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Eastern Bankshares, Inc. Reports Third Quarter 2021 Financial Results

October, 28, 2021

Company Announces Intent to Adopt Share Repurchase Program and Declares Quarterly Cash Dividend

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 its 2021 third quarter financial results, the declaration of a quarterly cash dividend of $0.08 per share, and the intent to adopt a share repurchase program. Net income for the third quarter of 2021 was $37.1 million, or $0.22 per share, compared to net income of $34.8 million, or $0.20 per share, reported for the second quarter of 2021. Operating net income* for the third quarter of 2021 was $37.4 million, or $0.22 per share, compared to $37.1 million, or $0.22 per share, reported for the prior quarter.

“Our third quarter financial results continue to demonstrate strong financial performance, and as the economy continues to recover from the pandemic, we remain optimistic about our future and long-term profitability,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank. “In the third quarter, we saw strong loan growth of $175 million excluding PPP loans, or a growth rate of over 8% on an annualized basis, while continuing to demonstrate strong asset quality. As we look to the future, there’s much to be excited about. We believe the combination with Century will solidify our position as the leading community bank here in Boston, and we look forward to continuing the high level of service that Century customers have come to expect. We are especially appreciative of the tremendous commitment our employees have demonstrated to our customers and the communities we serve, and thank them for their extraordinary efforts as our two organizations combine to become one.”

The Company also announced that its Board of Directors has approved a share repurchase program to purchase up to 9,337,900 shares, which represents 5% of the Company’s outstanding shares of common stock over a 12-month period. The authorization is contingent on receipt of approval or non-objection from the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The Company’s request for non-objection is pending. Assuming receipt of approval or non-objection from the Federal Reserve, the Company does not expect the share repurchases to begin before December 2021.

Rivers continued, “We remain committed to a thoughtful and holistic capital management strategy to deliver value for our shareholders. Our Board’s approval of a share repurchase program, together with our regular quarterly dividends, demonstrates our ability to continue to drive growth and effectively deploy capital while creating shareholder value.”

HIGHLIGHTS FOR THE THIRD QUARTER OF 2021

  • Operating net income* was $37.4 million in the third quarter, compared to $37.1 million in the prior quarter, and represented a 16% increase from the prior year quarter.
  • Loans, excluding Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans, grew $175.3 million, or 8% on an annualized basis from the prior quarter. Commercial loans, excluding PPP loans, and residential loans each grew 9% on an annualized basis from the prior quarter.
  • An improving economic outlook coupled with strong asset quality led to a $1.5 million release of loan loss reserves. Nonperforming loans were $42.1 million, or 0.44% of total loans, at the end of the third quarter compared to $41.7 million, or 0.43% of total loans, at the end of the second quarter.

BALANCE SHEET

Total assets were $17.5 billion at September 30, 2021, representing an increase of $413.8 million, or 2%, from June 30, 2021.

  • Available for sale securities increased $840.5 million, or 17%, on a consecutive quarter basis, to $5.7 billion, as excess liquidity was deployed into U.S. Agency securities. Cash and equivalents declined $312.5 million to $1.3 billion.
  • Total loans were $9.5 billion, representing a decrease of $116.5 million, or 1%, as PPP loan forgiveness outpaced new loan originations in the third quarter. Excluding PPP loans, total loans grew $175.3 million, or 2%, from the prior quarter, driven by growth in commercial loans, excluding PPP loans, of $143.9 million and in residential loans of $33.8 million.
  • Deposits totaled $13.6 billion, representing an increase of $399.5 million, or 3%, from June 30, 2021.
  • Shareholders’ equity was $3.4 billion, representing a decrease of $1.3 million from the prior quarter. The increase in retained earnings of $23.3 million was more than offset by the decrease in accumulated other comprehensive income of $26.8 million driven by a decrease in the market value of the available for sale investment portfolio.
  • At September 30, 2021, book value per share was $18.36 and tangible book value per share* was $16.33.

NET INTEREST INCOME

Net interest income was $102.7 million for the third quarter, compared to $104.6 million in the prior quarter, representing a decrease of $1.9 million on a consecutive quarter basis.

  • Included in net interest income was $5.9 million and $9.3 million of SBA PPP fee accretion net of deferred cost amortization in the third quarter and prior quarter, respectively. During the third quarter, $291.8 million in PPP loans were forgiven by the SBA or otherwise paid down compared to $502.9 million in the prior quarter.
  • Interest income on available for sale securities increased $1.8 million to $16.2 million in the third quarter as excess cash continued to be deployed into securities. Investment securities averaged $5.2 billion for the third quarter compared to $4.3 billion for the prior quarter, an increase of $905.1 million.
  • The net interest margin on a fully tax equivalent (“FTE”) basis* was 2.53% for the third quarter, representing a 16 basis points decrease from the prior quarter. The net interest margin continued to be pressured by the low interest rate environment and excess liquidity. The core net interest margin* in Appendix E demonstrates the impact of excess cash and the PPP program.

NONINTEREST INCOME

Noninterest income was $43.2 million for the third quarter, compared to $45.7 million for the prior quarter, representing a decrease of $2.5 million. Noninterest income on an operating basis* was $43.0 million for the third quarter, compared to $41.5 million for the prior quarter, an increase of $1.5 million.

  • Insurance commissions decreased $1.7 million to $22.0 million in the third quarter, compared to $23.7 million in the prior quarter.
  • Trust and investment advisory fees increased $0.2 million on a consecutive quarter basis to $6.3 million.
  • Loan-level interest rate swap income was $0.9 million in the third quarter, compared to losses of $1.2 million in the prior quarter, representing an increase of $2.0 million that was driven by an increase in the fair value of such interest rate swap transactions due to higher market interest rates.
  • Losses on securities held in rabbi trust accounts were $0.3 million in the third quarter compared to income of $4.2 million in the prior quarter, representing a decrease of $4.5 million primarily due to weaker investment performance in the period as compared to the prior quarter.
  • The gain on sale of loans held for sale totaled $0.7 million, down $0.1 million from the prior quarter.
  • Other noninterest income increased $1.5 million in the third quarter, in part due to a $0.5 million gain on a bank owned life insurance policy, combined with other higher miscellaneous income.

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

NONINTEREST EXPENSE

Noninterest expense was $99.0 million for the third quarter representing a decrease of $8.4 million, primarily driven by lower non-operating expenses* in the third quarter of $5.7 million. Noninterest expense on an operating basis* for the third quarter of 2021 was $97.2 million, compared to $99.9 million in the prior quarter.

