive compensation arrangements at banking organizations take into account risk and are consistent with safe and sound practices.
Our one- to four-family residential real estate loan portfolio consists of mortgage loans that enable borrowers to purchase or refinance existing homes, most of which serve as the primary residence of the owner. As of December 31, 2023, we had total residential real estate loans of $2.6 billion, representing 18.4% of our total loans.
Our one- to four-family residential real estate loan portfolio consists of mortgage loans that enable borrowers to purchase or refinance existing homes, most of which serve as the primary residence of the owner. As of December 31, 2024, we had total residential real estate loans of $3.9 billion, representing 22.1% of our total loans.
For further information regarding risks related to regulatory actions and litigation, please refer to “Risk Factors—Risks Related to Our Business—Operational risks are inherent in our businesses,” “Risk Factors—Risks Related to Regulations” in Part I, Item 1A of this Annual Report on Form 10-K.
For further information regarding risks related to regulatory actions and litigation, please refer to “Risk Factors—Risks Related to Our Business—Operational risks are inherent in our businesses,” “Risk Factors—Risks Related to Regulations” in Part I, Item 1A of this Annual Report on Form 10-K. Human Capital Management Human Capital Management has always been at the heart of our Company.
For additional information, see Note 17, “Commitments and Contingencies” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K. 21 In part as a result of the extensive regulation, supervision and examination of our business described elsewhere in this Annual Report on Form 10-K, we are also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding our business, certain of which may result in adverse judgments, settlements, fines, penalties, public or private censure, increased costs, required remediation, restriction on business activities or other impacts on us.
In part as a result of the extensive regulation, supervision and examination of our business described elsewhere in this Annual Report on Form 10-K, we are also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding our business, certain of which may result in adverse judgments, settlements, fines, penalties, public or private censure, increased costs, required remediation, restriction on business activities or other impacts on us.
Eastern Bank is subject to extensive regulation by the Massachusetts Commissioner of Banks, as its chartering authority, and by the FDIC, as its primary federal regulator.
Eastern Bank’s deposits are insured up to applicable limits by the FDIC. Eastern Bank is subject to extensive regulation by the Massachusetts Commissioner of Banks, as its chartering authority, and by the FDIC, as its primary federal regulator.
At December 31, 2023, our ten largest commercial and industrial lending relationships, including relationships with combined commercial and industrial and owner-occupied commercial real estate exposure (e.g., combination of outstanding principal balance and undrawn commitment amount), had an average exposure of $68.6 million and ranged in exposure size from $60.6 million to $80.4 million.
At December 31, 2024, our ten largest commercial and industrial lending relationships, including relationships with combined commercial and industrial and owner-occupied commercial real estate exposure (e.g., combination of outstanding principal balance and undrawn commitment amount), had an average exposure of $82.7 million and ranged in exposure size from $59.0 million to $228.2 million.
As of December 31, 2023, we had total consolidated assets of $21.1 billion, total gross loans of $14.0 billion, total deposits of $17.6 billion and total shareholders’ equity of $3.0 billion.
As of December 31, 2024, we had total consolidated assets of $25.6 billion, total gross loans of $18.1 billion, total deposits of $21.3 billion and total shareholders’ equity of $3.6 billion.
We believe our loan portfolio is well diversified with approximately 9,600 commercial relationships at December 31, 2023. Our lending area mainly consists of the greater Boston area, specifically eastern and central Massachusetts, southern New Hampshire, including the seacoast region, and northern Rhode Island.
We believe our loan portfolio is well diversified with approximately 11,000 commercial relationships at 6 December 31, 2024. Our lending area mainly consists of the greater Boston area, specifically eastern and central Massachusetts, southern New Hampshire, including the seacoast region, and northern Rhode Island. Our lending focuses on the following categories of loans: Commercial and Industrial Loans.
At December 31, 2023, our ten largest construction loans had an average exposure of $33.8 million, ranging from $27.8 million to $50.0 million. A portion of our commercial construction loans were included in the SNC program portfolio discussed above.
At December 31, 2024, our ten largest construction loans had an average exposure of $30.1 million, ranging from $22.5 million to $35.0 million. A portion of our commercial construction loans were included in the SNC program portfolio discussed above.
We generally do not continue to service residential loans that we sell in the secondary market. At December 31, 2023, our ten largest one- to four-family residential real estate loans had an average balance of $2.8 million, ranging from $2.2 million to $5.2 million.
We generally do not continue to service residential loans that we sell in the secondary market. At December 31, 2024, our ten largest one- to four-family residential real estate loans had an average balance of $4.4 million, ranging from $3.1 million to $5.7 million. Home Equity Loans and Lines of Credit.
The financial services industry in general and in our market in particular is highly competitive. We face significant competition in gathering deposits and originating loans. Our most direct competition for deposits has historically come from banking institutions operating in our primary market area.
We face significant competition in gathering deposits and originating loans. Our most direct competition for deposits has historically come from banking institutions operating in our primary market area.
Management partners with external organizations to develop diverse candidate pipelines, regularly reports on diverse hiring to the Board of Directors and the Compensation and Human Capital Management Committee, and has a talent acquisition team comprised of diverse colleagues.
Management partners with external organizations to develop candidate pipelines, regularly reports on hiring to the Board of Directors and the Compensation and Human Capital Management Committee and has a talent acquisition team comprised of dedicated colleagues who bring our inclusive values to bear in our recruiting efforts.
Employee Engagement We are dedicated to engaging our workforce to better understand how we can improve our culture and workplace. In 2023, we virtually hosted six Town Hall meetings, led by the CEO. At each meeting, employees were able to ask questions anonymously and engage directly with the CEO and Management Committee members.
We are dedicated to engaging our workforce to better understand how we can improve our culture and workplace. In 2024, we virtually hosted 8 Town Hall meetings, led by the Executive Chair. At each meeting, employees were able to ask questions anonymously and engage directly with the Executive Chair and Senior Executives.
Among other benefits, in 2023, we offered our employees three separate retirement benefits: a defined pension benefit plan, a 401(k) contribution, and an employee stock ownership plan (“ESOP”) through which Company stock is allocated to all eligible employees (based on age and hours worked).
Among other benefits, in 2024, we offered our employees three separate retirement benefits, which we believe helps us attract and retain top talent: a defined pension benefit plan, a 401(k) contribution, and an employee stock ownership plan (“ESOP”) through which Company stock is allocated to all eligible employees (based on age and hours worked), ensuring most of our employees are also shareholders.
In addition, the Massachusetts Commissioner of Banks has the authority to appoint the FDIC as a receiver or conservator if the Massachusetts Commissioner of Banks or the FDIC determine that a Massachusetts-chartered bank is conducting business in an unsafe or unauthorized manner, and under certain other circumstances.
In addition, the Massachusetts Commissioner of Banks has the authority to appoint the FDIC as a receiver or conservator if the Massachusetts Commissioner of Banks or the FDIC determine that a Massachusetts-chartered bank is conducting business in an unsafe or unauthorized manner, and under certain other circumstances. 11 The powers that Massachusetts-chartered banks can exercise under these laws include, but are not limited to, the following: Lending Activities.
For purposes of the regulatory capital requirements, common equity Tier 1 capital is generally defined as common shareholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital includes certain noncumulative perpetual preferred shares and related surplus and minority interests in equity accounts of consolidated subsidiaries.
Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital includes certain noncumulative perpetual preferred shares and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital.
Available Information We file annual, quarterly, and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (“Exchange Act”), with the Securities and Exchange Commission (“SEC”). Our SEC filings are available to the public from the SEC’s internet site at www.SEC.gov.
We monitor our trademarks and vigorously oppose the infringement of any of our marks as appropriate. Available Information We file annual, quarterly, and current reports, proxy statements and other information required by the Exchange Act with the SEC. Our SEC filings are available to the public from the SEC’s internet site at www.SEC.gov.
Median household income in 2022 for the Boston–Worcester–Providence CSA was approximately $95,000 compared to $75,000 for the United States as a whole. The estimated median age of the population in the Boston–Worcester–Providence CSA is 40.4 years, compared to 39.0 years for the United States as a whole.
The 4 estimated median age of the population in the Boston–Worcester–Providence CSA is 40.5 years, compared to 39.2 years for the United States as a whole.
Seven of the ten largest employers in the Boston metropolitan statistical area (“MSA”) are hospitals. Professional, scientific, and technical services, which covers a variety of industries including computer systems design, scientific research and development, management consulting, architecture and law, comprise the second largest share of the Boston MSA employers.
Professional, scientific, and technical services, which covers a variety of industries including computer systems design, scientific research and development, management consulting, architecture and law, comprise the second largest share of the Boston metropolitan statistical area employers. The financial services industry in general and in our market in particular is highly competitive.
These descriptions are not intended to be complete and are qualified in their entirety by reference to the full text of the statutes and regulations described. General Eastern Bank is a Massachusetts-chartered non-member bank. Eastern Bank’s deposits are insured up to applicable limits by the FDIC.
Described below are the material elements of selected laws and regulations applicable to us, the Bank, our subsidiaries and our affiliates. These descriptions are not intended to be complete and are qualified in their entirety by reference to the full text of the statutes and regulations described. General Eastern Bank is a Massachusetts-chartered non-member bank.
In connection with our pending acquisition of Cambridge Bancorp and its wholly owned depository subsidiary Cambridge Trust Company, we may elect to operate Cambridge Trust Company as a separate bank subsidiary for a relatively brief period, in which case Eastern Bankshares, Inc. would be subject to regulation as a bank holding company for purposes of Massachusetts law.
In connection with any future acquisitions, we may elect to operate the acquired bank as a separate bank subsidiary for a relatively brief period, in which case Eastern Bankshares, Inc. would be subject to regulation as a bank holding company for purposes of Massachusetts law.
Shares purchased by an affiliate of Eastern Bankshares, Inc. are subject to the resale restrictions of Rule 144 under the Securities Act (“Rule 144”).
Shares of common stock purchased by persons who are not affiliates of Eastern Bankshares, Inc. may be resold without registration. Shares purchased by an affiliate of Eastern Bankshares, Inc. are subject to the resale restrictions of Rule 144 under the Securities Act (“Rule 144”).
The amendments also will require Eastern Bank and other banks with assets of $2 billion or more large banks to delineate their geographic CRA assessment areas on the basis of full counties, metropolitan divisions, or metropolitan statistical areas.
The amendments also will require Eastern Bank and other banks with assets of $2 billion or more to delineate their geographic CRA assessment areas on the basis of full counties, metropolitan divisions, or metropolitan statistical areas. The final rule generally took effect on April 1, 2024, with certain provisions becoming effective on January 1, 2026, and January 1, 2027.
We contest liability and the amount of damages as appropriate in each pending matter. Where available information indicates that it is probable a liability has been incurred at the date of the Consolidated Financial Statements and we can reasonably estimate the amount of that loss, we accrue the estimated loss as a charge to income.
Where available information indicates that it is probable a liability has been incurred at the date of the Consolidated Financial Statements and we can reasonably estimate the amount of that loss, we accrue the estimated loss as a charge to income. 21 In many proceedings, however, it is inherently difficult to determine whether any loss is probable or even possible or to estimate the amount of any loss.
This framework is intended primarily for the protection of depositors, the FDIC’s Deposit Insurance Fund and the banking system as a whole, and generally is not intended for the protection of shareholders or other investors. Described below are the material elements of selected laws and regulations applicable to us, the Bank, our subsidiaries and our affiliates.
Regulation We are subject to the extensive regulatory framework applicable to bank holding companies, bank subsidiaries and their affiliates. This framework is intended primarily for the protection of depositors, the FDIC’s Deposit Insurance Fund and the banking system as a whole, and generally is not intended for the protection of shareholders or other investors.
This category, which we refer to as “business banking,” is comprised of loans to small businesses with exposures of under $1.0 million and small investment real estate projects with exposures of under $3.0 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.
