Eastern Bankshares, Inc. (EBC) FY 2024 MD&A

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K. In addition to historical data, this discussion contains forward-looking statements about our business, results of operations, cash flows, financial condition and prospects based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including, but not limited to, those discussed under Part I, Item 1A, “Risk Factors” appearing elsewhere in this Annual Report on Form 10-K.

Overview

We are a bank holding company, and our principal subsidiary, Eastern Bank, is a Massachusetts-chartered bank that has served the banking needs of our customers since 1818. Our business philosophy is to operate as a diversified financial services enterprise providing a broad array of banking and other financial services primarily to retail, commercial and small business customers. We had total assets of $25.6 billion and $21.1 billion at December 31, 2024 and 2023, respectively. We are subject to comprehensive regulation and examination by the Massachusetts Commissioner of Banks, the New Hampshire Banking Department, the FDIC, the Federal Reserve Board and the Consumer Financial Protection Bureau. Our business consists of a full range of banking, lending (commercial, residential and consumer), savings and small business offerings, including our wealth management and trust operations that we conduct through our Cambridge Trust Wealth Management division. Previously, our wealth management and trust operations were conducted through Eastern Wealth Management. Following our merger with Cambridge Bancorp, described further below, the wealth management divisions of both banks now operate under the “Cambridge Trust Wealth Management, a division of Eastern Bank,” brand name.

On July 12, 2024, we completed our previously announced merger with Cambridge and Cambridge Trust. In accordance with the terms of the definitive merger agreement, through which we agreed to acquire Cambridge through a merger with the Company as the surviving entity, each share of Cambridge common stock was exchanged for 4.956 shares of our common stock. The transaction qualified as a tax-free reorganization for federal income tax purposes and provided Cambridge shareholders with a tax-free exchange of their shares of Cambridge common stock in exchange for our common stock as the consideration they received in the merger. We issued 38.9 million shares of our common stock in the exchange which resulted in a transaction value of approximately $580.6 million based upon the closing price of our common stock on July 12, 2024 of $14.87 per share.

Cambridge, a Massachusetts corporation, was a federally registered bank holding company headquartered in Cambridge, Massachusetts. Cambridge Trust, a Massachusetts-chartered trust company formed in 1890, was a wholly-owned subsidiary of Cambridge that operated through a network of 18 full-service banking offices in eastern Massachusetts and New Hampshire with $5.3 billion in total assets and $3.9 billion in deposits as of July 12, 2024. Cambridge’s core services also included wealth management. Through its wealth management group, which had offices in Massachusetts and New Hampshire, it offered comprehensive investment management, as well as trust administration, estate settlement, and financial planning services. Cambridge had assets under management and administration of approximately $5.0 billion as of July 12, 2024. Cambridge Trust’s wholly owned subsidiary, Cambridge Trust Company of New Hampshire Inc. (“CTCNH”), offered trust services pursuant to New Hampshire law and was regulated by the New Hampshire Banking Department. CTCNH is now a subsidiary of Eastern Bank.

In recent years, we managed our business under two business segments: our banking business and our insurance agency business. 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, the results of discontinued operations were reclassified to “net income from discontinued operations” on our Consolidated Statements of Income. For additional discussion of discontinued operations, 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 discussion excludes amounts reported as discontinued operations.

Net income from continuing operations for the year ended December 31, 2024, computed in accordance with GAAP, was $119.6 million, as compared to a net loss from continuing operations of $62.7 million for the year ended December 31, 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. Partially offsetting the increase to net income for the year ended December 31, 2024 were one-time expenses associated with our merger with Cambridge including the allowance for loan losses associated with non-purchased credit deteriorated (“PCD”) loans, which was recorded subsequent to the completion of the

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merger and is hereafter referred to as the “non-PCD loan day-2” provision for the allowance for loan losses, and merger and acquisition expenses recorded.

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. Operating net income for the year ended December 31, 2024 was $192.6 million compared to $163.2 million for the year ended December 31, 2023. This increase was primarily due to increased net interest income and noninterest income on an operating basis for the year ended December 31, 2024 compared to year ended December 31, 2023 partially offset by an increase in noninterest expense on an operating basis over the same period. See “Non-GAAP Financial Measures” and “Results of Operations” below for a reconciliation of operating net income to net income on a GAAP basis and further discussion of noninterest income and noninterest expense.

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

Earnings (loss) per share from continuing operations, on a GAAP basis, increased from $(0.39) for the year ended December 31, 2023 to $0.66 for the year ended December 31, 2024. 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.

Operating earnings per share increased from $1.01 for the year ended December 31, 2023 to $1.06 for the year ended December 31, 2024, a 5.8% increase. The increase was primarily due to an increase net interest income and noninterest income on an operating basis which were partially offset by an increase in noninterest expense on an operating basis. Refer to the“Results of Operations” section below for additional discussion of the changes in net interest income, noninterest income and noninterest expense.

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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. The decrease in the GAAP efficiency ratio is primarily due to lower security losses during the year ended December 31, 2024 compared to year ended December 31, 2023. The decrease in the non-GAAP operating efficiency ratio was primarily due to increased net interest income and increased noninterest income on an operating basis which increased at a greater rate than noninterest expenses on an operating basis. Refer to the “Results of Operations” section below for additional discussion of the changes in net interest income, noninterest income and noninterest expense.

Outlook and Trends

Interest Rates

Beginning in March 2022, the Federal Open Market Committee (“FOMC”) voted to increase the federal funds rate multiple times from a range of 0.00% to 0.25% to a range of 5.25% to 5.50% on July 26, 2023, when the FOMC stated that it will continue to assess additional information and its implications for monetary policy. At its meeting on September 18, 2024, the FOMC decided to lower the target range for the federal funds rate by 50 basis points from the range set at its July 26, 2023 meeting to a range of 4.75% to 5.00%. At its meeting on November 7, 2024, the FOMC then decided to lower the target range for the federal funds rate by 25 basis points to a range of 4.50% to 4.75%. At its most recent meeting on January 29, 2025, the FOMC decided to maintain the target range for the federal funds rate at the range established following its November 7, 2024 meeting and indicated, in considering the extent and timing of additional adjustments to the target range for the federal funds rate, it will carefully assess incoming data, the evolving outlook, and the balance of risks. The FOMC further indicated it is strongly committed to supporting maximum employment and reducing the annual inflation rate to its 2 percent objective.

Inevitably, not all of our interest rate-sensitive assets and liabilities will re-price simultaneously and in equal volume in response to changes in the federal funds rate, and therefore the potential for interest rate exposure exists. Management believes that several factors will affect the actual impact of interest rate changes on our balance sheet and operating results, including, but not limited to, actual changes in interest rates or expectations of future changes, the degree of volatility in the securities markets, inflation rates or expectations of inflation, and the slope of the interest rate yield curve. We attempt to manage interest rate risk by identifying, quantifying, and, where appropriate, hedging our exposure. Approximately 31% of the outstanding principal balance of our loans, gross of outstanding interest rate swaps as described further below, as of December 31, 2024 was indexed to a market rate that is expected to reprice with similar magnitude and direction as the federal

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funds rate. 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. For more detail regarding such hedging financial instruments, refer to 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. Refer to the section titled “Management of Market Risk” within this Item 7 for additional discussion including the estimated change to our net interest income under interest rate risk measurement methodologies that use a variety of hypothetical scenarios assuming immediate and parallel changes in interest rates that may not reflect the manner in which actual yields and costs respond to changes in market interest rates.

Non-GAAP Financial Measures

We present certain non-GAAP financial measures, which management uses to evaluate our performance, and which exclude the effects of certain transactions, non-cash items and GAAP adjustments that we believe are unrelated to our core business and are therefore not necessarily indicative of our current performance or financial position. Management believes excluding these items facilitates greater visibility for investors into our core business as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding GAAP financial measures. Except as otherwise indicated, the information presented for the years ended December 31, 2023, 2022, 2021, and 2020 within this section excludes discontinued operations. 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 for further discussion regarding discontinued operations.

There are items in our financial statements that impact our results but which we believe are unrelated to our core business. Accordingly, we present operating net income, noninterest income on an operating basis, noninterest expense on an operating basis, total operating revenue, operating earnings per share, 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. 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.

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. We have included the tangible ratios because management believes that investors may find it useful to have access to the same analytical tools used by management to assess performance and identify trends.

In the third quarter of 2024, we changed our return on average tangible shareholders’ equity and operating return on average tangible shareholders’ equity computations to utilize tangible net income (loss) from continuing operations and tangible operating net income, respectively, in the numerators of the computations. Tangible net income (loss) from continuing operations excludes the amortization of intangible assets and the related tax effect and tangible operating net income excludes, in addition to the adjustments to derive operating net income, the amortization of intangible assets and related tax effect. In addition, in the third quarter of 2024, we changed the computation of our operating efficiency ratio to exclude, in addition to the adjustments made to operating net income, the amortization of intangible assets. Management believes the changes to such ratios result in a more meaningful measure of our financial performance and such measures are used by management when analyzing corporate performance.

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. An item which we consider to be non-core and exclude when computing these non-GAAP financial measures can be of substantial importance to our results for any particular period. In addition, our methodology for calculating non-GAAP financial measures may differ from the methodologies employed by other companies to calculate the same or similar performance measures and, accordingly, our reported non-GAAP financial measures may not be comparable to the same or similar performance measures reported by other companies.

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

(1)Comprised of merger and acquisition expenses incurred related to our acquisitions of Cambridge and Century Bancorp, Inc. (“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. 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 for additional discussion.

(2)Represents a non-cash settlement loss for the year ended December 31, 2022 related to the Defined Benefit Plan. For additional information, refer to Note 15, “Employee Benefits” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

(3)The net tax benefit amount for the year ended December 31, 2023 primarily resulted from the sale of securities classified as available for sale in the first quarter of 2023 and a $23.7 million tax benefit resulting from the transfer of certain securities from Market Street Securities Corp., a wholly owned subsidiary which was liquidated during the first quarter of 2023, to Eastern Bank.

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

(1)Interest income on 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, 2024, 21.8% for the year ended December 31, 2023, 21.6% for the year ended December 31, 2022, 21.0% for the year ended December 31, 2021, and 21.8% for the year ended December 31, 2020.

(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. 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. Refer to Note 23, “Discontinued

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

(1)Includes goodwill and other intangible assets which were associated with our insurance agency business for the years ended December 31, 2022, 2021, and 2020.

The following table summarizes the calculation of our average tangible shareholders’ equity and ratio of net income (loss) from continuing operations and operating net income to average tangible shareholders’ equity (“operating return

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on average tangible shareholders’ equity”), which reconciles to the most directly comparable GAAP measure, for the periods indicated:

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

(2)Includes goodwill and other intangible assets included in assets of discontinued operations within the Company’s Consolidated Balance Sheets for the years ended December 31, 2023, 2022, 2021, and 2020.

(3)The tax effect of amortization of intangible assets was calculated using our combined statutory tax rate of 27.7%for the year ended December 31, 2024, 28.2% for the year ended December 31, 2023, and 28.1% for the years ended December 31, 2022, 2021, and 2020.

Financial Position

Summary of Financial Position

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Cash and cash equivalents

Total cash and cash equivalents increased by $313.8 million, or 45.3%, to $1.0 billion at December 31, 2024 from $693.1 million at December 31, 2023. This increase was primarily due to proceeds from the sale of AFS securities of $1.1 billion and proceeds from maturities and principal paydowns of AFS and HTM securities of $0.4 billion. Partially offsetting these increases were net repayments of FHLB advances of $739.9 million, which includes repayment of advances assumed in connection with our merger with Cambridge, a net decrease in deposits, excluding deposits acquired from Cambridge, of $178.3 million, and a net increase in gross loans, excluding loans acquired from Cambridge, of $171.0 million during the year ended December 31, 2024. For further discussion of the change in securities, loans, and deposits, refer to the later “Securities,” “Loans,” and “Deposits” sections in this Item 7. For further information regarding our merger with Cambridge, refer to Note 3, “Mergers and Acquisitions” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

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. The Risk Management Committee of our Board of Directors is responsible for approving and overseeing our investment policy, which it reviews at least annually. This policy dictates that investment decisions be made based on the safety of the investment, liquidity requirements, potential returns and market risk considerations. We do not engage in any investment hedging activities or trading activities, nor do we purchase any high-risk investment products. We typically invest in the following types of securities:

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

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

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

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

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

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

Securities Portfolio Composition

Our securities portfolio has decreased $0.4 billion, or 8.5%, to $4.4 billion at December 31, 2024 from $4.9 billion at December 31, 2023. This decrease was primarily due to sales of AFS securities of $1.1 billion and maturities and principal paydowns of AFS and HTM securities of $0.4 billion. Included in this activity are principal paydowns and proceeds from the sale of securities acquired in connection with our merger with Cambridge of $883.0 million, representing all of the securities acquired at fair value. All acquired securities paid down or were sold immediately following the completion of the merger. No gain or loss was recognized upon the sale as the securities were marked to fair value in connection with our purchase accounting based upon quoted sale prices. Partially offsetting these items were purchases of AFS securities of $199.5 million.

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.

Our AFS securities are carried at fair value and are categorized within the fair value hierarchy based on the observability of model inputs. Securities which require inputs that are both significant to the fair value measurement and unobservable are classified as Level 3 within the fair value hierarchy. As of both December 31, 2024 and 2023, we had no securities categorized as Level 3 within the fair value hierarchy.

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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. Maturities of our securities portfolio are based on the final contractual payment dates, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur. Weighted average yields in the tables below have been calculated based on the amortized cost of the security:

Securities Portfolio, Weighted-Average Yield

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

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

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Loans

The following table shows the composition of our loan portfolio, by category, as of the dates indicated, and the balance of loans, by category, that were acquired in connection with our merger with Cambridge as of the merger date of July 12, 2024:

We consider our loan portfolio to be relatively diversified by borrower and industry. Our loans increased $4.1 billion, or 29.4%, to $18.1 billion at December 31, 2024 from $14.0 billion at December 31, 2023. The increase as of December 31, 2024 was primarily due to loans acquired in connection with our merger with Cambridge. Refer to Note 3, “Mergers and Acquisitions” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K for additional discussion. Excluding the addition of acquired loans, our gross loans increased $171.0 million, or 1.2%, which was primarily attributable to increased balances of business banking and consumer home equity loans.

•Excluding Cambridge-acquired loans, our business banking portfolio increased by $242.0 million, or 22.3%, from December 31, 2023 to December 31, 2024 which was primarily due to transfers from our commercial and industrial and commercial real estate portfolios. These transfers contributed to an overall decrease in the total balance of our commercial and industrial and commercial real estate portfolios and were partially offset by originations in those portfolios. In the normal course of business, loans are transferred from our commercial and industrial and commercial real estate portfolios to our business banking portfolio once the loan balances reach a certain dollar threshold.

•Excluding Cambridge-acquired loans, our consumer home equity portfolio increased by $89.4 million, or 7.4%, from December 31, 2023 to December 31, 2024 which was primarily due to additional draws by borrowers on home equity lines of credit.

We believe that our commercial loan portfolio composition is relatively diversified in terms of industry sectors, property types and various lending specialties. As of December 31, 2024, the amortized cost balances of concentrations in our commercial loan portfolios were as follows:

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We believe that the loan to value ratio (“LTV”) is an important factor in monitoring the risk characteristics of our loans secured by real estate. The following tables show the distribution of loan balances, on an amortized cost basis, by LTV and year of origination for each of our portfolios of loans secured by real estate as of December 31, 2024:

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(1)Current LTV is calculated based upon exposure amount and the most recently available appraisal value as of the reporting period.

(2)Insufficient data available to calculate LTV.

(3)We generally require an LTV of 80% or less on new CRE loan originations. Certain CRE loans with LTVs greater than 80% may have additional collateral pledged which is not included in the computation of the amounts stated.

The maturity distribution of our loan portfolio is one factor used by management to evaluate the risk characteristics of our loan portfolio. The following table shows the maturity distribution of our loans, on a gross basis, as of December 31, 2024:

Scheduled Contractual Loan Maturity

(1)Includes demand loans, or loans without a stated maturity.

The interest rate risk of our loan portfolio is an important element in the management of net interest margin. We attempt to manage the relationship between the interest rate sensitivity of our assets and liabilities to produce an effective interest differential that is not significantly impacted by changes in the level of interest rates. The following table shows the interest rate risk of our loans, on a gross basis, due one year after December 31, 2024:

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Loan Interest Rate Risk

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

For the commercial portfolio, which includes our commercial and industrial, commercial real estate, commercial construction and business banking loans, we monitor credit quality using a risk rating scale, which assigns a risk-grade to each borrower based on a number of quantitative and qualitative factors associated with a commercial loan transaction. Management utilizes a loan risk rating methodology based on a 15-point scale with the assistance of risk rating scorecard tools. Pass grades are 0-10 and non-pass categories, which align with regulatory guidelines, are: special mention (11), substandard (12), doubtful (13) and loss (14).

