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Eastern Bankshares, Inc. Reports First Quarter 2021 Financial Results

April, 29, 2021

BOSTON--(BUSINESS WIRE)-- Eastern Bankshares, Inc. (the “Company,” or together with its affiliates and subsidiaries, “Eastern”) (NASDAQ Global Select Market: EBC), the stock holding company of Eastern Bank, today announced 2021 first quarter financial results. Net income for the first quarter of 2021 was $47.7 million, or $0.28 per share, compared to a net loss of $44.1 million, or $0.26 per share, reported for the fourth quarter of 2020. Operating net income* for the first quarter of 2021 was $46.5 million, or $0.27 per share, compared to $31.6 million, or $0.18 per share, reported for the fourth quarter of 2020.

The quarter over quarter increase in operating net income* of $14.9 million is attributed to a combination of seasonally high insurance revenues which increased $5.7 million, notably higher interest rate swap revenue driven by an increase in the fair value of these transactions which was due to higher longer term interest rates, higher salary and wage expense deferrals in part due to Paycheck Protection Program (“PPP”) lending activity, and lower incentive compensation expense. In addition to these items, which are expected to be specific to the first quarter, Eastern continued to make progress on improving its overall profitability and efficiency.

The release of the Company’s quarterly financial results follows its announcement of the pending merger with Century Bancorp, Inc. (“Century”). Eastern expects the merger will create a combined franchise with approximately $22 billion in total assets and solidify Eastern’s leading position in Boston and eastern Massachusetts. The merger is expected to close in the middle of the fourth quarter of 2021, subject to certain conditions, including the receipt of required regulatory approvals, shareholder approval, and other standard conditions. The Company also recently announced a 33% increase to its quarterly cash dividend to $0.08 per share.

“We’re off to a tremendous start in 2021 and I’d like to thank all of our employees for their contributions,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank. “Our financial results for the first quarter show strong organic growth, sound asset quality, and reflect our continued commitment to be a source of financial support to businesses in need during the pandemic with the origination of $453 million in PPP loans in the first quarter. As we look to the future, our recently announced agreement to merge with Century is the next step in our journey towards expanding our presence in the communities we serve, and we look forward to welcoming Century’s customers.”

HIGHLIGHTS FOR THE FIRST QUARTER OF 2021

  • Net income was $47.7 million, or $0.28 per share, and operating net income* was $46.5 million, or $0.27 per share.
  • Total revenue was $155.3 million and total operating revenue* was $153.6 million driven by seasonally high insurance revenues of $28.1 million.
  • Release of loan loss reserves of $0.6 million, with $178.4 million in remaining COVID-19 modified loans.
  • Originated $452.6 million in new PPP loans to approximately 4,700 borrowers.
  • Book value and tangible book value per share* were $18.14 and $16.12, respectively.

BALANCE SHEET

Total assets were $16.7 billion at March 31, 2021, representing an increase of $0.8 billion or 5% from December 31, 2020.

  • Available for sale securities increased $0.8 billion, or 25%, on a consecutive quarter basis, to $4.0 billion, as excess liquidity was deployed into U.S. Agency securities. Cash and equivalents declined $0.2 billion to $1.9 billion.
  • Total loans were $9.9 billion, representing an increase of $186.0 million or 2% from the prior quarter as originations, including $452.6 million in new PPP loans, outpaced PPP forgiveness and other loan paydowns. Total PPP loans were $1.2 billion at March 31, 2021.
  • Deposits totaled $13.0 billion, representing an increase of $0.8 billion, or 7%, from December 31, 2020.
  • Shareholders’ equity was $3.4 billion, representing a decrease of $41.0 million or 1% from the prior quarter. The increase in retained earnings of $37.3 million was more than offset by the after-tax market value decline of the available for sale investment portfolio, which drove the decrease in accumulated other comprehensive income of $80.4 million. The decline in market value can be attributed to the increase in medium and long-term rates during the quarter.
  • At March 31, 2021, book value per share was $18.14 and tangible book value per share* was $16.12.

NET INTEREST INCOME

Net interest income was $100.1 million for the first quarter, compared to $103.6 million in the prior quarter, representing a decrease of $3.5 million on a consecutive quarter basis. There were two fewer days in the first quarter as compared to the prior quarter. Included in net interest income was $8.3 million and $6.1 million of Small Business Administration (“SBA”) PPP fee accretion net of deferred cost amortization in the first quarter and prior quarter, respectively. Also included in prior quarter net interest income was a favorable nonrecurring item of $3.8 million. The increase in PPP fee recognition on a consecutive quarter basis was attributable primarily to an increase in PPP loan forgiveness rates in the first quarter. Between December 31, 2020 and March 31, 2021, $240.7 million in PPP loans were forgiven through the SBA or otherwise paid down.

The net interest margin on a fully tax equivalent (“FTE”) basis* was 2.71% for the first quarter, representing a 13 basis points decrease from the prior quarter, primarily due to lower earning asset yields driven by the low rate environment coupled with higher average balances.

Please refer to Appendix E for a four-quarter trend analysis of the adjusted core margin*.

NONINTEREST INCOME

Noninterest income was $55.2 million for the first quarter, compared to $49.6 million for the prior quarter, representing an increase of $5.6 million.

  • Insurance commissions increased $5.7 million to $28.1 million in the first quarter, compared to $22.4 million in the prior quarter, driven by seasonality. Compared to the prior year quarter, insurance commissions increased $0.7 million, or 2%.
  • Trust and investment advisory fees increased $0.2 million on a consecutive quarter basis to $5.7 million due to higher equity values.
  • Loan-level interest rate swap revenue was $5.4 million in the first quarter, compared to $2.5 million in the prior quarter, representing an increase of $2.9 million that was primarily driven by a $3.0 million increase in the fair value of such interest rate swap transactions due to higher market interest rates.
  • Income on securities held in rabbi trust accounts was $1.8 million in the first quarter compared to $5.5 million in the prior quarter, a decrease of $3.7 million primarily due to lower equity market gains in the first quarter of 2021 as compared to the fourth quarter of 2020.
  • Mortgage origination activity was lower in the first quarter as compared to the prior quarter with the gain on sale of loans totaling $1.5 million, down $1.9 million from the prior quarter. This was partially offset by a $1.5 million increase in the gain/loss on commitments to sell mortgage loans which is recorded in other income.
  • The gain on sale of available for sale securities was $1.2 million in the first quarter, representing an increase of $1.2 million from the prior quarter, due to portfolio repositioning.

Please refer to Appendix B for a reconciliation of operating revenues and expenses*.

NONINTEREST EXPENSE

Noninterest expense was $94.0 million for the first quarter representing a decrease of $105.1 million, or 53%, from the prior quarter of $199.2 million. Prior quarter noninterest expense included costs associated with the Company’s mutual-to-stock conversion and initial public offering (“IPO”), including a $91.3 million donation of stock to the Eastern Bank Charitable Foundation (“EBCF”). Excluding this and other non-operating items for the respective quarters, noninterest expense on an operating basis* for the first quarter of 2021 was $92.5 million, compared to $101.8 million in the prior quarter.