Small Business Loans. This category, which we refer to as “business banking,” is comprised of loans to small businesses with exposures of under $1.0 million and small investment real estate projects with exposures of under $3.0 million.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeVarious risks, including risks associated with changes in interest rates, loan losses, cybersecurity and regulatory compliance, are inherent in our business and our industry generally. • Increases in interest rates have had and in the future may have a material adverse effect on many areas of our business, including net interest income, the earnings and volume of interest-earning assets and interest-bearing liabilities, and loan delinquency, and increases in interest rates may have a material adverse effect on our operating results. • If our allowance for loan losses is insufficient to cover actual loan losses, our earnings and capital could decrease. • The geographic concentration of our loan portfolio and lending activities in eastern Massachusetts and southern and coastal New Hampshire makes us vulnerable to a downturn in our local economy. • We face security risks to our information databases, including information we maintain relating to our customers, as precautions taken by us and our vendors may not be completely effective to prevent unauthorized access, human error, phishing attacks or other events that could impact the security, reliability, confidentiality, integrity and availability of our systems or those of our vendors. 27 • We operate in a highly competitive industry, and technological advances have lowered barriers to entry and made it possible for non-banks to offer products and services, such as loans and payment services, that traditionally were banking products. • We may be unable to successfully execute on our strategic plan or performance targets, including through a failure to attract or retain the necessary highly skilled and qualified personnel. • The fair value of our investments, including our securities portfolio, has declined due to increases in interest rates and may continue to decline, adversely impacting shareholders’ equity. • Commercial loans, including those secured by commercial real estate, are generally riskier than other types of loans and constitute a significant portion of our loan and lease portfolio. • We face significant legal and regulatory risks, both from regulatory investigations and proceedings and from private actions brought against us. • Operational risk and losses can result from factors such as internal and external fraud; errors by employees or third parties; failure to document transactions properly or to obtain proper authorization; failure to comply with applicable regulatory requirements and conduct of business rules; equipment failures, including those caused by natural disasters or utility outages; business continuity and data security system failures, including those encountered while implementing major new computer systems or upgrades to existing systems; or the inadequacy or failure of systems and controls, including those of our suppliers or counterparties. • We may be adversely affected by weaknesses in financial institutions, the financial markets and economic conditions in the United States, market changes, or changes in equity markets. • We are subject to capital and liquidity standards that may change from time to time, and we may be unable to raise additional capital if needed on terms that are acceptable to us, or at all. • Our business is subject to extensive state and federal regulations, which often limit or restrict our activities and may impose material financial requirements or limitations on the conduct of our business. • We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions, or could impede or materially delay our receipt of regulatory approval to acquire other companies. • We may incur fines, penalties and other negative consequences from regulatory violations, which could include inadvertent or unintentional violations. • We may be unable to disclose some restrictions or limitations on our operations imposed by our regulators. • Our stock-based benefit plan, which we adopted in 2021, has increased and is expected to continue to increase our annual compensation and benefit expenses.
Biggest changeUnrealized gains and losses, net of tax, in the estimated fair value of the available-for-sale portfolio is recorded as other comprehensive income, which has the effect of reducing our shareholders’ equity and therefore our tangible book value per share, which is a metric many investors in our common stock consider. • Commercial loans, including those secured by commercial real estate, are generally riskier than other types of loans and constitute a significant portion of our loan and lease portfolio. • We face significant legal and regulatory risks, both from regulatory investigations and proceedings and from private actions brought against us. • Operational risk and losses can result from factors such as internal and external fraud; errors by employees or third parties; failure to document transactions properly or to obtain proper authorization; failure to comply with applicable regulatory requirements and conduct of business rules; equipment failures, including those caused by natural disasters or utility outages; business continuity and data security system failures, including those encountered while implementing major new computer systems or upgrades to existing systems; or the inadequacy or failure of systems and controls, including those of our suppliers or counterparties. • We may be adversely affected by weaknesses in financial institutions, the financial markets and economic conditions in the United States, market changes, or changes in equity markets. • We are subject to capital and liquidity standards that may change from time to time, and we may be unable to raise additional capital if needed on terms that are acceptable to us, or at all. • Our business is subject to extensive state and federal regulations, which often limit or restrict our activities and may impose material financial requirements or limitations on the conduct of our business. • We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions, or could impede or materially delay our receipt of regulatory approval to acquire other companies. • We may incur fines, penalties and other negative consequences from regulatory violations, which could include inadvertent or unintentional violations. • We may be unable to disclose some restrictions or limitations on our operations imposed by our regulators. • Our stock-based benefit plan, which we adopted in 2021, has increased and is expected to continue to increase our annual compensation and benefit expenses.
The articles of organization of Eastern Bankshares, Inc. provide that state and federal courts located in Massachusetts will be the exclusive forum for substantially all disputes between us and our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
The articles of organization of Eastern Bankshares, Inc. provide that state and federal courts located in Massachusetts will be the exclusive forum for substantially all disputes between us and our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
The choice of forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that the shareholder finds favorable for disputes, could discourage such lawsuits against us and our directors, officers and other employees.
The choice of forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that the shareholder finds favorable for disputes and could discourage such lawsuits against us and our directors, officers and other employees.
A worsening of business and economic conditions generally or specifically in the principal markets in which we conduct business could have adverse effects on our business, including the following: • A decrease in the demand for, or the availability of, loans and other products and services offered by us; • A decrease in the value of our loans held for sale or other assets secured by residential or commercial real estate; • An impairment of certain intangible assets, such as goodwill; • A decrease in interest income from variable rate loans due to declines in interest rates; and 32 • An increase in the number of clients and counterparties who become delinquent, file for protection under bankruptcy laws or default on their loans or other obligations to us, which could result in a higher level of non-performing assets, net charge-offs, provisions for loan losses, and valuation adjustments on loans held for sale.
A worsening of business and economic conditions generally or specifically in the principal markets in which we conduct business could have adverse effects on our business, including the following: • A decrease in the demand for, or the availability of, loans and other products and services offered by us; • A decrease in the value of our loans held for sale or other assets secured by residential or commercial real estate; • An impairment of certain intangible assets, such as goodwill; • A decrease in interest income from variable rate loans due to declines in interest rates; and • An increase in the number of clients and counterparties who become delinquent, file for protection under bankruptcy laws or default on their loans or other obligations to us, which could result in a higher level of non-performing assets, net charge-offs, provisions for loan losses, and valuation adjustments on loans held for sale.
This support may be required by the Federal Reserve Board at times when Eastern Bankshares, Inc. might otherwise determine not to provide it or when doing so might not otherwise be in the interests of the shareholders or creditors of Eastern Bankshares, Inc., and may include one or more of the following: • Any extension of credit from Eastern Bankshares, Inc. to Eastern Bank or any other bank subsidiary that is included in the relevant bank’s capital would be subordinate in right of payment to depositors and certain other indebtedness of such subsidiary banks. • In the event of a bank holding company’s bankruptcy, any commitment that the bank holding company had been required to make to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment. • In certain circumstances if we have two or more bank subsidiaries, one bank subsidiary could be assessed for losses incurred by another bank subsidiary.
This support may be required by the Federal Reserve Board at times when Eastern Bankshares, Inc. might otherwise determine not to provide it or when doing so might not otherwise be in the interests of the shareholders or creditors of Eastern Bankshares, Inc., and may include one or more of the following: 42 • Any extension of credit from Eastern Bankshares, Inc. to Eastern Bank or any other bank subsidiary that is included in the relevant bank’s capital would be subordinate in right of payment to depositors and certain other indebtedness of such subsidiary banks. • In the event of a bank holding company’s bankruptcy, any commitment that the bank holding company had been required to make to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment. • In certain circumstances if we have two or more bank subsidiaries, one bank subsidiary could be assessed for losses incurred by another bank subsidiary.
The definition of “covered employees” generally includes anyone who served as the principal executive officer (“PEO”) or principal financial officer (“PFO”) at any time during the taxable year; the three highest compensated executive officers (other than the PEO or PFO), 46 determined under SEC rules; and any individual who was a covered employee, including of a “predecessor company,” at any point during a taxable year beginning on or after January 1, 2017, even after the employee terminates employment.
The definition of “covered employees” generally includes anyone who served as the principal executive officer (“PEO”) or principal financial officer (“PFO”) at any time during the taxable year; the three highest compensated executive officers (other than the PEO or PFO), determined under SEC rules; and any individual who was a covered employee, including of a “predecessor company,” at any point during a taxable year beginning on or after January 1, 2017, even after the employee terminates employment.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition and results of operations. We may incur fines, penalties and other negative consequences from regulatory violations, possibly even inadvertent or unintentional violations.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition and results of operations. 41 We may incur fines, penalties and other negative consequences from regulatory violations, possibly even inadvertent or unintentional violations.
We believe that progressively rising sea levels will be an area of risk over time for the coastal regions of Massachusetts and New Hampshire in our market, both as the frequency and severity of extreme weather events increase and as currently inhabited property and land parcels are exposed to episodic flooding and routinely higher tides.
We believe that progressively rising sea levels will be an area of risk over time for the coastal regions of Massachusetts and New Hampshire in our market, both as the frequency and severity of extreme weather events increase and as 39 currently inhabited property and land parcels are exposed to episodic flooding and routinely higher tides.
If we are unable to compete effectively, our business, financial condition and results of operations could be adversely affected, perhaps materially. 35 The fair value of Eastern Bank’s investments has declined and could decline further due to a variety of factors. Most of Eastern Bank’s investment securities portfolio is designated as available-for-sale.
If we are unable to compete effectively, our business, financial condition and results of operations could be adversely affected, perhaps materially. The fair value of Eastern Bank’s investments has declined and could decline further due to a variety of factors. Most of Eastern Bank’s investment securities portfolio is designated as available-for-sale.
Please see the section of this Annual Report on Form 10-K titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” with Item 7 for more information and Note 2, “Summary of Significant Accounting Policies” within the Notes to the Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K.
Please see the section of this Annual Report on Form 10-K titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” within Item 7 for more information and Note 2, “Summary of Significant Accounting Policies” within the Notes to the Consolidated Financial Statements included in Item 8 in this Annual Report on Form 10-K.
Any impairment charge would have a negative effect on our shareholders’ equity and financial results and may cause a decline in our stock price. 37 We are subject to stringent capital requirements and may need to raise additional capital in the future, and that capital may not be available or its cost may be high.
Any impairment charge would have a negative effect on our shareholders’ equity and financial results and may cause a decline in our stock price. We are subject to stringent capital requirements and may need to raise additional capital in the future, and that capital may not be available or its cost may be high.
We have undertaken and may continue to undertake measures to mitigate market-wide competitive deposit pressures or interest rate uncertainty or to otherwise manage our liquidity position. These have included and may continue to include accessing alternative funding sources, such as FHLBB advances and brokered certificates of deposit, as noted above.
We have undertaken and may continue to undertake measures to mitigate market-wide competitive deposit pressures or interest rate uncertainty or to otherwise manage our liquidity position. These have included and may 35 continue to include accessing alternative funding sources, such as FHLBB advances and brokered certificates of deposit, as noted above.
Any breach of our 33 system security could result in disruption of our operations, unauthorized access to confidential customer information, significant regulatory costs, such as enforcement actions and/or the imposition of civil money penalties, litigation exposure and other possible damages, loss or liability.
Any breach of our system security could result in disruption of our operations, unauthorized access to confidential customer information, significant regulatory costs, such as enforcement actions and/or the imposition of civil money penalties, litigation exposure and other possible damages, loss or liability.
Although we may contractually limit liability in connection with attacks against third-party providers, we remain exposed to the risk of loss associated with such vendors. In addition, a number of our vendors are large national entities with dominant market presence in their respective fields.
Although we may contractually limit 30 liability in connection with attacks against third-party providers, we remain exposed to the risk of loss associated with such vendors. In addition, a number of our vendors are large national entities with dominant market presence in their respective fields.
Replacing these third-party vendors could also entail significant and unpredictable delay and expense. 39 Operational risks are inherent in our businesses. Our enterprise risk management framework seeks to achieve an appropriate balance between risk and return, which is critical to optimizing shareholder value.
Replacing these third-party vendors could also entail significant and unpredictable delay and expense. Operational risks are inherent in our businesses. Our enterprise risk management framework seeks to achieve an appropriate balance between risk and return, which is critical to optimizing shareholder value.
Deposit insurance assessment rates are subject to change, and additional increases or modifications to assessments, due to, for 45 example, changes in base or special assessments or downgraded ratings of Eastern Bank, could have a materially adverse effect on our results of operations and financial condition.
Deposit insurance assessment rates are subject to change, and additional increases or modifications to assessments, due to, for example, changes in base or special assessments or downgraded ratings of Eastern Bank, could have a materially adverse effect on our results of operations and financial condition.
If we are unable to utilize our tax credits or, if our tax credits are subject to recapture or restructuring, it could have a material adverse effect on our business, financial condition and results of operations. We depend on the accuracy and completeness of information about clients and counterparties.
If we are unable to utilize our tax credits or, if our tax credits are subject to recapture or restructuring, it could have a material adverse effect on our financial condition and results of operations. We depend on the accuracy and completeness of information about clients and counterparties.
If our reputation is negatively affected by the actions of our employees, by our inability to conduct our operations in a manner that is appealing to current or prospective customers, or by events beyond our control, our business and operating results may be adversely affected.
If our reputation is negatively affected by the actions of our employees, by our inability to conduct our 29 operations in a manner that is appealing to current or prospective customers, or by events beyond our control, our business and operating results may be adversely affected.
The following risks are not the only risks we face. Additional risks that are not presently known or that we presently deem to be immaterial also could have a material adverse effect on our financial condition, results of operations and business.
The following risks are not the only risks we face. Additional risks that are not presently known or that we presently deem to be immaterial also could have a material adverse effect on our financial condition, results 25 of operations and business.