  • Salaries and employee benefits expense was $66.2 million in the third quarter, representing a decrease of $3.0 million from the prior quarter. The decrease was primarily driven by the Company’s lower benefits expense which was $4.5 million lower than the prior quarter. The decrease in benefits expense was attributable to the decreased market value of investments held in rabbi trust accounts by the Company’s defined contribution supplemental executive retirement plan (“DC SERP”).
  • Data processing expense was $12.2 million in the third quarter, a decrease of $1.4 million from the prior quarter. Professional services expense was $4.0 million, a decrease of $2.4 million from the prior quarter. These decreases were primarily attributed to lower costs associated with the pending acquisition of Century compared with such expenses in the prior quarter.
  • Marketing expenses were $1.6 million in the third quarter, representing a decrease of $1.9 million from the prior quarter primarily due to a decrease in advertising expense of $1.4 million.
  • Other noninterest expense increased $0.7 million in the third quarter to $3.7 million.

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

ASSET QUALITY

The allowance for loan losses was $103.4 million at September 30, 2021, or 1.09% of total loans, compared to $105.6 million or 1.10% of total loans at June 30, 2021. The Company released loan loss reserves totaling $1.5 million in the third quarter, compared to a release of $3.3 million in the prior quarter. The Company followed the incurred loss allowance GAAP accounting model at September 30, 2021 and all preceding periods.

Non-performing loans totaled $42.1 million at September 30, 2021 compared to $41.6 million at the end of the prior quarter. During the third quarter of 2021, the Company recorded total net charge-offs of $0.8 million, or 0.03% of average total loans on an annualized basis compared to $2.1 million and 0.09% in the prior quarter, respectively.

At September 30, 2021, approximately $110.6 million in COVID-19 modified loans remained under modified payment terms, down from $149.8 million at June 30, 2021. The commercial real estate portfolio contained $92.4 million of the remaining COVID-19 modifications at period end, of which $71.5 million or 77% were in the hotel segment.

Please refer to Appendix F for a detailed breakout on COVID-19 related loan modifications.

DIVIDENDS AND SHARE REPURCHASES

The Company’s Board of Directors declared a quarterly cash dividend of $0.08 per common share, payable on December 15, 2021, to shareholders of record as of the close of business on December 3, 2021.

The Company also announced that its Board of Directors has approved a share repurchase program to purchase up to 9,337,900 shares, which represents 5% of the Company’s outstanding shares of common stock over a 12-month period. The authorization is contingent on receipt of approval or non-objection from the Federal Reserve. The Company’s request for non-objection is pending. The Company is unable to predict whether the Federal Reserve will permit the Company to implement the proposed repurchase program in whole or part, whether the Federal Reserve will impose one or more related conditions on the Company, or the timing of such non-objection, if granted. Assuming receipt of approval or non-objection from the Federal Reserve, the Company does not expect the share repurchases to begin before December 2021.

Under the authorization, share repurchases may occur in open market transactions or privately negotiated transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and/or Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Repurchases will be made at management’s discretion from time to time at prices management considers to be attractive and in the best interests of both the Company and its shareholders, subject to the availability of shares, general market conditions, the trading price of the shares, alternative uses for capital, and the Company’s financial performance. Repurchases under this authorization may be suspended, terminated or modified by the Company at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate by management in its discretion. There can be no assurance that the Company will receive the required approval or non-objection for its proposed share repurchase program. The Company is not obligated to repurchase any particular number of shares even if regulatory approval or non-objection is obtained. The proposed repurchase program would be authorized through November 30, 2022, although it may be modified or terminated by the Board of Directors at any time.

CONFERENCE CALL INFORMATION

A conference call and webcast covering Eastern’s third quarter 2021 earnings will be held on Friday, October 29, 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 1389147. 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 September 30, 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 initial public offering (“IPO”), (vii) other real estate owned (“OREO”) gains, (viii) merger and acquisition expenses, (ix) the stock donation to the Eastern Bank Foundation (“EBF”, formerly known as the Eastern Bank Charitable Foundation) in connection with the Company’s mutual-to-stock conversion and IPO, and (x) settlement of putative consumer class action litigation matters related to overdraft and non-sufficient funds fees, and associated settlement expenses. 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 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 September 30, 2021 will be forgiven, 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 pending 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 closing conditions are not satisfied in a timely manner or at all; 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, including inflation, interest rates, interest rate sensitivity and liquidity, 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; market and monetary fluctuations, including fluctuations due to actual or anticipated changes to federal tax laws; credit quality, including adverse developments in local or regional real estate markets that decrease collateral values associated with existing loans; the failure to obtain the approval or non-objection of the Federal Reserve for the initiation of share repurchases, delays in obtaining such approval or non-objection, or adverse conditions imposed in connection with such approval or non-objection; and the failure of the Company to execute its planned share repurchases. 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)

Sep 30, 2021

Jun 30, 2021

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

 

 

 

 

 

 

Earnings data

 

 

 

 

 

Net interest income

$

102,691

 

$

104,608

 

$

100,091

 

$

103,608

 

$

98,742

 

Noninterest income

 

43,209

 

 

45,733

 

 

55,212

 

 

49,638

 

 

47,709

 

Total revenue

 

145,900

 

 

150,341

 

 

155,303

 

 

153,246

 

 

146,451

 

Noninterest expense

 

98,970

 

 

107,335

 

 

94,049

 

 

199,169

 

 

109,817

 

Pre-tax, pre-provision income (loss)

 

46,930

 

 

43,006

 

 

61,254

 

 

(45,923

)

 

36,634

 

(Release of) provision for allowance for loan losses

 

(1,488

)

 

(3,300

)

 

(580

)

 

900

 

 

700

 

Pre-tax income (loss)

 

48,418

 

 

46,306

 

 

61,834

 

 

(46,823

)

 

35,934

 

Net income (loss)

 

37,106

 

 

34,809

 

 

47,663

 

 

(44,062

)

 

28,505

 

Operating net income (non-GAAP)

 

37,391

 

 

37,097

 

 

46,537

 

 

31,612

 

 

32,322

 

 

 

 

 

 

 

Per-share data

 

 

 

 

 

Earnings (loss) per share

$

0.22

 

$

0.20

 

$

0.28

 

$

(0.26

)

n.a.

Operating earnings per share (non-GAAP)

$

0.22

 

$

0.22

 

$

0.27

 

$

0.18

 

n.a.

Book value per share

$

18.36

 

$

18.37

 

$

18.14

 

$

18.36

 

n.a.

Tangible book value per share (non-GAAP)

$

16.33

 

$

16.33

 

$

16.12

 

$

16.34

 

n.a.