  • Salaries and benefits were $64.0 million in the first quarter, representing a decrease of $6.3 million from the prior quarter. The decline was driven by a reduction in incentive compensation expense of $3.9 million that was in part due to the decline in total shareholders’ equity attributable to higher market interest rates, a decrease in the defined contribution supplemental executive retirement plan (“DC SERP”) expense of $1.9 million associated with the lower market value increase in assets held in rabbi trust accounts, and higher expense deferrals of $1.8 million due in part to PPP lending activity. Partially offsetting these declines was an increase in payroll taxes of $2.3 million quarter over quarter.
  • Other noninterest expense declined from $6.2 million in the prior quarter to $0.5 million in the first quarter, a decline of $5.7 million. The Company recorded impairment charges on tax credit investments of $3.2 million in the prior quarter, whereas no impairment was recorded in the first quarter. Included in other noninterest expense are components of the Company’s pension expense which were $2.3 million lower in the first quarter compared to the prior quarter. This was partially offset by an increase in pension service cost of $0.8 million which is included in salary and benefit expense.
  • Professional services expenses were $4.1 million in the first quarter, representing a decrease of $1.2 million from the prior quarter.
  • Marketing expenses were $1.7 million in the first quarter, representing a decrease of $1.1 million from the prior quarter.

Please refer to Appendix B for a reconciliation of operating revenues and expenses*.

ASSET QUALITY

The allowance for credit losses was $111.1 million at March 31, 2021, or 1.12% of total loans, compared to $113.0 million or 1.16% of total loans at December 31, 2020. The Company released loan loss reserves totaling $0.6 million in the first quarter, compared to a provision for credit losses of $0.9 million in the prior quarter. The Company followed the incurred loss allowance GAAP accounting model at March 31, 2021 and all preceding periods.

Non-performing loans totaled $44.0 million at March 31, 2021 compared to $43.3 million at the end of the prior quarter. During the first quarter of 2021, the Company recorded total net charge-offs of $1.4 million, or 0.06% of average total loans on an annualized basis compared to $3.3 million and 0.13% in the prior quarter, respectively.

At March 31, 2021, approximately $178.4 million in COVID-19 modified loans remained under modified payment terms, down from $332.7 million at December 31, 2020. Of the $178.4 million in COVID-19 modified loans at March 31, 2021, $86.4 million were loans that have been modified at least twice.

Please refer to Appendix F and Appendix G for detail on the Company’s lending exposure to industries which management believes are most likely to experience adverse effects of the COVID-19 pandemic, as well as a detailed breakout on COVID-19 related loan modifications.

CONFERENCE CALL INFORMATION

A conference call and webcast covering Eastern’s first quarter 2021 earnings will be held on Friday, April 30, 2021 at 9:00 a.m. Eastern Time. To join by telephone, participants can call the toll-free dial-in number (833) 233-4460 from within the U.S. or (647) 689-4543 if outside the U.S. and reference conference ID 9757837. The conference call will be simultaneously webcast. Participants may join the webcast on the Company’s Investor Relations website 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 110 locations serving communities in eastern Massachusetts, southern and coastal New Hampshire, and Rhode Island. As of March 31, 2021, Eastern Bank had approximately $17 billion in total assets. Eastern provides banking, investment and insurance products and services for consumers and businesses of all sizes, including through its Eastern Wealth Management division and its Eastern Insurance Group LLC subsidiary. Eastern takes pride in its outspoken advocacy and community support that includes $240 million in charitable giving since 1994. An inclusive company, Eastern employs approximately 1,900 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 businesses as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding GAAP financial measures.

There are items in 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, the operating efficiency ratio, and the ratio of noninterest income to total revenue on an operating basis. 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) expenses indirectly associated with the Company’s IPO, (vii) other real estate owned (“OREO”) gains, (viii) merger and acquisition expenses, and (ix) the stock donation to the EBCF in connection with the Company’s mutual-to-stock conversion and IPO. The Company does not provide an outlook for its total noninterest expense because it contains expense components, such as expense associated with rabbi trust accounts, which is market-driven, over which the Company cannot exercise control. Accordingly a reconciliation of the Company’s outlook for its noninterest expense on an operating basis to an outlook for total noninterest expense cannot be made available without unreasonable effort.

Management also presents the Company’s core net interest margin which excludes the impact of items management determines as being one-time in nature or not indicative of its core operating results. Such items include the impact of excess liquidity in the form of excess cash volume, PPP loans originated in response to the COVID-19 pandemic, and material purchase accounting adjustments. Similarly, management presents certain asset quality metrics excluding PPP loans which it does not consider to be part of the Company’s core portfolios. These metrics include the ratio of total nonperforming loans to total loans excluding PPP loans, the ratio of the allowance for loan losses to total loans excluding PPP loans, and the ratio of annualized net charge-offs to average total loans excluding PPP loans. The Company anticipates that the vast majority of its PPP loans outstanding at March 31, 2021 will be forgiven during 2021, and to the extent not forgiven, a PPP loan is intended to be 100% guaranteed by the SBA.

Management also presents tangible assets, tangible shareholders’ equity, tangible book value per share, and the ratio of tangible shareholders’ equity to tangible assets, 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 developments in the Company’s market relating to the COVID-19 pandemic, including the severity and duration of the associated economic slowdown, 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 the interest rate environment, risks associated with its proposed merger with Century, including the possibility that revenue or expense synergies or the other expected benefits of the transaction may not materialize for the Company in the timeframe expected or at all, or may be more costly to achieve; that the transaction may not be timely completed, if at all; that prior to the completion of the transaction or thereafter, the Company’s or Century’s businesses may not perform as expected due to transaction-related uncertainty or other factors; that the Company is unable to successfully implement integration strategies; that required regulatory, shareholder or other approvals are not obtained or other closing conditions are not satisfied in a timely manner or at all; that the timing of completion of the proposed merger is dependent on various factors that cannot be predicted with precision at this point; reputational risks and the reaction of the companies’ customers to the transaction; the inability to implement onboarding plans and other consequences associated with mergers; and diversion of management time on merger-related issues, as well as general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiary Eastern Bank are engaged. 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.

Further, given the ongoing and dynamic nature of the COVID-19 pandemic, it is difficult to predict what continued effects the COVID-19 pandemic will have on the Company's business and results of operations. The COVID-19 pandemic and the related local and national economic disruption may result in a continued decline in demand for the Company's products and services; increased levels of loan delinquencies, problem assets and foreclosures; an increase in the Company's allowance for loan losses; a decline in the value of loan collateral, including real estate; a greater decline in the yield on the Company's interest-earning assets than the decline in the cost of the Company's interest-bearing liabilities; and increased cybersecurity risks, as employees continue to work remotely. 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.

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 amounts)

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

Mar 31, 2020

 

 

 

 

 

 

Earnings data

 

 

 

 

 

Net interest income

$

100,091

 

$

103,608

 

$

98,742

 

$

98,755

 

$

100,146

 

Noninterest income

 

55,212

 

 

49,638

 

 

47,709

 

 

47,657

 

 

33,369

 

Total revenue

 

155,303

 

 

153,246

 

 

146,451

 

 

146,412

 

 

133,515

 

Noninterest expense

 

94,049

 

 

199,169

 

 

109,817

 

 

100,765

 

 

95,172

 

Pre-tax, pre-provision income (loss)

 

61,254

 

 

(45,923

)

 

36,634

 

 

45,647

 

 

38,343

 

Provision for credit losses

 

(580

)

 

900

 

 

700

 

 

8,600

 

 

28,600

 

Pre-tax income (loss)

 

61,834

 

 

(46,823

)

 

35,934

 

 

37,047

 

 

9,743

 

Net income (loss)

 

47,663

 

 

(44,062

)

 

28,505

 

 

29,850

 

 

8,445

 

Operating net income (non-GAAP)

 

46,537

 

 

31,612

 

 

32,322

 

 

27,301

 

 

10,858

 

 

 

 

 

 

 

Per-share data

 

 

 

 

 

Earnings (loss) per share

$

0.28

 

$

(0.26

)

 

n.a.