If we are unable to raise additional capital on terms that are acceptable to us or at all, our operations or our financial condition and liquidity could be materially and adversely affected, and we may be subject to adverse regulatory action.
If we are unable to raise additional capital on terms that are acceptable to us or at all, our operations or our financial condition and liquidity could be materially and adversely affected, and we may be subject to adverse 34 regulatory action.
Our key assumptions include: • that we will be able to attract and retain the requisite number of skilled and qualified personnel required to increase our loan origination volume, especially in our commercial banking portfolios.
Our key assumptions include: 31 • that we will be able to attract and retain the requisite number of skilled and qualified personnel required to increase our loan origination volume, especially in our commercial banking portfolios.
Additionally, our Board of Directors is currently classified, with directors serving three-year staggered terms. 47 However, the classified structure is being phased out, and by our 2027 annual meeting of stockholders, directors will be elected for annual terms.
Additionally, our Board of Directors is currently classified, with directors serving three-year staggered terms. However, the classified structure is being phased out, and by our 2027 annual meeting of stockholders, directors will be elected for annual terms.
If these projects are not operated in full compliance with the required terms, the tax credits could be subject to recapture or restructuring. Further, we may not be able to utilize any future tax credits.
If these projects are not operated in full compliance with the required terms, the tax credits could be subject to 37 recapture or restructuring. Further, we may not be able to utilize any future tax credits.
Taken as a whole, these statutory provisions and provisions in our articles of organization could result in our being less attractive to a potential acquirer and thus could adversely affect the market price of our common stock.
Taken as a whole, these statutory provisions and provisions in our articles of 44 organization could result in our being less attractive to a potential acquirer and thus could adversely affect the market price of our common stock.
Our need to review and evaluate the impact of ongoing rule proposals, final rules 44 and implementation guidance from regulators further complicates the development and implementation of new information systems for our business.
Our need to review and evaluate the impact of ongoing rule proposals, final rules and implementation guidance from regulators further complicates the development and implementation of new information systems for our business.
Residential loans with combined higher loan-to-value ratios are more sensitive to declining property values than those with lower combined loan-to-value ratios and, therefore, may experience a higher incidence of default and severity of losses. In addition, if the borrowers sell their homes, they may be unable to repay their loans in full from the sale proceeds.
Residential loans with relatively high combined loan-to-value ratios are more sensitive to declining property values than those with lower combined loan-to-value ratios and, therefore, may experience a higher incidence of default and severity of losses. In addition, if the borrowers sell their homes, they may be unable to repay their loans in full from the sale proceeds.
Any weakness in these systems or controls, or any violation or alleged violation of such laws or regulations, could result in increased regulatory supervision, enforcement actions and other disciplinary action, and have an adverse impact on our business, results of operations, reputation and ability to obtain future regulatory approvals, including those necessary to complete mergers or other acquisitions.
Any weakness in these systems or controls, or any violation or alleged violation of applicable laws or regulations, could result in increased regulatory supervision, enforcement actions and other disciplinary action, and have an adverse impact on our business, results of operations, reputation and ability to obtain future regulatory approvals, including those necessary to complete mergers or other acquisitions.
Market changes may adversely affect demand for our services and impact results of operations. Channels for servicing our customers are evolving rapidly, with less reliance on traditional branch facilities, more use of online and mobile banking, and increased demand for universal bankers and other relationship managers who can service multiples product lines.
Market changes may adversely affect demand for our services and impact results of operations. Channels for servicing our customers are evolving rapidly, with less reliance on traditional branch facilities, more use of online and mobile banking, and increased demand for universal bankers and other relationship managers who can service multiple product lines.
Each of these issues might adversely affect the Company, Cambridge or both during the transition period, resulting in adverse effects on the Company following the merger. Additionally, our assumptions regarding the fair value of assets being acquired or projections of future benefits following the merger could prove to be inaccurate.
Each of these issues might adversely affect the Company during the transition period, resulting in adverse effects on the Company following the merger. Additionally, our assumptions regarding the fair value of assets being acquired or projections of future benefits following the merger could prove to be inaccurate.
Our management recently completed these reviews and concluded that no impairment charge was necessary for the year ended December 31, 2023. We cannot provide assurance whether we will be required to take an impairment charge in the future.
Our management recently completed these reviews and concluded that no impairment charge was necessary for the year ended December 31, 2024. We cannot provide assurance whether we will be required to take an impairment charge in the future.
We intend to utilize all tax credits, as of December 31, 2023, to offset income tax liability. Substantially all of these tax credits are related to development projects that are subject to ongoing compliance requirements over certain periods of time to fully realize their value.
We intend to utilize all tax credits, as of December 31, 2024, to offset income tax liability. Substantially all of these tax credits are related to development projects that are subject to ongoing compliance requirements over certain periods of time to fully realize their value.
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 or shareholder approvals, delays in obtaining regulatory approvals; or the imposition of costly or burdensome conditions to regulatory approvals; • 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 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; • 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 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.
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 or shareholder approvals, delays in obtaining regulatory approvals; or the imposition of costly or burdensome conditions to regulatory approvals; • 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 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; • 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 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, as discussed below and elsewhere in this Annual Report on Form 10-K; and • Identification of internal control deficiencies of the acquired business.
Areas requiring significant estimates and assumptions by management include our valuation of goodwill and core deposit intangible in connection with our periodic impairment assessment of such balances, valuation of our retirement plans and pension benefits, our determination of our income tax provision, our evaluation of the adequacy of our allowance for loan losses, and our evaluation of our securities portfolio.
Areas requiring significant estimates and assumptions by management include our valuation of goodwill and core deposit intangible in connection with our periodic impairment assessment of such balances, valuation of our retirement plans and pension benefits, our determination of our income tax provision, our evaluation of the adequacy of our allowance for loan losses, and our evaluation of the fair value of our investment securities portfolio.
Before the merger may be completed, certain approvals or consents must be obtained from various bank regulatory and other authorities of the United States, the Commonwealth of Massachusetts and the State of New Hampshire.
Before a merger or other acquisition may be completed, certain approvals or consents must be obtained from various bank regulatory and other authorities of the United States, the Commonwealth of Massachusetts and the State of New Hampshire.
Any such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs on or limiting the revenues of the Company following the merger, any of which might have a material adverse effect on the Company following the merger.
Any such conditions or changes could have the effect of delaying completion of the transaction or imposing additional costs on or limiting the revenues of the Company following the completion of the transaction, any of which might have a material adverse effect on the Company.
We may be unsuccessful identifying and competing for acquisitions. We regularly look for acquisition opportunities of banks and financial institutions that meet our criteria, some of which may be material to our business and financial performance and could involve significant cash expenditures or result in a material increase in the number of shares of our common stock that are outstanding.
We regularly look for acquisition opportunities of banks and financial institutions that meet our criteria, some of which may be material to our business and financial performance and could involve significant cash expenditures or result in a material increase in the number of shares of our common stock that are outstanding.
Failure to properly utilize system enhancements that are implemented in the future could result in impairment charges that adversely impact our financial condition and results of operations and could result in significant costs to remediate or replace the defective components.
Failure to optimize system enhancements that are implemented in the future could result in impairment charges that adversely impact our financial condition and results of operations and could result in significant costs to remediate or replace the defective components.
The integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that could adversely affect our ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the merger.
The integration process, which is ongoing for Cambridge, could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that could adversely affect our ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the merger.
Although we have implemented risk management strategies, as well as policies and procedures designed to manage the risks associated with changes in market interest rates, changes in interest rates have had and may continue to have an adverse effect on our operating results and financial condition.
Although we have implemented risk management strategies, as well as policies and procedures designed to manage the risks associated with changes in market interest rates, changes in interest rates have from time to time had and may in the future have an adverse effect on our operating results and financial condition.
In addition, following the merger, if key employees terminate their employment, the Company’s business activities may be adversely affected, and management’s attention may be diverted from successfully integrating the Company and Cambridge to hiring suitable replacements, all of which may cause the Company’s business to suffer.
In addition, if key employees terminate their employment, the Company’s business activities may be adversely affected, and management’s attention may be diverted from successfully integrating the Company and the acquired company to hiring suitable replacements, all of which may cause the Company’s business to suffer.
The Federal Reserve Board regulates the money supply and credit conditions by using instruments such as open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits and the interest rate paid on such reserves.
The Federal Reserve Board, acting through its Federal Open Market Committee (FOMC), regulates the money supply and credit conditions by using instruments such as open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits and the interest rate paid on such reserves.
Increases to the federal funds rate, and competitor and customer responses to those increases, have caused and we anticipate will continue to cause competitive pressures to provide elevated deposit interest rates. The reduction in our overall level of deposits has increased and could continue to increase the extent to which we rely on other, more expensive sources for funding.
Increases to the federal funds rate in 2022 and 2023, and competitor and customer responses to those increases, have caused and potentially may cause competitive pressures to provide elevated deposit interest rates. The reduction in our overall level of deposits has increased and could continue to increase the extent to which we rely on other, more expensive sources for funding.
Although we have implemented risk controls and loss mitigation actions, and substantial resources are devoted to developing efficient procedures, identifying and rectifying weaknesses in existing procedures and training staff, it is not possible to be certain that such actions have been or will be effective in controlling each of the operational risks we face.
Although we have implemented and routinely refine our risk controls and loss mitigation actions, and we devote substantial resources to developing efficient procedures, identifying and rectifying weaknesses in existing procedures and staff training, it is not possible to be certain that such actions have been or will be effective in controlling each of the operational risks we face.
We expect that in most if not all cases a publicly traded company that we might acquire in the future will be a “predecessor company.” Accordingly, we expect that the number of our covered employees will increase if Eastern acquires one or more publicly held corporations, including through the prospective acquisition of Cambridge.
We expect that in most if not all cases a publicly traded company that we might acquire in the future will be a “predecessor company.” Accordingly, we expect that the number of our covered employees will increase if Eastern acquires one or more publicly held corporations.
In addition, we recognize compensation expense monthly for our employee stock ownership plan when shares are committed to be released to participants’ accounts, and we recognize compensation expense for restricted stock awards, performance stock units and restricted stock units over the vesting period of awards made to recipients.
In addition, we recognize compensation expense monthly for our employee stock ownership plan (which we sometimes refer to as our ESOP) when shares are committed to be released to participants’ accounts, and we recognize compensation expense for restricted stock awards, performance stock units and restricted stock units over the vesting period of awards made to recipients.
Failure to comply with these and other regulations, and supervisory expectations related thereto, may result in fines, penalties, lawsuits, regulatory sanctions, reputation damage or restrictions on our business. Non-compliance with the USA PATRIOT Act, Bank Secrecy Act or other laws and regulations could result in fines or sanctions.
Failure to comply with these and other regulations, and supervisory expectations related thereto, may result in fines, penalties, lawsuits, regulatory sanctions, reputation damage or restrictions on our business including restrictions on conducting acquisitions or establishing new branches. Non-compliance with the USA PATRIOT Act, Bank Secrecy Act or other laws and regulations could result in fines or sanctions.
If the Company and Cambridge are unable to retain key employees, including management, who are critical to the successful integration and future operations of the companies, the Company and Cambridge could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs.
If the Company is unable to retain key employees, including management, who are critical to the successful integration and future operations of the combined company, the Company could face disruptions in its operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs.
At December 31, 2023, we held loan participation interests in commercial and industrial, commercial real estate, commercial construction and business banking loans totaling $1.6 billion. Hedging against interest rate exposure may adversely affect our earnings. We employ techniques that limit, or “hedge,” the adverse effects of changing interest rates on our loan portfolios.
At December 31, 2024, we held loan participation interests in commercial and industrial, commercial real estate, commercial construction and business banking loans totaling $2.1 billion. 33 Hedging against interest rate exposure may adversely affect our earnings. We employ techniques that are intended to limit, or “hedge,” the adverse effects of changing interest rates on our loan portfolios.
We primarily serve individuals, businesses and municipalities located in eastern and central Massachusetts, including the greater Boston metropolitan area, southern New Hampshire, including its coastal region, and northern Rhode Island. At December 31, 2023, approximately $9.6 billion, or 91.2% of our total loans secured by real estate were secured by real estate located in this market area.
We primarily serve individuals, businesses and municipalities located in eastern and central Massachusetts, including the greater Boston metropolitan area, southern New Hampshire, including its coastal region, and northern Rhode Island. At December 31, 2024, approximately $13.0 billion, or 91.4% of our total loans secured by real estate were secured by real estate located in this market area.
Regulatory approvals related to the merger may not be received, may take longer to receive than expected, or may impose burdensome conditions, which could impose additional costs and could delay or prevent completion of the merger.
Regulatory approvals related to proposed business acquisitions may not be received, may take longer to receive than expected, or may impose burdensome conditions, which could impose additional costs and could delay or prevent completion of the acquisition.