Risk rating assignment is determined using one of 15 separate scorecards developed for distinctive portfolio segments based on common attributes. Key factors include: industry and market conditions, position within the industry, earnings trends, operating cash flow, asset/liability values, debt capacity, guarantor strength, management and controls, financial reporting, collateral and other considerations.

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.

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

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 following table shows the balances by borrowers’ current FICO scores as of the dates indicated:

(1)Borrower FICO scores are updated on a semi-annual basis, and the most recent update occurred in August 2024.

(2)Insufficient data available to report.

The delinquency rate of our total loan portfolio increased to 0.62% at December 31, 2024 from 0.41% at December 31, 2023.

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

Loan Delinquency Rates

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

Non-performing assets (“NPAs”) are comprised of non-performing loans (“NPLs”), OREO and non-performing securities. NPLs consist of non-accrual loans and loans that are more than 90 days past due but still accruing interest. OREO consists of real estate properties, which primarily serve as collateral to secure our loans, that we control due to foreclosure. These properties are recorded at the fair value less estimated costs to sell on the date we obtain control. Any write-downs to the cost of the related asset upon transfer to OREO to reflect the asset at fair value less estimated costs to sell is recorded through the allowance for loan losses.

NPLs increased $83.3 million, or 158%, to $135.8 million at December 31, 2024 from $52.6 million at December 31, 2023. 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.

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.

In the course of resolving NPLs, we may choose to restructure the contractual terms of certain loans. We attempt to work-out alternative payment schedules with the borrowers in order to avoid foreclosure actions. The aggregate amortized cost balance as of December 31, 2024 of loans modified during the year ended December 31, 2024 which were determined to be modifications to borrowers experiencing financial difficulty was $30.7 million. Included in such modifications were four commercial real estate loans collateralized by properties in our office risk segment. 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.

As of December 31, 2024, there were three loans with an aggregate balance of $0.5 million that had been modified to borrowers experiencing financial difficulty during the during the twelve-month period then ended which had subsequently defaulted during the year ended December 31, 2024. 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.

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

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. We consider factors such as payment history, collateral values and accrual status when determining whether there was evidence of deterioration at the merger date. As of December 31, 2024 and December 31, 2023,

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the carrying amount of PCD loans was $331.4 million and $49.1 million, respectively. The increase in PCD loans was due to our acquisition of PCD loans in the third quarter of 2024 in connection with our merger with Cambridge which was completed on July 12, 2024 and which added $356.1 million in PCD loans on a gross amortized cost basis.

Potential Problem Loans. 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 potential problem loans, or loans with potential weaknesses that were not included in the non-accrual loans or in the loans 90 or more past due categories, increased by $38.3 million, or 10.2%, to $412.0 million at December 31, 2024 from $373.7 million at December 31, 2023. These loans as a percentage of total loans decreased to 2.3% at December 31, 2024 from 2.7% at December 31, 2023. 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. Refer to the below “Commercial Real Estate Office Exposure” section of this Item 7 for additional information.

Commercial Real Estate Office Exposure. Our total office-related commercial real estate (“CRE”) loans (which is comprised of loans within our commercial real estate and construction portfolios that are secured by office space, medical office space, and mixed-use properties where rental income is primarily from office space) totaled $1.0 billion and $0.8 billion as of December 31, 2024 and 2023, respectively. Included in this total as of December 31, 2024 were loans with a balance of $288.1 million which were acquired during year ended December 31, 2024 in connection with our merger with Cambridge. As of December 31, 2024, our office-related CRE loans are primarily concentrated in Massachusetts, where approximately 92.1% of the total recorded investment balance of office-related CRE loans are located, and approximately 20.4% of the total recorded investment balance of office-related CRE loans are located in the City of Boston.

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. Such monitoring includes incremental risk management strategies undertaken by management including monthly internal CRE office exposure portfolio reporting, more frequent portfolio reviews, ongoing monitoring of market conditions, and additional portfolio analysis such as maturity risk analysis and rent rollover risk analysis. As of December 31, 2024, twelve of our office-related CRE loans, which had a total recorded investment balance of $87.0 million, were on non-accrual status. As of December 31, 2023, two of our office-related CRE loans were on non-accrual status and had a total recorded investment balance of $14.0 million.

The following table sets forth the unpaid principal balance of office-related CRE loans by loan segment and credit quality indicator as of the dates indicated:

The following table sets forth the unpaid principal balance of office-related CRE loans by loan segment and collateral use type as of the dates indicated:

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

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

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

•known increases in concentrations within each category;

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

•historical loan loss experience within each category;

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

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

•volume and trends in delinquencies and non-accruals;

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

•corporate goals and objectives;

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

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

Loans are evaluated on a regular basis by management. Expected lifetime losses are estimated on a collective basis for loans sharing similar risk characteristics and are determined using a quantitative model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output. For commercial and industrial, commercial real estate, commercial construction and business banking portfolios, the quantitative model uses a loan rating system which is comprised of management’s determination of probability of default, or PD, loss given default, or LGD, and exposure at default, or EAD, which are derived from historical loss experience and other factors. 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. Under our current methodology, the allowance for loan losses contains reserves related to loans for which

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the related allowance for loan losses is determined on an individual loan basis and on a collective basis, and other qualitative components.

The allowance for loan losses increased by $80.0 million, or 53.7%, to $229.0 million, or 1.29% of total loans, at December 31, 2024 from $149.0 million, or 1.07% of total loans at December 31, 2023. The increase in the allowance for loan losses was primarily due to our merger with Cambridge, which was completed on July 12, 2024. In connection with the merger, we recorded an allowance for acquired PCD loans of $55.8 million, as a gross-up of the corresponding loan balance, and an allowance for acquired non-PCD loans of $40.9 million, recognized through the provision for allowance for loan losses immediately following the completion of the merger. Excluding these amounts, the allowance for loan losses decreased by $16.7 million from December 31, 2023 to December 31, 2024. For further discussion of the change in the allowance for loan losses and the provision for allowance for loans 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.

In the ordinary course of business, we enter into commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable. The credit risk associated with these commitments is evaluated in a manner similar to the reserving method for loans receivable previously described. The reserve for unfunded lending commitments is included in other liabilities in the Consolidated Balance Sheets. Our reserve for unfunded lending commitments decreased by $1.0 million, or 7%, to $13.1 million at December 31, 2024 from $14.1 million at December 31, 2023. The decrease was primarily due to lower reserve rates and unfunded balances within the commercial construction portfolio, which were attributable to an improved economic forecast and draws by borrowers which served to reduce unfunded balances. The decrease in our reserve for unfunded lending commitments contributed to a decrease in our other non-interest expense during the year ended December 31, 2024.

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The following table summarizes credit ratios for the periods presented:

Credit Ratios

(1)Average loan balances exclude loans held for sale.

(2)Amounts presented include unearned discounts and deferred fees, net

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Non-accrual loans increased $83.3 million, or 158%, to $135.8 million at December 31, 2024 from $52.6 million at December 31, 2023, primarily due to loans acquired from Cambridge and which were already on non-accrual or were transferred to non-accrual following the completion of the merger. As of December 31, 2024, the amount of loans on non-accrual which were acquired from Cambridge was $59.3 million. For additional information regarding the credit quality of our loans, see 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.

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

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

Regardless of whether a loan is unsecured or collateralized, we charge off the amount of any confirmed loan loss in the period when the loans, or portions of loans, are deemed uncollectible. For troubled, collateral-dependent loans, loss

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confirming events may include an appraisal or other valuation that reflects a shortfall between the value of the collateral and the carrying value of the loan or receivable, or a deficiency balance following the sale of the collateral.

For additional information regarding our allowance for loan losses, see Note 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.

Federal Home Loan Bank stock

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

We held an investment in the FHLBB of $5.9 million at both December 31, 2024 and 2023. The amount of stock we are required to purchase is in proportional to our FHLB borrowings and level of total assets.

Goodwill and other intangible assets

The table below sets forth the carrying amount of goodwill and other intangible assets, net of accumulated amortization, as of the dates indicated below:

The balance of our goodwill and other intangible assets was $1.1 billion and $0.6 billion at December 31, 2024 and 2023, respectively. The increase in goodwill and other intangible assets at December 31, 2024 from December 31, 2023 was due to our merger with Cambridge during the third quarter of 2024. Refer to Note 3, “Mergers and Acquisitions” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K for additional discussion. We did not record any impairment to our goodwill or other intangible assets during the years ended December 31, 2024 and 2023. For discussion of the impairment testing performed, refer to Note 8, “Goodwill and Core Deposit Intangible Asset” within the Notes to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.

Deposits and other interest-bearing liabilities

Deposits originating within the markets we serve continue to be our primary source of funding our earning assets. Historically, we have been able to compete effectively for deposits in our primary market areas. The distribution and market share of deposits by type of deposit and type of depositor are important considerations in our assessment of the stability of our funding sources and our access to additional funds. Furthermore, we shift the mix and maturity of the deposits depending on economic conditions and loan and investment policies in an attempt, within set policies, to minimize cost and maximize net interest margin.

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The following table presents our deposits as of the dates indicated, and the balance of deposits, by category, that were acquired in connection with our merger with Cambridge as of the merger date of July 12, 2024:

Components of Deposits

Deposits increased by $3.7 billion, or 21.0%, to $21.3 billion at December 31, 2024 from $17.6 billion at December 31, 2023. This increase was primarily due to the addition of deposits acquired in connection with our merger with Cambridge, which was completed on July 12, 2024. Excluding the acquired deposit balances, deposits decreased $178.3 million, or 1.0%, at December 31, 2024 from December 31, 2023. This decrease was primarily driven by a decrease in the balances of omnibus deposit accounts which decreased $285.3 million from December 31, 2023 to December 31, 2024 and which contributed to the decrease in interest checking deposits, excluding the impact of our merger with Cambridge. Further, the remaining changes, which taken together comprise an overall increase, reflect organic deposit growth and a continued shift in deposit mix from non-interest-bearing/low-yielding deposit accounts to interest-bearing/higher-yielding deposit account types during the year ended December 31, 2024. 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. In accordance with the FDIC’s Call Report instructions, these estimates include accounts of wholly-owned subsidiaries, the holding company, and internal operating deposit accounts (together referred to as “internal deposit accounts”). In addition, these estimates include municipal deposit accounts for which securities were pledged by us to secure such deposits (“collateralized deposits”). 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.

The following table presents the classification of deposits on an average basis for the years indicated:

Classification of Deposits on an Average Basis

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

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

Borrowings

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

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

Borrowings by Category

Our total borrowings increased by $45.7 million to $93.9 million at December 31, 2024 compared to $48.2 million at December 31, 2023. The increase was primarily due to increased balances of interest rate swap collateral funds. Refer to the later “Liquidity, Capital Resources, Contractual Obligations, Commitments and Contingencies” section in this Item 7 for additional discussion of our liquidity position.

Results of Operations

The information presented within this section excludes discontinued operations with regard to the year ended December 31, 2023. 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 for further discussion regarding discontinued operations.

Summary of Results of Operations

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Comparison of the Years Ended December 31, 2024 and 2023

Interest and Dividend Income

Interest and dividend income increased by $150.3 million, or 18.9%, to $946.8 million during the year ended December 31, 2024 from $796.5 million during the year ended December 31, 2023. The increase was due to an increase in the average balance of our loan portfolio and our yields and was partially offset by a decrease in interest income on securities and other short-term investments.

•Interest income on loans increased $155.9 million, or 23.9%, to $808.0 million during the year ended December 31, 2024 from $652.1 million during the year ended December 31, 2023. The increase in interest income on our loans was due to an increase in the average balance of our loans and an increase in the yield on our loans. The average balance of our loans increased $2.0 billion, or 14.3%, to $15.8 billion during the year ended December 31, 2024 from $13.8 billion during the year ended December 31, 2023, which was primarily due to loans acquired in connection with our merger with Cambridge of $3.7 billion. The increase in yield, which increased 39 basis points to 5.22% during the year ended December 31, 2024, from 4.83% during the year ended December 31, 2023, was primarily due to accretion of the discount on loans acquired in our merger with Cambridge, increases in market rates of interest which resulted in increased yields on variable rate loans which repriced, and new loans originated at higher rates of interest.

•Interest income on securities and other short-term investments decreased by $5.6 million, or 3.9%, to $138.7 million during the year ended December 31, 2024 from $144.4 million during the year ended December 31, 2023. The decrease was primarily driven by a decrease in the average balance of our securities and other short-term investments, which decreased $0.8 billion, or 11.2%, to $6.2 billion for the year ended December 31, 2024 from $7.0 billion for the year ended December 31, 2023. The decrease in the average balance was primarily due to our sales of AFS securities during the year ended December 31, 2024, as well as maturities and principal paydowns on AFS and HTM securities. Partially offsetting the decrease in the average balance of our securities and other short-term investments, and contributing to the overall increase in interest income during the year ended December 31, 2024, was an increase in our yield on our securities and other short-term investments which increased 16 basis points during the year ended December 31, 2024 in comparison to the year ended December 31, 2023 primarily due to an increase in the rate paid on our cash held at the Federal Reserve Bank of Boston from an average of 5.10% during the year ended December 31, 2023 to an average of 5.21% during the year ended December 31, 2024.

Interest Expense

Interest expense increased $93.1 million to $339.2 million during the year ended December 31, 2024 from $246.1 million during the year ended December 31, 2023. The overall increase was attributable to an increase in deposit interest expense partially offset by a decrease in borrowings interest expense.

During the year ended December 31, 2024, interest expense on our interest-bearing deposits increased by $111.3 million to $337.4 million from $226.1 million during the year ended December 31, 2023. This increase was due to an increase in the average balance of interest-bearing deposits. During the year ended December 31, 2024, average interest-bearing deposits increased $1.3 billion, or 9.8%, to $14.1 billion, from $12.8 billion during the year ended December 31, 2023 primarily as a result of our merger with Cambridge which added approximately $2.9 billion in interest-bearing deposits. Also contributing to the increase was an increase in rates paid on deposits. Rates paid on deposits increased by 63 basis points to 2.40% during the year ended December 31, 2024 from 1.77% during the year ended December 31, 2023. This was primarily due to our increasing overall deposit rates paid in response to an increase in market rates of interest and heightened industry-wide competition for deposits, as well as a shift in deposit mix from lower interest-bearing account types to higher interest-bearing account types.

Interest expense related to our borrowings decreased by $18.2 million to $1.8 million during the year ended December 31, 2024 from $20.0 million during the year ended December 31, 2023. The decrease in borrowings interest expense during the year ended December 31, 2024 compared to the year ended December 31, 2023 was due to a decrease in our utilization of our FHLB borrowing capacity. Our utilization of FHLBB borrowings was greater during the year ended December 31, 2023 compared to the year ended December 31, 2024 as we had bolstered our on-balance sheet liquidity in response to the bank failures in the first quarter of 2023. During the fourth quarter of 2023, we paid down our FHLB advances primarily with the proceeds from the sale of our insurance agency business, which occurred in the fourth quarter of 2023. Both of these factors resulted in a reduced average balance of borrowings during the year ended December 31, 2024 compared to the year ended December 31, 2023.

Net Interest Income

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Net interest income increased by $57.2 million, or 10.4%, to $607.6 million during the year ended December 31, 2024, from $550.4 million during the year ended December 31, 2023. Net interest income increased due to a increase in the balance of average total interest-earning assets of $1.2 billion, or 5.7%, to $22.0 billion during the year ended December 31, 2024 from $20.8 billion during the year ended December 31, 2023, as well as an increase in our net interest margin during the year ended December 31, 2024.

The following chart shows our net interest margin over the past five years:

Net interest margin is determined by dividing FTE net interest income by average-earning assets. For purposes of the following discussion, income from tax-exempt loans and investment securities has been adjusted to an FTE basis, using a marginal tax rate of 21.8%, 21.8%, and 21.6% for the years ended December 31, 2024, 2023, and 2022, respectively.

Net interest margin increased 12 basis points basis points to 2.85% during the year ended December 31, 2024, from 2.73% during the year ended December 31, 2023. The increase in net interest margin for the year ended December 31, 2024 from the year ended December 31, 2023 was primarily due to an increase in the average balance and yield on interest-earning assets which exceeded the increase in the cost of our interest-earning liabilities.

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

Average Balances, Interest Earned/Paid, & Average Yields/Costs