 

 

 

n.a.

 

 

 

n.a.

Operating earnings per share (non-GAAP)

$

0.27

 

$

0.18

 

n.a.

 

 

 

n.a.

 

 

 

n.a.

Book value per share

$

18.14

 

$

18.36

 

n.a.

 

 

 

n.a.

 

 

 

n.a.

Tangible book value per share (non-GAAP)

$

16.12

 

$

16.34

 

 

n.a.

 

 

 

n.a.

 

 

 

n.a.

 

 

 

 

 

 

Profitability

 

 

 

 

 

Return on average assets (1)

 

1.19

%

 

(1.11

)%

 

0.80

%

 

0.88

%

 

0.29

%

Operating return on average assets (non-GAAP) (1)

 

1.15

%

 

0.79

%

 

0.90

%

 

0.81

%

 

0.38

%

Return on average shareholders' equity (1)

 

5.66

%

 

(5.61

)%

 

6.65

%

 

7.11

%

 

2.08

%

Operating return on average shareholders' equity (non-GAAP) (1)

 

5.53

%

 

4.02

%

 

7.54

%

 

6.51

%

 

2.67

%

Net interest margin (FTE) (1)

 

2.71

%

 

2.84

%

 

3.04

%

 

3.23

%

 

3.80

%

Cost of deposits (1)

 

0.03

%

 

0.03

%

 

0.06

%

 

0.11

%

 

0.23

%

Fee income ratio

 

35.55

%

 

32.39

%

 

32.58

%

 

32.55

%

 

24.99

%

Efficiency ratio

 

60.56

%

 

129.97

%

 

74.99

%

 

68.82

%

 

71.28

%

Operating efficiency ratio (non-GAAP)

 

60.22

%

 

68.33

%

 

69.95

%

 

68.90

%

 

69.54

%

 

 

 

 

 

 

Balance Sheet (end of period)

 

 

 

 

 

Total assets

$

16,726,795

 

$

15,964,190

 

$

15,460,594

 

$

13,996,523

 

$

12,343,754

 

Total loans

 

9,916,475

 

 

9,730,525

 

 

9,944,241

 

 

10,014,338

 

 

9,087,103

 

Total deposits

 

12,980,875

 

 

12,155,784

 

 

13,332,585

 

 

11,846,765

 

 

10,309,011

 

Total loans / total deposits

 

76

%

 

80

%

 

75

%

 

85

%

 

88

%

PPP loans

$

1,238,053

 

$

1,026,117

 

$

1,123,493

 

$

1,100,181

 

$

 

 

 

 

 

 

 

Asset quality

 

 

 

 

 

Allowance for loan losses ("ALLL")

$

111,080

 

$

113,031

 

$

115,432

 

$

116,636

 

$

109,138

 

ALLL / total nonperforming loans ("NPLs")

 

252.72

%

 

261.33

%

 

257.47

%

 

210.55

%

 

222.34

%

Total NPLs / total loans

 

0.44

%

 

0.45

%

 

0.45

%

 

0.56

%

 

0.54

%

Total NPLs / total loans (excl. PPP loans) (non-GAAP)

 

0.51

%

 

0.50

%

 

0.51

%

 

0.62

%

 

0.54

%

Net charge-offs (NCOs) / average total loans (1)

 

0.06

%

 

0.13

%

 

0.08

%

 

0.04

%

 

0.08

%

NCOs / average total loans (excl. PPP loans) (non-GAAP) (1)

 

0.06

%

 

0.15

%

 

0.09

%

 

0.05

%

 

0.08

%

Remaining COVID-19 loan modifications (2)

$

178,430

 

$

332,682

 

$

701,227

 

$

945,995

 

$

 

 

 

 

 

 

 

Capital adequacy

 

 

 

 

 

Shareholders' equity / assets

 

20.25

%

 

21.47

%

 

11.08

%

 

12.10

%

 

13.47

%

Tangible shareholders' equity / tangible assets (non-GAAP)

 

18.42

%

 

19.58

%

 

8.87

%

 

9.67

%

 

10.74

%

 

 

 

 

 

 

(1) Presented on an annualized basis.

(2) See Appendix G: COVID-19 Related Loan Modifications

 

 

 

 

 

 

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

As of

 

Mar 31, 2021 change from

(Unaudited, dollars in thousands)

Mar 31, 2021

Dec 31, 2020

Mar 31, 2020

 

Dec 31, 2020

 

Mar 31, 2020

ASSETS

 

 

 

 

△ $

△ %

 

△ $

△ %

Cash and due from banks

$

79,497

 

 

$

116,591

 

 

$

94,215

 

 

(37,094

)

 

(32

)%

 

(14,718

)

 

(16

)%

Short-term investments

 

1,780,835

 

 

 

1,937,479

 

 

 

672,234

 

 

(156,644

)

 

(8

)%

 

1,108,601

 

 

165

%

Cash and cash equivalents

 

1,860,332

 

 

 

2,054,070

 

 

 

766,449

 

 

(193,738

)

 

(9

)%

 

1,093,883

 

 

143

%

Securities held for trading

 

 

 

 

 

 

 

652

 

 

 

 

%

 

(652

)

 

(100

)%

Available for sale securities

 

3,986,253

 

 

 

3,183,861

 

 

 

1,549,927

 

 

802,392

 

 

25

%

 

2,436,326

 

 

157

%

Total securities

 

3,986,253

 

 

 

3,183,861

 

 

 

1,550,579

 

 

802,392

 

 

25

%

 

2,435,674

 

 

157

%

Loans held for sale

 

2,022

 

 

 

1,140

 

 

 

2,843

 

 

882

 

 

77

%

 

(821

)

 

(29

)%

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

1,986,366

 

 

 

1,995,016

 

 

 

1,771,122

 

 

(8,650

)

 

%

 

215,244

 

 

12

%

Commercial real estate

 

3,676,941

 

 

 

3,573,630

 

 

 

3,523,721

 

 

103,311

 

 

3

%

 

153,220

 

 

4

%

Commercial construction

 

249,416

 

 

 

305,708

 

 

 

293,135

 

 

(56,292

)

 

(18

)%

 

(43,719

)

 

(15

)%

Business banking

 

1,513,051

 

 

 

1,339,164

 

 

 

779,916

 

 

173,887

 

 

13

%

 

733,135

 

 

94

%

Total commercial loans

 

7,425,774

 

 

 

7,213,518

 

 

 

6,367,894

 

 

212,256

 

 

3

%

 

1,057,880

 

 

17

%

Residential real estate

 

1,406,510

 

 

 

1,370,957

 

 

 

1,420,003

 

 

35,553

 

 

3

%

 

(13,493

)

 

(1

)%

Consumer home equity

 

832,466

 

 

 

868,270

 

 

 

929,554

 

 

(35,804

)

 

(4

)%

 

(97,088

)

 

(10

)%

Other consumer

 

251,725

 

 

 

277,780

 

 

 

369,652

 

 

(26,055

)

 

(9

)%

 

(117,927

)

 

(32

)%

Total loans

 

9,916,475

 

 

 

9,730,525

 

 

 

9,087,103

 

 

185,950

 