 

 

 

 

 

 

Profitability

 

 

 

 

 

Return on average assets (1)

 

0.84

%

 

0.83

%

 

1.19

%

 

(1.11

)%

 

0.80

%

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

 

0.86

%

 

0.89

%

 

1.15

%

 

0.79

%

 

0.90

%

Return on average shareholders' equity (1)

 

4.27

%

 

4.10

%

 

5.66

%

 

(5.61

)%

 

6.65

%

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

 

4.30

%

 

4.36

%

 

5.53

%

 

4.02

%

 

7.54

%

Net interest margin (FTE) (1)

 

2.53

%

 

2.69

%

 

2.71

%

 

2.84

%

 

3.04

%

Cost of deposits (1)

 

0.02

%

 

0.03

%

 

0.03

%

 

0.03

%

 

0.06

%

Fee income ratio

 

29.62

%

 

30.42

%

 

35.55

%

 

32.39

%

 

32.58

%

Efficiency ratio

 

67.83

%

 

71.39

%

 

60.56

%

 

129.97

%

 

74.99

%

Operating efficiency ratio (non-GAAP)

 

66.14

%

 

67.78

%

 

60.22

%

 

68.33

%

 

69.95

%

 

 

 

 

 

 

Balance Sheet (end of period)

 

 

 

 

 

Total assets

$

17,461,223

 

$

17,047,453

 

$

16,726,795

 

$

15,964,190

 

$

15,460,594

 

Total loans

 

9,504,562

 

 

9,621,075

 

 

9,916,475

 

 

9,730,525

 

 

9,944,241

 

Total deposits

 

13,649,964

 

 

13,250,433

 

 

12,980,875

 

 

12,155,784

 

 

13,332,585

 

Total loans / total deposits

 

70

%

 

73

%

 

76

%

 

80

%

 

75

%

PPP loans

$

533,965

 

$

825,784

 

$

1,238,053

 

$

1,026,117

 

$

1,123,493

 

 

 

 

 

 

 

Asset quality

 

 

 

 

 

Allowance for loan losses ("ALLL")

$

103,398

 

$

105,637

 

$

111,080

 

$

113,031

 

$

115,432

 

ALLL / total nonperforming loans ("NPLs")

 

245.77

%

 

253.74

%

 

252.72

%

 

261.33

%

 

257.47

%

Total NPLs / total loans

 

0.44

%

 

0.43

%

 

0.44

%

 

0.45

%

 

0.45

%

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

 

0.47

%

 

0.47

%

 

0.51

%

 

0.50

%

 

0.51

%

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

 

0.03

%

 

0.09

%

 

0.06

%

 

0.13

%

 

0.08

%

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

 

0.03

%

 

0.10

%

 

0.06

%

 

0.15

%

 

0.09

%

Remaining COVID-19 loan modifications (2)

$

110,596

 

$

149,805

 

$

178,430

 

$

332,682

 

$

701,227

 

 

 

 

 

 

 

Capital adequacy

 

 

 

 

 

Shareholders' equity / assets

 

19.64

%

 

20.12

%

 

20.25

%

 

21.47

%

 

11.08

%

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

 

17.85

%

 

18.30

%

 

18.42

%

 

19.58

%

 

8.87

%

 

 

 

 

 

 

(1) Presented on an annualized basis.

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

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

As of

 

Sep 30, 2021 change from

(Unaudited, dollars in thousands)

Sep 30, 2021

Jun 30, 2021

Sep 30, 2020

 

Jun 30, 2021

 

Sep 30, 2020

ASSETS

 

 

 

 

△ $

△ %

 

△ $

△ %

Cash and due from banks

$

78,805

 

$

58,490

 

$

69,051

 

 

20,315

 

35

%

 

9,754

 

14

%

Short-term investments

 

1,172,956

 

 

1,505,757

 

 

2,259,033

 

 

(332,801

)

(22

)%

 

(1,086,077

)

(48

)%

Cash and cash equivalents

 

1,251,761

 

 

1,564,247

 

 

2,328,084

 

 

(312,486

)

(20

)%

 

(1,076,323

)

(46

)%

Available for sale securities

 

5,689,312

 

 

4,848,781

 

 

2,207,672

 

 

840,531

 

17

%

 

3,481,640

 

158

%

Total securities

 

5,689,312

 

 

4,848,781

 

 

2,207,672

 

 

840,531

 

17

%

 

3,481,640

 

158

%

Loans held for sale

 

1,757

 

 

2,734

 

 

4,649

 

 

(977

)

(36

)%

 

(2,892

)

(62

)%

Loans:

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

1,652,447

 

 

1,740,679

 

 

2,177,216

 

 

(88,232

)

(5

)%

 

(524,769

)

(24

)%

Commercial real estate

 

3,825,186

 

 

3,775,771

 

 

3,652,312

 

 

49,415

 

1

%

 

172,874

 

5

%

Commercial construction

 

243,146

 

 

237,927

 

 

297,508

 

 

5,219

 

2

%

 

(54,362

)

(18

)%

Business banking

 

1,225,538

 

 

1,339,852

 

 

1,251,573

 

 

(114,314

)

(9

)%

 

(26,035

)

(2

)%

Total commercial loans

 

6,946,317

 

 

7,094,229

 

 

7,378,609

 

 

(147,912

)

(2

)%

 

(432,292

)

(6

)%

Residential real estate

 

1,491,269

 

 

1,457,498

 

 

1,373,237

 

 

33,771

 

2

%

 

118,032

 

9

%

Consumer home equity

 

848,570

 

 

834,938

 

 

890,771

 

 

13,632

 

2

%

 

(42,201

)

(5

)%

Other consumer

 

218,406

 

 

234,410

 

 

301,624

 

 

(16,004

)

(7

)%

 

(83,218

)

(28

)%

Total loans

 

9,504,562

 

 

9,621,075

 

 

9,944,241

 

 

(116,513

)

(1

)%

 

(439,679

)

(4

)%

Allowance for loan losses

 

(103,398

)

 

(105,637

)

 

(115,432

)

 

2,239

 

(2

)%

 

12,034

 

(10

)%

Unamortized prem./disc. and def. fees

 

(23,104

)

 

(29,739

)

 

(32,747

)

 

6,635

 

(22

)%

 

9,643

 

(29

)%

Net loans

 

9,378,060

 

 

9,485,699

 

 

9,796,062

 

 

(107,639

)

(1

)%

 

(418,002

)

(4

)%

Federal Home Loan Bank stock, at cost

 

10,601

 

 

10,601

 

 

8,805

 

 

 

%

 

1,796

 

20

%

Premises and equipment

 

44,048

 

 

44,733

 

 

50,539

 

 

(685

)

(2

)%

 

(6,491

)

(13

)%

Bank-owned life insurance

 

79,259

 

 

79,634

 

 

78,058

 

 

(375

)

%

 

1,201

 

2

%

Goodwill and other intangibles, net

 

379,772

 

 

380,402

 

 

375,632

 

 

(630

)

%

 

4,140

 

1

%

Deferred income taxes, net

 

