~ Company Announces a 10% Increase to Quarterly
Dividend ~
Eastern Bankshares, Inc. (the “Company,” or together with its
subsidiaries, “Eastern”) (NASDAQ Global Select Market: EBC), the
stock holding company of Eastern Bank, today announced its 2023
third quarter financial results and the declaration of a quarterly
cash dividend of $0.11 per share, representing a $0.01, or 10%,
increase from the most recent quarterly dividend.
The release of the Company’s quarterly financial results follows
its September 19, 2023 announcement of the sale of the insurance
operations of Eastern Insurance Group, LLC (“Eastern Insurance”)
(“the insurance transaction”) and the pending merger with Cambridge
Bancorp (“Cambridge”) (“the merger”). Proceeds from the insurance
transaction will allow Eastern to focus on the growth and strategic
initiatives of its core banking business, including the merger with
Cambridge. The merger will create a combined franchise with
approximately $27 billion in total assets, create the largest
bank-owned independent investment advisor in Massachusetts, and
further solidify Eastern as the largest Boston-based mid-sized bank
by deposits. On a combined basis, the transactions are financially
compelling with expected earnings per share accretion in excess of
20% and an expected 10% improvement to the Company’s efficiency
ratio.
“The strategic transactions we announced just last month mark
the next step in our journey, and will enhance our Boston
franchise, allowing us to better meet the needs of our customers
and communities,” said Bob Rivers, Chief Executive Officer and
Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank.
“We are on track to complete the insurance transaction next week.
It’s been a remarkable effort by so many to get to the finish line,
and I express my gratitude to Tim Lodge, President and Chief
Executive Officer of Eastern Insurance, and his entire team.
Regarding the merger with Cambridge, we have submitted all required
regulatory merger applications and mobilized internal integration
resources at both Eastern and Cambridge. I’m confident that the
combined transactions will improve our focus, efficiency and
profitability, as well as enhance our liquidity position as we
continue to operate in a challenging environment.”
FINANCIAL HIGHLIGHTS FOR THE THIRD QUARTER OF 2023
- Net income of $59.1 million, or $0.36 per diluted share,
compared to net income of $48.7 million, or $0.30 per diluted
share, for the prior quarter.
- Operating net income*, which excludes the revenues, expenses,
and tax provision of discontinued operations, of $52.1 million, or
$0.32 per diluted share, compared to $41.1 million, or $0.25 per
diluted share, for the prior quarter.
- The insurance transaction triggered the elimination of a $14.6
million tax valuation allowance that was established as part of the
sale of available-for-sale securities in the first quarter of 2023
(the “securities sale”).
- The net interest margin on a fully tax equivalent basis held
relatively steady at 2.77% as compared to 2.80% in the prior
quarter.
- Continued focus on efficiency with total operating noninterest
expense of $98.7 million, essentially flat from the prior
quarter.
- Healthy balance sheet with 11.6% shareholders’ equity to
assets, 8.7% tangible shareholders’ equity to tangible assets* and
16.0% common equity tier 1 capital ratio1. Borrowings and brokered
deposits totaled 5.2% of assets.
- Overall credit metrics remained strong with net charge-offs
less than 1 basis point.
- Board declared a 10% increase in the quarterly cash dividend to
$0.11 per share.
Regarding the Company’s third quarter financial results, Mr.
Rivers commented, “Our results continue to demonstrate our robust
capital position and the strength of our franchise. We are
confident in our earnings capacity and remain focused on long-term
shareholder value, and the increase in our quarterly dividend is
further evidence of that confidence and commitment.”
In September 2023, following the approval of the insurance
transaction by the Company's Board of Directors and in accordance
with applicable accounting rules, the Company classified its
insurance operations as both held-for-sale and discontinued
operations. Accordingly, the Consolidated Balance Sheets and
Statements of Income present discontinued operations for the
current period and were adjusted for prior periods on a
retrospective basis. Please refer to Appendix G for the results of
discontinued operations.
____________________ 1 Regulatory capital ratios are preliminary
estimates.
BALANCE SHEET
Total assets were $21.1 billion at September 30, 2023,
representing a decrease of $437.2 million, or 2%, from June 30,
2023.
- Total securities decreased $267.9 million, or 5%, from the
prior quarter, to $4.7 billion, due to a decrease in the market
value of available-for-sale securities as well as principal
runoff.
- Total loans were $13.9 billion, representing a decrease of
$42.6 million, or 0.3%, from the prior quarter. The decrease was
driven primarily by the sale of approximately $192 million of
Shared National Credit (“SNC”) loans from the commercial and
industrial loan portfolio. This was partially offset by loan
originations to core customers.
- Deposits totaled $17.4 billion, representing a decrease of
$756.8 million, or 4%, from the prior quarter caused primarily by a
decrease in municipal deposits of approximately $375.0 million due
in part to seasonality, as well as a decrease in brokered deposits
of $305.9 million.
- Borrowed funds increased $364.2 million from the prior quarter
to $715.4 million in the third quarter, as Federal Home Loan Bank
(“FHLB”) borrowings were used to replace certain maturing brokered
CDs.
- Shareholders’ equity was $2.4 billion, representing a decrease
of $80.2 million from the prior quarter driven primarily by a
decrease in accumulated other comprehensive income, partially
offset by retained earnings. Please refer to Appendix D to this
press release for a roll-forward of tangible shareholders’
equity*.
- At September 30, 2023, book value per share was $13.87 and
tangible book value per share* was $10.14.
NET INTEREST INCOME
Net interest income was $137.2 million for the third quarter of
2023, compared to $141.6 million in the prior quarter, representing
a decrease of $4.4 million.
- Net interest margin on a fully tax equivalent (“FTE”) basis*
was 2.77% for the third quarter, representing a 3 basis point
decrease from the second quarter, as higher funding costs more than
offset increases in asset yields.
- Total interest-earning asset yields increased 10 basis points
from the prior quarter to 4.05%, due to increased loan and
short-term investment yields as a result of higher interest rates
during the quarter.
- Total interest-bearing liabilities cost increased 20 basis
points from the prior quarter to 1.99%, due primarily to higher
deposit costs resulting from deposit pricing increases and deposit
mix shifts.
NONINTEREST INCOME
Noninterest income, which excludes revenues from discontinued
operations, was $19.2 million for the third quarter of 2023,
compared to $26.2 million for the prior quarter, representing a
decrease of $7.0 million. Noninterest income on an operating basis*
was $20.7 million for the third quarter of 2023, compared to $23.2
million for the prior quarter, a decrease of $2.5 million.
- Service charges on deposit accounts increased $0.2 million on a
consecutive quarter basis to $7.4 million.
- Trust and investment advisory fees increased $0.1 million on a
consecutive quarter basis to $6.2 million.
- Debit card processing fees decreased $0.1 million from the
prior quarter to $3.4 million.
- Loan-level interest rate swap income increased $0.9 million
from the prior quarter to $1.7 million. The increase was driven by
higher cash income due to higher customer swap transaction volume
and an increase in the fair value adjustment of such
transactions.
- Losses from investments held in rabbi trust accounts were $1.5
million in the third quarter compared to gains of $3.0 million in
the prior quarter due to investment performance.
- In the third quarter, the Company incurred losses on sales of
commercial and industrial loans totaling $2.7 million due to the
sale of SNC loans. There were no sales in the prior quarter. The
losses on sale were partially offset by the release of loan loss
reserves totaling approximately $2.0 million associated with the
sale of SNC loans.
NONINTEREST EXPENSE
Noninterest expense, which excludes expenses from discontinued
operations, was $101.7 million for the third quarter of 2023,
compared to $99.9 million in the prior quarter, representing an
increase of $1.8 million. Noninterest expense on an operating
basis* for the third quarter of 2023 was $98.7 million, compared to
$98.6 million in the prior quarter, an increase of $0.1
million.
- Salaries and employee benefits expense was $60.9 million in the
third quarter, representing a decrease of $1.3 million from the
prior quarter.
- Office occupancy and equipment expense was $8.6 million in the
third quarter, a decrease of $0.4 million from the prior
quarter.
- Data processing expense was $13.4 million in the third quarter,
an increase of $0.6 million from the prior quarter.
- Professional services expense was $7.1 million in the third
quarter, an increase of $4.1 million from the prior quarter, due
primarily to merger and acquisition expenses of $3.6 million
related to the planned merger with Cambridge.
- Marketing expense was $1.8 million in the third quarter, a
decrease of $0.3 million from the prior quarter.
- Loan expenses were unchanged at $1.1 million in the third
quarter.
- Federal Deposit Insurance Corporation (“FDIC”) insurance
expense was $2.8 million in the third quarter, a decrease of $0.2
million from the prior quarter.
- Other noninterest expense was $5.5 million in the third
quarter, a decrease of $0.6 million from the prior quarter.
DISCONTINUED OPERATIONS
Net loss from discontinued operations was $4.4 million in the
third quarter, compared to net income of $4.2 million in the prior
quarter, a decrease of $8.6 million.