 

2

%

 

829,372

 

 

9

%

Allowance for loan losses

 

(111,080

)

 

 

(113,031

)

 

 

(109,138

)

 

1,951

 

 

(2

)%

 

(1,942

)

 

2

%

Unamortized prem./disc. and def. fees

 

(32,673

)

 

 

(23,536

)

 

 

(6,360

)

 

(9,137

)

 

39

%

 

(26,313

)

 

414

%

Net loans

 

9,772,722

 

 

 

9,593,958

 

 

 

8,971,605

 

 

178,764

 

 

2

%

 

801,117

 

 

9

%

Federal Home Loan Bank stock, at cost

 

8,805

 

 

 

8,805

 

 

 

8,805

 

 

 

 

%

 

 

 

%

Premises and equipment

 

46,619

 

 

 

49,398

 

 

 

54,867

 

 

(2,779

)

 

(6

)%

 

(8,248

)

 

(15

)%

Bank-owned life insurance

 

79,110

 

 

 

78,561

 

 

 

78,170

 

 

549

 

 

1

%

 

940

 

 

1

%

Goodwill and other intangibles, net

 

376,002

 

 

 

376,534

 

 

 

377,033

 

 

(532

)

 

%

 

(1,031

)

 

%

Deferred income taxes, net

 

31,508

 

 

 

13,229

 

 

 

5,152

 

 

18,279

 

 

138

%

 

26,356

 

 

512

%

Prepaid expenses

 

150,453

 

 

 

148,680

 

 

 

87,960

 

 

1,773

 

 

1

%

 

62,493

 

 

71

%

Other assets

 

412,969

 

 

 

455,954

 

 

 

440,291

 

 

(42,985

)

 

(9

)%

 

(27,322

)

 

(6

)%

Total assets

 

16,726,795

 

 

 

15,964,190

 

 

 

12,343,754

 

 

762,605

 

 

5

%

 

4,383,041

 

 

36

%

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand

 

5,369,164

 

 

 

4,910,794

 

 

 

3,646,052

 

 

458,370

 

 

9

%

 

1,723,112

 

 

47

%

Interest checking accounts

 

2,482,731

 

 

 

2,380,497

 

 

 

2,318,609

 

 

102,234

 

 

4

%

 

164,122

 

 

7

%

Savings accounts

 

1,362,463

 

 

 

1,256,736

 

 

 

1,002,709

 

 

105,727

 

 

8

%

 

359,754

 

 

36

%

Money market investment

 

3,522,990

 

 

 

3,348,898

 

 

 

3,016,932

 

 

174,092

 

 

5

%

 

506,058

 

 

17

%

Certificates of deposit

 

243,527

 

 

 

258,859

 

 

 

324,709

 

 

(15,332

)

 

(6

)%

 

(81,182

)

 

(25

)%

Total deposits

 

12,980,875

 

 

 

12,155,784

 

 

 

10,309,011

 

 

825,091

 

 

7

%

 

2,671,864

 

 

26

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

14,473

 

 

 

14,624

 

 

 

15,070

 

 

(151

)

 

(1

)%

 

(597

)

 

(4

)%

Escrow deposits of borrowers

 

14,878

 

 

 

13,425

 

 

 

16,357

 

 

1,453

 

 

11

%

 

(1,479

)

 

(9

)%

Total borrowed funds

 

29,351

 

 

 

28,049

 

 

 

31,427

 

 

1,302

 

 

5

%

 

(2,076

)

 

(7

)%

Other liabilities

 

329,524

 

 

 

352,305

 

 

 

340,582

 

 

(22,781

)

 

(6

)%

 

(11,058

)

 

(3

)%

Total liabilities

 

13,339,750

 

 

 

12,536,138

 

 

 

10,681,020

 

 

803,612

 

 

6

%

 

2,658,730

 

 

25

%

Shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares

 

1,868

 

 

 

1,868

 

 

 

 

 

 

 

%

 

1,868

 

 

%

Additional paid-in capital

 

1,854,895

 

 

 

1,854,068

 

 

 

 

 

827

 

 

%

 

1,854,895

 

 

%

Unallocated common shares held by the employee stock ownership plan ("ESOP")

 

(146,472

)

 

 

(147,725

)

 

 

 

 

1,253

 

 

(1

)%

 

(146,472

)

 

%

Retained earnings

 

1,702,946

 

 

 

1,665,607

 

 

 

1,651,314

 

 

37,339

 

 

2

%

 

51,632

 

 

3

%

Accumulated other comprehensive income (AOCI), net of tax

 

(26,192

)

 

 

54,234

 

 

 

11,420

 

 

(80,426

)

 

(148

)%

 

(37,612

)

 

(329

)%

Total shareholders' equity

 

3,387,045

 

 

 

3,428,052

 

 

 

1,662,734

 

 

(41,007

)

 

(1

)%

 

1,724,311

 

 

104

%

Total liabilities and shareholders' equity

 

16,726,795

 

 

 

15,964,190

 

 

 

12,343,754

 

 

762,605

 

 

5

%

 

4,383,041

 

 

36

%

 
 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

 

Three months ended

Three months ended Mar 31, 2021 change from three months ended

(Unaudited, dollars in thousands, except share data)

Mar 31, 2021

Dec 31, 2020

Mar 31, 2020

Dec 31, 2020

Mar 31, 2020

 

 

 

 

 

 

 

 

Interest and dividend income:

 

 

 

△ $

△ %

△ $

△ %

Interest and fees on loans

$

88,639

 

$

93,767

 

$

95,538

 

(5,128

)

(5

)%

(6,899

)

(7

)%

Taxable interest and dividends on available for sale securities

 

10,206

 

 

8,493

 

 

8,178

 

1,713

 

20

%

2,028

 

25

%

Non-taxable interest and dividends on available for sale securities

 

1,856

 

 

1,879

 

 

1,921

 

(23

)

(1

)%

(65

)

(3

)%

Interest on federal funds sold and other short-term investments

 

432

 

 

584

 

 

517

 

(152

)

(26

)%

(85

)

(16

)%

Interest and dividends on trading securities

 

 

 

 

 

5

 

 

%

(5

)

(100

)%

Total interest and dividend income

 

101,133

 

 

104,723

 

 

106,159

 

(3,590

)

(3

)%

(5,026

)

(5

)%

Interest expense:

 

 

 

 

 

 

 

Interest on deposits

 

1,002

 

 

1,070

 

 

5,414

 

(68

)

(6

)%

(4,412

)

(81

)%

Interest on borrowings

 

40

 

 

45

 

 

599

 

(5

)

(11

)%

(559

)

(93

)%

Total interest expense

 

1,042

 

 

1,115

 

 

6,013

 

(73

)

(7

)%

(4,971

)

(83

)%

Net interest income

 

100,091

 

 

103,608

 

 

100,146

 

(3,517

)

(3

)%

(55

)

%

(Release of) provision for allowance for loan losses

 

(580

)

 

900

 

 

28,600

 

(1,480

)

(164

)%

(29,180

)

(102

)%

Net interest income after provision for credit losses

 

100,671

 

 

102,708

 

 

71,546

 

(2,037

)

(2

)%

29,125

 

41

%

Noninterest income:

 

 

 

 

 

 

 

Insurance commissions

 

28,147

 

 

22,437

 

 

27,477

 

5,710

 

25

%

670

 

2

%

Service charges on deposit accounts

 

5,367

 

 

6,046

 

 

