INDEPENDENT BANK CORP (INDB) Risk Factors

Verbatim Item 1A Risk Factors from INDEPENDENT BANK CORP's latest 10-K. Filing date: 2026-02-27. Accession: 0000776901-26-000058.

This page reproduces the company's own Item 1A Risk Factors text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.

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ITEM 1A. RISK FACTORS

An investment in the Company’s securities is subject to risks inherent in its business. The material risks and uncertainties that management believes affect the Company are described below. Additional risks and uncertainties that management is not aware of or that management currently deems immaterial may also impact the Company’s business operations. If any of the events described in the risk factors occur, the Company’s financial condition and results of operations could be materially and adversely affected. If this were to happen, the value of the Company’s securities could decline significantly, which would impact the value of your investment in the Company’s stock.

External and Market-Related Risks

Changes in global, national or local economic conditions, including those in the states of Massachusetts and New Hampshire, may pose significant challenges for the Company and could adversely affect its financial condition and results of operations. The Company’s business is impacted by factors outside of its control as economic growth may slow down and the global, national or local economies may experience downturns, including recessionary periods. Market disruption, including potential disruption resulting from inflation, tariffs and global supply chain interruptions, government and central bank policy actions, changes in investor expectations regarding compensation for market risk, credit risk and liquidity risk and changing economic data could impact both the volatility and magnitude of the directional movements of interest rates and negatively impact the Company’s business. Additionally, potential sovereign debt defaults or actions taken by the U.S. government to avoid exceeding the debt ceiling may severely impact global and domestic economies and may lead to significantly tighter liquidity and impact the availability of credit. Additionally, as described further below, changes in market interest rates can have a material adverse effect on the Company’s profitability.

Substantially all of the loans the Company originates are secured by properties located in, or are made to businesses that operate in, Massachusetts and the broader New England area. Because of the current concentration of the Company’s loan origination activities in its geographic footprint, in the event of adverse economic conditions impacting the region (including, but not limited to, increased unemployment, downward pressure on the value of residential or commercial real estate, or political or business developments that may affect the ability of property owners and businesses to make payments of principal and interest on the underlying loans in the Bank’s geographic footprint), the Company would likely experience higher rates of loss and delinquency on its loans than if its loan portfolio were more geographically diversified, which could have an adverse effect on the Company’s results of operations or financial condition.

Although inflation has slowed from the levels experienced in recent years, possible inflationary pressures and any increases in market interest rates could cause the value of investment securities, particularly those with longer maturities, to

decrease, although this effect can be less pronounced for floating rate instruments. In addition, inflation generally increases the cost of goods and services the Company uses in business operations, such as electricity and other utilities, which increases the Company’s non-interest expenses. Furthermore, the Company’s customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their deposits and/or ability to repay their loans or other obligations increasing the Company’s credit risk. The Company is currently operating in an environment in which the Federal Reserve has shifted toward reducing interest rates, having implemented modest interest rate cuts in the fourth quarter of 2025. However, the inflationary outlook in the United States is currently uncertain. If inflationary pressures do not sufficiently subside, sustained higher interest rates by the Federal Reserve may be needed to tame persistent inflationary price pressures, which could push down asset prices and weaken economic activity.

Negative developments in the banking industry could adversely affect the Company’s financial conditions and results of operations. Certain events impacting the financial services industry, including the bank failures of 2023, have in the past had, and may in the future have, an adverse impact on the market price and volatility of the Company’s common stock. Moreover, these events have resulted in, and may continue to result in, decreased confidence in banks among certain depositors, as well as increased regulatory scrutiny and expectations, and could lead to further changes to laws or regulations applicable to the Company, which could have a material adverse impact on the Company’s business and result in increased costs necessary to comply with any such changes. Any further negative developments in the financial services industry may result in decreased confidence in banks among depositors, investors and other counterparties, as well as competition for deposits and significant disruption, volatility and depressed valuations of equity and other securities of banks in the capital markets.

Changes in debt and equity markets or economic downturns could affect the level of assets under administration and the demand for other fee-based services. Economic downturns could affect the volume of income earned from and demand for fee-based services. Revenues from the investment management business depend in large part on the level of assets under administration. Market volatility that results in customers liquidating investments, as well as lower asset values, can reduce the level of assets under administration and decrease the Company’s investment management revenues, which could materially adversely affect the Company’s results of operations.

The soundness of other financial institutions could adversely affect the Company’s liquidity and operations. The Company’s ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty and other relationships. The Company has exposure to many different counterparties, and routinely executes transactions with counterparties in the financial industry, including brokers and dealers, commercial banks, government sponsored entities, investment banks, and other institutional clients. As a result, defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by other institutions. Credit risk may be exacerbated when the collateral held by the Company cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the financial instrument exposure due the Company. There is no assurance that any such losses would not materially and adversely affect the Company’s results of operations.

Risks Related to Changes in Interest Rates

Changes in interest rates and other factors could adversely impact the Company’s financial condition and results of operations. The Company’s ability to make a profit, like that of most financial institutions, substantially depends upon its net interest income, which is the difference between the interest income earned on interest-earning assets, such as loans and investment securities, and the interest expense paid on interest-bearing liabilities, such as deposits and borrowings. However, certain assets and liabilities may react differently to changes in market interest rates. Given the Company is unable to predict fluctuations in market interest rates, interest rates on some types of assets and liabilities may fluctuate prior to changes in broader market interest rates, while rates on other types of assets and liabilities may lag behind. Changes in market interest rates could either positively or negatively affect the Company’s net interest income and profitability, depending upon the magnitude, direction and duration of the change. Further, any substantial, unexpected, or prolonged change in market interest rates could have a material adverse effect on the Company’s business, financial condition and results of operations.