- In the third quarter of 2023, there were approximately $10.7
million of expenses associated with the insurance transaction,
including the buyout of certain insurance producer contracts,
professional services expenses, and real estate lease impairment
charges.
- Discontinued operations is excluded from operating net
income.*
Please refer to Appendix G for additional information on
discontinued operations.
INCOME TAXES
The income tax benefit for the third quarter was $16.2 million
compared to income tax expense of $15.9 million in the prior
quarter, a decrease of $32.1 million.
- The insurance transaction triggered the elimination of a $14.6
million tax valuation allowance that was established as part of the
securities sale in the first quarter of 2023. The elimination was
made following the determination that the capital gain from the
insurance transaction and the capital gain carrybacks would be
greater than the previously incurred capital loss associated with
the securities sale.
- Excluding the impact of the tax valuation allowance
elimination, the tax benefit for the third quarter is reflective of
Eastern’s year-to-date net pre-tax loss position without
consideration for any pre-tax gains resulting from the insurance
transaction in the fourth quarter.
ASSET QUALITY
The allowance for loan losses was $155.1 million at September
30, 2023, or 1.12% of total loans, compared to $148.0 million, or
1.06% of total loans, at June 30, 2023. The Company recorded a
provision for loan losses totaling $7.3 million in the third
quarter of 2023 driven primarily by an increase in specific
reserves associated with three commercial real estate loans
collateralized by investor office real estate located in Boston’s
financial district.
Non-performing loans totaled $47.5 million at September 30, 2023
compared to $30.6 million at the end of the prior quarter. The
increase was driven by the non-accrual designation of the three
aforementioned commercial real estate loans. During the third
quarter of 2023, the Company recorded total net charge-offs of $0.1
million, or less than 0.01% of average total loans on an annualized
basis, compared to $0.5 million or less than 0.01% of average total
loans in the prior quarter, respectively.
Please refer to the investor presentation for a review of the
Company’s office-related commercial real estate exposure.
DIVIDENDS AND SHARE REPURCHASES
The Company’s Board of Directors has declared a quarterly cash
dividend of $0.11 per common share, representing a $0.01, or 10%,
increase from the prior quarter. The dividend will be payable on
December 15, 2023 to shareholders of record as of the close of
business on December 1, 2023.
The Company’s share repurchase authorization expired in August
of 2023. The Company did not repurchase any shares of its common
stock during the third quarter of 2023.
CONFERENCE CALL AND PRESENTATION INFORMATION
A conference call and webcast covering Eastern’s third quarter
2023 earnings will be held on Friday, October 27, 2023 at 9:00 a.m.
Eastern Time. To join by telephone, participants can call the
toll-free dial-in number (888) 259-6580 from within the U.S. and
reference conference ID 50539618. The conference call will be
simultaneously webcast. Participants may join the webcast on the
Company’s Investor Relations website at investor.easternbank.com. A
presentation providing additional information for the quarter is
also available at investor.easternbank.com. A replay of the webcast
will be made available on demand on this site.
ABOUT EASTERN BANKSHARES, INC.
Eastern Bankshares, Inc. is the stock holding company for
Eastern Bank. Founded in 1818, Boston-based Eastern Bank has more
than 120 locations serving communities in eastern Massachusetts,
southern and coastal New Hampshire, and Rhode Island. As of
September 30, 2023, Eastern Bank had approximately $21 billion in
total assets. Eastern provides a full range of banking and wealth
management solutions for consumers and businesses of all sizes, and
takes pride in its outspoken advocacy and community support that
includes $240 million in charitable giving since 1994. An inclusive
company, Eastern employs approximately 2,100 deeply committed
professionals who value relationships with their customers,
colleagues, and communities. For investor information, visit
investor.easternbank.com.
NON-GAAP FINANCIAL MEASURES
*Denotes a non-GAAP financial measure used in this press
release.
A non-GAAP financial measure is defined as a numerical measure
of the Company’s historical or future financial performance,
financial position or cash flows that excludes (or includes)
amounts, or is subject to adjustments that have the effect of
excluding (or including) amounts that are included in the most
directly comparable measure calculated and presented in accordance
with accounting principles generally accepted in the United States
(“GAAP”) in the Company’s statement of income, balance sheet or
statement of cash flows (or equivalent statements).
The Company presents non-GAAP financial measures, which
management uses to evaluate the Company’s performance, and which
exclude the effects of certain transactions that management
believes are unrelated to its core business and are therefore not
necessarily indicative of its current performance or financial
position. Management believes excluding these items facilitates
greater visibility for investors into the Company’s 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, these non-GAAP financial
measures presented in this press release exclude discontinued
operations. Please refer to Appendix G to this press release for
further information regarding discontinued operations.
There are items in the Company’s financial statements that
impact its financial results, but which management believes are
unrelated to the Company’s core business. Accordingly, the Company
presents noninterest income on an operating basis, total operating
revenue, noninterest expense on an operating basis, operating net
income, operating earnings per share, operating return on average
assets, operating return on average shareholders’ equity, operating
return on average tangible shareholders’ equity (discussed further
below), and the operating efficiency ratio. Each of these figures
excludes the impact of such applicable items because management
believes such exclusion can provide greater visibility into the
Company’s core business and underlying trends. Such items that
management does not consider to be core to the Company’s business
include (i) income and expenses from investments held in rabbi
trusts, (ii) gains and losses on sales of securities available for
sale, net, (iii) gains and losses on the sale of other assets, (iv)
rabbi trust employee benefits, (v) impairment charges on tax credit
investments and associated tax credit benefits, (vi) other real
estate owned (“OREO”) gains, (vii) merger and acquisition expenses,
(viii) the non-cash pension settlement charge recognized related to
the Defined Benefit Plan, (ix) certain discrete tax items, and (x)
net income from discontinued operations. The Company does not
provide an outlook for its total noninterest income and total
noninterest expense because each contains income or expense
components, as applicable, such as income associated with rabbi
trust accounts and rabbi trust employee benefit expense, which are
market-driven, and over which the Company cannot exercise control.
Accordingly, reconciliations of the Company’s outlook for its
noninterest income on an operating basis and its noninterest
expense on an operating basis to an outlook for total noninterest
income and total noninterest expense, respectively, cannot be made
available without unreasonable effort.
Management also presents tangible assets, tangible shareholders’
equity, average tangible shareholders’ equity, tangible book value
per share, the ratio of tangible shareholders’ equity to tangible
assets including the impact of mark-to-market adjustments on
held-to-maturity securities, return on average tangible
shareholders’ equity, and operating return on average shareholders’
equity (discussed further above), each of which excludes the impact
of goodwill and other intangible assets, as management believes
these financial measures provide investors with the ability to
further assess the Company’s performance, identify trends in its
core business and provide a comparison of its capital adequacy to
other companies. The Company 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.
These non-GAAP financial measures presented in this press
release should not be considered an alternative or substitute for
financial results or measures determined in accordance with GAAP or
as an indication of the Company’s cash flows from operating
activities, a measure of its liquidity position or an indication of
funds available for its cash needs. An item which management
considers to be non-core and excludes when computing these non-GAAP
measures can be of substantial importance to the Company’s results
for any particular period. In addition, management’s methodology
for calculating non-GAAP financial measures may differ from the
methodologies employed by other banking companies to calculate the
same or similar performance measures, and accordingly, the
Company’s reported non-GAAP financial measures may not be
comparable to the same or similar performance measures reported by
other banking companies. Please refer to Appendices A-E for
reconciliations of the Company's GAAP financial measures to the
non-GAAP financial measures in this press release.
FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” within
the meaning of section 27A of the Securities Act of 1933, as
amended, and section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements include statements regarding
anticipated future events and can be identified by the fact that
they do not relate strictly to historical or current facts. You can
identify these statements from the use of the words “may,” “will,”
“should,” “could,” “would,” “plan,” “potential,” “estimate,”
“project,” “believe,” “intend,” “anticipate,” “expect,” “target”
and similar expressions. Forward-looking statements, by their
nature, are subject to risks and uncertainties. There are many
factors that could cause actual results to differ materially from
expected results described in the forward-looking statements.