6,098

 

(679

)

(11

)%

(731

)

(12

)%

Trust and investment advisory fees

 

5,663

 

 

5,502

 

 

5,095

 

161

 

3

%

568

 

11

%

Debit card processing fees

 

2,749

 

 

2,749

 

 

2,470

 

 

%

279

 

11

%

Interest rate swap income (losses)

 

5,405

 

 

2,538

 

 

(6,009

)

2,867

 

113

%

11,414

 

(190

)%

Income (losses) from investments held in rabbi trusts

 

1,846

 

 

5,535

 

 

(6,743

)

(3,689

)

(67

)%

8,589

 

(127

)%

Gains (losses) on trading securities, net

 

 

 

(1

)

 

(2

)

1

 

(100

)%

2

 

(100

)%

Gains on sales of mortgage loans held for sale, net

 

1,479

 

 

3,334

 

 

93

 

(1,855

)

(56

)%

1,386

 

1490

%

Gains on sales of securities available for sale, net

 

1,164

 

 

3

 

 

122

 

1,161

 

38700

%

1,042

 

854

%

Other

 

3,392

 

 

1,495

 

 

4,768

 

1,897

 

127

%

(1,376

)

(29

)%

Total noninterest income

 

55,212

 

 

49,638

 

 

33,369

 

5,574

 

11

%

21,843

 

65

%

Noninterest expense:

 

 

 

 

 

 

 

Salaries and employee benefits

 

64,040

 

 

70,310

 

 

61,589

 

(6,270

)

(9

)%

2,451

 

4

%

Office occupancy and equipment

 

8,217

 

 

8,198

 

 

8,689

 

19

 

%

(472

)

(5

)%

Data processing

 

12,129

 

 

11,354

 

 

10,004

 

775

 

7

%

2,125

 

21

%

Professional services

 

4,148

 

 

5,307

 

 

3,689

 

(1,159

)

(22

)%

459

 

12

%

Charitable contributions

 

 

 

91,288

 

 

1,187

 

(91,288

)

(100

)%

(1,187

)

(100

)%

Marketing

 

1,691

 

 

2,823

 

 

2,468

 

(1,132

)

(40

)%

(777

)

(31

)%

Loan expenses

 

1,847

 

 

2,025

 

 

1,112

 

(178

)

(9

)%

735

 

66

%

FDIC insurance

 

948

 

 

946

 

 

906

 

2

 

%

42

 

5

%

Amortization of intangible assets

 

532

 

 

755

 

 

702

 

(223

)

(30

)%

(170

)

(24

)%

Other

 

497

 

 

6,163

 

 

4,826

 

(5,666

)

(92

)%

(4,329

)

(90

)%

Total noninterest expense

 

94,049

 

 

199,169

 

 

95,172

 

(105,120

)

(53

)%

(1,123

)

(1

)%

Income (loss) before income tax expense (benefit)

 

61,834

 

 

(46,823

)

 

9,743

 

108,657

 

(232

)%

52,091

 

535

%

Income tax expense (benefit)

 

14,171

 

 

(2,761

)

 

1,298

 

16,932

 

(613

)%

12,873

 

992

%

Net income (loss)

 

47,663

 

 

(44,062

)

 

8,445

 

91,725

 

(208

)%

39,218

 

464

%

 

 

 

 

 

 

 

 

Share data:

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

172,049,044

 

 

171,812,535

 

n.a.

 

 

 

 

Earnings (loss) per share

$

0.28

 

$

(0.26

)

n.a.

 

 

 

 

 
 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

AVERAGE BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN

 

As of and for the three months ended

 

Mar 31, 2021

Dec 31, 2020

Mar 31, 2020

(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

$

7,317,951

$

69,210

3.84

%

$

7,265,156

$

73,289

4.01

%

$

6,275,057

$

69,615

4.46

%

Residential

 

1,393,139

 

11,274

3.28

%

 

1,367,073

 

11,641

3.39

%

 

1,429,994

 

13,303

3.74

%

Consumer

 

1,105,698

 

8,937

3.28

%

 

1,164,468

 

9,621

3.29

%

 

1,311,172

 

13,407

4.11

%

Total loans

 

9,816,788

 

89,421

3.69

%

 

9,796,697

 

94,551

3.84

%

 

9,016,223

 

96,325

4.30

%

Investment securities

 

3,631,530

 

12,577

1.40

%

 

2,627,679

 

10,945

1.66

%

 

1,500,413

 

10,685

2.86

%

Cash and other short-term investments

 

1,740,561

 

432

0.10

%

 

2,291,118

 

584

0.10

%

 

240,440

 

517

0.86

%

Total interest earning assets

 

15,188,879

 

102,430

2.73

%

 

14,715,494

 

106,080

2.87

%

 

10,757,076

 

107,527

4.02

%

Non-interest-earning assets

 

1,120,603

 

 

 

1,123,550

 

 

 

1,022,216

 

 

Total assets

$

16,309,482

 

 

$

15,839,044

 

 

$

11,779,292

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Savings

$

1,300,057

$

64

0.02

%

$

1,232,669

$

62

0.02

%

$

976,881

$

54

0.02

%

Interest checking

 

2,391,025

 

234

0.04

%

 

2,282,786

 

232

0.04

%

 

1,902,128

 

819

0.17

%

Money market

 

3,440,214

 

587

0.07

%

 

3,362,335

 

609

0.07

%

 

2,981,427

 

3,904

0.53

%

Time deposits

 

251,115

 

117

0.19

%

 

267,378

 

167

0.25

%

 

327,144

 

638

0.78

%

Total interest-bearing deposits

 

7,382,411

 

1,002

0.06

%

 

7,145,168

 

1,070

0.06

%

 

6,187,580

 

5,415

0.35

%

Borrowings

 

25,625

 

40

0.63

%

 

25,529

 

45

0.70

%

 

163,463

 

599

1.47

%

Total interest-bearing liabilities

 

7,408,036

 

1,042

0.06

%

 

7,170,697

 

1,115

0.06

%

 

6,351,043

 

6,014

0.38

%

Demand deposit accounts

 

5,125,831

 

 

 

5,167,221

 

 

 

3,477,377

 

 

Other non-interest-bearing liabilities

 

358,087

 

 

 

376,197

 

 

 

318,656

 

 

Total liabilities

 

12,891,954

 

 

 

12,714,115

 

 

 

10,147,076

 

 

Shareholders' equity

 

3,417,528

 

 

 

3,124,929

 

 

 

1,632,216

 

 

Total liabilities and shareholders' equity

$

16,309,482

 

 

$

15,839,044

 

 

$

11,779,292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income - FTE

 

$

101,388

 

 

$

104,965

 

 

$

101,513

 

Net interest rate spread (2)

 

 

2.67

%

 

 

2.81

%

 

 

3.64

%

Net interest-earning assets (3)

$

7,780,843

 

 

$

7,544,797

 

 

$

4,406,033

 

 

Net interest margin - FTE (4)

 

 

2.71

%

 

 

2.84

%

 

 

3.80

%

 

 

 

 

 

 

 

 

 

 

(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 represents net interest income divided by average total interest-earning assets.

(5) Presented on an annualized basis.