Our business may be adversely affected by credit risks associated with residential property. At December 31, 2023, loans secured by one- to four-family residential real estate were $4.0 billion, or 28.5% of total loans.
Our business may be adversely affected by credit risks associated with residential property. At December 31, 2024, loans secured by one- to four-family residential real estate were $5.5 billion, or 31.2% of total loans.
Thus, changes in interest rates have impacted and may continue to impact many areas of our business, including net interest income, both the earnings and volume of interest-earning assets and interest-bearing liabilities, as well as loan delinquency.
Thus, changes in interest rates have impacted and will likely continue to impact many areas of our business, including net interest income, both the earnings and volume of interest-earning assets and interest-bearing liabilities, as well as loan delinquency and the fair values of our investment portfolio.
At December 31, 2023, we maintained investments of approximately $223.4 million in entities for which we receive allocations of tax credits, excluding investments of approximately $3.9 million in qualified zone academy bond investments, which we utilize to offset our income tax liability. We recorded the benefit of $9.4 million in credits for the year ended December 31, 2023.
At December 31, 2024, we maintained investments of approximately $222.7 million in entities for which we receive allocations of tax credits, excluding investments of approximately $3.9 million in qualified zone academy bond investments, which we utilize to offset our income tax liability. We recorded the benefit of $17.0 million in credits for the year ended December 31, 2024.
Public health crises, such as pandemics and epidemics, domestic or geopolitical crises, such as terrorism, military conflict, wars or the perception that hostilities may be imminent, political instability or civil unrest, or other conflict, human error or other events outside of our control, could cause disruptions to our 42 business or the United States economy as a whole, and our business and operating results could suffer.
Public health crises, such as pandemics and epidemics (including a possible resurgence of the COVID-19 virus or the possible emergence of the H5 avian influenza), domestic or geopolitical crises, such as terrorism, military conflict, wars or the perception that hostilities may be imminent, political instability or civil unrest, or other conflict, human error or other events outside of our control, could cause disruptions to our business or the United States economy as a whole, and our business and operating results could suffer.
Loans secured by one- to four-family residential real estate include residential real estate mortgages, home equity loans and lines and investment real estate loans secured by one- to four-family residential properties. At December 31, 2023, $185.5 million of one- to four-family residential real estate loans were part of the commercial loan portfolio.
Loans secured by one- to four-family residential real estate include residential real estate mortgages, home equity loans and lines of credit and investment real estate loans secured by one- to four-family residential properties. At December 31, 2024, $236.1 million of one- to four-family residential real estate loans were part of the commercial loan portfolio.
The excess of the purchase price over the fair value of the net identifiable tangible and intangible assets acquired determines the amount of the purchase price that is allocated to goodwill acquired. As of December 31, 2023, goodwill and other identifiable intangible assets were $566.2 million.
The excess of the purchase price over the fair value of the net identifiable tangible and intangible assets acquired determines the amount of the purchase price that is allocated to goodwill acquired. As of December 31, 2024, goodwill and other identifiable intangible assets were $1.1 billion.
A significant portion of our loan portfolio is secured by real estate, and we could become subject to environmental liabilities with respect to one or more of these properties. At December 31, 2023, $10.5 billion, or 75.5% of our total loans, comprised loans secured by real estate.
A significant portion of our loan portfolio is secured by real estate, and we could become subject to environmental liabilities with respect to one or more of these properties. At December 31, 2024, $14.3 billion, or 80.4% of our total loans, comprised loans secured by real estate.
In addition, because of the risks associated with commercial loans, including the economic stress in our market due to the COVID-19 pandemic, the switch to hybrid and remote work, and rising interest rates, we may experience higher rates of default than if the portfolio were more heavily weighted toward residential mortgage loans.
In addition, because of the risks associated with commercial loans, including the economic stress in our market due to the COVID-19 pandemic, the increasing prevalence of hybrid and remote work, and a higher interest rate environment than existed when loans were first originated, we may experience higher rates of default than if the portfolio were more heavily weighted toward residential mortgage loans.
Our ability to raise additional capital will depend, for example, on conditions in the capital markets at that time, which are outside our control, and on our financial condition and performance.
Our ability to raise additional capital will depend, for example, on conditions in the capital markets at that time, which are outside our control, and on our financial condition and our recent operating results at that time and expectations regarding our future operating results.
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.
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. Our business may be adversely affected by the public policy priorities of the Trump administration.
If our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by Nasdaq, the SEC or other regulatory authorities, which could require additional financial and management resources. 40 We maintain a significant investment in projects that generate tax credits, which we may not be able to fully utilize, or, if utilized, may be subject to recapture or restructuring.
If our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by Nasdaq, the SEC or other regulatory authorities, which could require additional financial and management resources.
These governmental entities, including the Federal Reserve Board, the FDIC, the Massachusetts Division of Banks and the New 29 Hampshire Banking Department, may impose conditions on the completion of the merger or require changes to the terms of the merger.
These governmental entities, including the Federal Reserve Board, the FDIC, the Massachusetts Division of Banks and the New Hampshire Banking Department, may impose conditions on the completion of the transaction or require changes to the terms of the transaction, require divestitures or place restrictions on our conduct after the completion of the transaction.
We have in the past elected to sell and may in the future elect to sell additional investment securities. In that event, we would recognize a loss and take a charge to our operating results in the quarter in which a decision to sell such securities is made.
In that event, we would recognize a loss and take a charge to our operating results in the quarter in which a decision to sell such securities is made.
In addition to these specific effects, widespread adverse economic conditions that could affect us include: • Reduced consumer spending; • Increased unemployment; 41 • Lower wage income levels; • Declines in the market value of residential and commercial real estate; • Inflation or deflation; • Fluctuations in the value of the U.S. dollar; • Volatility in short-term and long-term interest rates (For more information regarding the potential effect of fluctuating interest rates, see “Changes in interest rates may have an adverse effect on our profitability.”); and • Higher bankruptcy filings.
In addition to these specific effects, widespread adverse economic conditions that could affect us include: • Reduced consumer spending; • Increased unemployment; • Lower wage income levels; • Declines in the market value of residential and commercial real estate, including real estate that collateralizes our loans; • Inflation or deflation; • Fluctuations in the value of the U.S. dollar; • Volatility in short-term and long-term interest rates (For more information regarding the potential effect of fluctuating interest rates, see “Changes in interest rates may have an adverse effect on our profitability.”); and • Higher bankruptcy filings. 38 Changes in accounting standards can be difficult to predict and can materially impact how we record and report our financial condition and results of operations.
Many of these companies, including our competitors, have fewer regulatory constraints, and some have lower cost structures, in part due to lack of physical locations and regulatory compliance costs.
Many of these companies, including our competitors, have fewer regulatory constraints, and some have lower cost structures, in part due to lack of physical locations and regulatory compliance costs. Some of these companies also have greater resources to invest in technological improvements than we currently have.
Regulatory developments could adversely affect our business by increasing our costs and thereby making our business less profitable. Our profitability may be adversely affected by current and future rulemaking and enforcement activity by the various federal, state and self-regulatory organizations to which we are subject.
Our profitability may be adversely affected by current and future rulemaking and enforcement activity by the various federal, state and self-regulatory organizations to which we are subject.
The monetary and related policies of the Federal Reserve Board have had a significant effect on the operating results of financial institutions in the past and are expected to continue to do so in the future.
Their use also affects interest rates charged on loans or paid on deposits. 40 The monetary and related policies of the Federal Reserve Board have had a significant effect on the operating results of financial institutions in the past and are expected to continue to do so in the future.
In addition, new, unexpected technological changes could have a disruptive effect on the way banks offer products and services. We believe our success depends, to a great extent, on our ability to use technology to offer products and services that provide convenience to customers and to create additional efficiencies in our operations.
We believe our success depends, to a great extent, on our ability to use technology to offer products and services that provide convenience to customers and to create additional efficiencies in our operations.
These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.
These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits.
From time to time, the Financial Accounting Standards Board changes the financial accounting and reporting principles that govern the preparation of our financial statements. These changes can be hard to anticipate and implement and can materially impact how we record and report our financial condition and results of operations.
Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. From time to time, the Financial Accounting Standards Board changes the financial accounting and reporting principles that govern the preparation of our financial statements.
For these reasons, we may 36 experience higher rates of delinquencies, default and losses on our home equity loans, which could have a material adverse effect on our financial condition and results of operations.
For home equity loans and lines of credit, we may be unsuccessful in recovering all or a portion of our loan proceeds in the event of default. For these reasons, we may experience higher rates of delinquencies, default and losses on our home equity loans, which could have a material adverse effect on our financial condition and results of operations.
In addition to the necessity of maintaining our enterprise risk management framework, our operations depend on our ability to process a very large number of transactions efficiently and accurately while complying with applicable laws and regulations.
If our risk management framework proves ineffective, we could suffer unexpected losses and our business and results of operations could be materially adversely affected. 36 In addition to the necessity of maintaining our enterprise risk management framework, our operations depend on our ability to process a very large number of transactions efficiently and accurately while complying with applicable laws and regulations.
The following risks are not the only risks we face. Additional risks that are not presently known or that we presently deem to be immaterial also could have a material adverse effect on our financial condition, results of operations and business.
Additional risks that are not presently known or that we presently deem to be immaterial also could have a material adverse effect on our future business, financial condition, results of operations and cash flows. Summary of Material Risk Factors This section summarizes some of the risks potentially affecting our business, financial condition, results of operations and cash flows.
As part of Eastern Bank’s community reinvestment initiatives, we invest in qualified affordable housing projects and other tax credit investment projects. Eastern Bank receives low-income housing tax credits, investment tax credits, rehabilitation tax credits and other tax credits as a result of its investments in these limited partnership investments.
Eastern Bank receives low-income housing tax credits, investment tax credits, rehabilitation tax credits and other tax credits as a result of its investments in these limited partnership investments.
We routinely execute transactions with counterparties in the financial industry, including brokers and dealers, other commercial banks, investment banks, mutual and hedge funds, and other financial institutions.
Financial services institutions are interconnected as a result of trading, clearing, counterparty and other relationships. We routinely execute transactions with counterparties in the financial industry, including brokers and dealers, other commercial banks, investment banks, mutual and hedge funds, and other financial institutions.
Risks Related to Stock-Based Benefit Plans Our stock-based benefit plans have increased and will continue to increase our expenses and reduce our income. In 2021, we adopted the Equity Plan, which impacts our annual compensation and benefit expenses related to awards granted to participants under such plan.
In 2021, we adopted the Equity Plan, which impacts our annual compensation and benefit expenses related to awards granted to participants under such plan.
If our ongoing assumptions regarding borrower or depositor behavior or overall economic conditions are significantly different than we anticipate, then our risk mitigation may be insufficient to protect against interest rate risk and our operating results and financial condition would be adversely affected.
If actual borrower or depositor behavior or overall economic conditions in the future are significantly different than we anticipate, then our risk mitigation may be insufficient to protect against interest rate risk and our operating results and financial condition would be adversely affected. 28 If our allowance for loan losses is insufficient to cover loan losses, our earnings and capital could decrease.
Although we have begun considering and developing various measures to address potential future regulatory requirements, these measures may not be sufficient in every instance to ensure full compliance with such requirements.
Although we have begun considering and developing various measures to address potential future regulatory requirements, these measures may not be sufficient in every instance to ensure full compliance with such requirements. The prevalence of remote and hybrid working arrangements has reduced demand for office space in our market.
Furthermore, any number of unanticipated adverse occurrences for either the business of Cambridge or the Company may cause us to fail to realize some or all of the expected benefits.
The Company may fail to realize some or all of the anticipated benefits of Cambridge or other acquired businesses if the integration process takes longer or is more costly than expected. Furthermore, any number of unanticipated adverse occurrences for either the acquired business or the Company may cause us to fail to realize some or all of the expected benefits.
The Company and Cambridge may also incur additional costs to maintain employee morale and to retain key employees. There can be no assurances that the expected benefits and efficiencies related to the integration of the businesses will be realized to offset these transaction and integration costs over time.
There can be no assurances that the expected benefits and efficiencies related to the integration of the acquired businesses will be realized to offset these transaction and integration costs over time.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn 2023, no cybersecurity events were identified that materially impacted our business strategy, operations, or financial condition. As further detailed in the “Risk Factors” section In Part I, Item 1A of this Annual Report on Form 10-K, we believe cybersecurity matters could pose a material risk to our strategy, operations, or financial condition.
Biggest changeIn 2024, no cybersecurity events were identified that materially impacted our business strategy, operations, or financial condition. As further detailed in the “Risk Factors” section In Part I, Item 1A of this Annual Report on Form 10-K, we believe cybersecurity 45 matters could pose a material risk to our strategy, operations, or financial condition.
The Risk Management Committee of our Board of Directors has responsibility for oversight of the design, implementation, and operation of our enterprise risk management framework, including review and approval of risk management policies and review of our monitoring of risk, the effectiveness of its risk management processes, and material 48 changes in risk.