Certain factors that could cause actual results to differ
materially from expected results include; adverse developments in
the level and direction of loan delinquencies and charge-offs and
changes in estimates of the adequacy of the allowance for loan
losses; increased competitive pressures; changes in interest rates
and resulting changes in competitor or customer behavior, mix or
costs of sources of funding, and deposit amounts and composition;
risks associated with the Company’s completion and/or
implementation of the merger with Cambridge, including risks that
required regulatory, shareholder or other approvals for the merger
are not obtained or other closing conditions are not satisfied in a
timely manner or at all and that the merger fails to occur in the
timeframe expected or at all; prior to the completion of the merger
or thereafter, Cambridge or the Company may not perform as expected
due to transaction-related uncertainty or other factors; and
revenue or expense synergies may not fully materialize for the
Company in the timeframe expected or at all, or may be more costly
to achieve; risks associated with the disposition of Eastern
Insurance, including risks that the disposition fails to occur in
the timeframe expected or at all, does not provide the full
expected economic or strategic benefits, or may be more costly to
achieve; adverse national or regional economic conditions or
conditions within the securities markets or banking sector;
legislative and regulatory changes and related compliance costs
that could adversely affect the business in which the Company and
its subsidiary Eastern Bank are engaged, including the effect of,
and changes in, monetary and fiscal policies and laws, such as the
interest rate policies of the Board of Governors of the Federal
Reserve System or a failure to raise the national debt ceiling;
market and monetary fluctuations, including inflationary or
recessionary pressures, interest rate sensitivity, liquidity
constraints, increased borrowing and funding costs, and
fluctuations due to actual or anticipated changes to federal tax
laws; the realizability of deferred tax assets; the Company’s
ability to successfully implement its risk mitigation strategies;
asset and credit quality deterioration, including adverse
developments in local or regional real estate markets that decrease
collateral values associated with existing loans; and operational
risks such as cybersecurity incidents, natural disasters, and
pandemics, including COVID-19. For further discussion of such
factors, please see the Company’s most recent Annual Report on Form
10-K and subsequent filings with the U.S. Securities and Exchange
Commission (the “SEC”), which are available on the SEC’s website at
www.sec.gov.
You should not place undue reliance on forward-looking
statements, which reflect the Company's expectations only as of the
date of this press release. The Company does not undertake any
obligation to update forward-looking statements.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger transaction, the Company
intends to file with the SEC a Registration Statement on Form S-4
that will include a Joint Proxy Statement of the Company and
Cambridge and a Prospectus of the Company (the “joint proxy
statement/prospectus”), as well as other relevant documents
concerning the proposed transaction. This communication does not
constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any vote or approval, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction. INVESTORS AND SHAREHOLDERS OF THE COMPANY AND
CAMBRIDGE ARE URGED TO READ THE REGISTRATION STATEMENT AND THE
JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT
BECOMES AVAILABLE AND EACH OTHER RELEVANT DOCUMENT FILED WITH THE
SEC, AS WELL AS ANY AMENDMENT OR SUPPLEMENT TO THOSE DOCUMENTS,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A copy of the
definitive joint proxy statement/prospectus, as well as other
filings containing information about the Company and Cambridge, can
be obtained without charge, at the SEC’s website
(http://www.sec.gov). Copies of the joint proxy
statement/prospectus and the filings with the SEC that will be
incorporated by reference in the joint proxy statement/prospectus
can also be obtained, without charge, by directing a request to the
Company’s Investor Relations team via email at
InvestorRelations@easternbank.com or by telephone at (781)
598-7920, or to Cambridge Investor Relations via email at
InvestorRelations@cambridgetrust.com or by telephone at (617)
520-5520.
PARTICIPANTS IN THE SOLICITATION
The Company, Cambridge, and their respective directors,
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies
from the shareholders of the Company and/or Cambridge in connection
with the proposed transaction under the rules of the SEC.
Information regarding the Company’s directors and executive
officers is available in its definitive proxy statement relating to
its 2023 Annual Meeting of Shareholders, which was filed with the
SEC on April 3, 2023, and its Annual Report on Form 10-K for the
year ended December 31, 2022, which was filed with the Commission
on February 24, 2023, and other documents filed by the Company with
the SEC. Information regarding Cambridge’s directors and executive
officers is available in its definitive proxy statement relating to
its 2023 Annual Meeting of Shareholders, which was filed with the
SEC on March 16, 2023 and other documents filed by Cambridge with
the SEC. Other information regarding the participants in the proxy
solicitation and a description of their interests will be included
in the joint proxy statement/prospectus and other relevant
materials filed with the SEC, which may be obtained free of charge
as described in the preceding paragraph.
EASTERN BANKSHARES, INC. AND
SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS
Certain information in this press release is presented as
reviewed by the Company’s management and includes information
derived from the Company’s Consolidated Statements of Income,
non-GAAP financial measures, and operational and performance
metrics. For information on non-GAAP financial measures, please see
the section titled "Non-GAAP Financial Measures."
As of and for the three months
ended
(Unaudited, dollars in thousands, except
per-share data)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Earnings data
Net interest income
$
137,205
$
141,588
$
138,309
$
149,994
$
152,179
Noninterest income (loss) (1)
19,157
26,204
(309,853
)
22,425
19,524
Total revenue (1)
156,362
167,792
(171,544
)
172,419
171,703
Noninterest expense (1)
101,748
99,934
95,891
112,583
95,765
Pre-tax, pre-provision income (loss)
(1)
54,614
67,858
(267,435
)
59,836
75,938
Provision for allowance for loan
losses
7,328
7,501
25
10,880
6,480
Pre-tax income (loss) (1)
47,286
60,357
(267,460
)
48,956
69,458
Net income (loss) from continuing
operations
63,464
44,419
(202,081
)
40,918
52,808
Net (loss) income from discontinued
operations
(4,351
)
4,238
7,985
1,376
1,969
Net income (loss)
59,113
48,657
(194,096
)
42,294
54,777
Operating net income (non-GAAP) (1)
52,085
41,092
53,134
48,570
53,602
Per-share data
Earnings (losses) per share, basic and
diluted
$
0.36
$
0.30
$
(1.20
)
$
0.26
$
0.33
Continuing operations
$
0.39
$
0.27
$
(1.25
)
$
0.25
$
0.32
Discontinued operations
$
(0.03
)
$
0.03
$
0.05
$
0.01
$
0.01
Operating earnings per share, basic
(non-GAAP) (1)
$
0.32
$
0.25
$
0.33
$
0.30
$
0.33
Operating earnings per share, diluted
(non-GAAP) (1)
$
0.32
$
0.25
$
0.33
$
0.30
$
0.33
Book value per share
$
13.87
$
14.33
$
14.63
$
14.03
$
13.59
Tangible book value per share
(non-GAAP)
$
10.14
$
10.59
$
10.88
$
10.28
$
9.87
Profitability
Return on average assets (1) (2)
1.18
%
0.81
%
(3.64
)%
0.73
%
0.93
%
Operating return on average assets
(non-GAAP) (1)(2)
0.97
%
0.75
%
0.95
%
0.86
%
0.93
%
Return on average shareholders' equity (1)
(2)
9.91
%
6.85
%
(33.31
)%
6.71
%
7.55
%
Operating return on average shareholders'
equity (1)(2)
8.14
%
6.34
%
8.76
%
7.96
%
7.66
%
Return on average tangible shareholders'
equity (non-GAAP) (1)(2)
13.38
%
9.19
%
(45.55
)%
9.23
%
9.88
%
Operating return on average tangible
shareholders' equity (non-GAAP) (1)(2)
10.99
%
8.50
%
11.98
%
10.95
%
10.03
%
Net interest margin (FTE) (2)
2.77
%
2.80
%
2.66
%
2.81
%
2.87
%
Cost of deposits (2)
1.33
%
1.22
%
0.92
%
0.37
%
0.10
%
Efficiency ratio (1)
65.07
%
59.56
%
(55.90
)%
65.30
%
55.77
%
Operating efficiency ratio (non-GAAP)
(1)
60.83
%
58.47
%
57.97
%
57.26
%
54.49
%
Balance Sheet (end of period)
Total assets
$
21,146,292
$
21,583,493
$
22,720,530
$
22,646,858
$
22,042,933
Total loans
13,919,275
13,961,878
13,675,250
13,575,531
12,903,954
Total deposits
17,424,169
18,180,972
18,541,580
18,974,359
18,733,381
Total loans / total deposits
80
%
77
%
74
%
72
%
69
%
Asset quality
Allowance for loan losses ("ALLL")
$
155,146
$
147,955
$
140,938
$
142,211
$
131,663
ALLL / total nonperforming loans
("NPLs")
326.86
%
484.18
%
407.65
%
368.38
%
387.77
%
Total NPLs / total loans
0.34
%
0.22
%
0.25
%
0.28
%
0.26
%
Net charge-offs (recoveries) ("NCOs") /
average total loans (2)
0.00
%
0.01
%
0.00
%
0.01
%
0.01
%
Capital adequacy
Shareholders' equity / assets
11.57
%
11.71
%
11.35
%
10.91
%
10.96
%
Tangible shareholders' equity / tangible
assets (non-GAAP)
8.73
%
8.93
%
8.70
%
8.24
%
8.20
%
(1) Excludes discontinued operations.
(2) Presented on an annualized basis.