Factors such as inflation, tariffs, recession, unemployment, money supply, global disorder, instability in domestic and foreign financial markets, political uncertainty, and other factors beyond the Company’s control, may affect interest rates. Changes in market interest rates also affect the level of voluntary prepayments on loans and the receipt of payments on mortgage-backed securities, which can impact the expected timing of receipt of proceeds. Particularly in a decreasing interest rate environment, prepayments may result in proceeds having to be reinvested at a lower rate than the loan or mortgage-backed security being prepaid. Conversely, in a period of rising interest rates, the interest income earned on the Company’s assets may

not increase as rapidly as the interest that the Company pays on its liabilities. Additionally, increases in interest rates may decrease loan demand or make it more difficult for borrowers to repay variable rate loans. Although the Company pursues an asset/liability management strategy designed to manage its risk arising from changes in interest rates, the Company’s strategy may not be fully effective, or may only be effective in part, and changes in market interest rates can have a material adverse effect on the Company’s profitability.

Risks Related to the Company’s Lending Activities

If the Company experiences credit losses at a level higher than anticipated in the Company’s models, its earnings could materially decrease. The Company’s loan customers may not repay loans according to their terms, and the collateral securing the payment of loans may be insufficient to assure repayment or cover losses. If loan customers fail to repay loans according to the terms of the loans, the Company may experience significant credit losses that could have a material adverse effect on its operating results and capital ratios. The Company makes various assumptions and judgments about the collectability of its loan portfolio, including the creditworthiness of borrowers, the value of the real estate and other assets serving as collateral for the repayment of loans, and the enforceability of its loan documents. In determining the amount of the allowance for credit losses, the Company, in addition to assessing the collectability of its loan portfolio, relies on an evaluation of economic conditions, which involves a high level of subjectivity, as well as significant estimates of current credit risks and trends using existing qualitative and quantitative information and reasonable supportable forecasts of future economic conditions, all of which may undergo frequent and material changes. If the assumptions underlying the determination of the Company’s allowance for credit losses prove to be incorrect, the current allowance for credit losses may not be sufficient to cover losses inherent in the Company’s loan portfolio and an adjustment may be necessary to allow for different economic conditions or adverse developments in its loan portfolio. A problem with one or more loans could require the Company to significantly increase the level of its allowance for credit losses. In addition, federal and state regulators periodically review the Company’s allowance for credit losses and may require it to increase its allowance for credit losses or recognize further loan charge-offs, based on judgments different than those of management. Material additions to the allowance would materially

decrease the Company’s net income and could have a material adverse effect on the Company’s results of operations or financial condition.

A significant portion of the Company’s loan portfolio is secured by real estate, and events that negatively impact the real estate market could adversely affect asset quality and the profitability of loans secured by real property including potentially increasing the number of defaults and loan loss levels. The real estate collateral securing the Company’s loans provides an alternate source of repayment in the event of default by the borrower. Should real estate values deteriorate during the time the credit is extended, the Company is potentially exposed to greater losses. A real estate downturn in the Company’s primary market areas could result in an increase in the number of borrowers who default on loans and a reduction in the value of the collateral securing loans, which in turn could have an adverse effect on the Company’s profitability and asset quality. Further, if the Company is required to liquidate collateral securing a loan to satisfy the related debt during a period of reduced real estate values, the Company may experience higher credit losses and costs than expected and its earnings and shareholders’ equity could be adversely affected. Any declines in real estate prices in the Company’s primary markets may also result in increases in delinquencies and losses in its loan portfolios. Unanticipated decreases in real estate prices coupled with certain events, such as a prolonged economic downturn or elevated levels of unemployment could drive credit losses beyond the level provided for in the Company’s allowance for credit losses. If this occurs, the Company’s earnings could be adversely affected.

The Company’s emphasis on originating commercial loans may increase lending risks. At December 31, 2025, 77.2% of the Company’s loan portfolio consisted of commercial loans. The Company’s commercial loan portfolio is comprised of commercial and industrial loans, commercial real estate loans, commercial construction loans, which also includes small business banking loans. Commercial and industrial loans may expose the Company to additional risks since their underwriting is typically based on the borrower’s ability to make repayments from the cash flow of its business and may be secured by non-real estate collateral that may depreciate over time, or by owner-occupied real estate, the value of which is subject to market fluctuations and may deteriorate over the life of the loan. Commercial real estate loans and small business loans generally expose the Company to greater risk of non-payment and loss than residential mortgage loans because repayment of the loans typically depends on the successful operation of the property and the continuity of tenant rental payments. Commercial real estate loans also typically involve larger loan balances to single borrowers or groups of related borrowers compared to residential mortgage loans. Factors such as increased prevalence of remote or hybrid work arrangements and consumer preference for online shopping have led and continue to lead to a decreased demand for office and retail space creating increased property vacancies and declining rent growth, which could impact the value of the future cash flow and value of the involved property that serves as loan collateral. Such trends have resulted in and may continue to result in a shrinkage of the commercial real estate market, which could materially impact the Company’s results of operations and financial condition and possibly the Company’s long-term business strategy because commercial real estate loans are currently the Company’s largest loan category. Commercial construction loans are generally considered to involve a higher degree of credit risk than long-term financing on owner-occupied residential real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction as compared to estimated costs. Changes in economic conditions that are outside of the control of the borrower and lender could impact the value of the future cash flow and value of the underlying loan collateral.

The Company may experience losses and expenses if security interests granted for loans are not enforceable. When the Bank makes loans, it sometimes obtains liens, such as real estate mortgages or other asset pledges, to provide the Bank with one or more security interests in collateral. If there is a loan default, the Bank may seek to foreclose upon collateral and enforce the security interests to obtain repayment and eliminate or mitigate the Company’s loss. Drafting errors, granting errors, recording errors, other defects or imperfections in the security interests granted to the Bank and/or changes in law may render liens granted to the Bank unenforceable. The Company may incur losses or expenses if security interests granted to the Bank are not properly perfected or are otherwise unenforceable.