34,135

 

 

26,161

 

 

19,925

 

 

7,974

 

30

%

 

14,210

 

71

%

Prepaid expenses

 

148,180

 

 

145,941

 

 

92,473

 

 

2,239

 

2

%

 

55,707

 

60

%

Other assets

 

444,338

 

 

458,520

 

 

498,695

 

 

(14,182

)

(3

)%

 

(54,357

)

(11

)%

Total assets

 

17,461,223

 

 

17,047,453

 

 

15,460,594

 

 

413,770

 

2

%

 

2,000,629

 

13

%

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Demand

 

5,484,126

 

 

5,399,297

 

 

6,312,479

 

 

84,829

 

2

%

 

(828,353

)

(13

)%

Interest checking accounts

 

2,693,276

 

 

2,656,610

 

 

2,207,266

 

 

36,666

 

1

%

 

486,010

 

22

%

Savings accounts

 

1,444,928

 

 

1,403,472

 

 

1,217,898

 

 

41,456

 

3

%

 

227,030

 

19

%

Money market investment

 

3,802,319

 

 

3,544,897

 

 

3,315,198

 

 

257,422

 

7

%

 

487,121

 

15

%

Certificates of deposit

 

225,315

 

 

246,157

 

 

279,744

 

 

(20,842

)

(8

)%

 

(54,429

)

(19

)%

Total deposits

 

13,649,964

 

 

13,250,433

 

 

13,332,585

 

 

399,531

 

3

%

 

317,379

 

2

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

14,172

 

 

14,323

 

 

14,773

 

 

(151

)

(1

)%

 

(601

)

(4

)%

Escrow deposits of borrowers

 

15,900

 

 

14,119

 

 

14,664

 

 

1,781

 

13

%

 

1,236

 

8

%

Total borrowed funds

 

30,072

 

 

28,442

 

 

29,437

 

 

1,630

 

6

%

 

635

 

2

%

Other liabilities

 

351,895

 

 

337,956

 

 

385,200

 

 

13,939

 

4

%

 

(33,305

)

(9

)%

Total liabilities

 

14,031,931

 

 

13,616,831

 

 

13,747,222

 

 

415,100

 

3

%

 

284,709

 

2

%

Shareholders' equity:

 

 

 

 

 

 

 

 

 

Common shares

 

1,868

 

 

1,868

 

 

 

 

 

%

 

1,868

 

%

Additional paid-in capital

 

1,857,165

 

 

1,856,241

 

 

 

 

924

 

%

 

1,857,165

 

%

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

 

(143,966

)

 

(145,219

)

 

 

 

1,253

 

(1

)%

 

(143,966

)

%

Retained earnings

 

1,747,300

 

 

1,723,979

 

 

1,709,669

 

 

23,321

 

1

%

 

37,631

 

2

%

Accumulated other comprehensive income ("AOCI"), net of tax

 

(33,075

)

 

(6,247

)

 

3,703

 

 

(26,828

)

429

%

 

(36,778

)

(993

)%

Total shareholders' equity

 

3,429,292

 

 

3,430,622

 

 

1,713,372

 

 

(1,330

)

%

 

1,715,920

 

100

%

Total liabilities and shareholders' equity

 

17,461,223

 

 

17,047,453

 

 

15,460,594

 

 

413,770

 

2

%

 

2,000,629

 

13

%

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

Three months ended

 

Three months ended Sep 30, 2021 change from three months ended

(Unaudited, dollars in thousands, except share data)

Sep 30, 2021

Jun 30, 2021

Sep 30, 2020

 

Jun 30, 2021

 

Sep 30, 2020

 

 

 

 

 

 

 

 

 

 

Interest and dividend income:

 

 

 

 

△ $

△ %

 

△ $

△ %

Interest and fees on loans

$

86,735

 

$

90,936

 

$

90,704

 

(4,201

)

(5

)%

 

(3,969

)

(4

)%

Taxable interest and dividends on available for sale securities

 

14,314

 

 

12,457

 

 

7,554

 

1,857

 

15

%

 

6,760

 

89

%

Non-taxable interest and dividends on available for sale securities

 

1,848

 

 

1,857

 

 

1,883

 

(9

)

%

 

(35

)

(2

)%

Interest on federal funds sold and other short-term investments

 

571

 

 

431

 

 

372

 

140

 

32

%

 

199

 

53

%

Total interest and dividend income

 

103,468

 

 

105,681

 

 

100,513

 

(2,213

)

(2

)%

 

2,955

 

3

%

Interest expense:

 

 

 

 

 

 

 

 

 

Interest on deposits

 

736

 

 

1,031

 

 

1,727

 

(295

)

(29

)%

 

(991

)

(57

)%

Interest on borrowings

 

41

 

 

42

 

 

44

 

(1

)

(2

)%

 

(3

)

(7

)%

Total interest expense

 

777

 

 

1,073

 

 

1,771

 

(296

)

(28

)%

 

(994

)

(56

)%

Net interest income

 

102,691

 

 

104,608

 

 

98,742

 

(1,917

)

(2

)%

 

3,949

 

4

%

(Release of) provision for allowance for loan losses

 

(1,488

)

 

(3,300

)

 

700

 

1,812

 

(55

)%

 

(2,188

)

(313

)%

Net interest income after provision for loan losses

 

104,179

 

 

107,908

 

 

98,042

 

(3,729

)

(3

)%

 

6,137

 

6

%

Noninterest income:

 

 

 

 

 

 

 

 

 

Insurance commissions

 

21,956

 

 

23,664

 

 

21,884

 

(1,708

)

(7

)%

 

72

 

%

Service charges on deposit accounts

 

5,935

 

 

5,708

 

 

5,052

 

227

 

4

%

 

883

 

17

%

Trust and investment advisory fees

 

6,310

 

 

6,074

 

 

5,311

 

236

 

4

%

 

999

 

19

%

Debit card processing fees

 

3,030

 

 

3,170

 

 

2,721

 

(140

)

(4

)%

 

309

 

11

%

Interest rate swap income (losses)

 

881

 

 

(1,164

)

 

1,319

 

2,045

 

(176

)%

 

(438

)

(33

)%

(Losses) income from investments held in rabbi trusts

 

(289

)

 

4,216

 

 

3,800

 

(4,505

)

(107

)%

 

(4,089

)

(108

)%

Gains on sales of mortgage loans held for sale, net

 

717

 

 

848

 

 

2,219

 

(131

)

(15

)%

 

(1,502

)

(68

)%

Gains on sales of securities available for sale, net

 

1

 

 

1

 

 

 

 

%

 

1

 

%

Other

 

4,668

 

 

3,216

 

 

5,403

 

1,452

 

45

%

 

(735

)

(14

)%

Total noninterest income

 

43,209

 

 

45,733

 

 

47,709

 

(2,524

)

(6

)%

 

(4,500

)

(9

)%

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

66,238

 

 

69,276

 

 

66,593

 

(3,038

)

(4

)%

 

(355

)

(1

)%

Office occupancy and equipment

 

7,960

 

 

8,094

 

 

8,294

 

(134

)

(2

)%

 

(334

)

(4

)%

Data processing

 

12,191

 

 

13,572

 

 

11,721

 

(1,381

)

(10

)%

 

470

 

4

%

Professional services

 

4,024

 

 

6,439

 

 

5,510

 

(2,415

)

(38

)%

 

(1,486

)

(27

)%

Charitable contributions

 

 

 

 

 

 

 

%

 

 

%

Marketing

 

1,598

 

 

3,497

 

 

1,943

 

(1,899

)

(54

)%

 

(345

)

(18

)%

Loan expenses

 

1,586

 

 

1,854

 

 

1,554

 

(268

)

(14

)%

 

32

 

2

%

Federal Deposit Insurance Corporation ("FDIC") insurance

 

1,056

 

 

985

 

 

938

 

71

 

7

%

 

118

 

13

%

Amortization of intangible assets

 

629

 

 

625

 

 

699

 

4

 

1

%

 

(70

)

(10

)%

Other

 

3,688

 

 

2,993

 

 

12,565

 

695

 

23

%

 

(8,877

)

(71

)%

Total noninterest expense

 

98,970

 

 

107,335

 

 

109,817

 

(8,365

)

(8

)%

 

(10,847

)

(10

)%

Income before income tax expense

 

48,418

 

 

46,306

 

 

35,934

 

2,112

 

5

%

 

12,484

 

35

%

Income tax expense

 

11,312

 

 

11,497

 

 

7,429

 

(185

)

(2

)%

 

3,883

 

52

%

Net income

 

37,106

 

 

34,809

 

 

28,505

 

2,297

 

7

%

 

8,601

 

30

%

 

 

 

 

 

 

 

 

 

 

Share data:

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding (1)

 

172,298,615

 

 

172,173,707

 

n.a.

 

 

 

 

 

 

Earnings per share

$

0.22

 

$

0.20

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Shares held by the Company’s ESOP that have not been allocated to employees in accordance with the terms of the ESOP are not deemed outstanding for earnings per share calculations.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

 

Nine months ended

 

 

 

(Unaudited, dollars in thousands, except share data)

Sep 30, 2021

Sep 30, 2020

 

Change

 

 

 

 

 

 

Interest and dividend income:

 

 

 

△ $

△ %

Interest and fees on loans

$

266,310

 

$

278,385

 

 

(12,075

)

(4

)%

Taxable interest and dividends on available for sale securities

 

36,977

 

 

23,332

 

 

13,645

 

58

%

Non-taxable interest and dividends on available for sale securities

 

5,561

 

 

5,709

 

 

(148

)

(3

)%

Interest on federal funds sold and other short-term investments

 

1,434

 

 

1,173

 

 

261

 

22

%

Interest and dividends on trading securities

 

 

 

6

 

 

(6

)

(100

)%

Total interest and dividend income

 

310,282

 

 

308,605

 

 

1,677

 

1

%

Interest expense:

 

 

 

 

 

Interest on deposits

 

2,769

 

 

10,245

 

 

(7,476

)

(73

)%

Interest on borrowings

 

123

 

 

717

 

 

(594

)

(83

)%

Total interest expense

 

2,892

 

 

10,962

 

 

(8,070

)

(74

)%

Net interest income

 

307,390

 

 

297,643

 

 

9,747

 

3

%

(Release of) provision for allowance for loan losses

 

(5,368

)

 

37,900

 

 

(43,268

)

(114

)%

Net interest income after provision for loan losses

 

312,758

 

 

259,743

 

 

53,015

 

20

%

Noninterest income:

 

 

 

 

 

Insurance commissions

 

73,767

 

 

72,058

 

 

1,709

 

2

%

Service charges on deposit accounts

 

17,010

 

 

15,514

 

 

1,496

 

10

%

Trust and investment advisory fees

 

18,047

 

 

15,600

 

 

2,447

 

16

%

Debit card processing fees

 

8,949

 

 

7,528

 

 

1,421

 

19

%

Interest rate swap income (losses)

 

5,122

 

 

(3,919

)

 

9,041

 

(231

)%

Income from investments held in rabbi trusts

 

5,773

 

 

4,802

 

 

971

 

20

%

Losses on trading securities, net

 

 

 

(3

)

 

3

 

(100

)%

Gains on sales of mortgage loans held for sale, net

 

3,044

 

 

3,732

 

 

(688

)

(18

)%

Gains on sales of securities available for sale, net

 

1,166

 

 

285

 

 

881

 

309

%

Other

 

11,276

 

 

13,138

 

 

(1,862

)

(14

)%

Total noninterest income

 

144,154

 

 

128,735

 

 

15,419

 

12

%

Noninterest expense:

 

 

 

 

 

Salaries and employee benefits

 

199,554

 

 

191,517

 

 

8,037

 

4

%

Office occupancy and equipment

 

24,271

 

 

25,598

 

 

(1,327

)

(5

)%

Data processing

 

37,892

 

 

33,905

 

 

3,987

 

12

%

Professional services

 

14,611

 

 

13,595

 

 

1,016

 

7

%

Charitable contributions

 

 

 

3,984

 

 

(3,984

)

(100

)%

Marketing

 

6,786

 

 

6,056

 

 

730

 

12

%

Loan expenses

 

5,287

 

 

4,702

 

 

585

 

12

%

FDIC insurance

 

2,989

 

 

2,788

 

 

201

 

7

%

Amortization of intangible assets

 

1,786

 

 

2,102

 

 

(316

)

(15

)%

Other

 

7,178

 

 

21,507

 

 

(14,329

)

(67

)%

Total noninterest expense

 

300,354

 

 

305,754

 

 

(5,400

)

(2

)%

Income before income tax expense

 

156,558

 

 

82,724

 

 

73,834

 

89

%

Income tax expense

 

36,980

 

 

15,924

 

 

21,056

 

132

%

Net income

 

119,578

 

 

66,800

 

 

52,778

 

79

%

 

 

 

 

 

 

Share data:

 

 

 

 

 

Weighted average common shares outstanding (1)

 

172,174,469

 

n.a.

 

 

 

Earnings per share

$

0.69

 

n.a.

 

 

 

 

 

 

 

 

 

(1) Shares held by the Company’s ESOP that have not been allocated to employees in accordance with the terms of the ESOP are not deemed outstanding for earnings per share calculations.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

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

 

As of and for the three months ended

 

Sep 30, 2021

 

Jun 30, 2021

 

Sep 30, 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

$

6,995,556

 

$

67,276

 

3.82

%

 

$

7,301,745

 

$

71,747

 

3.94

%

 

$

7,314,805

 

$

69,127

 

3.76

%

Residential

 

1,477,891

 

 

11,479

 

3.08

%

 

 

1,433,056

 

 

11,397

 

3.19

%

 

 

1,390,719

 

 

12,269

 

3.51

%

Consumer

 

1,055,075

 

 

8,803

 

3.31

%

 

 

1,061,900

 

 

8,597

 

3.25

%

 

 

1,209,340

 

 

10,091

 

3.32

%

Total loans

 

9,528,522

 

 

87,558

 

3.65

%

 

 

9,796,701

 

 

91,741

 

3.76

%

 

 

9,914,864

 

 

91,487

 

3.67

%

Investment securities

 

5,249,742

 

 

16,656

 

1.26

%

 

 

4,344,690

 

 

14,778

 

1.36

%

 

 

1,712,928

 

 

10,007

 

2.32

%

Federal funds sold and other short-term investments

 

1,503,919

 

 

570

 

0.15

%

 

 

1,617,741

 

 

431

 

0.11

%

 

 

1,462,047

 

 

372

 

0.10

%

Total interest-earning assets

 

16,282,183

 

 

104,784

 

2.55

%

 

 

15,759,132

 

 

106,950

 

2.72

%

 

 

13,089,839

 

 

101,866

 

3.10

%

Non-interest-earning assets

 

1,141,168

 

 

 

 

 

 

1,061,121

 

 

 

 

 

 

1,139,440

 

 

 

 

Total assets

$

17,423,351

 

 

 

 

 

$

16,820,253

 

 

 

 

 

$

14,229,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings

$

1,441,385

 

$

36

 

0.01

%

 

$

1,385,735

 

$

69

 

0.02

%

 

$

1,187,083

 

$

62

 

0.02

%

Interest checking

 

2,687,196

 

 

244

 

0.04

%

 

 

2,541,862

 

 

253

 

0.04

%

 

 

2,307,972

 

 

334

 

0.06

%

Money market

 

3,762,855

 

 

360

 

0.04

%

 

 

3,523,330

 

 

605

 

0.07

%

 

 

3,311,847

 

 

1,051

 

0.13

%

Time deposits

 

233,145

 

 

96

 

0.16

%

 

 

246,801

 

 

104

 

0.17

%

 

 

294,025

 

 

280

 

0.38

%

Total interest-bearing deposits

 

8,124,581

 

 

736

 

0.04

%

 

 

7,697,728

 

 

1,031

 

0.05

%

 

 

7,100,927

 

 

1,727

 

0.10

%

Borrowings

 

26,074

 

 

41

 

0.62

%

 

 

25,042

 

 

42

 

0.67

%

 

 

25,478

 

 

44

 

0.69

%

Total interest-bearing liabilities

 

8,150,655

 

 

777

 

0.04

%

 

 

7,722,770

 

 

1,073

 

0.06

%

 

 

7,126,405

 

 

1,771

 

0.10

%

Demand deposit accounts

 

5,471,906

 

 

 

 

 

 

5,355,170

 

 

 

 

 

 

5,034,474

 

 

 

 

Other noninterest-bearing liabilities

 

350,111

 

 

 

 

 

 

335,816

 

 

 

 

 

 

362,073

 

 

 

 

Total liabilities

 

13,972,672

 

 

 

 

 

 

13,413,756

 

 

 

 

 

 

12,522,952

 

 

 

 

Shareholders' equity

 

3,450,679

 

 

 

 

 

 

3,406,497

 

 

 

 

 

 

1,706,327

 

 

 

 

Total liabilities and shareholders' equity

$

17,423,351

 

 

 

 

 

$

16,820,253

 

 

 

 

 

$

14,229,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income - FTE

 

 

$

104,007

 

 

 

 

 

$

105,877

 

 

 

 

 

$

100,095

 

 

Net interest rate spread (2)

 

 

 

 

2.51

%

 

 

 

 

 

2.66

%

 

 

 

 

 

3.00

%

Net interest-earning assets (3)

$

8,131,528

 

 

 

 

 

$

8,036,362

 

 

 

 

 

$

5,963,434

 

 

 

 

Net interest margin - FTE (4)

 

 

 

 

2.53

%

 

 

 

 

 

2.69

%

 

 

 

 

 

3.04

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

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

 

As of and for the nine months ended

 

Sep 30, 2021

 

Sep 30, 2020

(Unaudited, dollars in thousands)

Avg.

Balance

 

Interest

 

Yield /

Cost (5)

 

Avg.

Balance

 

Interest

 

Yield /

Cost (5)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

Loans (1):

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

7,203,903

 

$

208,228

 

3.86

%

 

$

6,929,729

 

$

208,534

 

4.02

%

Residential

 

1,435,006

 

 

34,150

 

3.18

%

 

 

1,412,268

 

 

38,127

 

3.61

%

Consumer

 

1,074,039

 

 

26,337

 

3.28

%

 

 

1,261,211

 

 

34,108

 

3.61

%

Total loans

 

9,712,948

 

 

268,715

 

3.70

%

 

 

9,603,208

 

 

280,769

 

3.91

%

Investment securities

 

4,414,582

 

 

44,015

 

1.33

%

 

 

1,556,985

 

 

30,782

 

2.64

%

Federal funds sold and other short-term investments

 

1,619,873

 

 

1,434

 

0.12

%

 

 

952,141

 

 

1,173

 

0.16

%

Total interest earning assets

 

15,747,403

 

 

314,164

 

2.67

%

 

 

12,112,334

 

 

312,724

 

3.45

%

Non-interest-earning assets

 

1,106,967

 

 

 

 

 

 

1,089,473

 

 

 

 

Total assets

$

16,854,370

 

 

 

 

 

$

13,201,807

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

Savings

$

1,376,243

 

$

169

 

0.02

%

 

$

1,086,957

 

$

181

 

0.02

%

Interest checking

 

2,541,113

 

 

730

 

0.04

%

 

 

2,208,517

 

 

1,801

 

0.11

%

Money market

 

3,576,648

 

 

1,553

 

0.06

%

 

 

3,162,528

 

 

6,883

 

0.29

%

Time deposits

 

243,621

 

 

317

 

0.17

%

 

 

311,462

 

 

1,380

 

0.59

%

Total interest-bearing deposits

 

7,737,625

 

 

2,769

 

0.05

%

 

 

6,769,464

 

 

10,245

 

0.20

%

Borrowings

 

25,582

 

 

123

 

0.64

%

 

 

87,738

 

 

717

 

1.09

%

Total interest-bearing liabilities

 

7,763,207

 

 

2,892

 

0.05

%

 

 

6,857,202

 

 

10,962

 

0.21

%

Demand deposit accounts

 

5,318,903

 

 

 

 

 

 

4,322,809

 

 

 

 

Other noninterest-bearing liabilities

 

347,237

 

 

 

 

 

 

345,869

 

 

 

 

Total liabilities

 

13,429,347

 

 

 

 

 

 

11,525,880

 

 

 

 

Shareholders' equity

 

3,425,023

 

 

 

 

 

 

1,675,927

 

 

 

 

Total liabilities and shareholders' equity

$

16,854,370

 

 

 

 

 

$

13,201,807

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income - FTE

 

 

$

311,272

 

 

 

 

 

$

301,762

 

 

Net interest rate spread (2)

 

 

 

 

2.62

%

 

 

 

 

 

3.24

%

Net interest-earning assets (3)

$

7,984,196

 

 

 

 

 

$

5,255,132

 

 

 

 

Net interest margin - FTE (4)

 

 

 

 

2.64

%

 

 

 

 

 

3.33

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

Sep 30, 2021

Jun 30, 2021

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

(Unaudited, dollars in thousands)

 

 

 

 

 

Non-accrual loans:

 

 

 

 

 

Commercial

$

29,166

 

$

29,356

 

$

30,275

 

$

30,059

 

$

28,968

 

Residential

 

7,185

 

 

6,445

 

 

8,127

 

 

6,815

 

 

7,419

 

Consumer

 

4,262

 

 

4,106

 

 

3,873

 

 

4,131

 

 

4,727

 

Total non-accrual loans

 

40,613

 

 

39,907

 

 

42,275

 

 

41,005

 

 

41,114

 

Accruing loans past due 90 days or more:

 

 

 

 

 

Commercial

 

1,171

 

 

1,439

 

 

1,390

 

 

1,959

 

 

3,384

 

Residential

 

278

 

 

277

 

 

280

 

 

279

 

 

326

 

Consumer

 

9

 

 

9

 

 

9

 

 

9

 

 

9

 

Total accruing loans past due 90 days or more

 

1,458

 

 

1,725

 

 

1,679

 

 

2,247

 

 

3,719

 

Total non-performing loans

 

42,071

 

 

41,632

 

 

43,954

 

 

43,252

 

 

44,833

 

Other real estate owned

 

 

 

38

 

 

 

 

 

 

40

 

Other non-performing assets:

 

 

 

 

 

 

 

 

 

 

Total non-performing assets

$

42,071

 

$

41,670

 

$

43,954

 

$

43,252

 

$

44,873

 

Total accruing troubled debt restructured loans

$

34,723

 

$

38,316

 

$

39,367

 

$

41,095

 

$

39,881

 

Total non-performing loans to total loans

 

0.44

%

 

0.43

%

 

0.44

%

 

0.45

%

 

0.45

%

Total non-performing assets to total assets

 

0.24

%

 

0.24

%

 

0.26

%

 

0.27

%

 

0.29

%

 

 

 

 

 

 

(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.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

ASSET QUALITY - PROVISION, ALLOWANCE, AND NET CHARGE OFFS

 

Three months ended

 

Sep 30, 2021

Jun 30, 2021

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

(Unaudited, dollars in thousands)

 

 

 

 

 

Average total loans

$

9,528,522

 

$

9,796,701

 

$

9,816,788

 

$

9,796,697

 

$

9,914,864

 

Allowance for loan losses, beginning of the period

$

105,637

 

$

111,080

 

$

113,031

 

$

115,432

 

$

116,636

 

Charged-off loans:

 

 

 

 

 

Commercial and industrial

 

 

 

550

 

 

 

 

1,603

 

 

140

 

Commercial real estate

 

8

 

 

 

 

234

 

 

 

 

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

867

 

 

1,838

 

 

1,384

 

 

1,433

 

 

1,179

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

Consumer home equity

 

 

 

 

 

 

 

79

 

 

22

 

Other consumer

 

742

 

 

275

 

 

364

 

 

713

 

 

1,077

 

Total charged-off loans

 

1,617

 

 

2,663

 

 

1,982

 

 

3,828

 

 

2,418

 

Recoveries on loans previously charged-off:

 

 

 

 

 

Commercial and industrial

 

40

 

 

13

 

 

9

 

 

92

 

 

306

 

Commercial real estate

 

 

 

4

 

 

 

 

220

 

 

4

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

469

 

 

291

 

 

365

 

 

47

 

 

91

 

Residential real estate

 

88

 

 

17

 

 

10

 

 

9

 

 

43

 

Consumer home equity

 

63

 

 

3

 

 

71

 

 

100

 

 

31

 

Other consumer

 

206

 

 

192

 

 

156

 

 

59

 

 

39

 

Total recoveries

 

866

 

 

520

 

 

611

 

 

527

 

 

514

 

Net loans charged-off (recoveries):

 

 

 

 

 

Commercial and industrial

 

(40

)

 

537

 

 

(9

)

 

1,511

 

 

(166

)

Commercial real estate

 

8

 

 

(4

)

 

234

 

 

(220

)

 

(4

)

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

398

 

 

1,547

 

 

1,019

 

 

1,386

 

 

1,088

 

Residential real estate

 

(88

)

 

(17

)

 

(10

)

 

(9

)

 

(43

)

Consumer home equity

 

(63

)

 

(3

)

 

(71

)

 

(21

)

 

(9

)

Other consumer

 

536

 

 

83

 

 

208

 

 

654

 

 

1,038

 

Total net loans charged-off

 

751

 

 

2,143

 

 

1,371

 

 

3,301

 

 

1,904

 

(Release of) provision for loan losses

 

(1,488

)

 

(3,300

)

 

(580

)

 

900

 

 

700

 

Total allowance for loan losses, end of period

$

103,398

 

$

105,637

 

$

111,080

 

$

113,031

 

$

115,432

 

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

 

0.03

%

 

0.09

%

 

0.06

%

 

0.13

%

 

0.08

%

Allowance for loan losses as a percent of total loans

 

1.09

%

 

1.10

%

 

1.12

%

 

1.16

%

 

1.16

%

Allowance for loan losses as a percent of nonperforming loans

 

245.77

%

 

253.74

%

 

252.72

%

 

261.33

%

 

257.47

%

 

 

 

 

 

 

(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)

Sep 30, 2021

Jun 30, 2021

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

 

 

 

 

 

 

Net income (GAAP)

$

37,106

 

$

34,809

 

$

47,663

 

$

(44,062

)

$

28,505

 

Add:

 

 

 

 

 

Noninterest income components:

 

 

 

 

 

Losses (income) from investments held in rabbi trusts

 

289

 

 

(4,216

)

 

(1,846

)

 

(5,535

)

 

(3,800

)

Gains on sales of securities available for sale, net

 

(1

)

 

(1

)

 

(1,164

)

 

(3

)

 

 

(Gains) losses on sale of other assets

 

(490

)

 

(29

)

 

(18

)

 

(49

)

 

71

 

Noninterest expense components:

 

 

 

 

 

Rabbi trust employee benefit (income) expense

 

(53

)

 

2,063

 

 

986

 

 

2,838

 

 

1,445

 

Impairment charge (reversal) on tax credit investments

 

1,133

 

 

(1,419

)

 

 

 

3,189

 

 

7,590

 

Indirect IPO costs (1)

 

 

 

 

 

 

 

 

 

549

 

Gain on sale of OREO

 

(87

)

 

 

 

 

 

(61

)

 

(546

)

Merger and acquisition expenses

 

740

 

 

3,479

 

 

589

 

 

90

 

 

 

Settlement and expenses for putative consumer class action matters

 

 

 

3,325

 

 

 

 

 

 

 

Stock donation to the EBF

 

 

 

 

 

 

 

91,287

 

 

 

Total impact of non-GAAP adjustments

 

1,531

 

 

3,202

 

 

(1,453

)

 

91,756

 

 

5,309

 

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

 

1,246

 

 

914

 

 

(327

)

 

16,082

 

 

1,492

 

Non-GAAP adjustments, net of tax

$

285

 

$

2,288

 

$

(1,126

)

$

75,674

 

$

3,817

 

Operating net income (non-GAAP)

$

37,391

 

$

37,097

 

$

46,537

 

$

31,612

 

$

32,322

 

 

 

 

 

 

 

Weighted average common shares outstanding during the period (3):

 

 

 

 

 

Basic

 

172,298,615

 

 

172,173,707

 

 

172,049,044

 

 

171,812,535

 

 

 

Diluted

 

172,298,615

 

 

172,173,707

 

 

172,049,044

 

 

171,812,535

 

 

 

 

 

 

 

 

 

Earnings (loss) per share, basic

$

0.22

 

$

0.20

 

$

0.28

 

$

(0.26

)

n.a.

Earnings (loss) per share, diluted

$

0.22

 

$

0.20

 

$

0.28

 

$

(0.26

)

n.a.

 

 

 

 

 

 

Operating earnings per share, basic (non-GAAP)

$

0.22

 

$

0.22

 

$

0.27

 

$

0.18

 

n.a.

Operating earnings per share, diluted (non-GAAP)

$

0.22

 

$

0.22

 

$

0.27

 

$

0.18

 

n.a.

 

 

 

 

 

 

Return on average assets (4)

 

0.84

%

 

0.83

%

 

1.19

%

 

(1.11

)%

 

0.80

%

Add:

 

 

 

 

 

Losses (income) from investments held in rabbi trusts (4)

 

0.01

%

 

(0.10

)%

 

(0.05

)%

 

(0.14

)%

 

(0.11

)%

Gains on sales of securities available for sale, net (4)

 

%

 

%

 

(0.03

)%

 

%

 

%

(Gains) losses on sale of other assets (4)

 

(0.01

)%

 

%

 

%

 

%

 

%

Rabbi trust employee benefit (income) expense (4)

 

%

 

0.05

%

 

0.02

%

 

0.07

%

 

0.04

%

Impairment charge (reversal) on tax credit investments (4)

 

0.03

%

 

(0.03

)%

 

%

 

0.08

%

 

0.21

%

Indirect IPO costs (1) (4)

 

%

 

%

 

%

 

%

 

0.02

%

Gain on sale of OREO (4)

 

%

 

%

 

%

 

%

 

(0.02

)%

Merger and acquisition expenses (4)

 

0.02

%

 

0.08

%

 

0.01

%

 

%

 

%

Settlement and expenses for putative consumer class action matters (4)

 

%

 

0.08

%

 

%

 

%

 

%

Stock donation to the EBF (4)

 

%

 

%

 

%

 

2.29

%

 

%

Less net tax benefit (expense) associated with non-GAAP adjustments (2) (4)

 

0.03

%

 

0.02

%

 

(0.01

)%

 

0.40

%

 

0.04

%

Operating return on average assets (non-GAAP) (4)

 

0.86

%

 

0.89

%

 

1.15

%

 

0.79

%

 

0.90

%

 

 

 

 

 

 

Return on average shareholders' equity (4)

 

4.27

%

 

4.10

%

 

5.66

%

 

(5.61

)%

 

6.65

%

Add:

 

 

 

 

 

Losses (income) from investments held in rabbi trusts (4)

 

0.03

%

 

(0.50

)%

 

(0.22

)%

 

(0.70

)%

 

(0.89

)%

Gains on sales of securities available for sale, net (4)

 

%

 

%

 

(0.14

)%

 

%

 

%

(Gains) losses on sale of other assets (4)

 

(0.06

)%

 

%

 

%

 

(0.01

)%

 

0.02

%

Rabbi trust employee benefit (income) expense (4)

 

(0.01

)%

 

0.24

%

 

0.12

%

 

0.36

%

 

0.34

%

Impairment charge (reversal) on tax credit investments (4)

 

0.13

%

 

(0.17

)%

 

%

 

0.41

%

 

1.77

%

Indirect IPO costs (1) (4)

 

%

 

%

 

%

 

%

 

0.13

%

Gain on sale of OREO (4)

 

(0.01

)%

 

%

 

%

 

(0.01

)%

 

(0.13

)%

Merger and acquisition expenses (4)

 

0.09

%

 

0.41

%

 

0.07

%

 

0.01

%

 

%

Settlement and expenses for putative consumer class action matters (4)

 

%

 

0.39

%

 

%

 

%

 

%

Stock donation to the EBF (4)

 

%

 

%

 

%

 

11.62

%

 

%

Less net tax benefit (expense) associated with non-GAAP adjustments (2) (4)

 

0.14

%

 

0.11

%

 

(0.04

)%

 

2.05

%

 

0.35

%

Operating return on average shareholders' equity (non-GAAP) (4)

 

4.30

%

 

4.36

%

 

5.53

%

 

4.02

%

 

7.54

%

 

 

 

 

 

 

(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) Shares held by the Company’s ESOP that have not been allocated to employees in accordance with the terms of the ESOP are not deemed outstanding for earnings per share calculations.

(4) Presented on an annualized basis.

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, 2021

Jun 30, 2021

Mar 31, 2021

Dec 31, 2020

Sep 30, 2020

(Unaudited, dollars in thousands)

 

 

 

 

 

Net interest income (GAAP)

$

102,691

 

$

104,608

 

$

100,091

&nb