EASTERN BANKSHARES, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of
Sep 30, 2023 change
from
(Unaudited, dollars in thousands)
Sep 30,
2023
Jun 30,
2023
Sep 30,
2022
Jun 30, 2023
Sep 30, 2022
ASSETS
△ $
△ %
△ $
△ %
Cash and due from banks
$
72,689
$
105,066
$
102,776
$
(32,377
)
(31
)%
$
(30,087
)
(29
)%
Short-term investments
536,119
768,436
55,661
(232,317
)
(30
)%
480,458
863
%
Cash and cash equivalents
608,808
873,502
158,437
(264,694
)
(30
)%
450,371
284
%
Available for sale ("AFS") securities
4,261,518
4,520,293
6,844,615
(258,775
)
(6
)%
(2,583,097
)
(38
)%
Held to maturity ("HTM") securities
455,900
465,061
481,963
(9,161
)
(2
)%
(26,063
)
(5
)%
Total securities
4,717,418
4,985,354
7,326,578
(267,936
)
(5
)%
(2,609,160
)
(36
)%
Loans held for sale
23,892
2,835
951
21,057
743
%
22,941
2412
%
Loans:
Commercial and industrial
3,087,509
3,341,976
3,023,729
(254,467
)
(8
)%
63,780
2
%
Commercial real estate
5,396,912
5,242,290
4,985,654
154,622
3
%
411,258
8
%
Commercial construction
382,615
371,367
314,193
11,248
3
%
68,422
22
%
Business banking
1,087,799
1,089,548
1,096,436
(1,749
)
—
%
(8,637
)
(1
)%
Total commercial loans
9,954,835
10,045,181
9,420,012
(90,346
)
(1
)%
534,823
6
%
Residential real estate
2,550,861
2,510,705
2,118,852
40,156
2
%
432,009
20
%
Consumer home equity
1,193,859
1,198,290
1,168,476
(4,431
)
—
%
25,383
2
%
Other consumer
219,720
207,702
196,614
12,018
6
%
23,106
12
%
Total loans
13,919,275
13,961,878
12,903,954
(42,603
)
—
%
1,015,321
8
%
Allowance for loan losses
(155,146
)
(147,955
)
(131,663
)
(7,191
)
5
%
(23,483
)
18
%
Unamortized prem./disc. and def. fees
(19,307
)
(15,202
)
(19,349
)
(4,105
)
27
%
42
—
%
Net loans
13,744,822
13,798,721
12,752,942
(53,899
)
—
%
991,880
8
%
Federal Home Loan Bank stock, at cost
37,125
26,894
18,714
10,231
38
%
18,411
98
%
Premises and equipment
59,033
59,421
63,022
(388
)
(1
)%
(3,989
)
(6
)%
Bank-owned life insurance
163,700
162,718
159,838
982
1
%
3,862
2
%
Goodwill and other intangibles, net
566,709
567,213
568,308
(504
)
—
%
(1,599
)
—
%
Deferred income taxes, net
416,081
352,060
342,937
64,021
18
%
73,144
21
%
Prepaid expenses
156,113
157,675
180,234
(1,562
)
(1
)%
(24,121
)
(13
)%
Other assets
527,873
476,074
342,435
51,799
11
%
185,438
54
%
Assets of discontinued operations
124,718
121,026
128,537
3,692
3
%
(3,819
)
(3
)%
Total assets
$
21,146,292
$
21,583,493
$
22,042,933
$
(437,201
)
(2
)%
$
(896,641
)
(4
)%
LIABILITIES AND SHAREHOLDERS'
EQUITY
Deposits:
Demand
$
5,177,015
$
5,346,693
$
6,582,122
$
(169,678
)
(3
)%
$
(1,405,107
)
(21
)%
Interest checking accounts
3,671,871
4,173,079
5,047,018
(501,208
)
(12
)%
(1,375,147
)
(27
)%
Savings accounts
1,393,545
1,495,540
1,990,188
(101,995
)
(7
)%
(596,643
)
(30
)%
Money market investment
4,709,149
4,814,412
4,757,477
(105,263
)
(2
)%
(48,328
)
(1
)%
Certificates of deposit
2,472,589
2,351,248
356,576
121,341
5
%
2,116,013
593
%
Total deposits
17,424,169
18,180,972
18,733,381
(756,803
)
(4
)%
(1,309,212
)
(7
)%
Borrowed funds:
Federal Home Loan Bank advances
673,525
314,021
384,215
359,504
114
%
289,310
75
%
Escrow deposits of borrowers
24,947
22,980
21,853
1,967
9
%
3,094
14
%
Interest rate swap collateral funds
16,900
14,210
16,650
2,690
19
%
250
2
%
Total borrowed funds
715,372
351,211
422,718
364,161
104
%
292,654
69
%
Other liabilities
525,378
488,007
428,663
37,371
8
%
96,715
23
%
Liabilities of discontinued operations
34,820
36,531
42,008
(1,711
)
(5
)%
(7,188
)
(17
)%
Total liabilities
18,699,739
19,056,721
19,626,770
(356,982
)
(2
)%
(927,031
)
(5
)%
Shareholders' equity:
Common shares
1,766
1,766
1,778
—
—
%
(12
)
(1
)%
Additional paid-in capital
1,661,136
1,656,750
1,676,396
4,386
—
%
(15,260
)
(1
)%
Unallocated common shares held by the
employee stock ownership plan ("ESOP")
(133,992
)
(135,232
)
(138,950
)
1,240
(1
)%
4,958
(4
)%
Retained earnings
1,747,225
1,704,470
1,855,757
42,755
3
%
(108,532
)
(6
)%
Accumulated other comprehensive income
("AOCI"), net of tax
(829,582
)
(700,982
)
(978,818
)
(128,600
)
18
%
149,236
(15
)%
Total shareholders' equity
2,446,553
2,526,772
2,416,163
(80,219
)
(3
)%
30,390
1
%
Total liabilities and shareholders'
equity
$
21,146,292
$
21,583,493
$
22,042,933
$
(437,201
)
(2
)%
$
(896,641
)
(4
)%
EASTERN BANKSHARES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
Three months ended
Three months ended Sep 30,
2023 change from three months ended
(Unaudited, dollars in thousands, except
per-share data)
Sep 30,
2023
Jun 30,
2023
Sep 30,
2022
Jun 30,
2023
Sep 30,
2022
Interest and dividend income:
△ $
△ %
△ $
△ %
Interest and fees on loans
$
169,274
$
160,862
$
124,992
$
8,412
5
%
$
44,282
35
%
Taxable interest and dividends on
securities
24,191
24,618
29,280
(427
)
(2
)%
(5,089
)
(17
)%
Non-taxable interest and dividends on
securities
1,434
1,434
1,917
—
—
%
(483
)
(25
)%
Interest on federal funds sold and other
short-term investments
7,269
14,851
1,638
(7,582
)
(51
)%
5,631
344
%
Total interest and dividend income
202,168
201,765
157,827
403
—
%
44,341
28
%
Interest expense:
Interest on deposits
59,607
56,146
4,781
3,461
6
%
54,826
1147
%
Interest on borrowings
5,356
4,031
867
1,325
33
%
4,489
518
%
Total interest expense
64,963
60,177
5,648
4,786
8
%
59,315
1050
%
Net interest income
137,205
141,588
152,179
(4,383
)
(3
)%
(14,974
)
(10
)%
Provision for allowance for loan
losses
7,328
7,501
6,480
(173
)
(2
)%
848
13
%
Net interest income after provision for
allowance for loan losses
129,877
134,087
145,699
(4,210
)
(3
)%
(15,822
)
(11
)%
Noninterest income:
Service charges on deposit accounts
7,403
7,242
6,708
161
2
%
695
10
%
Trust and investment advisory fees
6,235
6,131
5,832
104
2
%
403
7
%
Debit card processing fees
3,388
3,513
3,249
(125
)
(4
)%
139
4
%
Interest rate swap income
1,695
825
1,562
870
105
%
133
9
%
(Losses) income from investments held in
rabbi trusts
(1,523
)
3,002
(2,248
)
(4,525
)
(151
)%
725
(32
)%
Losses on sales of commercial and
industrial loans
(2,651
)
—
—
(2,651
)
—
%
(2,651
)
—
%
(Losses) gains on sales of mortgage loans
held for sale, net
(164
)
(50
)
22
(114
)
228
%
(186
)
(845
)%
Losses on sales of securities available
for sale, net
—
—
(198
)
—
—
%
198
(100
)%
Other
4,774
5,541
4,597
(767
)
(14
)%
177
4
%
Total noninterest income
19,157
26,204
19,524
(7,047
)
(27
)%
(367
)
(2
)%
Noninterest expense:
Salaries and employee benefits
60,898
62,183
61,292
(1,285
)
(2
)%
(394
)
(1
)%
Office occupancy and equipment
8,641
9,067
8,880
(426
)
(5
)%
(239
)
(3
)%
Data processing
13,443
12,814
12,242
629
5
%
1,201
10
%
Professional services
7,125
3,025
4,218
4,100
136
%
2,907
69
%
Marketing expenses
1,765
2,111
2,118
(346
)
(16
)%
(353
)
(17
)%
Loan expenses
1,082
1,115
2,211
(33
)
(3
)%
(1,129
)
(51
)%
Federal Deposit Insurance Corporation
("FDIC") insurance
2,808
3,034
1,578
(226
)
(7
)%
1,230
78
%
Amortization of intangible assets
504
504
299
—
—
%
205
69
%
Other
5,482
6,081
2,927
(599
)
(10
)%
2,555
87
%
Total noninterest expense
101,748
99,934
95,765
1,814
2
%
5,983
6
%
Income before income tax (benefit)
expense
47,286
60,357
69,458
(13,071
)
(22
)%
(22,172
)
(32
)%
Income tax (benefit) expense
(16,178
)
15,938
16,650
(32,116
)
(202
)%
(32,828
)
(197
)%
Net income from continuing operations
$
63,464
$
44,419
$
52,808
$
19,045
43
%
$
10,656
20
%
Net (loss) income from discontinued
operations
$
(4,351
)
$
4,238
$
1,969
$
(8,589
)
(203
)%
$
(6,320
)
(321
)%
Net income
$
59,113
$
48,657
$
54,777
$
10,456
21
%
$
4,336
8
%
Share data:
Weighted average common shares
outstanding, basic
162,370,469
162,232,236
163,718,962
138,233
0
%
(1,348,493
)
(1
)%
Weighted average common shares
outstanding, diluted
162,469,887
162,246,675
164,029,649
223,212
0
%
(1,559,762
)
(1
)%
Earnings (loss) per share, basic:
Continuing operations
$
0.39
$
0.27
$
0.32
$
0.12
43
%
$
0.07
21
%
Discontinued operations
$
(0.03
)
$
0.03
$
0.01
$
(0.05
)
(203
)%
$
(0.04
)
(323
)%
Earnings per share, basic
$
0.36
$
0.30
$
0.33
$
0.06
21
%
$
0.03
9
%
Earnings (loss) per share, diluted:
Continuing operations
$
0.39
$
0.27
$
0.32
$
0.12
43
%
$
0.07
21
%
Discontinued operations
$
(0.03
)
$
0.03
$
0.01
$
(0.05
)
(203
)%
$
(0.04
)
(323
)%
Earnings per share, diluted
$
0.36
$
0.30
$
0.33
$
0.06
21
%
$
0.03
9
%
EASTERN BANKSHARES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
Nine months ended
(Unaudited, dollars in thousands, except
per-share data)
Sep 30, 2023
Sep 30, 2022
Change
Interest and dividend income:
△ $
△ %
Interest and fees on loans
$
483,676
$
333,595
$
150,081
45
%
Taxable interest and dividends on
securities
77,451
88,277
(10,826
)
(12
)%
Non-taxable interest and dividends on
securities
4,302
5,585
(1,283
)
(23
)%
Interest on federal funds sold and other
short-term investments
27,384
2,726
24,658
905
%
Total interest and dividend income
592,813
430,183
162,630
38
%
Interest expense:
Interest on deposits
158,686
11,164
147,522
1321
%
Interest on borrowings
17,025
959
16,066
1675
%
Total interest expense
175,711
12,123
163,588
1349
%
Net interest income
417,102
418,060
(958
)
—
%
Provision for allowance for loan
losses
14,854
7,045
7,809
111
%
Net interest income after provision for
allowance for loan losses
402,248
411,015
(8,767
)
(2
)%
Noninterest income:
Service charges on deposit accounts
21,117
23,558
(2,441
)
(10
)%
Trust and investment advisory fees
18,136
17,967
169
1
%
Debit card processing fees
10,071
9,417
654
7
%
Interest rate swap income
2,112
6,087
(3,975
)
(65
)%
Income (losses) from investments held in
rabbi trusts
4,336
(13,997
)
18,333
(131
)%
Losses on sales from sales of commercial
and industrial loans
(2,651
)
—
(2,651
)
—
%
(Losses) gains on sales of mortgage loans
held for sale, net
(288
)
240
(528
)
(220
)%
Losses on sales of securities available
for sale, net
(333,170
)
(2,474
)
(330,696
)
13367
%
Other
15,845
13,527
2,318
17
%
Total noninterest (loss) income
(264,492
)
54,325
(318,817
)
(587
)%
Noninterest expense:
Salaries and employee benefits
185,264
171,525
13,739
8
%
Office occupancy and equipment
26,797
28,804
(2,007
)
(7
)%
Data processing
38,555
39,711
(1,156
)
(3
)%
Professional services
13,277
11,510
1,767
15
%
Marketing expenses
4,899
6,262
(1,363
)
(22
)%
Loan expenses
3,292
5,757
(2,465
)
(43
)%
Federal Deposit Insurance Corporation
("FDIC") insurance
8,388
4,710
3,678
78
%
Amortization of intangible assets
1,299
899
400
44
%
Other
15,802
6,888
8,914
129
%
Total noninterest expense
297,573
276,066
21,507
8
%
(Loss) income before income tax (benefit)
expense
(159,817
)
189,274
(349,091
)
(184
)%
Income tax (benefit) expense
(65,619
)
43,681
(109,300
)
(250
)%
Net (loss) income from continuing
operations
(94,198
)
145,593
(239,791
)
(165
)%
Net income from discontinued
operations
7,872
11,872
(4,000
)
(34
)%
Net (loss) income
$
(86,326
)
$
157,465
$
(243,791
)
(155
)%
Share data:
Weighted average common shares
outstanding, basic
162,199,158
166,682,222
(4,483,064
)
(3
)%
Weighted average common shares
outstanding, diluted
162,260,503
166,867,643
(4,607,140
)
(3
)%
Earnings (loss) per share, basic:
Continuing operations
$
(0.58
)
$
0.87
$
(1.45
)
(167
)%
Discontinued operations
$
0.05
$
0.07
$
(0.02
)
(29
)%
(Loss) earnings per share, basic
$
(0.53
)
$
0.94
$
(1.47
)
(156
)%
Earnings (loss) per share, diluted:
Continuing operations
$
(0.58
)
$
0.87
$
(1.45
)
(167
)%
Discontinued operations
$
0.05
$
0.07
$
(0.02
)
(29
)%
(Loss) earnings per share, diluted
$
(0.53
)
$
0.94
$
(1.47
)
(156
)%
EASTERN BANKSHARES, INC. AND
SUBSIDIARIES
AVERAGE BALANCES, INTEREST
EARNED/PAID, & AVERAGE YIELDS
As of and for the three months
ended
Sep 30, 2023
Jun 30, 2023
Sep 30, 2022
(Unaudited, dollars in thousands)
Avg.
Balance
Interest
Yield /
Cost (5)
Avg.
Balance
Interest
Yield /
Cost (5)
Avg.
Balance
Interest
Yield /
Cost (5)
Interest-earning assets:
Loans (1):
Commercial
$
9,988,712
$
128,051
5.09
%
$
9,920,608
$
121,319
4.91
%
$
9,138,029
$
96,270
4.18
%
Residential
2,553,150
22,988
3.57
%
2,513,941
21,992
3.51
%
2,043,219
15,811
3.07
%
Consumer
1,386,350
22,227
6.36
%
1,370,011
21,045
6.16
%
1,341,528
16,072
4.75
%
Total loans
13,928,212
173,266
4.94
%
13,804,560
164,356
4.78
%
12,522,776
128,153
4.06
%
Investment securities
5,777,173
26,009
1.79
%
5,885,545
26,435
1.80
%
8,716,105
31,708
1.44
%
Federal funds sold and other short-term
investments
537,602
7,269
5.36
%
1,174,964
14,851
5.07
%
282,629
1,638
2.30
%
Total interest-earning assets
20,242,987
206,544
4.05
%
20,865,069
205,642
3.95
%
21,521,510
161,499
2.98
%
Non-interest-earning assets
1,033,879
1,084,413
911,025
Total assets
$
21,276,866
$
21,949,482
$
22,432,535
Interest-bearing liabilities:
Deposits:
Savings
$
1,441,636
$
43
0.01
%
$
1,552,702
$
47
0.01
%
$
2,021,125
$
51
0.01
%
Interest checking
3,903,062
6,302
0.64
%
4,270,945
6,141
0.58
%
5,211,914
2,686
0.20
%
Money market
4,836,895
27,695
2.27
%
5,064,469
26,611
2.11
%
4,824,452
1,893
0.16
%
Time deposits
2,341,684
25,567
4.33
%
2,275,844
23,347
4.11
%
380,560
151
0.16
%
Total interest-bearing deposits
12,523,277
59,607
1.89
%
13,163,960
56,146
1.71
%
12,438,051
4,781
0.15
%
Borrowings
414,252
5,356
5.13
%
348,597
4,031
4.64
%
157,686
867
2.18
%
Total interest-bearing liabilities
12,937,529
64,963
1.99
%
13,512,557
60,177
1.79
%
12,595,737
5,648
0.18
%
Demand deposit accounts
5,257,704
5,332,045
6,614,467
Other noninterest-bearing liabilities
541,827
505,555
445,640
Total liabilities
18,737,060
19,350,157
19,655,844
Shareholders' equity
2,539,806
2,599,325
2,776,691
Total liabilities and shareholders'
equity
$
21,276,866
$
21,949,482
$
22,432,535
Net interest income - FTE
$
141,581
$
145,465
$
155,851
Net interest rate spread (2)
2.06
%
2.16
%
2.80
%
Net interest-earning assets (3)
$
7,305,458
$
7,352,512
$
8,925,773
Net interest margin - FTE (4)
2.77
%
2.80
%
2.87
%
(1) Includes non-accrual loans.