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

ASSET QUALITY - NON-PERFORMING ASSETS (1)

 

As of

 

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

Mar 31, 2020

(Unaudited, dollars in thousands)

 

 

 

 

 

Non-accrual loans:

 

 

 

 

 

Commercial

$

30,275

 

$

30,059

 

$

28,968

 

$

31,273

 

$

38,054

 

Residential

 

8,127

 

 

6,815

 

 

7,419

 

 

11,693

 

 

5,594

 

Consumer

 

3,873

 

 

4,131

 

 

4,727

 

 

9,374

 

 

4,085

 

Total non-accrual loans

 

42,275

 

 

41,005

 

 

41,114

 

 

52,340

 

 

47,733

 

Accruing loans past due 90 days or more:

 

 

 

 

 

Commercial

 

1,390

 

 

1,959

 

 

3,384

 

 

2,802

 

 

1,345

 

Residential

 

280

 

 

279

 

 

326

 

 

244

 

 

 

Consumer

 

9

 

 

9

 

 

9

 

 

9

 

 

9

 

Total accruing loans past due 90 days or more

 

1,679

 

 

2,247

 

 

3,719

 

 

3,055

 

 

1,354

 

Total non-performing loans

 

43,954

 

 

43,252

 

 

44,833

 

 

55,395

 

 

49,087

 

Other real estate owned

 

 

 

 

 

40

 

 

40

 

 

40

 

Other non-performing assets:

 

 

 

 

 

 

 

 

 

 

Total non-performing assets

$

43,954

 

$

43,252

 

$

44,873

 

$

55,435

 

$

49,127

 

Total accruing troubled debt restructured loans

$

39,367

 

$

41,095

 

$

39,881

 

$

40,691

 

$

41,880

 

Total non-performing loans to total loans

 

0.44

%

 

0.45

%

 

0.45

%

 

0.56

%

 

0.54

%

Total non-performing assets to total assets

 

0.26

%

 

0.27

%

 

0.29

%

 

0.40

%

 

0.40

%

 

 

 

 

 

 

(1) Non-performing assets are comprised of NPLs, OREO, and non-performing securities. NPLs consist of non-accrual loans and loans that are more than 90 days past due but still accruing interest. OREO consists of real estate properties, which primarily serve as collateral to secure the Company’s loans, that it controls due to foreclosure. These properties are recorded at the lower of cost or fair value less estimated costs to sell on the date the Company obtains control.

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

ASSET QUALITY - PROVISION, ALLOWANCE, AND NET CHARGE OFFS

 

Three months ended

 

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

Mar 31, 2020

(Unaudited, dollars in thousands)

 

 

 

 

 

Average total loans

$

9,816,788

 

$

9,796,697

 

$

9,914,731

 

$

9,875,110

 

$

9,016,223

 

Allowance for loan losses, beginning of the period

$

113,031

 

$

115,432

 

$

116,636

 

$

109,138

 

$

82,297

 

Charged-off loans:

 

 

 

 

 

Commercial and industrial

 

 

 

1,603

 

 

140

 

 

27

 

 

 

Commercial real estate

 

234

 

 

 

 

 

 

24

 

 

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

1,384

 

 

1,433

 

 

1,179

 

 

1,198

 

 

1,337

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

Consumer home equity

 

 

 

79

 

 

22

 

 

 

 

473

 

Other consumer

 

364

 

 

713

 

 

1,077

 

 

15

 

 

533

 

Total charged-off loans

 

1,982

 

 

3,828

 

 

2,418

 

 

1,264

 

 

2,343

 

Recoveries on loans previously charged-off:

 

 

 

 

 

Commercial and industrial

 

9

 

 

92

 

 

306

 

 

58

 

 

322

 

Commercial real estate

 

 

 

220

 

 

4

 

 

5

 

 

1

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

365

 

 

47

 

 

91

 

 

27

 

 

127

 

Residential real estate

 

10

 

 

9

 

 

43

 

 

13

 

 

60

 

Consumer home equity

 

71

 

 

100

 

 

31

 

 

8

 

 

14

 

Other consumer

 

156

 

 

59

 

 

39

 

 

51

 

 

60

 

Total recoveries

 

611

 

 

527

 

 

514

 

 

162

 

 

584

 

Net loans charged-off (recoveries):

 

 

 

 

 

Commercial and industrial

 

(9

)

 

1,511

 

 

(166

)

 

(31

)

 

(322

)

Commercial real estate

 

234

 

 

(220

)

 

(4

)

 

19

 

 

(1

)

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

1,019

 

 

1,386

 

 

1,088

 

 

1,171

 

 

1,210

 

Residential real estate

 

(10

)

 

(9

)

 

(43

)

 

(13

)

 

(60

)

Consumer home equity

 

(71

)

 

(21

)

 

(9

)

 

(8

)

 

459

 

Other consumer

 

208

 

 

654

 

 

1,038

 

 

(36

)

 

473

 

Total net loans charged-off

 

1,371

 

 

3,301

 

 

1,904

 

 

1,102

 

 

1,759

 

(Release of) provision for loan losses

 

(580

)

 

900

 

 

700

 

 

8,600

 

 

28,600

 

Total allowance for loan losses, end of period

$

111,080

 

$

113,031

 

$

115,432

 

$

116,636

 

$

109,138

 

Net charge-offs to average total loans outstanding during this period (1)

 

0.06

%

 

0.13

%

 

0.08

%

 

0.04

%

 

0.08

%

Allowance for loan losses as a percent of total loans

 

1.12

%

 

1.16

%

 

1.16

%

 

1.17

%

 

1.20

%

Allowance for loan losses as a percent of nonperforming loans

 

252.72

%

 

261.33

%

 

257.47

%

 

210.55

%

 

222.34

%

 

 

 

 

 

 

(1) 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."

 

 

Three Months Ended

(Unaudited, dollars in thousands, except share data)

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

Mar 31, 2020

 

 

 

 

 

 

Net income (GAAP)

$

47,663

 

$

(44,062

)

$

28,505

 

$

29,850

 

$

8,445

 

Add:

 

 

 

 

 

Noninterest income components:

 

 

 

 

 

(Income) loss from investments held in rabbi trusts

 

(1,846

)

 

(5,535

)

 

(3,800

)

 

(7,745

)

 

6,743

 

(Gain) loss on sales of securities available for sale, net

 

(1,164

)

 

(3

)

 

 

 

(163

)

 

(122

)

(Gain) loss on sale of other assets

 

(18

)

 

(49

)

 

71

 

 

27

 

 

(29

)

Noninterest expense components:

 

 

 

 

 

Rabbi trust employee benefit expense (income)

 

986

 

 

2,838

 

 

1,445

 

 

3,985

 

 

(3,479

)

Impairment charge on tax credit investments

 

 

 

3,189

 

 

7,590

 

 

 

 

 

IPO costs (1)

 

 

 

 

 

549

 

 

380

 

 

270

 

(Gain) loss on sale of OREO

 

 

 

(61

)

 

(546

)

 

 

 

 

Merger and acquisition expenses

 

589

 

 

90

 

 

 

 

 

 

 

Stock donation to the EBCF

 

 

 

91,287

 

 

 

 

 

 

 

Total impact of non-GAAP adjustments

 

(1,453

)

 

91,756

 

 

5,309

 

 

(3,516

)

 

3,383

 

Less net tax (expense) benefit associated with non-GAAP adjustments (2)

 

(327

)

 

16,082

 

 

1,492

 

 

(967

)

 

970

 

Non-GAAP adjustments, net of tax

$

(1,126

)

$

75,674

 

$

3,817

 

$

(2,549

)

$

2,413

 

Operating net income (non-GAAP)

$

46,537

 

$

31,612

 

$

32,322

 

$

27,301

 

$

10,858

 

 

 

 

 

 

 

Weighted average common shares outstanding during the period:

 

 

 

 

 

Basic

 

172,049,044

 

 

171,812,535

 

 

 

 

 

 

 

Diluted

 

172,049,044

 

 

171,812,535

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share, basic

$

0.28

 

$

(0.26

)

n.a.