The Risk Management Committee of our Board of Directors has responsibility for oversight of the design, implementation, and operation of our enterprise risk management framework, including review and approval of risk management policies and review of our monitoring of risk, the effectiveness of its risk management processes, and material changes in risk.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAt December 31, 2023, we leased 78 of our offices, and the total net book value of our land, buildings, furniture, fixtures and equipment was $60.1 million.
Biggest changeAt December 31, 2024, we leased 90 of our offices, and the total net book value of our land, buildings, furniture, fixtures and equipment was $66.6 million.
ITEM 2. PROPERTIES At December 31, 2023, we conducted our banking business through our corporate headquarters in Boston, Massachusetts and 97 branch offices located in eastern Massachusetts and southern New Hampshire. In addition, Eastern Bank occupies two administrative/operational offices, in Lynn and Brockton, Massachusetts.
ITEM 2. PROPERTIES At December 31, 2024, we conducted our banking business through our corporate headquarters in Boston, Massachusetts and 109 branch offices located in eastern Massachusetts and southern New Hampshire. In addition, Eastern Bank occupies two administrative/operational offices, in Lynn and Brockton, Massachusetts.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeInformation used in the graph and table was obtained from a third party provider, a source believed to be reliable, but we are not responsible for any errors or omission in such information. 50 Period Ending Index 10/15/2020 12/31/2020 03/31/2021 06/30/2021 9/30/2021 12/31/2021 3/31/2022 Eastern Bankshares, Inc. 100.00 134.24 159.29 170.48 168.94 168.53 180.81 Russell 2000 100.00 120.82 136.16 142.00 135.81 138.72 128.28 KBW Regional Banks 100.00 134.82 174.87 172.39 177.93 184.23 180.21 Index 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Eastern Bankshares, Inc. 155.75 166.55 147.04 108.26 106.19 109.33 124.94 Russell 2000 106.22 103.90 110.37 113.39 119.29 113.18 129.05 KBW Regional Banks 158.61 164.85 171.46 140.67 132.59 135.75 170.78 Source: Zacks Investment Research, Inc. © 1980-2024 Dividends We intend to continue to pay regular cash dividends to holders of our common stock; however, any future determination to declare and pay cash dividends will be made at the discretion of our Board of Directors and will depend on a variety of factors, including applicable laws, our financial condition, results of operations, business prospects, general business or financial market conditions, regulatory environment and other factors our Board of Directors may deem relevant.
Biggest changePeriod Ending Index 10/15/2020 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Eastern Bankshares, Inc. 100.00 134.24 168.53 147.04 124.94 156.33 Russell 2000 100.00 120.82 138.72 110.37 129.05 143.94 KBW Regional Banks 100.00 134.82 184.23 171.46 170.78 193.32 Source: Zacks Investment Research, Inc. © 1980-2025 47 Dividends We intend to continue to pay regular cash dividends to holders of our common stock; however, any future determination to declare and pay cash dividends will be made at the discretion of our Board of Directors and will depend on a variety of factors, including applicable laws, our financial condition, results of operations, business prospects, general business or financial market conditions, regulatory environment and other factors our Board of Directors may deem relevant.
Comparative Stock Performance Graph The stock performance graph below and associated table compare the cumulative total shareholder return of our common stock from October 15, 2020 to December 31, 2023 to the cumulative total return of the Russell 2000 Index and the KBW Regional Banking Index.
Comparative Stock Performance Graph The stock performance graph below and associated table compare the cumulative total shareholder return of our common stock from October 15, 2020 to December 31, 2024 to the cumulative total return of the Russell 2000 Index and the KBW Regional Banking Index.
The lines in the graph and the numbers in the table below represent quarterly index levels derived from the compounded daily returns that include reinvestment or retention of all dividends. If the quarterly interval, based on the last day of a quarter, was not a trading day, the preceding trading day was used.
The lines in the graph and the numbers in the table below represent annual index levels derived from the compounded daily returns that include reinvestment or retention of all dividends. If the annual interval, based on the last day of a year, was not a trading day, the preceding trading day was used.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Eastern Bankshares, Inc.’s common stock trades on the Nasdaq Global Select Market under the symbol EBC. As of February 22, 2024, there were 7,930 common shareholders of record based on information provided by our transfer agent.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Eastern Bankshares, Inc.’s common stock trades on the Nasdaq Global Select Market under the symbol EBC. As of February 24, 2025, there were 7,950 common shareholders of record based on information provided by our transfer agent.
The stock price performance shown on the stock performance graph and associated table below is not necessarily indicative of future price performance.
The stock price performance shown on the stock performance graph and associated table below is not necessarily indicative of future price performance. Information used in the graph and table was obtained from a third party provider, a source believed to be reliable, but we are not responsible for any errors or omission in such information.
Removed
Repurchases of Common Shares On September 7, 2022, we announced receipt of a notice of non-objection from the Board of Governors of the Federal Reserve System for a new share repurchase program. The program authorized the purchase of up to 8,900,000 shares over a 12-month period and was limited to $200.0 million through August 31, 2023.
Added
Repurchases of Common Shares On July 25, 2024, we announced the approval by our Board of Directors of a new share repurchase program.
Removed
The program expired in August 2023. We made no repurchases of shares during the year ended December 31, 2023. ITEM 6. [RESERVED] 51
Added
The program authorized the purchase of up to 10,800,000 shares over a 12-month period and is limited to $200.0 million through July 31, 2025 and may be modified or terminated by our Board of Directors at any time.
Added
Repurchases are made at management’s discretion from time to time at prices management considers to be attractive and in the best interests of both the Company and its shareholders, subject to the availability of shares, general market conditions, the trading price of the shares, alternative uses for capital and liquidity, and our financial performance.
Added
Repurchases may be suspended, terminated or modified by us at any time for any reason.
Added
Information regarding the shares repurchased under the plans is presented in the following table: Period Total Number of Shares Repurchased Average Price Paid per Share Total Number of Shares Repurchased as Part of the Share Repurchase Programs Maximum Number of Shares That May Yet Be Purchased Under the Share Repurchase Programs July 1, 2024 – July 31, 2024 — $ — — 10,800,000 August 1, 2024 – August 31, 2024 770,252 $ 15.01 770,252 10,029,748 September 1, 2024 – September 30, 2024 66,147 $ 15.86 836,399 9,963,601 October 1, 2024 – October 31, 2024 100,433 $ 15.96 936,832 9,863,168 November 1, 2024 – November 30, 2024 157,771 $ 17.91 1,094,603 9,705,397 December 1, 2024 – December 31, 2024 650,221 $ 17.51 1,744,824 9,055,176 Total 1,744,824 $ 16.29 ITEM 6. [RESERVED] 48

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

2 edited+0 added−0 removed0 unchanged
Biggest changeFinancial Statements 98 Consolidated Balance Sheets 101 Consolidated Statements of Income 102 Consolidated Statements of Comprehensive Income (Loss) 103 Consolidated Statements of Changes in Shareholders' Equity 104 Consolidated Statements of Cash Flows 105 Notes to Consolidated Financial Statements 107
Biggest changeFinancial Statements 92 Consolidated Balance Sheets 95 Consolidated Statements of Income 96 Consolidated Statements of Comprehensive Income (Loss) 97 Consolidated Statements of Changes in Shareholders' Equity 98 Consolidated Statements of Cash Flows 100 Notes to Consolidated Financial Statements 102
Item 6. [Reserved] 51 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 52 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 97 Item 8.
Item 6. [Reserved] 48 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 49 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 91 Item 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

215 edited+82 added−108 removed119 unchanged
Biggest changeAverage asset and liability balances included in discontinued operations are included in non-interest-earnings assets and liabilities, respectively. 79 Average Balances, Interest Earned/Paid, & Average Yields/Costs As of and for the Year Ended December 31, 2023 2022 2021 Average Outstanding Balance Interest Average Yield /Cost Average Outstanding Balance Interest Average Yield /Cost Average Outstanding Balance Interest Average Yield /Cost (Dollars in thousands) Interest-earning assets: Loans (1): Residential $ 2,538,588 $ 90,139 3.55 % $ 2,064,609 $ 63,803 3.09 % $ 1,510,703 $ 47,143 3.12 % Commercial 9,913,968 491,427 4.96 % 9,147,540 366,097 4.00 % 7,410,024 288,557 3.89 % Consumer 1,381,745 86,167 6.24 % 1,327,417 56,965 4.29 % 1,103,042 36,019 3.27 % Total loans 13,834,301 667,733 4.83 % 12,539,566 486,865 3.88 % 10,023,769 371,719 3.71 % Non-taxable investment securities 197,682 7,279 3.68 % 253,651 9,091 3.58 % 260,399 9,335 3.58 % Taxable investment securities 6,050,024 101,233 1.67 % 8,413,217 118,690 1.41 % 4,890,737 58,312 1.19 % Other short-term investments 720,864 37,395 5.19 % 420,834 3,271 0.78 % 1,514,351 1,886 0.12 % Total interest-earning assets 20,802,871 813,640 3.91 % 21,627,268 617,917 2.86 % 16,689,256 441,252 2.64 % Non-interest-earning assets 921,622 986,865 1,173,830 Total assets $ 21,724,493 $ 22,614,133 $ 17,863,086 Interest-bearing liabilities: Deposits: Savings accounts $ 1,515,713 $ 217 0.01 % $ 2,015,651 $ 209 0.01 % $ 1,483,271 $ 230 0.02 % Interest checking accounts 4,070,585 24,235 0.60 % 4,890,709 11,675 0.24 % 2,866,091 1,997 0.07 % Money market investments 4,918,343 104,002 2.11 % 5,057,445 13,479 0.27 % 3,870,712 2,342 0.06 % Time accounts 2,303,520 97,621 4.24 % 463,261 3,258 0.70 % 280,141 598 0.21 % Total interest-bearing deposits 12,808,161 226,075 1.77 % 12,427,066 28,621 0.23 % 8,500,215 5,167 0.06 % Federal funds purchased 8 — — % 964 24 2.49 % — — — % Other borrowings 418,876 19,975 4.77 % 255,668 8,482 3.32 % 26,495 165 0.62 % Total interest-bearing liabilities 13,227,045 246,050 1.86 % 12,683,698 37,127 0.29 % 8,526,710 5,332 0.06 % Demand accounts 5,404,208 6,647,518 5,547,615 Other noninterest-bearing liabilities 522,239 451,384 364,191 Total liabilities 19,153,492 19,782,600 14,438,516 Shareholders’ equity 2,571,001 2,831,533 3,424,570 Total liabilities and shareholders’ equity $ 21,724,493 $ 22,614,133 $ 17,863,086 Net interest income - FTE $ 567,590 $ 580,790 $ 435,920 Net interest rate spread (2) 2.05 % 2.57 % 2.58 % Net interest-earning assets (3) $ 7,575,826 $ 8,943,570 $ 8,162,546 Net interest margin - FTE (4) 2.73 % 2.69 % 2.61 % Average interest-earning assets to interest-bearing liabilities 157.28 % 170.51 % 195.73 % Return on average assets (5) 1.07 % 0.88 % 0.87 % Return on average equity (6) 9.03 % 7.05 % 4.52 % Noninterest expenses to average assets (7) 2.35 % 2.08 % 2.49 % (1) Non-accrual loans are included in loans.