(2) Net interest rate spread represents
the difference between the weighted average yield on
interest-earning assets and the weighted average cost of
interest-bearing liabilities.
(3) Net interest-earning assets represent
total interest-earning assets less total interest-bearing
liabilities.
(4) Net interest margin - FTE represents
fully-taxable equivalent net interest income* divided by average
total interest-earning assets. Please refer to Appendix B to this
press release for a reconciliation of fully-taxable equivalent net
interest income.
(5) Presented on an annualized basis.
EASTERN BANKSHARES, INC. AND
SUBSIDIARIES
AVERAGE BALANCES, INTEREST
EARNED/PAID, & AVERAGE YIELDS
As of and for the nine months
ended
Sep 30, 2023
Sep 30, 2022
(Unaudited, dollars in thousands)
Avg.
Balance
Interest
Yield /
Cost (5)
Avg.
Balance
Interest
Yield /
Cost (5)
Interest-earning assets:
Loans (1):
Commercial
$
9,892,337
$
365,298
4.94
%
$
9,019,196
$
258,082
3.83
%
Residential
2,526,980
66,593
3.52
%
1,980,630
44,966
3.04
%
Consumer
1,371,761
63,333
6.17
%
1,315,136
38,016
3.86
%
Total loans
13,791,078
495,224
4.80
%
12,314,962
341,064
3.70
%
Non-taxable investment securities
197,744
5,452
3.69
%
264,717
7,072
3.57
%
Taxable investment securities
6,244,397
77,451
1.66
%
8,484,540
88,277
1.39
%
Total investment securities
6,442,141
82,903
1.72
%
8,749,257
95,349
1.46
%
Federal funds sold and other short-term
investments
721,025
27,384
5.08
%
541,285
2,726
0.67
%
Total interest-earning assets
20,954,244
605,511
3.86
%
21,605,504
439,139
2.72
%
Non-interest-earning assets
952,378
1,099,406
Total assets
$
21,906,622
$
22,704,910
Interest-bearing liabilities:
Deposits:
Savings
$
1,570,803
$
172
0.01
%
$
2,046,254
$
153
0.01
%
Interest checking
4,177,492
17,155
0.55
%
4,897,321
6,778
0.19
%
Money market
4,979,820
74,612
2.00
%
5,151,384
3,559
0.09
%
Time deposits
2,184,631
66,747
4.08
%
429,401
674
0.21
%
Total interest-bearing deposits
12,912,746
158,686
1.64
%
12,524,360
11,164
0.12
%
Borrowings
478,347
17,025
4.76
%
75,027
959
1.71
%
Total interest-bearing liabilities
13,391,093
175,711
1.75
%
12,599,387
12,123
0.13
%
Demand deposit accounts
5,469,593
6,698,640
Other noninterest-bearing liabilities
512,546
436,724
Total liabilities
19,373,232
19,734,751
Shareholders' equity
2,533,390
2,970,159
Total liabilities and shareholders'
equity
$
21,906,622
$
22,704,910
Net interest income - FTE
$
429,800
$
427,016
Net interest rate spread (2)
2.11
%
2.59
%
Net interest-earning assets (3)
$
7,563,151
$
9,006,117
Net interest margin - FTE (4)
2.74
%
2.64
%
(1) Includes non-accrual loans.
(2) Net interest rate spread represents
the difference between the weighted average yield on
interest-earning assets and the weighted average cost of
interest-bearing liabilities.
(3) Net interest-earning assets represent
total interest-earning assets less total interest-bearing
liabilities.
(4) Net interest margin - FTE represents
fully-taxable equivalent net interest income* divided by average
total interest-earning assets. Please refer to Appendix B to this
press release for a reconciliation of fully-taxable equivalent net
interest income.
(5) Presented on an annualized basis.
EASTERN BANKSHARES, INC. AND
SUBSIDIARIES
ASSET QUALITY - NON-PERFORMING
ASSETS (1)
As of
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
(Unaudited, dollars in thousands)
Non-accrual loans:
Commercial
$
31,703
$
14,178
$
17,271
$
21,474
$
19,886
Residential
8,075
8,796
9,603
9,750
8,513
Consumer
7,687
7,584
7,699
7,380
5,555
Total non-accrual loans
47,465
30,558
34,573
38,604
33,954
Total accruing loans past due 90 days or
more:
—
—
—
—
—
Total non-performing loans
47,465
30,558
34,573
38,604
33,954
Other real estate owned
—
—
—
—
—
Other non-performing assets:
—
—
—
—
—
Total non-performing assets (1)
$
47,465
$
30,558
$
34,573
$
38,604
$
33,954
Total accruing troubled debt restructured
("TDR") (2)
$
—
$
—
$
—
$
28,834
$
36,275
Total non-performing loans to total
loans
0.34
%
0.22
%
0.25
%
0.28
%
0.26
%
Total non-performing assets to total
assets
0.22
%
0.14
%
0.15
%
0.17
%
0.15
%
(1) Non-performing assets are comprised of
NPLs, other real estate owned ("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 the Company’s loans, that it controls due to
foreclosure or acceptance of a deed in lieu of foreclosure.
(2) The Company adopted ASU 2022-02 on
January 1, 2023 which eliminated the TDR recognition and
measurement guidance. Accordingly, the Company had no TDRs to
report as of March 31, 2023 and subsequent periods.
EASTERN BANKSHARES, INC. AND
SUBSIDIARIES
ASSET QUALITY - PROVISION,
ALLOWANCE, AND NET CHARGE-OFFS (RECOVERIES)
Three months ended
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
(Unaudited, dollars in thousands)
Average total loans
$
13,926,194
$
13,803,292
$
13,633,165
$
13,203,450
$
12,521,426
Allowance for loan losses, beginning of
the period
147,955
140,938
142,211
131,663
125,531
Total cumulative effect of change in
accounting principle (1):
—
—
(1,143
)
—
—
Charged-off loans:
Commercial and industrial
11
—
—
256
11
Commercial real estate
—
—
—
—
—
Commercial construction
—
—
—
—
—
Business banking
303
254
343
370
369
Residential real estate
—
—
—
—
—
Consumer home equity
—
—
7
1
—
Other consumer
731
591
561
515
603
Total charged-off loans
1,045
845
911
1,142
983
Recoveries on loans previously
charged-off:
Commercial and industrial
120
26
139
248
126
Commercial real estate
2
2
4
38
3
Commercial construction
—
—
—
—
—
Business banking
609
204
481
391
286
Residential real estate
30
18
15
14
56
Consumer home equity
39
—
1
8
6
Other consumer
108
111
116
111
158
Total recoveries
908
361
756
810
635
Net loans charged-off (recoveries):
Commercial and industrial
(109
)
(26
)
(139
)
8
(115
)
Commercial real estate
(2
)
(2
)
(4
)
(38
)
(3
)
Commercial construction
—
—
—
—
—
Business banking
(306
)
50
(138
)
(21
)
83
Residential real estate
(30
)
(18
)
(15
)
(14
)
(56
)
Consumer home equity
(39
)
—
6
(7
)
(6
)
Other consumer
623
480
445
404
445
Total net loans charged-off
137
484
155
332
348
Provision for allowance for loan
losses
7,328
7,501
25
10,880
6,480
Total allowance for loan losses, end of
period
$
155,146
$
147,955
$
140,938
$
142,211
$
131,663
Net charge-offs to average total loans
outstanding during this period (2)
0.00
%
0.01
%
0.00
%
0.01
%
0.01
%
Allowance for loan losses as a percent of
total loans
1.12
%
1.06
%
1.03
%
1.05
%
1.02
%
Allowance for loan losses as a percent of
nonperforming loans
326.86
%
484.18
%
407.65
%
368.38
%
387.77
%
(1) For the quarter ended March 31, 2023,
represents the adjustment needed to reflect the cumulative day one
impact pursuant to the Company’s adoption of ASU 2022-02 (i.e.,
cumulative effect adjustment related to the adoption of ASU 2022-02
as of January 1, 2023). The adjustment represents a $1.1 million
decrease to the allowance attributable to the change in accounting
methodology for estimating the allowance for loan losses resulting
from the Company’s adoption of the standard.
(2) Presented on an annualized basis.
APPENDIX A: Reconciliation of Non-GAAP
Earnings Metrics
For information on non-GAAP financial
measures, please see the section titled "Non-GAAP Financial
Measures."
As of and for the Three Months
Ended
(Unaudited, dollars in thousands, except
per-share data)
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Net income (loss) from continuing
operations (GAAP)
$
63,464
$
44,419
$
(202,081
)
$
40,918
$
52,808
Add:
Noninterest income components:
Losses (income) from investments held in
rabbi trusts
1,523
(3,002
)
(2,857
)
(3,235
)
2,248
Losses on sales of securities available
for sale, net
—
—
333,170
683
198
Gains (losses) on sales of other
assets
(2
)
—
5
10
(467
)
Noninterest expense components:
Rabbi trust employee benefit (income)
expense
(586
)
1,314
1,274
1,103
(867
)
Merger and acquisition expenses
3,630
—
—
—
—
Defined Benefit Plan settlement loss
—
—
—
12,045
—
Total impact of non-GAAP adjustments
4,565
(1,688
)
331,592
10,606
1,112
Less net tax benefit associated with
non-GAAP adjustments (2)
15,944
1,639
76,377
2,954
318
Non-GAAP adjustments, net of tax
$
(11,379
)
$
(3,327
)
$
255,215
$
7,652
$
794
Operating net income (non-GAAP)
$
52,085
$
41,092
$
53,134
$
48,570
$
53,602
Weighted average common shares outstanding
during the period:
Basic
162,370,469
162,232,236
161,991,373
162,032,522
163,718,962
Diluted
162,469,887
162,246,675
162,059,431
162,263,547
164,029,649
Earnings (losses) per share from
continuing operations, basic:
$
0.39
$
0.27
$
(1.25
)
$
0.25
$
0.32
Earnings (losses) per share from
continuing operations, diluted:
$
0.39
$
0.27
$
(1.25
)
$
0.25
$
0.32
Operating earnings per share, basic
(non-GAAP)
$
0.32
$
0.25
$
0.33
$
0.30
$
0.33
Operating earnings per share, diluted
(non-GAAP)
$
0.32
$
0.25
$
0.33
$
0.30
$
0.33
Return on average assets (3)
1.18
%
0.81
%
(3.64
)%
0.73
%
0.93
%
Add:
Losses (income) from investments held in
rabbi trusts (3)
0.03
%
(0.05
)%
(0.05
)%
(0.06
)%
0.04
%
Losses on sales of securities available
for sale, net (3)
0.00
%
0.00
%
6.00
%
0.01
%
0.00
%
Gains (losses) on sales of other assets
(3)
0.00
%
0.00
%
0.00
%
0.00
%
(0.01
)%
Rabbi trust employee benefit (income)
expense (3)
(0.01
)%
0.02
%
0.02
%
0.02
%
(0.02
)%
Merger and acquisition expenses (3)
0.07
%
0.00
%
0.00
%
0.00
%
0.00
%
Defined Benefit Plan settlement loss
(3)
0.00
%
0.00
%
0.00
%
0.21
%
0.00
%
Less net tax benefit associated with
non-GAAP adjustments (2) (3)
0.30
%
0.03
%
1.38
%
0.05
%
0.01
%
Operating return on average assets
(non-GAAP) (3)
0.97
%
0.75
%
0.95
%
0.86
%
0.93
%
Return on average shareholders' equity
(3)
9.91
%
6.85
%
(33.31
)%
6.71
%
7.55
%
Add:
Losses (income) from investments held in
rabbi trusts (3)
0.24
%
(0.46
)%
(0.47
)%
(0.53
)%
0.32
%
Losses on sales of securities available
for sale, net (3)
0.00
%
0.00
%
54.92
%
0.11
%
0.03
%
Gains (losses) on sales of other assets
(3)
0.00
%
0.00
%
0.00
%
0.00
%
(0.07
)%
Rabbi trust employee benefit (income)
expense (3)
(0.09
)%
0.20
%
0.21
%
0.18
%
(0.12
)%
Merger and acquisition expenses (3)
0.57
%
0.00
%
0.00
%
0.00
%
0.00
%
Defined Benefit Plan settlement loss
(3)
0.00
%
0.00
%
0.00
%
1.97
%
0.00
%
Less net tax benefit associated with
non-GAAP adjustments (2) (3)
2.49
%
0.25
%
12.59
%
0.48
%
0.05
%
Operating return on average
shareholders' equity (non-GAAP) (3)
8.14
%
6.34
%
8.76
%
7.96
%
7.66
%
Average tangible shareholders'
equity:
Average total shareholders' equity
(GAAP)
$
2,539,806
$
2,599,325
$
2,460,170
$
2,420,174
$
2,776,691
Less: Average goodwill and other
intangibles (4)
658,591
659,825
660,795
661,841
656,684
Average tangible shareholders' equity
(non-GAAP)
$
1,881,215
$
1,939,500
$
1,799,375
$
1,758,333
$
2,120,007
Return on average tangible
shareholders' equity (non-GAAP) (3)
13.38
%
9.19
%
(45.55
)%
9.23
%
9.88
%
Add:
Losses (income) from investments held in
rabbi trusts (3)
0.32
%
(0.62
)%
(0.64
)%
(0.73
)%
0.42
%
Losses on sales of securities available
for sale, net (3)
0.00
%
0.00
%
75.09
%
0.15
%
0.04
%
Gains (losses) on sales of other assets
(3)
0.00
%
0.00
%
0.00
%
0.00
%
(0.09
)%
Rabbi trust employee benefit (income)
expense (3)
(0.12
)%
0.27
%
0.29
%
0.25
%
(0.16
)%
Merger and acquisition expenses (3)
0.77
%
0.00
%
0.00
%
0.00
%
0.00
%
Defined Benefit Plan settlement loss
(3)
0.00
%
0.00
%
0.00
%
2.72
%
0.00
%
Less net tax benefit associated with
non-GAAP adjustments (2) (3)
3.36
%
0.34
%
17.21
%
0.67
%
0.06
%
Operating return on average tangible
shareholders' equity (non-GAAP) (3)
10.99
%
8.50
%
11.98
%
10.95
%
10.03
%
(1) Net income from continuing operations
is used for computing return on average assets, return on average
shareholders' equity, and return on average tangible shareholders'
equity. Noninterest income and expense components presented in this
table exclude discontinued operations.
(2) The net tax benefit associated with
these items is generally determined by assessing whether each item
is included or excluded from net taxable income and applying our
combined statutory tax rate only to those items included in net
taxable income. The net tax benefit for the three months ended
September 30, 2023 was primarily due to the reversal of the
remainder of the federal portion of the valuation allowance
established in connection with the sale of securities in the first
quarter of 2023, described further below, and a net tax benefit
associated with a change in management’s estimate of annual pre-tax
loss for purposes of determining our quarterly income tax
provision. Upon the sale of securities in the first quarter of
2023, we established a valuation allowance of $17.4 million, as it
was determined at that time that it was not more-likely-than-not
that the entirety of the deferred tax asset related to the loss on
such securities would be realized. Following the execution of the
agreement to sell our insurance agency business in September 2023
and our estimate of the resulting capital gain, which is estimated
to be sufficient to realize federal capital losses related to the
securities sale, we reversed the associated federal valuation
allowance previously established as we had determined it was
more-likely-than-not that the entirety of the federal deferred tax
asset related to the loss on such securities would be realized. The
tax expense resulting from the sale of the insurance agency
business is expected to be recognized in the fourth quarter
following the closing of the sale.
(3) Presented on an annualized basis.
(4) Includes goodwill and other intangible
assets of discontinued operations.
APPENDIX B: Reconciliation of Non-GAAP
Operating Revenues and Expenses
For information on non-GAAP financial
measures, please see the section titled "Non-GAAP Financial
Measures."
Three Months Ended
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
(Unaudited, dollars in thousands)
Net interest income (GAAP)
$
137,205
$
141,588
$
138,309
$
149,994
$
152,179
Add:
Tax-equivalent adjustment (non-GAAP)
(1)
4,376
3,877
4,445
3,780
3,672
Fully-taxable equivalent net interest
income (non-GAAP)
$
141,581
$
145,465
$
142,754
$
153,774
$
155,851
Noninterest income (loss) (GAAP)
(2)
$
19,157
$
26,204
$
(309,853
)
$
22,425
$
19,524
Less:
(Losses) income from investments held in
rabbi trusts
(1,523
)
3,002
2,857
3,235
(2,248
)
Losses on sales of securities available
for sale, net
—
—
(333,170
)
(683
)
(198
)
Gains on sales of other assets
2
—
(5
)
(10
)
467
Noninterest income on an operating
basis (non-GAAP) (2)
$
20,678
$
23,202
$
20,465
$
19,883
$
21,503
Noninterest expense (GAAP) (2)
$
101,748
$
99,934
$
95,891
$
112,583
$
95,765
Less:
Rabbi trust employee benefit (income)
expense
(586
)
1,314
1,274
1,103
(867
)
Merger and acquisition expenses (2)
3,630
—
—
—
—
Defined Benefit Plan settlement loss
—
—
—
12,045
—
Noninterest expense on an operating
basis (non-GAAP) (2)
$
98,704
$
98,620
$
94,617
$
99,435
$
96,632
Total revenue (loss) (GAAP) (2)
$
156,362
$
167,792
$
(171,544
)
$
172,419
$
171,703
Total operating revenue (non-GAAP) (2)
$
162,259
$
168,667
$
163,219
$
173,657
$
177,354
Efficiency ratio (GAAP) (2)
65.07
%
59.56
%
(55.90
)%
65.30
%
55.77
%
Operating efficiency ratio (non-GAAP)
(2)
60.83
%
58.47
%
57.97
%
57.26
%
54.49
%
(1) Interest income on tax-exempt loans
and investment securities has been adjusted to an FTE basis using a
marginal tax rate of 21.7%, 21.8%, 21.7%, 21.6%, and 21.5% for the
three months ended September 30, 2023, June 30, 2023, March 31,
2023, December 31, 2022, and September 30, 2022, respectively.
(2) Noninterest income and expense
components presented in this table exclude discontinued
operations.
APPENDIX C: Reconciliation of Non-GAAP
Capital Metrics
For information on non-GAAP financial
measures, please see the section titled "Non-GAAP Financial
Measures."
As of
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
(Unaudited, dollars in thousands, except
per-share data)
Tangible shareholders' equity:
Total shareholders' equity (GAAP)
$
2,446,553
$
2,526,772
$
2,579,123
$
2,471,790
$
2,416,163
Less: Goodwill and other intangibles
(1)
657,824
658,993
660,165
661,126
662,222
Tangible shareholders' equity
(non-GAAP)
1,788,729
1,867,779
1,918,958
1,810,664
1,753,941
Tangible assets:
Total assets (GAAP)
21,146,292
21,583,493
22,720,530
22,646,858
22,042,933
Less: Goodwill and other intangibles
(1)
657,824
658,993
660,165
661,126
662,222
Tangible assets (non-GAAP)
$
20,488,468
$
20,924,500
$
22,060,365
$
21,985,732
$
21,380,711
Shareholders' equity to assets ratio
(GAAP)
11.57
%
11.71
%
11.35
%
10.91
%
10.96
%
Tangible shareholders' equity to tangible
assets ratio (non-GAAP)
8.73
%
8.93
%
8.70
%
8.24
%
8.20
%
Common shares outstanding
176,376,675
176,376,675
176,328,426
176,172,073
177,772,553
Book value per share (GAAP)
$
13.87
$
14.33
$
14.63
$
14.03
$
13.59
Tangible book value per share
(non-GAAP)
$
10.14
$
10.59
$
10.88
$
10.28
$
9.87
(1) Includes goodwill and other intangible
assets of discontinued operations.
APPENDIX D: Tangible Shareholders’
Equity Roll Forward Analysis
For information on non-GAAP financial
measures, please see the section titled "Non-GAAP Financial
Measures."
As of
Change from
Sep 30, 2023
Jun 30, 2023
Jun 30, 2023
(Unaudited, dollars in thousands, except
per-share data)
Common stock
$
1,766
$
1,766
$
—
Additional paid in capital
1,661,136
1,656,750
4,386
Unallocated ESOP common stock
(133,992
)
(135,232
)
1,240
Retained earnings
1,747,225
1,704,470
42,755
AOCI, net of tax - available for sale
securities
(763,871
)
(646,611
)
(117,260
)
AOCI, net of tax - pension
6,021
6,381
(360
)
AOCI, net of tax - cash flow hedge
(71,732
)
(60,752
)
(10,980
)
Total shareholders' equity:
$
2,446,553
$
2,526,772
$
(80,219
)
Less: Goodwill and other intangibles
(1)
657,824
658,993
(1,169
)
Tangible shareholders' equity
(non-GAAP)
$
1,788,729
$
1,867,779
$
(79,050
)
Common shares outstanding
176,376,675
176,376,675
—
Per share:
Common stock
$
0.01
$
0.01
$
—
Additional paid in capital
9.42
9.39
0.02
Unallocated ESOP common stock
(0.76
)
(0.77
)
0.01
Retained earnings
9.91
9.66
0.24
AOCI, net of tax - available for sale
securities
(4.33
)
(3.67
)
(0.66
)
AOCI, net of tax - pension
0.03
0.04
—
AOCI, net of tax - cash flow hedge
(0.41
)
(0.34
)
(0.06
)
Total shareholders' equity:
$
13.87
$
14.33
$
(0.45
)
Less: Goodwill and other intangibles
(1)
3.73
3.74
(0.01
)
Tangible shareholders' equity
(non-GAAP)
$
10.14
$
10.59
$
(0.45
)
(1) Includes goodwill and other
intangible assets of discontinued operations.
APPENDIX E: HTM-Marked Tangible Common
Equity Ratio
For information on non-GAAP financial
measures, please see the section titled "Non-GAAP Financial
Measures."
As of
Sep 30, 2023
Jun 30, 2023
(Unaudited, dollars in thousands, except
per-share data)
HTM-marked tangible shareholders'
equity:
Total shareholders' equity (GAAP)
$
2,446,553
$
2,526,772
Less: Goodwill and other intangibles
(1)
657,824
658,993
Less: After-tax fair value mark on HTM
securities (2)
48,981
37,462
HTM-marked tangible shareholders'
equity (non-GAAP)
1,739,748
1,830,317
HTM-marked tangible assets:
Total assets (GAAP)
21,146,292
21,583,493
Less: Goodwill and other intangibles
(1)
657,824
658,993
Less: After-tax fair value mark on HTM
securities (2)
48,981
37,462
HTM-marked tangible assets
(non-GAAP)
20,439,487
20,887,038
Shareholders' equity to assets ratio
(GAAP)
11.57
%
11.71
%
HTM-marked tangible shareholders' equity
to HTM-marked tangible assets ratio (non-GAAP)
8.51
%
8.76
%
(1) Includes goodwill and other intangible
assets of discontinued operations.
(2) Assumes pre-tax mark-to-market
adjustments are tax-effected at a marginal tax rate of 28.23%.
APPENDIX F: Regulatory Capital
Ratios
As of September 30,
2023
(Unaudited, dollars in thousands)
Eastern Bankshares, Inc. (1)
Minimum Capital Required to be
Well-Capitalized under Prompt Corrective Action Provisions
Capital Amount Above Minimums
(1)
Tier 1 capital (to average assets)
leverage
12.27
%
5.00
%
$
1,562,370
Common equity Tier 1 capital (to
risk-weighted assets)
16.02
%
6.50
%
$
1,566,730
Tier 1 capital (to risk-weighted
assets)
16.02
%
8.00
%
$
1,319,872
Total regulatory capital (to risk-weighted
assets)
17.05
%
10.00
%
$
1,160,236
(1) Regulatory capital figures are
preliminary estimates.
APPENDIX G: Discontinued
Operations
ASSETS AND LIABILITIES OF DISCONTINUED
OPERATIONS
As of and for the three months
ended
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
(Unaudited, dollars in thousands)
Assets
Premises and equipment
$
50
$
80
$
99
$
163
$
239
Goodwill and intangibles, net
91,115
91,780
92,447
93,117
93,914
Deferred income taxes, net
(187
)
(1,006
)
(1,169
)
(315
)
(387
)
Prepaid expenses
476
713
937
532
508
Other assets
33,264
29,459
27,417
34,722
34,263
Assets held for sale
124,718
121,026
119,731
128,219
128,537
Liabilities
Other liabilities
34,820
36,531
29,430
34,930
42,008
Liabilities held for sale
34,820
36,531
29,430
34,930
42,008
OPERATING RESULTS OF DISCONTINUED
OPERATIONS
Three Months Ended
Nine Months Ended
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
9/30/2023
9/30/2022
(Unaudited, dollars in thousands)
Noninterest income:
Insurance commissions
25,897
27,609
31,671
22,376
23,926
85,177
77,511
Other noninterest income
13
18
20
42
41
51
137
Total noninterest income
25,910
27,627
31,691
22,418
23,967
85,228
77,648
Noninterest expense:
Salaries and employee benefits
24,655
17,041
16,295
16,032
16,768
57,991
49,057
Office occupancy and equipment
2,755
735
789
918
823
4,279
2,401
Data processing
1,013
1,060
1,143
1,087
1,052
3,216
3,248
Professional services
1,291
1,031
293
271
549
2,615
738
Marketing expenses
53
25
74
64
101
152
182
Amortization of intangible assets
665
668
669
798
734
2,002
1,868
Other
1,514
1,154
1,308
1,331
1,186
3,976
3,613
Total noninterest expense
31,946
21,714
20,571
20,501
21,213
74,231
61,107
(Loss) income from discontinued operations
before income tax expense
(6,036
)
5,913
11,120
1,917
2,754
10,997
16,541
Income tax (benefit) expense
(1,685
)
1,675
3,135
541
785
3,125
4,669
(Loss) income from discontinued
operations, net of taxes
(4,351
)
4,238
7,985
1,376
1,969
7,872
11,872
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026084392/en/
Investor Contact
Jillian Belliveau Eastern Bankshares, Inc.
InvestorRelations@easternbank.com 781-598-7920
Media Contact
Andrea Goodman Eastern Bank a.goodman@easternbank.com
781-598-7847
Eastern Bankshares (NASDAQ:EBC)
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