 

 

n.a.

 

 

n.a.

Earnings (loss) per share, diluted

$

0.28

 

$

(0.26

)

n.a.

 

 

n.a.

 

 

n.a.

 

 

 

 

 

 

Operating earnings per share, basic (non-GAAP)

$

0.27

 

$

0.18

 

n.a.

 

 

n.a.

 

 

n.a.

Operating earnings per share, diluted (non-GAAP)

$

0.27

 

$

0.18

 

n.a.

 

 

n.a.

 

 

n.a.

 

 

 

 

 

 

Return on average assets (3)

 

1.19

%

 

(1.11

)%

 

0.80

%

 

0.88

%

 

0.29

%

Add:

 

 

 

 

 

(Income) loss from investments held in rabbi trusts (3)

 

(0.05

)%

 

(0.14

)%

 

(0.11

)%

 

(0.23

)%

 

0.23

%

(Gain) loss on sales of securities available for sale, net (3)

 

(0.03

)%

 

%

 

%

 

%

 

%

(Gain) loss on sale of other assets (3)

 

%

 

%

 

%

 

%

 

%

Rabbi trust employee benefit expense (income) (3)

 

0.02

%

 

0.07

%

 

0.04

%

 

0.12

%

 

(0.12

)%

Impairment charge on tax credit investments (3)

 

%

 

0.08

%

 

0.21

%

 

%

 

%

IPO costs (1) (3)

 

%

 

%

 

0.02

%

 

0.01

%

 

0.01

%

(Gain) loss on sale of OREO (3)

 

%

 

%

 

(0.02

)%

 

%

 

%

Merger and acquisition expenses (3)

 

0.01

%

 

%

 

%

 

%

 

%

Stock donation to the EBCF (3)

 

%

 

2.29

%

 

%

 

%

 

%

Less net tax benefit (expense) associated with non-GAAP adjustments (2) (3)

 

(0.01

)%

 

0.40

%

 

0.04

%

 

(0.03

)%

 

0.03

%

Operating return on average assets (non-GAAP) (3)

 

1.15

%

 

0.79

%

 

0.90

%

 

0.81

%

 

0.38

%

 

 

 

 

 

 

Return on average shareholders' equity (3)

 

5.66

%

 

(5.61

)%

 

6.65

%

 

7.11

%

 

2.08

%

Add:

 

 

 

 

 

(Income) loss from investments held in rabbi trusts (3)

 

(0.22

)%

 

(0.70

)%

 

(0.89

)%

 

(1.84

)%

 

1.66

%

(Gain) loss on sales of securities available for sale, net (3)

 

(0.14

)%

 

%

 

%

 

(0.04

)%

 

(0.03

)%

(Gain) loss on sale of other assets (3)

 

%

 

(0.01

)%

 

0.02

%

 

0.01

%

 

(0.01

)%

Rabbi trust employee benefit expense (income) (3)

 

0.12

%

 

0.36

%

 

0.34

%

 

0.95

%

 

(0.86

)%

Impairment charge on tax credit investments (3)

 

%

 

0.41

%

 

1.77

%

 

%

 

%

IPO costs (1) (3)

 

%

 

%

 

0.13

%

 

0.09

%

 

0.07

%

(Gain) loss on sale of OREO (3)

 

%

 

(0.01

)%

 

(0.13

)%

 

%

 

%

Merger and acquisition expenses (3)

 

0.07

%

 

0.01

%

 

%

 

%

 

%

Stock donation to the EBCF (3)

 

%

 

11.62

%

 

%

 

%

 

%

Less net tax benefit (expense) associated with non-GAAP adjustments (2) (3)

 

(0.04

)%

 

2.05

%

 

0.35

%

 

(0.23

)%

 

0.24

%

Operating return on average shareholders' equity (non-GAAP) (3)

 

5.53

%

 

4.02

%

 

7.54

%

 

6.51

%

 

2.67

%

 

 

 

 

 

 

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

(2) The net tax benefit (expense) associated with these items is determined by assessing whether each item is included or excluded from net taxable income and applying the Company's combined statutory tax rate only to those items included in net taxable income. Additionally, the net tax benefit (expense) for the impairment charge of tax credit investment includes associated tax credit benefits.

(3) Ratios have been annualized.

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

 

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

Mar 31, 2020

(Unaudited, dollars in thousands)

 

 

 

 

 

Net interest income (GAAP)

$

100,091

 

$

103,608

 

$

98,742

 

$

98,755

 

$

100,146

 

Add:

 

 

 

 

 

Tax-equivalent adjustment (non-GAAP)

 

1,297

 

 

1,357

 

 

1,353

 

 

1,378

 

 

1,368

 

Fully-taxable equivalent net interest income (non-GAAP)

$

101,388

 

$

104,965

 

$

100,095

 

$

100,133

 

$

101,514

 

 

 

 

 

 

 

Noninterest income (GAAP)

$

55,212

 

$

49,638

 

$

47,709

 

$

47,657

 

$

33,369

 

Less:

 

 

 

 

 

Income (loss) from investments held in rabbi trusts

 

1,846

 

 

5,535

 

 

3,800

 

 

7,745

 

 

(6,743

)

Gain (loss) on sales of securities available for sale, net

 

1,164

 

 

3

 

 

 

 

163

 

 

122

 

Gain (loss) on sale of other assets

 

18

 

 

49

 

 

(71

)

 

(27

)

 

29

 

Noninterest income on an operating basis (non-GAAP)

$

52,184

 

$

44,051

 

$

43,980

 

$

39,776

 

$

39,961

 

 

 

 

 

 

 

Noninterest expense (GAAP)

$

94,049

 

$

199,169

 

$

109,817

 

$

100,765

 

$

95,172

 

Less:

 

 

 

 

 

Rabbi trust employee benefit expense (income)

 

986

 

 

2,838

 

 

1,445

 

 

3,985

 

 

(3,479

)

Impairment charge on tax credit investments

 

 

 

3,189

 

 

7,590

 

 

 

 

 

IPO costs (1)

 

 

 

 

 

549

 

 

380

 

 

270

 

(Gain) loss on sale of OREO

 

 

 

(61

)

 

(546

)

 

 

 

 

Merger and acquisition expenses

 

589

 

 

90

 

 

 

 

 

 

 

Stock donation to the EBCF

 

 

 

91,287

 

 

 

 

 

 

 

Noninterest expense on an operating basis (non-GAAP)

$

92,474

 

$

101,826

 

$

100,779

 

$

96,400

 

$

98,381

 

 

 

 

 

 

 

Total revenue (GAAP)

$

155,303

 

$

153,246

 

$

146,451

 

$

146,412

 

$

133,515

 

Total operating revenue (non-GAAP)

$

153,572

 

$

149,016

 

$

144,075

 

$

139,909

 

$

141,475

 

 

 

 

 

 

 

Efficiency ratio (GAAP)

 

60.56

%

 

129.97

%

 

74.99

%

 

68.82

%

 

71.28

%

Operating efficiency ratio (non-GAAP)

 

60.22

%

 

68.33

%

 

69.95

%

 

68.90

%

 