The Company is subject to environmental liability risk associated with lending activities which could have a material adverse effect on its financial condition and results of operations. A significant portion of the Company’s loan portfolio is secured by real property. During the ordinary course of business, the Company may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, the Company may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may require the Company to incur substantial expenses and may materially reduce the affected property’s value or limit the Company’s ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase the Company’s exposure to environmental liability. Environmental reviews conducted prior to originating certain commercial real estate loans, as well as before initiating any foreclosure action on real property, as required by Company policies and procedures, may not detect all

potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on the Company’s financial condition or results of operations.

Risks Related to Legal, Regulatory and Policy Matters

The Company operates in a highly regulated environment and may be adversely impacted by changes in industry practices, laws, regulations, and accounting standards. Any changes in industry practices, laws, regulations or accounting standards, failure by the Company to comply with any such changes, or any changes in regulators’ supervisory policies or examination procedures, whether by the Massachusetts Commissioner of Banks, the FDIC, the Federal Reserve, other state or federal regulators, the U.S. Congress, or the Massachusetts legislature, could have a material adverse effect on the Company’s business, financial condition, results of operations, and cash flows. In addition, personnel changes at such regulatory agencies may result in differing interpretations of existing rules and guidelines, including more stringent enforcement and more severe penalties, which may be unpredictable. For example, new appointments to the Board of Governors at the Federal Reserve, or increased political pressures on the Federal Reserve, could impact monetary policy. Any such changes may lead to increased costs of compliance as well an increased risk of formal or informal regulatory actions. Additionally, certain aspects of regulatory or legislative changes to laws applicable in the financial services industry, including the adoption of new rules or more aggressive examination and enforcement by the Company’s regulators over its overdraft protection practices, have led and may in the future lead certain banking organizations to modify their overdraft protection programs, including the imposition of overdraft transaction fees. Any such competitive pressures from the Company’s peers could cause the Company to modify its program and practices in ways that may negatively impact the profitability of the Company’s business activities and expose it to increased business and compliance costs, which, in turn could have an adverse effect on the Company’s financial condition and results of operations.

The costs of compliance with fair lending laws or negative outcomes with respect to challenges of the Company’s compliance with such laws, inclusive of laws impacting banks exceeding $10 billion in total assets, could have a material adverse effect on the Company’s business, financial condition or results of operations or could damage the Company’s reputation. The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose non-discriminatory lending and other requirements on financial institutions. The U.S. Department of Justice and other federal agencies, including the FDIC, are responsible for enforcing these laws and regulations. A successful challenge to an institution’s performance under the CRA and fair lending laws and regulations could result in, among other sanctions, the required payment of damages and civil monetary penalties, injunctive relief, imposition of restrictions on acquisitions and restrictions on expansion. Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. The costs of defending, and any adverse outcome from, any challenge with respect to the Company’s compliance with fair lending laws could damage the Company’s reputation or could have a material adverse effect on the Company’s business, financial condition or results of operations.

The impact of changes to the Internal Revenue Code or federal, state or local taxes may adversely affect the Company’s financial results or business. The Company is subject to changes in tax law which could impact the Company’s effective tax rate. Changes in U.S. federal, state and local tax law, interpretation of existing tax law, or adverse determinations by tax authorities, could increase the Company’s tax burden or otherwise adversely affect the Company’s financial condition or results of operations. The Company’s results of operations may be impacted by changes resulting from different political philosophies governing individual and corporate taxation, as well as regulation. For example, the Tax Cuts and Jobs Act (“TCJA”), enacted in December 2017, made broad and complex changes to the U.S. tax code. Additionally, on July 4, 2025, the One Big Beautiful Bill Act was signed into law, which included a broad range of tax reform provisions affecting businesses, including extending and modifying certain key provisions from the TCJA and accelerating the phase-out of certain incentives from the Inflation Reduction Act of 2022. Tax law changes may or may not be retroactive to previous periods and could negatively affect the current and future financial performance of the Company. Changes in enacted tax rates are recognized when promulgated and therefore could have a material impact on the Company’s results.

Claims and litigation could result in losses and damage to the Company’s reputation. From time to time as part of the Company’s normal course of business, customers, bankruptcy trustees, former customers, contractual counterparties, third parties and former employees make claims and take legal action against the Company based on its alleged actions or inactions. If such claims and legal actions are not resolved in a manner favorable to the Company, they may result in financial liability and/or adversely affect the market perception of the Company and its products and services. A judgment significantly in excess of any reserve, or in excess of any applicable insurance coverage or third-party indemnity, could also materially adversely affect our financial condition or results of operations. Even unfounded claims can result in substantial legal costs, management distraction, and potential settlements or penalties. Litigation may also generate negative publicity, harming the Company’s reputation, customer relationships, and financial performance. This may also impact customer demand for the Company’s

products and services. Any material financial liability or reputational damage resulting from claims or litigation could have a material adverse effect on the Company’s business, financial condition and results of operations.

Changes in U.S. trade policies and other global political factors beyond the Company’s control, including the imposition of tariffs, retaliatory tariffs, or other sanctions, may adversely impact the Company’s business, financial condition and results of operations. There have been, and may be in the future, extensive changes and discussions with respect to U.S. and international trade policies, legislation, treaties and tariffs, embargoes, sanctions and other trade restrictions. Tariffs, retaliatory tariffs or other trade restrictions on products and materials that customers import or export, including tariffs imposed by the U.S. presidential administration, or a trade war or other related governmental actions related to tariffs, international trade agreements or policies or other trade restrictions have the potential to negatively impact the Company’s and/or the Bank’s customers’ costs, demand for the Bank’s customers’ products, and/or the U.S. economy or certain sectors thereof and, thus, could adversely impact the Company’s business, financial condition and results of operations. In addition, to the extent changes in the global political environment, including existing and future conflicts, may have a negative impact on the global economy and financial markets, including the financial services industry generally and, as a result, the Company and the markets in which it operates, the Company’s business, results of operations and financial condition could be materially and adversely impacted in the future.

The Company may not be able to detect money laundering and other illegal or improper activities fully or on a timely basis, which could expose it to additional liability and could have a material adverse effect on the Company. The Company is required to comply with anti-money laundering, anti-terrorism and other laws and regulations in the United States. These laws and regulations require the Company, among other things, to adopt and enforce “know-your-customer” policies and procedures and to report suspicious transactions to applicable regulatory authorities. These laws and regulations have become increasingly complex and detailed, require improved systems and sophisticated monitoring and compliance personnel and have become the subject of enhanced government supervision.

The policies and procedures the Company has adopted for the purposes of detecting and preventing the use of its banking network for money laundering and related activities may not completely eliminate instances in which the Company’s platforms may be used by customers to engage in money laundering and other illegal or improper activities. To the extent the Company fails to fully comply with applicable laws and regulations, banking agencies have the authority to impose fines and other penalties on the Company. In addition, the Company’s business and reputation could suffer if customers use its banking network for money laundering or illegal purposes.

Risks Related to the Company’s Strategic Activities

Acquisitions may be more difficult, costly or time consuming than expected, and the expected benefits of such acquisitions may not be realized. While focusing on organic growth, the Company’s strategy also includes, in part, growth through opportunistic whole or partial acquisitions of other banks, branches, financial institutions, or related businesses. The Company may not be able to identify suitable acquisition candidates or complete such acquisitions in the future. Competition for acquisitions can be highly competitive, and the Company may not be able to acquire other institutions on acceptable terms. Any possible acquisition may be subject to regulatory approval, and there can be no assurance that the Company will be able to obtain any such approval in a timely manner or at all. Acquisitions may also result in potential dilution of stockholder value or possible future impairment of goodwill and other intangibles.

In addition, fees, expenses and charges associated with any acquisition transaction may be higher than anticipated. Costs or difficulties relating to integration matters might be greater than expected and the Company may be unable to realize expected cost savings and synergies from its acquisitions, including the merger with Enterprise, in the amounts and in the timeframe anticipated. For example, it is possible that any integration process could result in the loss of key employees, the disruption of the Company’s ongoing business or diversion of management’s attention from other business activities or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with customers and employees or to achieve the anticipated benefits and cost savings of a merger. With respect to the merger with Enterprise, there remains a possibility that the integration process may present unexpected challenges or may not achieve all anticipated benefits in the expected timeframe or at all. The loss of key employees could adversely affect the Company’s ability to successfully conduct its business in the markets in which an acquired company operates, which could have an adverse effect on the Company’s financial results and the value of its common stock.

Further, following any acquisition, the combined company’s actual cost savings and revenue enhancements, if any, cannot be quantified in advance. Any actual cost savings or revenue enhancements will depend on future expense levels and operating results, the timing of certain events and general industry, regulatory and business conditions. In addition, the

Company may not be successful in mitigating deposit erosion or loan quality deterioration at acquired institutions. Many of these events will be beyond the control of the combined company.

The Company may not realize the value of strategic investments and strategic initiatives that it pursues and such investments and initiatives could divert resources or introduce unforeseen risks to the Company’s business. The Company may execute strategic initiatives or make other strategic investments in businesses, products, technologies or platforms to enhance or grow its business. These strategic initiatives and investments may introduce new costs or liabilities which could impact the Company’s ability to grow or maintain acceptable performance. The Company may be unable to integrate systems, personnel or technologies from its strategic investments and initiatives. Strategic investments and initiatives may also present unforeseen legal, regulatory or other challenges that the Company may not be able to manage effectively. The planning and integration of a strategic investment or initiative may shift employee time and other resources which could impair the Company’s ability to focus on its core business. New strategic investments and strategic initiatives may not perform as expected due to lack of acceptance by customers or employees, higher than forecasted costs or losses, lengthy transition periods, synergies or savings not being realized and a variety of other factors. This may result in a delay or unrealized benefit, or in some cases, increased costs or other unforeseen risks to the Company’s business.

Risks Related to Financial and Accounting Matters

The Company’s securities portfolio performance in difficult market conditions could have adverse effects on the Company’s results of operations. Under accounting principles generally accepted in the United States of America (“GAAP”), the Company measures expected credit losses on its securities portfolios in accordance with the CECL methodology, taking into consideration quantitative and qualitative factors such as current market conditions, the extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, current analysts’ evaluations, the Company’s ability and intent to hold investments until a recovery of amortized cost, as well as other factors. Adverse developments with respect to one or more of these factors could require the Company to recognize an allowance for credit losses, with the credit related portion of the reduction in the value required to be recognized as a charge to the Company’s earnings. Market volatility can make it extremely challenging to accurately value certain securities the Company holds. Subsequent periodic valuations of securities, taking into consideration then prevailing factors, may result in changes to valuations. Significant negative changes to valuations could result in the recognition of an allowance for credit losses within the Company’s securities portfolio, which could have an adverse effect on the Company’s results of operations or financial condition.

Impairment of goodwill and/or intangible assets could require charges to earnings, which could result in a negative impact on the Company’s results of operations. Goodwill is an intangible asset that arises when the Company acquires a business for an amount greater than the net fair value of the assets of the acquired business. The Bank has recognized goodwill as an asset on the balance sheet in connection with several acquisitions. When an intangible asset is determined to have an indefinite useful life, it is not amortized, and instead is evaluated for impairment. The Company conducts goodwill and other intangible asset impairment tests annually, or more frequently if necessary, first by using qualitative approach, and if deemed necessary, a quantitative assessment. A significant and sustained decline in the Company’s stock price and market capitalization, a significant decline in the Company’s expected future cash flows, a significant adverse change in the business climate, slower growth rates or other factors could result in a finding of impairment of goodwill or other intangible assets. If the Company were to conclude that a future write-down of goodwill or other intangible assets is necessary, then the Company would record the appropriate charge to earnings, which could have material adverse effect on the Company’s results of operations or financial condition.

Deterioration in the performance or financial position of the Federal Home Loan Bank (“FHLB”) of Boston might restrict the FHLB of Boston’s ability to meet the funding needs of its members, cause a suspension of its dividend, and cause its stock to be determined to be impaired. When necessary, components of the Bank’s liquidity needs are met through its access to funding pursuant to its membership in the FHLB of Boston. The FHLB of Boston is a cooperative that provides services to its member banking institutions. The primary reason for joining the FHLB of Boston is to obtain funding and the purchase of stock in the FHLB of Boston is a requirement for a member to gain access to funding. Any unexpected changes to the underwriting guidelines for wholesale borrowings or lending policies of the FHLB of Boston may limit or restrict our ability to borrow. Additionally, any deterioration in the FHLB of Boston’s performance or financial condition may affect the Company’s ability to access funding and/or require the Company to deem the required investment in FHLB of Boston stock to be impaired. If the Company is not able to access funding, it may not be able to meet its liquidity needs, which could have an adverse effect on its results of operations or financial condition. Similarly, if the Company deems all or part of its investment in FHLB of Boston stock impaired, such action could have a material adverse effect on the Company’s results of operations or financial condition.

Reductions in the value of the Company’s deferred tax assets could adversely affect the Company’s results of operations. A deferred tax asset is created by the tax effect of the differences between an asset’s book value and its tax basis. The Company assesses its deferred tax assets periodically to determine the likelihood of the Company’s ability to realize available benefits. These assessments consider the performance of the associated business and its ability to generate future taxable income. If the information available to the Company at the time of assessment indicates there is a greater than 50% chance that it will not realize the deferred tax asset benefit, the Company is required to establish a valuation allowance for the deferred tax asset and reduce its future deferred tax assets to the amount that can be be realized. Recording such a valuation allowance could have a material adverse effect on the Company’s results of operations or financial condition. Additionally, the deferred tax assets are determined using effective tax rates expected to apply to the Company’s taxable income in the years in which the temporary differences are expected to be recovered or settled. Accordingly, a change in statutory tax rates may result in a decrease or increase to the Company’s deferred tax assets. A decrease in the Company’s deferred tax assets could have a material adverse effect on the Company’s results of operations or financial condition.

Some of the Company’s accounting policies require the use of estimates and assumptions that affect the value of the Company’s assets and liabilities and results of operations and if actual events differ from the Company’s estimates and assumptions, the Company’s results of operations and financial condition could be materially adversely affected. Certain accounting policies require the use of estimates and assumptions that may affect the value of the Company’s assets and liabilities and results of operations. The Company has identified the accounting policies regarding the allowance for credit losses, security valuations and allowance for credit losses, valuation of goodwill, and income taxes to be critical because these policies require management to make difficult, subjective and complex judgments, estimates and assumptions about matters that are inherently uncertain. Under each of these policies, it is possible that materially different values and results of operations would be reported under different conditions, different judgments, or different estimates or assumptions. Further, as new information becomes available, the Company may make a determination to refine or change its judgments, estimates and assumptions, any of which could materially adversely affect the value of the Company’s assets and liabilities or its results of operations.

From time to time, the FASB and the SEC change applicable guidance governing the form and content of the Company’s financial statements. In addition, accounting standard setters and those who interpret GAAP, such as the FASB, SEC, and banking regulators, may change or even reverse their previous interpretations or positions on how these standards should be applied. Such changes are expected to continue and may accelerate. Changes in GAAP and current interpretations are beyond the Company’s control, can be hard to predict and could materially impact how the Company reports its financial results and condition. In certain cases, the Company could be required to apply new or revised guidance retroactively or apply existing guidance differently (also retroactively), which may result in the Company restating prior period financial statements for material amounts. Additionally, significant changes to GAAP may require costly technology changes, additional training and personnel, and other expenses that could materially adversely affect the Company’s results of operations.

Risks Related to Information Security and Technology

The need to mitigate against and react to cyber-security risks, and electronic fraud risks require significant resources, and any system failure, a cyber-security attack or electronic fraud which impacts the Company or its third-party service providers could result in increased operating costs as well as litigation and other liabilities. The risk of electronic fraudulent activity within the financial services industry, especially in the commercial banking sector, due to cyber-attacks (crime committed through or involving the internet, such as phishing, hacking, ransomware, denial of service attacks, stealing information, unauthorized intrusions into internal systems or the systems of the Company’s third-party vendors, including through the use of rapidly evolving artificial intelligence (“AI”) technologies) continues to increase and could adversely impact the Company’s operations or damage its reputation. The Company’s information technology infrastructure and systems may be vulnerable to cyber-terrorism, computer viruses, damage from physical theft, fire, power loss, telecommunications failure or a similar catastrophic event, system or third-party software failures and other intentional or unintentional interference, fraud, and other unauthorized attempts to access or interfere with the systems.

Information security risks exist because of the proliferation of modern technologies, as well as the sophistication and level of activity of perpetrators of cyber-attacks. The use of AI technologies by cybercriminals continues to be a major concern, including with respect to deep-fake technologies, which continue to improve, allowing bad actors to manipulate or fabricate visual and audio content and convincingly fake identities. Many financial institutions and service providers to financial institutions have reported significant breaches in the security of their websites or other systems, some of which have involved sophisticated and targeted attacks intended to obtain unauthorized access to confidential information, destroy data, deny service, or sabotage systems, often through the introduction of computer viruses or malware, cyber-attacks and other means. The Company has seen attempts to gain unauthorized access to its systems and expects such attempts will continue, and may

intensify, in the future. While the Company has implemented a comprehensive cybersecurity strategy and program to strengthen the control environment, there can be no assurance these risk mitigation strategies will be sufficient to prevent future significant breaches or losses.

The Company expects risk exposure to cyber-attacks will remain elevated or increase in the future due to, among other things, the increasing size and prominence of the Company in the financial services industry, its expansion of internet and mobile banking tools and products based on customer needs, and its increasing use of operational software hosted on the Internet as more and more software solutions used in the Company’s operations migrate from solutions hosted within the Company’s firewalls to internet-hosted solutions at third-party locations.

The Company relies extensively on third-party service providers for its core operations. A successful cyber-security attack on one of the Company’s third-party service providers could disrupt operations, adversely affect the Company’s business, or result in the disclosure or misuse of the Company’s confidential information, including customer confidential information. There can be no assurance that the precautions the Company takes to seek to manage cyber risk related to third-party service providers will be effective or prevent a cyber-attack that could expose the Company to significant operational costs and damages or reputational harm.

Although the Company maintains an insurance policy covering cyber risks, there can be no assurance that this policy will afford coverage for all possible losses or would be adequate to cover all financial losses, damages, and penalties, including lost revenues, should the Company experience any system failure or cyber-attack in one or more Company or third-party systems.

The Company’s risk-based technology and systems or the personnel who monitor such technology and systems may not identify and/or prevent or effectively mitigate successful cyber-attacks when they occur. Significant operational costs and damages or reputational harm may occur if the Company fails to identify and prevent or effectively mitigate, or there is a delay in identifying or mitigating, a cyber-attack on its systems or those of its third-party service providers. Any breach, damage or failure that causes an interruption in operations could have a material adverse effect on the Company’s financial condition and results of operations, including as a result of the time and money needed to correct the issue. Computer break-ins, ransomware, phishing and other disruptions could also jeopardize the security of information stored in and transmitted through Company computer systems and network infrastructure, which may result in litigation or significant liability or penalties to the Company, reputational damage, and may cause existing and potential customers to refrain from doing business with the Company. Finally, depending on the type of incident, banking regulators may impose restrictions on the Company’s business and consumer laws may require reimbursement of customer losses.

The pace of technology continues to evolve at a rapid pace and may present challenges for the Company to understand and adapt to these changes. The financial services industries continually experience rapid technological change with frequent introductions of new technology-driven products and services, such as AI, including generative AI, machine learning, and similar tools and technologies that collect, aggregate, analyze or generate data or other materials or content. These new technologies may be superior to, or render obsolete, the technologies currently used in the Company’s products and services.

An effective use of technology can increase efficiency, enable financial institutions to better serve customers, and reduce costs. Additionally, as a result of the shift toward remote banking, the Company’s customers have become more reliant on, and their expectations have increased with respect to, new technology-driven products and services. In addition, technology has lowered barriers to entry and made it possible for “non-banks” to offer traditional bank products and services using innovative technological platforms such as fintech and blockchain. These “digital banks” may be able to achieve economies of scale and offer better pricing than the Company offers for banking products and services, and they may have fewer regulatory burdens than traditional banks such as the Company. However, some modern technologies needed to compete effectively result in incremental operating costs and capital investments. The Company’s future success depends in part upon its ability to continue to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in operations. Many of the Company’s competitors, because of their larger size and available capital, have substantially greater resources to invest in technological improvements. The Company may not be able to effectively implement new technology-driven products and services, including the planned 2026 core system upgrade, or be successful in marketing these products and services to its customers within the same time frame as its large competitors or within the time frame expected by its customers. Failure to successfully keep pace with technological change affecting the financial services industry could lead to loss of customers and could have a material adverse impact on the Company’s business and, in turn, its financial condition and results of operations.

The development and use of AI presents risks and challenges that may adversely impact the Company’s business. The Company or its third-party vendors, clients and counterparties may develop or incorporate AI technology in certain

business processes, services or products. The development and use of AI present a number of risks and challenges to the Company’s business. The legal and regulatory environment relating to AI is uncertain and rapidly evolving and includes regulatory expectations targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment, and other laws applicable to the use of AI. These evolving laws and regulations could increase the Company’s compliance costs and the risk of non-compliance and could require changes with respect to any use or implementation of AI technology by the Company. AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential or proprietary information, that infringes on the intellectual property rights of others, or that is otherwise harmful. In addition, the complexity of many AI models makes it difficult to understand why they are generating particular outputs. This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of AI models, reducing erroneous output, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made. Further, the Company may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which the Company may have limited visibility. Any of these risks could expose the Company to liability or adverse legal or regulatory consequences and harm the Company’s reputation and the public perception of its business or the effectiveness of its security measures.

The Company is subject to laws regarding the privacy, information security and protection of personal information and any violation of these laws or an incident involving personal, confidential, or proprietary information of individuals could damage the Company’s reputation and otherwise adversely affect its results of operations and financial condition. The Company regularly collects, processes, transmits and stores confidential information regarding its customers and employees. In some cases, this confidential or proprietary information is collected, compiled, processed, transmitted or stored by third parties on the Company’s behalf. Legislation and regulation governing the privacy and protection of personal information of individuals (including customers, employees, suppliers and other third parties) have been evolving, expanding and increasing in complexity in recent years, and although the Company makes and will continue to make reasonable efforts to comply with all applicable laws and regulations, there can be no assurance that the Company will not be subject to regulatory action or monetary penalties in the event of an incident.

The Company is subject to the Gramm-Leach-Bliley Act which, among other things: (i) imposes certain limitations on the ability to share non-public personal information about customers with non-affiliated third parties; (ii) requires that the Company provide certain disclosures to customers about its information collection, sharing and security practices and afford customers the right to “opt out” of any information sharing by the Company with non-affiliated third parties (with certain exceptions); and (iii) requires that the Company develop, implement and maintain a written comprehensive information security program containing appropriate safeguards based on its size and complexity, the nature and scope of its activities, and the sensitivity of customer information processed by the Company, as well as plans for responding to data security breaches. Various state and federal banking regulators and states have also enacted data security breach notification requirements with varying levels of individual, consumer, regulatory or law enforcement notification in certain circumstances in the event of a security breach. Ensuring that the collection, use, transfer, and storage of personal information by the Company complies with all applicable laws and regulations can increase costs. Furthermore, the Company may not be able to ensure that all its customers, suppliers, counterparties and other third parties have appropriate controls in place to protect the confidentiality of information exchanged with them, particularly where such information is transmitted by electronic means. If personal, confidential, or proprietary information of customers or others were to be mishandled or misused, the Company could be exposed to litigation or regulatory sanctions under personal information laws and regulations. Concerns regarding the effectiveness of the Company’s measures to safeguard personal information, or even the perception that such measures are inadequate, could cause the Company to lose customers or potential customers and thereby reduce revenues. Accordingly, any failure or perceived failure to comply with applicable privacy or data protection laws and regulations may subject the Company to inquiries, examinations and investigations that could result in requirements to modify or cease certain operations or practices or in significant liabilities, fines or penalties, and could damage the Company’s reputation and otherwise adversely affect the Company’s results of operations and financial condition.

The Company’s controls and procedures may be inadequate, and failure to comply with controls and procedures or related regulations could have a material adverse effect on the Company’s business, results of operations and financial condition. The Company faces the risk that the design of its controls and procedures, including those designed to mitigate the risk of fraud by employees or outside third parties, may be inadequate or be circumvented, thereby causing delays or failures in detection of errors or inaccuracies in data and information. The Company regularly reviews and updates the Company’s internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any

system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of the Company’s controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on the Company’s business, results of operations and financial condition. In addition, while the Company maintains a control framework designed to monitor service provider risks, including those relating to internet vulnerability, fraud and operational errors of employees, the failure of a service provider to perform in accordance with the contracted arrangements could be disruptive to the Company’s operations, which could have a material adverse impact on the Company’s financial condition or results of operations, and the Company’s (or the service provider’s) business continuity plans, risk management processes and procedures or security systems may not adequately mitigate such risk.

Risks Related to Liquidity

The Company may be unable to adequately manage its liquidity risk, which could affect its ability to meet its obligations as they become due, capitalize on growth opportunities, or pay dividends on its common stock. Liquidity risk refers to managing the Company’s liquidity so that it can meet its obligations as the obligations become due, opportunistically capitalize on potential growth opportunities as they arise, or pay dividends on its common stock. The Company’s liquidity arises from its ability to generate sufficient cash, liquidate assets or obtain adequate funding on a timely basis, at a reasonable cost and within acceptable risk tolerances. Liquidity is required to fund various obligations, including credit commitments to borrowers, mortgage and other loan originations, withdrawals by depositors, repayment of borrowings, dividends to shareholders, operating expenses and capital expenditures. The Company’s liquidity is derived primarily from funding obtained from the FHLB of Boston; retail core deposit growth and retention; principal and interest payments on loans; principal and interest payments on investment securities the Company issues; sale, maturity and prepayment of investment securities the Company holds; net cash provided from operations; and access to other funding sources. Any substantial, unexpected or prolonged changes in the level or cost of liquidity could have a material adverse effect on the Company’s business. Factors that could detrimentally impact the Company’s access to liquidity sources include a decrease in the level of business activity as a result of a downturn in the markets in which the Company’s loans are concentrated or an adverse regulatory action against the Company. The Company’s ability to borrow could also be impaired by factors that are not specific to the Company, such as a disruption in the financial markets or negative views and expectations about prospects for banks of the Company’s size or the financial services industry generally.

Risks Related to Environmental and Social Matters

Responses to climate change could adversely affect the Company’s business and performance, including indirectly through impacts on its customers. Concerns over the long-term impacts of climate change have led and could continue to lead to governmental efforts in certain regions of the world to mitigate those impacts. Consumers and businesses also may change their behavior on their own as a result of these concerns. The Company and its customers will need to respond to new laws and regulations as well as consumer and business preferences resulting from climate change concerns. The Company and its customers may face cost increases, asset value reductions, operating process changes, and the like. Impacts to the Company could include a drop in demand for its products and services, particularly in certain sectors. In addition, the Company could face reductions in creditworthiness on the part of some customers or in the value of assets securing loans.

Environmental, social and governance risks could adversely affect the Company’s reputation, business and performance and the trading price of its common stock. The Company may face scrutiny from some federal and state government agencies, regulatory bodies, investors, customers, regulators and other stakeholders related to its environmental, social and governance practices. Some investors, investor advocacy groups and investment funds are focused on these practices, especially as they relate to the environment, climate change, diversity and inclusion, workplace conduct and human capital management. These stakeholders often have differing priorities and expectations regarding these issues, and in some cases conflicting priorities. In addition, sentiment against certain environmental, social and governance practices has gained momentum across the U.S., as evidenced by executive orders, policies, legislation, as well as other initiatives issued and enacted at the federal and state levels.

The subjective nature of methods used by various stakeholders to assess a company with respect to environmental, social and governance-related criteria could result in erroneous perceptions or a misrepresentation of the Company’s actual policies and practices. Organizations that provide ratings information to investors on environmental, social and governance-related matters may also assign unfavorable ratings to the Company.

Failure to adapt to or comply with changing investor or stakeholder expectations and standards on environmental, social and governance matters could negatively impact the Company’s reputation, its ability to do business with certain customers, vendors, suppliers or other third parties, its ability to attract and retain employees and its stock price. The Company could also face negative publicity or reputational harm based on the identity of those with whom it chooses to do business. Any of the foregoing could have an adverse impact on the Company’s business, financial condition or results of operations.

Risks Related to the Company’s Business and Industry Generally

The Company’s business depends on maintaining the trust and confidence of customers and other market participants, and the Company’s reputation is critical to its business. The Company’s ability to originate and maintain accounts and business is highly dependent upon the perceptions of borrowers and deposit holders and other external perceptions of the Company’s business practices and financial health. The Company’s reputation is vulnerable to threats that can be difficult or impossible to control, and costly or impossible to remediate. Regulatory inquiries and actual or alleged incidents of employee misconduct and rumors, among other things, can substantially damage the Company’s reputation, even if the inquiries, allegations, or rumors are baseless or satisfactorily addressed. Adverse perceptions regarding the Company’s reputation in the consumer, commercial and funding markets could result in difficulties in generating and maintaining accounts and business, as well as in financing accounts and the Company’s business. Further, adverse perceptions can result in decreases in the levels of deposits that customers and potential customers choose to maintain with the Company. Any of the foregoing could have a material adverse effect on the Company’s results of operations or financial condition.

If the Company’s risk management framework does not effectively identify or mitigate the Company’s risks, the Company could suffer unexpected losses and its results of operations and financial condition could be materially adversely affected. The Company’s risk management framework seeks to identify and mitigate risk while appropriately balancing risk and return. The Company has established processes and procedures intended to identify, measure, monitor and report the types of risk to which it is subject, including strategic and emerging risk, culture/reputation risk, credit risk, liquidity risk, market and interest rate risk, operations risk, compliance risk, and technology and cyber risk. The Company seeks to monitor and control its risk exposure through a framework of policies, procedures and reporting requirements. Management of the Company’s risks in some cases depends upon the use of analytical and/or forecasting models, which, in turn, rely on assumptions and estimates. If the models used to mitigate these risks are inadequate, or the assumptions or estimates are inaccurate or otherwise flawed, the Company may fail to adequately protect against risks and may incur losses. In addition, there may be risks that exist, or that develop in the future, that the Company has not appropriately anticipated, identified or mitigated, which could lead to unexpected losses and the Company’s results of operations or financial condition could be materially adversely affected.

The Company has strong competition within its market area which may constrain the Company’s ability to grow and achieve profitability. The Company faces significant competition in its market area both in attracting deposits and in the origination of loans. See “Market Area and Competition” in Item 1. Business of this Report. Mergers and acquisitions of financial institutions within the Company’s market area may occur, which could add more competitive pressure as the Company would be competing with the resultant larger financial institutions with greater financial resources on a combined basis. Additionally, the Company’s market share and income may be adversely affected by its inability to successfully compete against larger and more diverse financial service providers. If the Company is unable to compete effectively, it may lose market share or fail to maintain its market share, and income generated from loans, deposits, and other financial products may decline.

The success of the Company is dependent on the Company’s ability to attract, hire and retain key personnel. The Company’s business is complex and specialized and performance is largely dependent on the knowledge, talents and efforts of highly skilled individuals. The Company relies on key personnel to manage and operate its business, including its major revenue producing functions and key operational functions, such as loan and deposit generation and the Company’s investment management services. The loss of key personnel or challenges attracting and retaining adequate skilled professionals could adversely affect the Company’s ability to maintain and manage these functions effectively and could also adversely impact the achievement of strategic growth objectives. The loss of key personnel or challenges attracting and retaining adequate skilled professionals could also result in increased compensation costs and higher recruiting and hiring expenses, which could adversely impact the Company’s net income. Additionally, if the Company does not maintain effective succession planning, including identifying and developing internal talent, identifying and attracting external talent, and preparing for orderly leadership transitions, it may face disruptions in essential business functions. The Company’s ability to continue to compete effectively depends on its ability to attract new skilled employees, and to retain and motivate its existing key employees. Competition for skilled employees in the Company’s markets and businesses can be intense, and the Company may not be able to hire or retain skilled employees in adequate numbers, in particular due to an increasingly competitive labor market. The labor market continues to be highly competitive with sustained pressure on the availability and retention of skilled professionals. The Company operates in an environment marked by ongoing competition for talent across all areas of its

business. In addition to competitive dynamics, the labor market is being influenced by broader structural and macroeconomic factors, including demographic shifts driven by retirements within the financial services industry, a limited pipeline of experienced mid-level and senior banking professionals, evolving employee expectations related to career development and purpose, and increased demand for specialized skills in areas such as commercial credit, risk management, compliance, data analytics, cybersecurity, and digital banking. Employers across the financial services sector continue to offer enhanced compensation, benefits, and flexible work arrangements, including hybrid and remote models, as long-term features of their employment value proposition. Ongoing regulatory complexity, heightened compliance requirements, and increased workload demands may further intensify competition for highly qualified professionals with relevant subject matter expertise. As competition for experienced banking, technology, credit, lending, and investment management, and commercial relationship management talent remains strong, the Company may be required to invest additional resources in recruitment, compensation, training, development, succession planning, and retention initiatives. Wage inflation, benefit cost increases, and investments in programs designed to retain, develop, or attract skilled employees could increase operating expenses and adversely impact earnings.

Natural disasters, severe weather, public health crises or other catastrophic or man-made events could have an adverse effect on the Company’s business or results of operations. The nature and level of such natural disasters, public health crises, pandemics or epidemics, or man-made events, including political events such as war, civil unrest or terrorist attacks, and other catastrophic events cannot be predicted. Additionally, the Company’s market area includes coastal regions that are susceptible to adverse weather conditions and natural disasters which cannot be predicted and may be exacerbated by global climate change, including, but not limited to, rain storms, hurricanes, blizzards and nor’easters and related flooding and wind damage. Such events can disrupt operations, result in damage to properties and negatively affect the local economies in the markets where the Company operates. The Company’s borrowers may suffer property damage, experience interruption of their businesses or lose their jobs, which may negatively impact the ability of these borrowers to make deposits with the Company or repay their loans or negatively impact values of collateral securing loans, any of which could result in losses and increased provisions for credit losses. Additionally, the occurrence of these events could harm the Company’s operations thorough interference with communications, including the interruption or loss of its computer systems which could prevent the gathering of deposits, originating loans and processing and controlling business flow, as well as through the destruction of facilities and operational, financial and management information systems, and could cause us to incur significant costs to repair any resulting damage to the Company’s property or business relationships.

Risks of Owning Stock in the Company

Our stock price can be volatile. The Company’s stock price can fluctuate widely in response to a variety of factors, including: actual or anticipated variations in the Company’s quarterly operating results; recommendations by securities analysts; acquisitions or business combinations; capital commitments by or involving the Company; operating and stock price performance of other companies that investors deem comparable to the Company; new technology used or services offered by the Company’s competitors; new reports relating to trends, concerns and other issues in the financial services industry; and changes in government regulations. General market fluctuations, industry factors and general economic and political conditions and events have caused a decline in the Company’s stock price in the past, and these factors, as well as, interest rate changes, unfavorable credit loss trends, or unforeseen events such as geopolitical conflicts could cause volatility in the Company’s stock price regardless of its operating results.