Biggest changeAverage Balances, Interest Earned/Paid, & Average Yields/Costs As of and for the Year Ended December 31, 2024 2023 2022 Average Outstanding Balance Interest Average Yield /Cost Average Outstanding Balance Interest Average Yield /Cost Average Outstanding Balance Interest Average Yield /Cost (Dollars in thousands) Interest-earning assets: Loans (1): Commercial $ 11,087,978 $ 591,885 5.34 % $ 9,913,968 $ 491,427 4.96 % $ 9,147,540 $ 366,097 4.00 % Residential 3,214,769 131,648 4.10 % 2,538,588 90,139 3.55 % 2,064,609 63,803 3.09 % Consumer 1,509,516 101,552 6.73 % 1,381,745 86,167 6.24 % 1,327,417 56,965 4.29 % Total loans 15,812,263 825,085 5.22 % 13,834,301 667,733 4.83 % 12,539,566 486,865 3.88 % Non-taxable investment securities 197,391 7,342 3.72 % 197,682 7,279 3.68 % 253,651 9,091 3.58 % Taxable investment securities 5,176,736 90,582 1.75 % 6,050,024 101,233 1.67 % 8,413,217 118,690 1.41 % Other short-term investments 810,670 42,377 5.23 % 720,864 37,395 5.19 % 420,834 3,271 0.78 % Total interest-earning assets 21,997,060 965,386 4.39 % 20,802,871 813,640 3.91 % 21,627,268 617,917 2.86 % Non-interest-earning assets 1,296,780 921,622 986,865 Total assets $ 23,293,840 $ 21,724,493 $ 22,614,133 Interest-bearing liabilities: Deposits: Savings accounts $ 1,466,914 $ 3,136 0.21 % $ 1,515,713 $ 217 0.01 % $ 2,015,651 $ 209 0.01 % Interest checking accounts 4,167,043 43,187 1.04 % 4,070,585 24,235 0.60 % 4,890,709 11,675 0.24 % Money market investments 5,283,231 140,695 2.66 % 4,918,343 104,002 2.11 % 5,057,445 13,479 0.27 % Time accounts 3,146,139 150,349 4.78 % 2,303,520 97,621 4.24 % 463,261 3,258 0.70 % Total interest-bearing deposits 14,063,327 337,367 2.40 % 12,808,161 226,075 1.77 % 12,427,066 28,621 0.23 % Federal funds purchased 8 — — % 8 — — % 964 24 2.49 % Other borrowings 68,227 1,802 2.64 % 418,876 19,975 4.77 % 255,668 8,482 3.32 % Total interest-bearing liabilities 14,131,562 339,169 2.40 % 13,227,045 246,050 1.86 % 12,683,698 37,127 0.29 % Demand accounts 5,348,124 5,404,208 6,647,518 Other noninterest-bearing liabilities 545,291 522,239 451,384 Total liabilities 20,024,977 19,153,492 19,782,600 Shareholders’ equity 3,268,863 2,571,001 2,831,533 Total liabilities and shareholders’ equity $ 23,293,840 $ 21,724,493 $ 22,614,133 Net interest income - FTE $ 626,217 $ 567,590 $ 580,790 Net interest rate spread (2) 1.99 % 2.05 % 2.57 % Net interest-earning assets (3) $ 7,865,498 $ 7,575,826 $ 8,943,570 Net interest margin - FTE (4) 2.85 % 2.73 % 2.69 % Average interest-earning assets to interest-bearing liabilities 155.66 % 157.28 % 170.51 % Return on average assets (5) 0.51 % 1.07 % 0.88 % Return on average equity (6) 3.66 % 9.03 % 7.05 % Noninterest expenses to average assets (7) 2.18 % 2.35 % 2.08 % (1) Non-accrual loans are included in loans.
On October 31, 2023, we sold substantially all of the assets and transferred certain liabilities of our insurance agency business. In the third quarter, following management’s decision to sell our insurance agency business, we reclassified the related assets and liabilities to assets and liabilities of discontinued operations, respectively, on our Consolidated Balance Sheets.
On October 31, 2023, we sold substantially all of the assets and transferred certain liabilities of our insurance agency business. In the third quarter of 2023, following management’s decision to sell our insurance agency business, we reclassified the related assets and liabilities to assets and liabilities of discontinued operations, respectively, on our Consolidated Balance Sheets.
Accordingly, we present operating net income, noninterest income on an operating basis, noninterest expense on an operating basis, total operating revenue, operating earnings per share, operating net income to average tangible shareholders’ equity, tangible book value per share, and the operating efficiency ratio, each of which excludes the impact of such items because we believe such exclusion can provide greater visibility into our core business and underlying trends.
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, tangible net income to average tangible shareholders’ equity, tangible operating net income to average tangible shareholders’ equity, tangible book value per share, and the operating efficiency ratio, each of which excludes the impact of such items because we believe such exclusion can provide greater visibility into our core business and underlying trends.
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 funding sources and our access to additional funds.
The distribution and market share of deposits by type of deposit and type of depositor are important considerations in our assessment of the stability of our funding sources and our access to additional funds.
We then model NII for the same period under the assumption that market rates increase and decrease instantaneously by certain basis point increments, which vary by period depending upon market conditions, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.
We then model NII for the same period under the assumption that market rates increase and decrease instantaneously by certain basis point increments, which vary by period depending upon market conditions, with changes in interest rates representing immediate, permanent, and parallel shifts in the yield curve.
For residential real estate, consumer home equity and other consumer portfolios, our quantitative model uses historical loss 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 71 in the loan portfolio.
For residential real estate, consumer home equity and other consumer portfolios, our quantitative model uses historical loss 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 in the loan portfolio.
Refer to Note 23, “Discontinued Operations ” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K. 80 The following table presents, on a tax equivalent basis, the effects of changing rates and volumes on our net interest income for the periods indicated.
Refer to Note 23, “Discontinued Operations ” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K. The following table presents, on a tax equivalent basis, the effects of changing rates and volumes on our net interest income for the periods indicated.
If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation and S-X or Regulation S-K, the pending content of the related amendment will be removed from the codification and will not become effective for any entity. Early adoption is not permitted and the amendments are required to be applied on a prospective basis.
If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation and S-X or Regulation S-K, the pending content of the related amendment will be removed from the codification and will not become effective for any entity. Early adoption is not permitted and the 84 amendments are required to be applied on a prospective basis.
(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 - FTE represents fully-taxable equivalent net interest income divided by average total interest-earning assets.
(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. 75 (3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (4) Net interest margin - FTE represents fully-taxable equivalent net interest income divided by average total interest-earning assets.
Merger and acquisition expenses previously reported for the years ended December 31, 2022, 2021, 2020 and 2018 related to acquisitions by Eastern Insurance Group were excluded from the above table as they were reclassified to discontinued operations.
Merger and acquisition expenses previously reported for the years ended December 31, 2022, 2021, and 2020 related to acquisitions by Eastern Insurance Group were excluded from the above table as they were reclassified to discontinued operations.
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.
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 state and municipal securities.
When available information confirms that specific loans or portions thereof are uncollectible, these amounts are promptly 74 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.
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.
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 troubled, collateral-dependent loans, loss 69 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.
The year-over-year change was primarily due to an increase in plan assets and an increase in lump sum conversion rates, partially offset by a decrease in discount rate assumptions used for determining the benefit obligation.
The year-over-year change was primarily due to an increase in plan assets and an increase in discount rates, partially offset by a decrease in lump sum conversion rates assumptions used for determining the benefit obligation.
(2) Reflects costs associated with the IPO that are indirectly related to the IPO and were not recorded as a reduction of capital (3) Comprised of merger and acquisition expenses incurred related to our acquisition of Cambridge and Century.
(2) Reflects costs associated with the IPO that were indirectly related to the IPO and were not recorded as a reduction of capital. (3) Comprised of merger and acquisition expenses incurred related to our acquisition of Cambridge and Century.
RMC advises the Board of Directors with respect to the adequacy of capital allocated based on the level of risk as well as risk issues that could impact liquidity and/ 90 or capital adequacy.
RMC advises the Board of Directors with respect to the adequacy of capital allocated based on the level of risk as well as risk issues that could impact liquidity and/or capital adequacy.
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. 57 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.
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. 52 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.
We periodically review current prepayment speeds to determine whether prepayment estimates require modification that could cause amortization or 61 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.
We periodically review current prepayment speeds to determine whether prepayment estimates require modification that could cause amortization or 57 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.
The Society of Actuaries (“SOA”) most recently issued mortality improvement tables during the year ended December 31, 2021. We reviewed our recent mortality experience and we determined our current mortality assumptions were appropriate to measure our pension plan obligations as of December 31, 2023. Significant differences in actual experience or significant changes in assumptions may materially affect the pension obligations.
The Society of Actuaries (“SOA”) most recently issued mortality improvement tables during the year ended December 31, 2021. We reviewed our recent mortality experience and we determined our current mortality assumptions were appropriate to measure our pension plan obligations as of December 31, 2024. Significant differences in actual experience or significant changes in assumptions may materially affect the pension obligations.
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 banking and other financial services primarily to retail, commercial and small business customers.
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.
ALCO meets at least monthly, or more frequently as needed, to review, among other things, our sensitivity to interest rate changes, loan pricing and activity, investment activity and strategy, hedging strategies, deposit pricing and funding strategies with respect to overall balance sheet composition, as well as earnings simulations over multiple years.
ALCO meets monthly, or more frequently as needed, to review, among other things, our sensitivity to interest rate changes, loan pricing and activity, investment activity and strategy, hedging strategies, deposit pricing and funding strategies with respect to overall balance sheet composition, as well as earnings simulations over multiple years.
For additional information related to our interest rate derivative financial instruments, see Note 18, “Derivative Financial Instruments” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K. 93 Economic Value of Equity Analysis.
For additional information related to our interest rate derivative financial instruments, see Note 18, “Derivative Financial Instruments” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K. 88 Economic Value of Equity Analysis.
Management’s estimate of our allowance for loan losses as of December 31, 2023 and the provision for loan losses for the year ended December 31, 2023, was supported, in part, by Oxford Economics’ December 2023 Baseline forecast (“the forecast”) which was used to develop management’s estimate of the effect of expected future economic conditions on the allowance for loan losses.
Management’s estimate of our allowance for loan losses as of December 31, 2024 and the provision for loan losses for the year ended December 31, 2024, was supported, in part, by Oxford Economics’ December 2024 Baseline forecast (“the forecast”) which was used to develop management’s estimate of the effect of expected future economic conditions on the allowance for loan losses.
For additional information on our income taxes, refer to Note 12, “Income Taxes” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K. Pension and other Post Retirement Benefit Plans .
For additional information on our income taxes, refer to Note 13, “Income Taxes” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K. Pension and other Post Retirement Benefit Plans .
If the 69 restructured loan is on accrual status prior to being modified, we review it to determine if the modified loan should remain on 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.
If the book value exceeds the fair value, an impairment is charged to net income. As of December 31, 2023, management identified one reporting unit for purposes of testing goodwill for impairment: the banking business. We performed our annual assessment of impairment for the banking business as of September 30, 2023.
If the book value exceeds the fair value, an impairment is charged to net income. As of December 31, 2024, management identified one reporting unit for purposes of testing goodwill for impairment: the banking business. We performed our annual assessment of impairment for the banking business as of September 30, 2024.
Purchased credit deteriorated (“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.
Purchased credit deteriorated (“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 merger date.
Net loss from continuing operations for the year ended December 31, 2023 and net income from continuing operations for the year ended December 31, 2022 included items that our management considers non-core, which management excludes for purposes of assessing our operating net income, a non-GAAP financial measure.
Net income from continuing operations for the year ended December 31, 2024 and net loss from continuing operations for the year ended December 31, 2023 included items that our management considers non-core, which management excludes for purposes of assessing our operating net income, a non-GAAP financial measure.
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: Our U.S. government securities consist of U.S. Agency bonds and U.S. Treasury 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: Our U.S. government securities consists of U.S. Agency bonds and U.S. Treasury securities.
For additional information related to the Company’s income taxes see Note 12, “Income Taxes” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.
For additional information related to the Company’s income taxes see Note 13, “Income Taxes” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.
Management may use investment strategy, loan and deposit pricing, non-core funding strategies, and interest rate derivative financial instruments, within internal policy guidelines, to manage interest rate risk as part of our asset/liability strategy.
Management may use techniques such as investment strategy, loan and deposit pricing, non-core funding strategies, and interest rate derivative financial instruments, within internal policy guidelines, to manage interest rate risk as part of our asset/liability strategy.
For further discussion of management’s economic forecast assumptions and our sensitivity analysis of the allowance for loan losses as of December 31, 2023, refer to the earlier “Provision for Loan Losses” discussion within the “Results of Operations” within this Item 7.
For further discussion of management’s economic forecast assumptions and our sensitivity analysis of the allowance for loan losses as of December 31, 2024, refer to the earlier “Provision for Loan Losses” discussion within the “Results of Operations” within this Item 7.
Use of the upside scenario would have resulted in an incremental decrease in the allowance for loan losses of approximately $6.3 million as of December 31, 2023. Our periodic evaluation of the appropriate allowance for loan losses considers the risk characteristics of the loan portfolio, current economic conditions, and trends in loan delinquencies and charge-offs.
Use of the upside scenario would have resulted in an incremental decrease in the allowance for loan losses of approximately $6.3 million as of December 31, 2024. 77 Our periodic evaluation of the appropriate allowance for loan losses considers the risk characteristics of the loan portfolio, current economic conditions, and trends in loan delinquencies and charge-offs.
We also present tangible shareholders’ equity, tangible assets, the ratio of tangible shareholders’ equity to tangible assets, average tangible shareholders’ equity, the ratios of net income and operating net income to average tangible shareholders’ equity and tangible book value per share, each of which excludes the impact of goodwill and other intangible assets, as we believe these financial measures provide investors with the ability to further assess our performance, identify trends in our core business and provide a comparison of our capital adequacy to other companies.
We also present tangible shareholders’ equity, tangible assets, the ratio of tangible shareholders’ equity to tangible assets, average tangible shareholders’ equity, the ratios of tangible net income (loss) from continuing operations and tangible operating net income to average tangible shareholders’ equity and tangible book value per share, each of which excludes the impact of goodwill and other intangible assets, as we believe these financial measures provide investors with the ability to further assess our performance, identify trends in our core business and provide a comparison of our capital adequacy to other companies.
This election was made upon our adoption of ASU 2014-01, Investments–Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects , which introduced the option to apply proportional amortization to low-income-housing tax credit investments.
This election was made upon the Company’s adoption of ASU 2014-01, Investments–Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects , which 83 introduced the option to apply proportional amortization to low-income-housing tax credit investments .
While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return. 86 In November 2023, an investment policy study was completed for the Defined Benefit Plan.
While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return. In November 2024, an investment policy study was completed for the Defined Benefit Plan.
In the normal course of business, we become aware of possible credit problems in which borrowers exhibit potential for the inability to comply with the contractual terms of their loans, but which currently do not yet meet the criteria for classification as NPLs. These loans are neither delinquent nor on non-accrual status.
In the normal course of business, we become aware of possible credit problems in which borrowers exhibit the potential to be unable to comply in the future with the contractual terms of their loans, but which currently do not yet meet the criteria for classification as NPLs. These loans are neither delinquent nor on non-accrual status.
Our non-GAAP financial measures should not be considered as an alternative or substitute to GAAP net income from continuing operations, 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.
Our non-GAAP financial measures should not be considered as an alternative or substitute to GAAP net income (loss), 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.
(“Century”). Merger and acquisition expenses previously reported for the years ended December 31, 2022 and 2021 related to acquisitions by Eastern Insurance Group were excluded from the above table as they were reclassified to discontinued operations.
(“Century”). Merger and acquisition expenses previously reported for the year ended December 31, 2022 related to acquisitions by Eastern Insurance Group were excluded from the above table as they were reclassified to discontinued operations.
A portion of these loans have been hedged using interest rate swaps to convert the floating rate interest receipts to a fixed rate. The notional amount of floating rate loans swapped totaled $2.4 billion as of December 31, 2023, representing approximately 17% of the outstanding principal balance of our loans at that date.
A portion of these loans have been hedged using interest rate swaps to convert the floating rate interest receipts to a fixed rate. The notional amount of floating rate loans swapped totaled $2.4 billion as of December 31, 2024, representing approximately 13% of the outstanding principal balance of our loans at that date.
As a result of the study, it was determined that the weighted-average long-term rate of return on assets of 7.50% was reasonable as of December 31, 2023. Another key assumption in determining net pension expense is the assumed discount rate used to discount plan obligations.
As a result of the study, it was determined that the weighted-average long-term rate of return on assets of 7.25% was reasonable as of December 31, 2024. Another key assumption in determining net pension expense is the assumed discount rate used to discount plan obligations.
NPLs as a percentage of total loans increased to 0.38% at December 31, 2023 from 0.28% at December 31, 2022. Refer to the later “Allowance for Credit Losses” section in this Item 7 for a discussion of the change in non-accrual loans which comprise our NPLs as of December 31, 2023 and December 31, 2022.
NPLs as a percentage of total loans increased to 0.76% at December 31, 2024 from 0.38% at December 31, 2023. Refer to the later “Allowance for Credit Losses” section in this Item 7 for a discussion of the change in non-accrual loans which comprise our NPLs as of December 31, 2024 and December 31, 2023.
Updates made by ASU 2023-02 allow a reporting entity to make an accounting policy election to apply the proportional amortization method on a tax-credit-program-by-tax-credit-program basis. We had previously made an accounting policy election to account for our investments in low-income-housing tax credit investments using the proportional amortization method.
Updates made by ASU 2023-02 allow a reporting entity to make an accounting policy election to apply the proportional amortization method on a tax-credit-program-by-tax-credit-program basis. The Company had previously made an accounting policy election to account for its investments in low-income-housing tax credit investments using the proportional amortization method.
The tables below represent an analysis of our interest rate risk as measured by the estimated changes in our EVE, resulting from an instantaneous and sustained parallel shift in the yield curve (+100, +200, +400 basis points and -100, -200, and -400 basis points) at December 31, 2023 and (+200, +300, +400 basis points and -100, -200 basis points) at December 31, 2022.
The tables below represent an analysis of our interest rate risk as measured by the estimated changes in our EVE, resulting from an instantaneous and sustained parallel shift in the yield curve (+100, +200, +400 basis points and -100, -200, and -400 basis points) at both December 31, 2024 and 2023.
As of both December 31, 2023 and 2022, we had no securities categorized as Level 3 within the fair value hierarchy. 62 The following tables show contractual maturities of our AFS and HTM securities and weighted average yields at and for the years ended December 31, 2023 and 2022.
As of both December 31, 2024 and 2023, we had no securities categorized as Level 3 within the fair value hierarchy. 58 The following tables show contractual maturities of our AFS and HTM securities and weighted average yields at and for the years ended December 31, 2024 and 2023.
Special mention, substandard and doubtful loans totaled 4.1% and 2.2% of total commercial loans outstanding at December 31, 2023 and 2022, respectively. This increase was driven by several risk rating downgrades of loans in the commercial and industrial and commercial real estate portfolios.
Special mention, substandard and doubtful loans totaled 4.9% and 4.1% of total commercial loans outstanding at December 31, 2024 and 2023, respectively. This increase was driven by several risk rating downgrades of loans in the commercial real estate and commercial and industrial portfolios.
The total amount of interest recorded on NPLs during both the years ended December 31, 2023 and 2022 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 $6.5 million and $3.9 million for the years ended December 31, 2023 and 2022, respectively.
The total amount of interest recorded on NPLs during both the years ended December 31, 2024 and 2023 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 $8.8 million and $6.5 million for the years ended December 31, 2024 and 2023, respectively.
The amendments in this update: 1. Require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”). 2.
Require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision-maker (“CODM”) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”). 2.
The FDIC also announced that, as required by the FDIA, any losses to the Deposit Insurance Fund (“DIF”) to support uninsured depositors would be recovered by a special assessment.
In 2023, the FDIC announced that, as required by the FDIA, any losses to the Deposit Insurance Fund (“DIF”) to support uninsured depositors would be recovered by a special assessment.
Our asset-liability management strategy is devised and monitored by our ALCO, a subcommittee of the ERMC, in accordance with policies approved by the RMC. ALCO operates under a charter developed and approved by the ERMC.
Our asset-liability management strategy is devised and monitored by our ALCO in accordance with policies approved by RMC. ALCO operates under a charter developed and approved by ERMC.
Given prevailing market conditions such as rising interest rates, reduced occupancy as a result of the increase in hybrid work arrangements post-COVID, and lower commercial real estate valuations, we are carefully monitoring these loans for signs of deterioration in credit quality.
Given prevailing market conditions such as reduced occupancy as a result of the increase in hybrid and fully remote work arrangements post-COVID and lower commercial real estate valuations, we are carefully monitoring these loans for signs of deterioration in credit quality.
Refer to the “Results of Operations” section below for additional discussion of the changes in net interest income, noninterest income and noninterest expense. 53 The following chart shows our efficiency ratio on a GAAP and operating (non-GAAP) basis over the past five years (refer to the “Non-GAAP Financial Measures” section below for additional information on the determination of each measure): Both the GAAP efficiency ratio and non-GAAP operating efficiency ratio for the year ended December 31, 2023 increased compared to the year ended December 31, 2022.
Refer to the “Results of Operations” section below for additional discussion of the changes in net interest income, noninterest income and noninterest expense. 50 The following chart shows our efficiency ratio on a GAAP and operating (non-GAAP) basis over the past five years (refer to the “Non-GAAP Financial Measures” section below for additional information on the determination of each measure): Both the GAAP efficiency ratio and non-GAAP operating efficiency ratio decreased during the year ended December 31, 2024 compared to the year ended December 31, 2023.
From time to time, we expect we will exceed policy limits, in which case we may seek corrective action after considering, among other things, market conditions, customer reaction, and the estimated impact on profitability. A remediation plan will be presented to ALCO, Enterprise Risk Management Committee (“ERMC”) and RMC that carefully outlines the proposed corrective action.
From time to time, we expect we will exceed policy limits, in which case we may seek corrective action after considering, among other things, market conditions, customer reaction, and the estimated impact on profitability. A remediation plan will be presented to ALCO, ERMC and RMC that carefully outlines the proposed corrective action.
As of December 31, 2023, there were no loans that had been modified to borrowers experiencing financial difficulty during the year ended December 31, 2023 and which had subsequently defaulted during the period.
As of December 31, 2023, there were no loans that had been modified to borrowers experiencing financial difficulty during the twelve-month period then ended which had subsequently defaulted during the year ended December 31, 2023.
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.
We also analyze the sensitivity of our financial condition to changes in interest rates through our 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.
For the retail portfolio, which includes residential real estate, consumer home equity, and other consumer portfolios, we monitor credit quality using the borrower’s FICO score. As of December 31, 2023, 70.9% of retail borrowers, based on amortized cost balances, have a FICO score of 740 or greater.
For the retail portfolio, which includes residential real estate, consumer home equity, and other consumer portfolios, we monitor credit quality using the borrower’s FICO score. As of December 31, 2024, 72.0% of retail borrowers, based on amortized cost balances, have a FICO score of 740 or greater.
The effects of actual results differing from assumptions and the changing of assumptions are included in unamortized net actuarial gains and losses that are subject to amortization to pension expense over future periods. The unamortized pre-tax actuarial loss on all of our pension plans was $69.7 million and $99.0 million at December 31, 2023 and December 31, 2022, respectively.
The effects of actual results differing from assumptions and the changing of assumptions are included in 82 unamortized net actuarial gains and losses that are subject to amortization to pension expense over future periods. The unamortized pre-tax actuarial loss on all of our pension plans was $34.1 million and $69.7 million at December 31, 2024 and December 31, 2023, respectively.
Such items that we do not consider to be core to our business include (i) income and expenses from investments held in rabbi trusts, (ii) gains and losses on sales of securities available for sale, net, (iii) gains and losses on the sale of other assets, (iv) rabbi trust employee benefits, (v) impairment charges on tax credit investments and associated tax credit benefits, (vi) expenses indirectly associated with our IPO, (vii) other real estate owned (“OREO”) gains, (viii) merger and acquisition expenses, (ix) the stock donation to the Eastern Bank Foundation (the “Foundation”) in connection with our mutual-to-stock conversion and IPO, (x) settlement of putative consumer class action litigation matters related to overdraft and non-sufficient fund fees, and associated settlement expenses, and (xi) the non-cash pension settlement charge recognized related to our Defined Benefit Plan.
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 equity investments, (iv) gains and losses on the sale of other assets, (v) rabbi trust employee benefits expense, (vi) impairment charges on tax credit investments and associated tax credit benefits, (vii) expenses indirectly associated with our IPO, (viii) other real estate owned (“OREO”) gains, (ix) merger and acquisition expenses, including the “day-2” provision for allowance for loan losses for non-PCD acquired loans, (x) the stock donation to the Eastern Bank Foundation (the “Foundation”) in connection with our mutual-to-stock conversion and IPO, (xi) settlement of putative consumer class action litigation matters related to overdraft and non-sufficient fund fees, and associated settlement expenses, (xii) the non-cash pension settlement charge recognized related to our Defined Benefit Plan, and (xiii) certain discrete tax items.
In other words, in addition to the measure that is most consistent with the measurement principles under generally accepted accounting principles (“GAAP”), a public entity is not precluded from reporting additional measures of a segment’s profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources. 5.
In other words, in addition to the measure that is most consistent with the measurement principles under U.S. GAAP, a public entity is not precluded from reporting additional measures of a segment’s profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources. 5.
We did not have trading investments at December 31, 2023 and 2022. A portion of our securities portfolio continues to be tax-exempt. Investments in federally tax-exempt securities totaled $191.1 million at December 31, 2023 compared to $182.9 million at December 31, 2022.
We did not have trading investments at December 31, 2024 and 2023. A portion of our securities portfolio continues to be tax-exempt. Investments in federally tax-exempt securities totaled $183.1 million at December 31, 2024 compared to $191.1 million at December 31, 2023.
The net loss from continuing operations and resulting decline from net income during the year ended December 31, 2022 was primarily due to the sale of available for sale securities at a loss in connection with our balance sheet repositioning completed in March 2023.
The net loss from continuing operations for the year ended December 31, 2023 and subsequent increase to net income during the year ended December 31, 2024 was primarily due to the sale of available for sale securities at a loss in connection with our balance sheet repositioning completed in March 2023.
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.
Interest rate risk is the sensitivity of the net present value of assets and liabilities and 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.
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 21.8% for the year ended December 31, 2023, 21.6% for the year ended December 31, 2022 and 21.0% for the year ended December 31, 2021.
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 21.8%, 21.8%, and 21.6% for the years ended December 31, 2024, 2023, and 2022, respectively.
ALCO may meet more frequently if there are changes in the economic environment, such as rapid increases or decreases in interest rates due to or as a result of exogenous or unknown factors so that ALCO can make any necessary strategic adjustments to ensure risk is well-managed.
ALCO may meet more frequently if there are changes in the economic environment, such as rapid increases or decreases in interest rates due to or as a result of exogenous or unknown factors so that ALCO can make any necessary strategic adjustments to better manage interest rate risk.
For additional information regarding our allowance for loan losses, see Note 4, “Loans and Allowance for Credit Losses” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.
For additional information on our allowance for loan losses, refer to Note 5, “Loans and Allowance for Credit Losses” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K. Goodwill.
The Board ensures that approved policy limits, as described further above, conform to stated risk appetite. The Board monitors, on at least a quarterly basis, a set of key risk metrics, including those, but not limited to those, pertaining to market risk.
The Board of Directors regularly assesses whether the approved policy limits, as described further above, conform to stated risk appetite. The Board of Directors monitors, on at least a quarterly basis, a set of key risk metrics, including those, but not limited to those, pertaining to market risk.
The following tables sets forth the allocation of the allowance for loan losses by loan categories listed in loan portfolio composition and the related loan balances as a percentage of total loans as of the dates indicated: Summary of Allocation of Allowance for Loan Losses As of December 31, 2023 2022 Allowance for Loan Losses Percent of Allowance in Category to Total Allowance Percent of Loans in Category to Total Loans Allowance for Loan Losses Percent of Allowance in Category to Total Allowance Percent of Loans in Category to Total Loans (Dollars in thousands) Commercial and industrial $ 26,959 18.09 % 21.71 % $ 26,859 18.89 % 23.21 % Commercial real estate 65,475 43.95 % 39.05 % 54,730 38.49 % 37.97 % Commercial construction 6,666 4.47 % 2.77 % 7,085 4.98 % 2.48 % Business banking 14,913 10.01 % 7.77 % 16,189 11.38 % 8.03 % Residential real estate 25,954 17.42 % 18.36 % 28,129 19.78 % 18.13 % Consumer home equity 5,595 3.76 % 8.65 % 6,454 4.54 % 8.75 % Other consumer 3,431 2.30 % 1.69 % 2,765 1.94 % 1.43 % Total $ 148,993 100.00 % 100.00 % $ 142,211 100.00 % 100.00 % As of December 31, 2021 2020 2019 Allowance for Loan Losses Percent of Allowance in Category to Total Allocated Allowance Percent of Loans in Category to Total Loans Allowance for Loan Losses Percent of Allowance in Category to Total Allocated Allowance Percent of Loans in Category to Total Loans 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 $ 18,018 18.43 % 24.10 % $ 26,617 23.54 % 20.51 % $ 20,919 25.42 % 18.27 % Commercial real estate 52,373 53.56 % 36.82 % 54,569 48.28 % 36.73 % 34,730 42.20 % 39.34 % Commercial construction 2,585 2.64 % 1.81 % 4,553 4.03 % 3.14 % 3,424 4.16 % 3.05 % Business banking 10,983 11.23 % 10.87 % 13,152 11.64 % 13.76 % 8,260 10.04 % 8.58 % Residential real estate 6,556 6.70 % 15.69 % 6,435 5.69 % 14.09 % 6,380 7.75 % 15.90 % Consumer home equity 3,722 3.81 % 8.96 % 3,744 3.31 % 8.92 % 4,027 4.89 % 10.38 % Other consumer 3,308 3.38 % 1.75 % 3,467 3.07 % 2.85 % 4,173 5.07 % 4.48 % Other 242 0.25 % — % 494 0.44 % — % 384 0.47 % — % Total $ 97,787 100.00 % 100.00 % $ 113,031 100.00 % 100.00 % $ 82,297 100.00 % 100.00 % To determine if a loan should be charged-off, all possible sources of repayment are analyzed.
The following tables set forth the allocation of the allowance for loan losses by loan categories listed in loan portfolio composition and the related loan balances as a percentage of total loans as of the dates indicated: Summary of Allocation of Allowance for Loan Losses As of December 31, 2024 2023 Allowance for Loan Losses Percent of Allowance in Category to Total Allowance Percent of Loans in Category to Total Loans Allowance for Loan Losses Percent of Allowance in Category to Total Allowance Percent of Loans in Category to Total Loans (Dollars in thousands) Commercial and industrial $ 41,090 17.95 % 18.24 % $ 26,959 18.09 % 21.71 % Commercial real estate 116,175 50.74 % 39.37 % 65,475 43.95 % 39.05 % Commercial construction 8,462 3.70 % 2.74 % 6,666 4.47 % 2.77 % Business banking 19,899 8.69 % 8.01 % 14,913 10.01 % 7.77 % Residential real estate 32,291 14.10 % 22.48 % 25,954 17.42 % 18.36 % Consumer home equity 7,472 3.26 % 7.66 % 5,595 3.76 % 8.65 % Other consumer 3,563 1.56 % 1.50 % 3,431 2.30 % 1.69 % Total $ 228,952 100.00 % 100.00 % $ 148,993 100.00 % 100.00 % As of December 31, 2022 2021 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 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 $ 26,859 18.89 % 23.21 % $ 18,018 18.43 % 24.10 % $ 26,617 23.54 % 20.51 % Commercial real estate 54,730 38.49 % 37.97 % 52,373 53.56 % 36.82 % 54,569 48.28 % 36.73 % Commercial construction 7,085 4.98 % 2.48 % 2,585 2.64 % 1.81 % 4,553 4.03 % 3.14 % Business banking 16,189 11.38 % 8.03 % 10,983 11.23 % 10.87 % 13,152 11.64 % 13.76 % Residential real estate 28,129 19.78 % 18.13 % 6,556 6.70 % 15.69 % 6,435 5.69 % 14.09 % Consumer home equity 6,454 4.54 % 8.75 % 3,722 3.81 % 8.96 % 3,744 3.31 % 8.92 % Other consumer 2,765 1.94 % 1.43 % 3,308 3.38 % 1.75 % 3,467 3.07 % 2.85 % Other — — % — % 242 0.25 % — % 494 0.44 % — % Total $ 142,211 100.00 % 100.00 % $ 97,787 100.00 % 100.00 % $ 113,031 100.00 % 100.00 % To determine if a loan should be charged-off, all possible sources of repayment are analyzed.
To illustrate the sensitivity of the modeled result to the impact of a hypothetical change in the economic forecast, management calculated the allowance for loan losses assuming the downside economic forecast scenario and, separately, the upside economic forecast scenario. The downside scenario assumed the U.S. economy will experience a decline in GDP in 2024 of 0.7%.
To illustrate the sensitivity of the modeled result to the impact of a hypothetical change in the economic forecast, management calculated the allowance for loan losses assuming the downside economic forecast scenario and, separately, the upside economic forecast scenario. The downside scenario assumed the U.S. economy will experience a slight growth in GDP in 2025 of 0.1%.
The aggregate amortized cost balance as of December 31, 2023 of loans modified during the year ended December 31, 2023, determined in accordance with ASU 2022-02, which were determined to be modifications to borrowers experiencing financial difficulty was $19.4 million.
The aggregate amortized cost balance as of December 31, 2023 of loans modified during the year ended December 31, 2023 which were determined to be modifications to borrowers experiencing financial difficulty was $19.4 million.
The decrease in earnings per share from continuing operations to a loss per share from continuing operations was due to a decrease in net income from continuing operations for the year ended December 31, 2022 to a net loss from continuing operations for the year ended December 31, 2023 as a result of a loss on sale of AFS securities in March 2023, which was part of our balance sheet repositioning, as described above.
The loss per share from continuing operations for the year ended December 31, 2023 was a result of a loss on sale of AFS securities in March 2023, which was part of our balance sheet repositioning, as described above.
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.
Expected lifetime losses are estimated on a collective basis for loans sharing similar risk characteristics and are 80 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.
The following table provides details regarding our delinquency rates as of the dates indicated: 68 Loan Delinquency Rates Delinquency Rate as of December 31, 2023 2022 Commercial and industrial 0.13 % 0.12 % Commercial real estate — % — % Commercial construction — % — % Business banking 0.58 % 1.00 % Residential real estate 1.11 % 1.46 % Consumer home equity 1.43 % 1.33 % Other consumer 0.46 % 0.63 % Total 0.41 % 0.50 % As a general rule, loans more than 90 days past due with respect to principal or interest are classified as non-accrual loans.
The delinquency rate of our total loan portfolio increased to 0.62% at December 31, 2024 from 0.41% at December 31, 2023. 63 The following table provides details regarding our delinquency rates as of the dates indicated: Loan Delinquency Rates Delinquency Rate as of December 31, 2024 2023 Commercial and industrial 0.00 % 0.13 % Commercial real estate 0.46 % — % Commercial construction — % — % Business banking 1.19 % 0.58 % Residential real estate 1.04 % 1.11 % Consumer home equity 1.29 % 1.43 % Other consumer 0.62 % 0.46 % Total 0.62 % 0.41 % As a general rule, loans more than 90 days past due with respect to principal or interest are classified as non-accrual loans.
For liquidity monitoring purposes, we exclude internal deposit accounts and collateralized deposits from our estimate of uninsured deposits. Our estimate of uninsured deposits, excluding internal deposit accounts and collateralized deposits, was $5.5 billion and $7.3 billion at December 31, 2023 and December 31, 2022, respectively.
For liquidity monitoring purposes, we exclude internal deposit accounts and collateralized deposits from our estimate of uninsured deposits. Our estimate of uninsured deposits, excluding internal deposit accounts and collateralized deposits, was $6.9 billion and $5.5 billion at December 31, 2024 and December 31, 2023, respectively.
Interest rate sensitivity is the most significant market risk to which we are exposed. Interest rate risk is the sensitivity of the net present value of assets and liabilities and/or income to changes in interest rates.
Market risk is the sensitivity of the net present value of assets and liabilities and/or income to changes in interest rates, foreign exchange rates, commodity prices and other market-driven rates or prices. Interest rate sensitivity is the most significant market risk to which we are exposed.
(4) Loans with a carrying value of $1.1 billion at both December 31, 2023 and 2022 and securities with a carrying value of $168.8 million at December 31, 2023 were pledged to the Discount Window, resulting in this additional borrowing capacity. No securities were pledged to the Discount Window at December 31, 2022.
(4) Loans with a carrying value of $3.1 billion and $1.1 billion at December 31, 2024 and 2023, respectively, and securities with a carrying value of $794.8 million and $168.8 million at December 31, 2024 and 2023, respectively, were pledged to the Discount Window, resulting in this additional borrowing capacity.
The overfunded status of all of our pension plans improved during the year ended December 31, 2023 to $69.0 million from $56.8 million primarily due to: (i) actual pension plan investment returns less than expected of $33.7 million; (ii) the favorable effect of an increase in lump sum conversion rates of $5.8 million; and (iii) changes in other actuarial assumptions and demographic data updates; partially offset by (iv) the unfavorable effect of a decrease in discount rates of $7.7 million.
The overfunded status of all of our pension plans improved during the year ended December 31, 2024 to $110.9 million from $69.0 million primarily due to: (i) actual pension plan investment returns greater than expected of $12.7 million; and (ii) the favorable effect of an increase in discount rates of $22.2 million; partially offset by (iii) changes in other actuarial assumptions and demographic data updates; and (iv) the unfavorable effect of a decrease in lump sum conversion rates of $0.3 million.
This shift in deposit mix during the year ended December 31, 2023 was due primarily to increases in rates paid on certificates of deposit, which attracted depositors to such products. The Bank’s estimate of total uninsured deposits was $8.0 billion and $9.0 billion at December 31, 2023 and 2022, respectively.
The shift in deposit mix was due primarily to increases in rates paid on money market investment deposits and certificates of deposit, which attracted depositors to such products. The Bank’s estimate of total uninsured deposits was $9.0 billion and $8.0 billion at December 31, 2024 and 2023, respectively.
Use of the downside scenario would have resulted in an incremental increase in the allowance for loan losses of approximately $12.3 million as of December 31, 2023. The upside scenario assumed GDP growth of 2.5% in 2024 along with 82 sustained recovery.
Use of the downside scenario would have resulted in an incremental increase in the allowance for loan losses of approximately $16.9 million as of December 31, 2024. The upside scenario assumed GDP growth of 3.3% in 2025 along with sustained recovery.
Under existing accounting standards, the proportional amortization method is allowable only for equity investments in low-income-housing tax credit structures.
Under previously effective accounting standards, the proportional amortization method was allowable only for equity investments in low-income-housing tax credit structures.
The increase in potential problem loans from December 31, 2022 to December 31, 2023 was primarily due to the downgrade of certain commercial and industrial and commercial real estate loans during the year ended December 31, 2023, including certain commercial real estate loans collateralized by properties in the office risk segment.
The increase in potential problem loans from December 31, 2023 to December 31, 2024 was primarily due to the downgrade of certain commercial real estate and commercial and industrial loans during the year ended December 31, 2024, including certain commercial real estate loans collateralized by properties in the office risk segment, and the addition of certain loans acquired in connection with our merger with Cambridge.

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