69.54

%

 

 

 

 

 

 

Noninterest income / total revenue (GAAP)

 

35.55

%

 

32.39

%

 

32.58

%

 

32.55

%

 

24.99

%

Noninterest income / total revenue on an operating basis (non-GAAP)

 

33.98

%

 

29.56

%

 

30.53

%

 

28.43

%

 

28.25

%

 

 

 

 

 

 

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

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

 

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

Mar 31, 2020

(Unaudited, dollars in thousands, except share data)

 

 

 

 

 

Tangible shareholders' equity:

 

 

 

 

 

Total shareholders' equity (GAAP)

$

3,387,045

 

$

3,428,052

 

$

1,713,372

 

$

1,693,630

 

$

1,662,734

 

Less: Goodwill and other intangibles

 

376,002

 

 

376,534

 

 

375,632

 

 

376,331

 

 

377,033

 

Tangible shareholders' equity (non-GAAP)

 

3,011,043

 

 

3,051,518

 

 

1,337,740

 

 

1,317,299

 

 

1,285,701

 

 

 

 

 

 

 

Tangible assets:

 

 

 

 

 

Total assets (GAAP)

 

16,726,795

 

 

15,964,190

 

 

15,460,594

 

 

13,996,523

 

 

12,343,754

 

Less: Goodwill and other intangibles

 

376,002

 

 

376,534

 

 

375,632

 

 

376,331

 

 

377,033

 

Tangible assets (non-GAAP)

$

16,350,793

 

$

15,587,656

 

$

15,084,962

 

$

13,620,192

 

$

11,966,721

 

 

 

 

 

 

 

Shareholders' equity to assets ratio (GAAP)

 

20.25

%

 

21.47

%

 

11.08

%

 

12.10

%

 

13.47

%

Tangible shareholders' equity to tangible assets ratio (non-GAAP)

 

18.42

%

 

19.58

%

 

8.87

%

 

9.67

%

 

10.74

%

 

 

 

 

 

 

Common shares outstanding

 

186,758,154

 

 

186,758,154

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share (GAAP)

$

18.14

 

$

18.36

 

n.a.

 

n.a.

 

n.a.

Tangible book value per share (non-GAAP)

$

16.12

 

$

16.34

 

n.a.

 

n.a.

 

n.a.

 

APPENDIX D: Reconciliation of Non-GAAP Credit Metrics

For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures."

 

 

As of

(Unaudited, dollars in thousands)

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

Mar 31, 2020

 

 

 

 

 

 

Total loans excluding PPP loans:

 

 

 

 

 

Total loans (GAAP) (1)

$

9,883,802

 

$

9,706,989

 

$

9,911,494

 

$

9,979,616

 

$

9,080,743

 

Less: PPP loans (1)

 

1,210,598

 

 

1,007,487

 

 

1,098,883

 

 

1,072,312

 

 

 

Total loans excluding PPP loans (non-GAAP)

$

8,673,204

 

$

8,699,502

 

$

8,812,611

 

$

8,907,304

 

$

9,080,743

 

 

 

 

 

 

 

Total nonperforming loans (NPLs) (GAAP)

$

43,954

 

$

43,252

 

$

44,833

 

$

55,395

 

$

49,087

 

 

 

 

 

 

 

Total NPLs / total loans (GAAP)

 

0.44

%

 

0.45

%

 

0.45

%

 

0.56

%

 

0.54

%

Total NPLs / total loans (excl. PPP loans) (non-GAAP)

 

0.51

%

 

0.50

%

 

0.51

%

 

0.62

%

 

0.54

%

 

 

 

 

 

 

Allowance for loan losses (ALLL) (GAAP)

$

111,080

 

$

113,031

 

$

115,432

 

$

116,636

 

$

109,138

 

 

 

 

 

 

 

ALLL / total loans (GAAP)

 

1.12

%

 

1.16

%

 

1.16

%

 

1.17

%

 

1.20

%

ALLL / total loans (excl. PPP loans) (non-GAAP)

 

1.28

%

 

1.30

%

 

1.31

%

 

1.31

%

 

1.20

%

 

 

 

 

 

 

 

As of and for the three months ended

(Unaudited, dollars in thousands)

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

Jun 30, 2020

Mar 31, 2020

 

 

 

 

 

 

Average total loans excluding PPP Loans:

 

 

 

 

 

Average total loans (GAAP)

$

9,816,788

 

$

9,796,697

 

$

9,914,731

 

$

9,875,110

 

$

9,016,223

 

Less: Average PPP loans

 

1,131,516

 

 

1,076,155

 

 

1,091,464

 

 

818,665

 

 

 

Average total loans excluding PPP loans (non-GAAP)

$

8,685,272

 

$

8,720,542

 

$

8,823,267

 

$

9,056,445

 

$

9,016,223

 

 

 

 

 

 

 

Total net loans charged-off (NCOs) (GAAP)

$

1,371

 

$

3,301

 

$

1,904

 

$

1,102

 

$

1,759

 

 

 

 

 

 

 

NCOs / Average total loans (GAAP) (2)

 

0.06

%

 

0.13

%

 

0.08

%

 

0.04

%

 

0.08

%

NCOs / Average total loans (excl. PPP loans) (non-GAAP) (2)

 

0.06

%

 

0.15

%

 

0.09

%

 

0.05

%

 

0.08

%

 

 

 

 

 

 

(1) Includes unamortized premiums, net of unearned discounts and deferred fees.

(2) Presented on an annualized basis

Appendix E: Reconciliation of Non-GAAP Core Margin

For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures."

 

 

As of and for the three months ended

 

Mar 31, 2021

 

Dec 31, 2020

(Unaudited, dollars in thousands)

Volume

Interest

Margin

Impact (1)

 

Volume

Interest

Margin

Impact (1)

 

 

 

 

 

 

 

 

Reported total average interest earnings assets, net interest income, and net interest margin (2)

$

15,188,879

 

$

101,388

 

2.71

%

 

$

14,715,494

 

$

104,965

 

2.84

%

Non-GAAP adjustments:

 

 

 

 

 

 

 

PPP loan volume earning 1%

 

(1,131,516

)

 

(2,887

)

0.13

%

 

 

(1,076,155

)

 

(2,741

)

0.14

%

SBA PPP loan fee accretion, net of deferred origination cost amortization

 

 

 

(8,339

)

(0.22

)%

 

 

 

 

(6,102

)

(0.16

)%

Excess cash (3)

 

(1,436,783

)

 

(354

)

0.27

%

 

 

(1,996,808

)

 

(502

)

0.43

%

Deferred loan fee income adjustment

 

 

 

 

%

 

 

 

 

(3,774

)

(0.10

)%

Core margin (Non-GAAP) (4)

$

12,620,580

 

$

89,808

 

2.89

%

 

$

11,642,531

 

$

91,846

 

3.14

%

 

 

 

 

 

 

 

 

Core margin change from prior quarter

 

 

(0.25

)%

 

 

 

(0.28

)%

 

 

 

 

 

 

 

 

 

Sep 30, 2020

 

Jun 30, 2020

 

Volume

Interest

Margin

Impact (1)

 

Volume

Interest

Margin

Impact (1)

 

 

 

 

 

 

 

 

Reported total average interest earnings assets, net interest income, and net interest margin (2)

$

13,089,839

 

$

100,095

 

3.04

%

 

$

12,479,343

 

$

100,137

 

3.23

%

Non-GAAP adjustments: