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Eastern Bankshares, Inc. Reports First Quarter 2022 Financial Results

April, 28, 2022

Company 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 2022 first quarter financial results and the declaration of a quarterly cash dividend. Net income for the first quarter of 2022 was $51.5 million, or $0.30 per diluted share, compared to net income of $35.1 million, or $0.20 per diluted share, reported for the fourth quarter of 2021. Operating net income* for the first quarter of 2022 was $55.1 million, or $0.32 per diluted share, compared to $44.9 million, or $0.26 per diluted share, reported for the prior quarter.

“Our first quarter results were strong as we began to realize the benefits of the investments we’ve made to grow our business and solidify our position as the leading community bank in Greater Boston,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank. “We remain focused on delivering on our strategic priorities, which include developing new ways to deliver our offerings and services to customers, expanding our role as an employer of choice, and contributing positively to our local community while delivering greater value to our shareholders. Our operating earnings in the first quarter were 23% higher than the same period a year ago, and we believe we are well positioned to benefit from higher interest rates in the quarters ahead.”

HIGHLIGHTS FOR THE FIRST QUARTER OF 2022

  • Operating net income* of $55.1 million for the first quarter of 2022 is 23% higher than the prior quarter and 18% higher than the prior year quarter.
  • Loan growth excluding Paycheck Protection Program (“PPP”) loans was 3.1% on an annualized basis. Commercial loan growth excluding PPP loans was 4.4% on an annualized basis.
  • The Company adopted Accounting Standards Update (“ASU”) 2016-13 (defined below) which included the current expected credit losses methodology ("CECL") as of January 1, 2022 and recorded a net decrease to retained earnings of $20.1 million in connection with such adoption. The Company recorded a $0.5 million release of allowance for loan losses for the first quarter.
  • The Company repurchased 2,866,621 shares of its common stock during the first quarter of 2022 at a weighted average price of $21.12 excluding commissions, for an aggregate purchase price of $60.5 million.
  • Subsequent to quarter end, on April 1, 2022, the Company completed the previously announced transfer of its cannabis banking and money service business to Needham Bank, marking the last Century Bancorp, Inc. (“Century”) integration milestone.

BALANCE SHEET

Total assets were $22.8 billion at March 31, 2022, representing a decrease of $676.1 million, or 3%, from December 31, 2021.

  • Total securities decreased $198.5 million, or 2%, from the prior quarter, to $8.3 billion, due to a decline in the market value of available for sale securities, investment sales and paydowns partially offset by reinvestment. Cash and equivalents declined $401.3 million from the prior quarter to $830.5 million.
  • Total loans were $12.2 billion, representing a decrease of $99.3 million, or 1%, from the prior quarter. The decrease was driven by PPP loan paydowns of $190.2 million, partially offset by loan growth excluding PPP loans of $90.9 million, or 3.1% on an annualized basis.
  • Deposits totaled $19.4 billion, representing a decrease of $235.5 million, or 1%, from the prior quarter.
  • Shareholders’ equity was $3.0 billion, representing a decrease of $398.0 million from the prior quarter. The decrease was driven primarily by a decline in the market value of the available for sale investment portfolio which drove a decrease in accumulated other comprehensive income of $356.0 million. Additional paid-in capital decreased $57.6 million in the first quarter associated primarily with the Company’s share repurchase activity. Retained earnings increased $14.3 million as net income was partially offset by a $20.1 million reduction related to the adoption of CECL and quarterly dividends. Please refer to the Asset Quality section of this press release for additional information on CECL and Appendix E to this press release for a roll forward of tangible shareholders’ equity*.
  • At March 31, 2022, book value per share was $16.40 and tangible book value per share* was $12.83.

NET INTEREST INCOME

Net interest income was $128.1 million for the first quarter, compared to $122.4 million in the prior quarter, representing an increase of $5.7 million from the prior quarter.

  • The increase in net interest income on a consecutive quarter basis was primarily due to an increase in average earning assets of $2.4 billion, a result of the full quarter impact of the Century merger. This was partially offset by a decline in the net interest margin.
  • Included in net interest income was $5.8 million and $10.8 million of PPP fee accretion net of deferred cost amortization in the first quarter and prior quarter, respectively. During the first quarter of 2022, $190.2 million in PPP loans were forgiven by the U.S. Small Business Administration or otherwise paid down compared to $276.3 million in the prior quarter.
  • The net interest margin on a fully tax equivalent (“FTE”) basis* was 2.42% for the first quarter, representing a 12 basis point decrease from the prior quarter. The prior quarter’s net interest margin benefited from higher PPP fee accretion compared to the first quarter.

NONINTEREST INCOME

Noninterest income was $46.4 million for the first quarter, compared to $49.0 million for the prior quarter, representing a decrease of $2.6 million. Noninterest income on an operating basis* was $53.3 million for the first quarter, compared to $44.5 million for the prior quarter, an increase of $8.8 million.

  • Insurance commissions increased $7.8 million to $28.7 million in the first quarter, compared to $20.9 million in the prior quarter, driven by seasonality. Compared to the prior year quarter, insurance commissions increased $0.6 million, or 2%.
  • Service charges on deposit accounts increased $1.3 million to $8.5 million in the first quarter, primarily due to higher account analysis fees.
  • Trust and investment advisory fees decreased $0.4 million on a consecutive quarter basis to $6.1 million.
  • Loan-level interest rate swap income was $2.9 million in the first quarter, compared to $0.5 million in the prior quarter, representing an increase of $2.4 million. The increase was driven by a $2.0 million increase in the fair value of such interest rate swap transactions and a $0.4 million increase in cash income due to higher swap transaction volume.
  • Losses from investments held in rabbi trust accounts were $4.4 million in the first quarter compared to gains of $4.4 million in the prior quarter, representing a decrease of $8.9 million due to weaker investment performance in the period as compared to the prior quarter.
  • Realized losses on available for sale securities totaled $2.2 million in the first quarter compared to no gain or loss in the prior quarter.
  • Other noninterest income decreased $2.0 million in the first quarter, due primarily to decreased income on bank owned life insurance policies.

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

NONINTEREST EXPENSE

Noninterest expense was $108.9 million for the first quarter, compared to $143.6 million in the prior quarter, representing a decrease of $34.7 million. The decrease was primarily driven by a reduction in merger and acquisition costs of $30.7 million related to the merger with Century. Noninterest expense on an operating basis* for the first quarter was $110.9 million, compared to $110.3 million in the prior quarter, an increase of $0.6 million.

  • Salaries and employee benefits expense was $69.5 million in the first quarter, representing a decrease of $26.8 million from the prior quarter, primarily due to a reduction in costs incurred in the prior quarter related to the Century merger as well as a decrease in benefits expense attributable to the lower market value of investments held in rabbi trust accounts associated with the Company’s defined contribution supplemental executive retirement plan.
  • Office occupancy and equipment expense was $11.6 million in the first quarter, a decrease of $4.6 million from the prior quarter, primarily due to a reduction in expenses associated with the Century merger.
  • Professional services expense was $4.7 million in the first quarter, a decrease of $5.2 million from the prior quarter, primarily due to a reduction in expenses associated with the Century merger.

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

ASSET QUALITY

The Company adopted ASU 2016-13, Financial Instruments-Credit Losses on Financial Instruments and relevant amendments (Topic 326) (“ASU 2016-13”) on January 1, 2022, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit losses methodology or CECL. Upon the January 1, 2022 adoption of CECL, the allowance for loan losses increased $27.1 million, and the reserve for unfunded commitments increased $1.0 million for a combined increase of $28.1 million for the allowance for credit losses. There was no material impact to other in-scope assets. The after-tax decrease to retained earnings of $20.1 million, or $0.11 per share, was recognized as a reduction to retained earnings and represented the cumulative effective adjustment from a change in accounting policies.

The allowance for loan losses was $124.2 million at March 31, 2022, or 1.02% of total loans, compared to $97.8 million or 0.80% of total loans at December 31, 2021. The increase in the reserve ratio was primarily due to the additional reserves required under CECL for loans acquired from Century which were recorded at fair value at the time of acquisition. Under CECL, the credit mark that is part of the day one fair value adjustment on acquired loans cannot be considered in the allowance computation, whereas, under the incurred loss model, the credit mark could be considered. The Company released loan loss reserves totaling $0.5 million in the first quarter, compared to a release of $4.3 million in the prior quarter.

Non-performing loans totaled $33.8 million at March 31, 2022 compared to $35.0 million at the end of the prior quarter. During the first quarter of 2022, the Company recorded total net charge-offs of $0.2 million, or 0.01% of average total loans on an annualized basis, compared to $1.3 million and 0.05% in the prior quarter, respectively.

At March 31, 2022, approximately $49.0 million in COVID-19 modified loans remained under modified payment terms, down from $106.7 million at December 31, 2021. The commercial real estate portfolio contained $39.4 million of the remaining COVID-19 modifications at period end, all of which were in the hotel segment.

DIVIDENDS AND SHARE REPURCHASES

The Company’s Board of Directors has declared a quarterly cash dividend of $0.10 per common share. The dividend will be payable on June 15, 2022, to shareholders of record as of the close of business on June 3, 2022.

The Company repurchased 2,866,621 shares of its common stock during the first quarter of 2022 at a weighted average price of $21.12 excluding commissions, for an aggregate purchase price of $60.5 million. Through March 31, 2022, the Company had repurchased 4,002,499 shares of its common stock in total under the Company’s current repurchase authorization at a weighted average price of $20.92 excluding commissions, for an aggregate purchase price of $83.7 million. At March 31, 2022, there were 5,335,401 shares available for repurchase and $141.3 million in total market value remaining under the Company’s current repurchase authorization, which expires on November 30, 2022 and is limited to $225.0 million in total market value.

CONFERENCE CALL INFORMATION

A conference call and webcast covering Eastern’s first quarter 2022 earnings will be held on Friday, April 29, 2022 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 5295184. 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 120 locations serving communities in eastern Massachusetts, southern and coastal New Hampshire, and Rhode Island. As of March 31, 2022, Eastern Bank had approximately $23 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 2,100 deeply committed professionals who value relationships with their customers, colleagues, and communities. For investor information, visit investor.easternbank.com.

NON-GAAP FINANCIAL MEASURES

*Denotes a non-GAAP financial measure used in this press release.

A non-GAAP financial measure is defined as a numerical measure of the Company’s historical or future financial performance, financial position or cash flows that excludes (or includes) amounts, or is subject to adjustments that have the effect of excluding (or including) amounts that are included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”) in the Company’s statement of income, balance sheet or statement of cash flows (or equivalent statements).

The Company presents non-GAAP financial measures, which management uses to evaluate the Company’s performance, and which exclude the effects of certain transactions that management believes are unrelated to its core business and are therefore not necessarily indicative of its current performance or financial position. Management believes excluding these items facilitates greater visibility for investors into the Company’s core 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”) 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 presents certain asset quality metrics excluding PPP loans which it does not consider to be part of the Company’s core portfolio. 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, 2022 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 that revenue or expense synergies or the other expected benefits of the Company’s merger with Century (“Transaction”) may not fully materialize for the Company in the timeframe expected or at all, or may be more costly to achieve; risks that the Company is unable to successfully implement integration strategies for the transaction; reputational risks and the reaction of customers to the Transaction; and diversion of management time on Transaction-related issues; as well as general economic conditions or conditions within the securities markets; and legislative and regulatory changes and related compliance costs that could adversely affect the business in which the Company and its subsidiary Eastern Bank are engaged, including 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; and the failure of the Company to execute all of 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; reduced demand for office space in the Company’s markets due to remote and/or hybrid work arrangements; 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, 2022

Dec 31, 2021

Sep 30, 2021

Jun 30, 2021

Mar 31, 2021

 

 

 

 

 

 

Earnings data

 

 

 

 

 

Net interest income

$

128,124

 

$

122,437

 

$

102,691

 

$

104,608

 

$

100,091

 

Noninterest income

 

46,415

 

 

49,001

 

 

43,209

 

 

45,733

 

 

55,212

 

Total revenue

 

174,539

 

 

171,438

 

 

145,900

 

 

150,341

 

 

155,303

 

Noninterest expense

 

108,866

 

 

143,602

 

 

98,970

 

 

107,335

 

 

94,049

 

Pre-tax, pre-provision income

 

65,673

 

 

27,836

 

 

46,930

 

 

43,006

 

 

61,254

 

Release of allowance for loan losses

 

(485

)

 

(4,318

)

 

(1,488

)

 

(3,300

)

 

(580

)

Pre-tax income

 

66,158

 

 

32,154

 

 

48,418

 

 

46,306

 

 

61,834

 

Net income

 

51,516

 

 

35,087

 

 

37,106

 

 

34,809

 

 

47,663

 

Operating net income (non-GAAP)

 

55,107

 

 

44,860

 

 

37,391

 

 

37,097

 

 

46,537

 

 

 

 

 

 

 

Per-share data

 

 

 

 

 

Earnings per share, basic

$

0.30

 

$

0.20

 

$

0.22

 

$

0.20

 

$

0.28

 

Earnings per share, diluted

$

0.30

 

$

0.20

 

$

0.22

 

$

0.20

 

$

0.28

 

Operating earnings per share, basic (non-GAAP)

$

0.32

 

$

0.26

 

$

0.22

 

$

0.22

 

$

0.27

 

Operating earnings per share, diluted (non-GAAP)

$

0.32

 

$

0.26

 

$

0.22

 

$

0.22

 

$

0.27

 

Book value per share

$

16.40

 

$

18.28

 

$

18.36

 

$

18.37

 

$

18.14

 

Tangible book value per share (non-GAAP)

$

12.83

 

$

14.80

 

$

16.33

 

$

16.33

 

$

16.12

 

 

 

 

 

 

 

Profitability

 

 

 

 

 

Return on average assets (1)

 

0.90

%

 

0.67

%

 

0.84

%

 

0.83

%

 

1.19

%

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

 

0.96

%

 

0.86

%

 

0.86

%

 

0.89

%

 

1.15

%

Return on average shareholders' equity ("ROE") (1)

 

6.38

%

 

4.07

%

 

4.27

%

 

4.10

%

 

5.66

%

Operating ROE (non-GAAP) (1)

 

6.82

%

 

5.19

%

 

4.30

%

 

4.36

%

 

5.53

%

Net interest margin (FTE) (1)

 

2.42

%

 

2.54

%

 

2.53

%

 

2.69

%

 

2.71

%

Cost of deposits (1)

 

0.07

%

 

0.06

%

 

0.02

%

 

0.03

%

 

0.03

%

Fee income ratio

 

26.59

%

 

28.58

%

 

29.62

%

 

30.42

%

 

35.55

%

Efficiency ratio

 

62.37

%

 

83.76

%

 

67.83

%

 

71.39

%

 

60.56

%

Operating efficiency ratio (non-GAAP)

 

60.39

%

 

65.21

%

 

66.14

%

 

67.78

%

 

60.22

%

 

 

 

 

 

 

Balance Sheet (end of period)

 

 

 

 

 

Total assets

$

22,836,072

 

$

23,512,128

 

$

17,461,223

 

$

17,047,453

 

$

16,726,795

 

Total loans

 

12,182,203

 

 

12,281,510

 

 

9,504,562

 

 

9,621,075

 

 

9,916,475

 

Total deposits

 

19,392,816

 

 

19,628,311

 

 

13,649,964

 

 

13,250,433

 

 

12,980,875

 

Total loans / total deposits

 

63

%

 

63

%

 

70

%

 

73

%

 

76

%

PPP loans

$

141,166

 

$

331,385

 

$

533,965

 

$

825,784

 

$

1,238,053

 

 

 

 

 

 

 

Asset quality

 

 

 

 

 

Allowance for loan losses ("ALLL") (2)

$

124,166

 

$

97,787

 

$

103,398

 

$

105,637

 

$

111,080

 

ALLL / total nonperforming loans ("NPLs")

 

367.13

%

 

279.53

%

 

245.77

%

 

253.74

%

 

252.72

%

Total NPLs / total loans

 

0.28

%

 

0.29

%

 

0.44

%

 

0.43

%

 

0.44

%

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

 

0.28

%

 

0.29

%

 

0.47

%

 

0.47

%

 

0.51

%

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

 

0.01

%

 

0.05

%

 

0.03

%

 

0.09

%

 

0.06

%

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

 

0.01

%

 

0.05

%

 

0.03

%

 

0.10

%

 

0.06

%

Remaining COVID-19 loan modifications

$

49,033

 

$

106,657

 

$

110,596

 

$

149,805

 

$

178,430

 

 

 

 

 

 

 

Capital adequacy

 

 

 

 

 

Shareholders' equity / assets

 

13.17

%

 

14.49

%

 

19.64

%

 

20.12

%

 

20.25

%

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

 

10.61

%

 

12.06

%

 

17.85

%

 

18.30

%

 

18.42

%

(1) Presented on an annualized basis.

(2) The Company adopted ASU 2016-13 on January 1, 2022 using the modified retrospective approach. Accordingly, at March 31, 2022, the allowance for loan losses was determined in accordance with ASC 326, “Financial Instruments-Credit Losses” and ASC 310, “Receivables,” as amended. At December 31, 2021, the allowance for loan losses was determined in accordance with ASC 450, “Contingencies” and ASC 310, “Receivables.”

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

As of

 

Mar 31, 2022 change from

(Unaudited, dollars in thousands)

Mar 31, 2022

Dec 31, 2021

Mar 31, 2021

 

Dec 31, 2021

 

Mar 31, 2021

ASSETS

 

 

 

 

△ $

△ %

 

△ $

△ %

Cash and due from banks

$

118,362

 

$

144,634

 

$

79,497

 

 

(26,272

)

(18

) %

 

38,865

 

49

%

Short-term investments

 

712,132

 

 

1,087,158

 

 

1,780,835

 

 

(375,026

)

(34

) %

 

(1,068,703

)

(60

) %

Cash and cash equivalents

 

830,494

 

 

1,231,792

 

 

1,860,332

 

 

(401,298

)

(33

) %

 

(1,029,838

)

(55

) %

Available for sale ("AFS") securities

 

7,917,305

 

 

8,511,224

 

 

3,986,253

 

 

(593,919

)

(7

) %

 

3,931,052

 

99

%

Held to maturity ("HTM") securities

 

395,434

 

 

 

 

 

 

395,434

 

%

 

395,434

 

%

Total securities

 

8,312,739

 

 

8,511,224

 

 

3,986,253

 

 

(198,485

)

(2

) %

 

4,326,486

 

109

%

Loans held for sale

 

1,166

 

 

1,206

 

 

2,022

 

 

(40

)

(3

) %

 

(856

)

(42

) %

Loans:

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

2,886,560

 

 

2,960,527

 

 

1,986,366

 

 

(73,967

)

(2

) %

 

900,194

 

45

%

Commercial real estate

 

4,609,824

 

 

4,522,513

 

 

3,676,941

 

 

87,311

 

2

%

 

932,883

 

25

%

Commercial construction

 

246,093

 

 

222,328

 

 

249,416

 

 

23,765

 

11

%

 

(3,323

)

(1

) %

Business banking

 

1,201,007

 

 

1,334,694

 

 

1,513,051

 

 

(133,687

)

(10

) %

 

(312,044

)

(21

) %

Total commercial loans

 

8,943,484

 

 

9,040,062

 

 

7,425,774

 

 

(96,578

)

(1

) %

 

1,517,710

 

20

%

Residential real estate

 

1,936,182

 

 

1,926,810

 

 

1,406,510

 

 

9,372

 

%

 

529,672

 

38

%

Consumer home equity

 

1,099,211

 

 

1,100,153

 

 

832,466

 

 

(942

)

%

 

266,745

 

32

%

Other consumer

 

203,326

 

 

214,485

 

 

251,725

 

 

(11,159

)

(5

) %

 

(48,399

)

(19

) %

Total loans

 

12,182,203

 

 

12,281,510

 

 

9,916,475

 

 

(99,307

)

(1

) %

 

2,265,728

 

23

%

Allowance for loan losses

 

(124,166

)

 

(97,787

)

 

(111,080

)

 

(26,379

)

27

%

 

(13,086

)

12

%

Unamortized prem./disc. and def. fees

 

(24,434

)

 

(26,442

)

 

(32,673

)

 

2,008

 

(8

) %

 

8,239

 

(25

) %

Net loans

 

12,033,603

 

 

12,157,281

 

 

9,772,722

 

 

(123,678

)

(1

) %

 

2,260,881

 

23

%

Federal Home Loan Bank stock, at cost

 

10,904

 

 

10,904

 

 

8,805

 

 

 

%

 

2,099

 

24

%

Premises and equipment

 

73,180

 

 

80,984

 

 

46,619

 

 

(7,804

)

(10

) %

 

26,561

 

57

%

Bank-owned life insurance

 

157,954

 

 

157,091

 

 

79,110

 

 

863

 

1

%

 

78,844

 

100

%

Goodwill and other intangibles, net

 

654,759

 

 

649,703

 

 

376,002

 

 

5,056

 

1

%

 

278,757

 

74

%

Deferred income taxes, net

 

183,137

 

 

76,535

 

 

31,508

 

 

106,602

 

139

%

 

151,629

 

481

%

Prepaid expenses

 

188,704

 

 

179,330

 

 

150,453

 

 

9,374

 

5

%

 

38,251

 

25

%

Other assets

 

389,432

 

 

456,078

 

 

412,969

 

 

(66,646

)

(15

) %

 

(23,537

)

(6

) %

Total assets

 

22,836,072

 

 

23,512,128

 

 

16,726,795

 

 

(676,056

)

(3

) %

 

6,109,277

 

37

%

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Demand

 

6,788,742

 

 

7,020,864

 

 

5,369,164

 

 

(232,122

)

(3

) %

 

1,419,578

 

26

%

Interest checking accounts

 

4,662,134

 

 

4,478,566

 

 

2,482,731

 

 

183,568

 

4

%

 

2,179,403

 

88

%

Savings accounts

 

2,089,427

 

 

2,077,495

 

 

1,362,463

 

 

11,932

 

1

%

 

726,964

 

53

%

Money market investment

 

5,406,198

 

 

5,525,005

 

 

3,522,990

 

 

(118,807

)

(2

) %

 

1,883,208

 

53

%

Certificates of deposit

 

446,315

 

 

526,381

 

 

243,527

 

 

(80,066

)

(15

) %

 

202,788

 

83

%

Total deposits

 

19,392,816

 

 

19,628,311

 

 

12,980,875

 

 

(235,495

)

(1

) %

 

6,411,941

 

49

%

Borrowed funds:

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

13,689

 

 

14,020

 

 

14,473

 

 

(331

)

(2

) %

 

(784

)

(5

) %

Escrow deposits of borrowers

 

21,233

 

 

20,258

 

 

14,878

 

 

975

 

5

%

 

6,355

 

43

%

Total borrowed funds

 

34,922

 

 

34,278

 

 

29,351

 

 

644

 

2

%

 

5,571

 

19

%

Other liabilities

 

399,942

 

 

443,187

 

 

329,524

 

 

(43,245

)

(10

) %

 

70,418

 

21

%

Total liabilities

 

19,827,680

 

 

20,105,776

 

 

13,339,750

 

 

(278,096

)

(1

) %

 

6,487,930

 

49

%

Shareholders' equity:

 

 

 

 

 

 

 

 

 

Common shares

 

1,834

 

 

1,863

 

 

1,868

 

 

(29

)

(2

) %

 

(34

)

(2

) %

Additional paid-in capital

 

1,777,670

 

 

1,835,241

 

 

1,854,895

 

 

(57,571

)

(3

) %

 

(77,225

)

(4

) %

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

 

(141,455

)

 

(142,709

)

 

(146,472

)

 

1,254

 

(1

) %

 

5,017

 

(3

) %

Retained earnings

 

1,782,997

 

 

1,768,653

 

 

1,702,946

 

 

14,344

 

1

%

 

80,051

 

5

%

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

 

(412,654

)

 

(56,696

)

 

(26,192

)

 

(355,958

)

628

%

 

(386,462

)

1475

%

Total shareholders' equity

 

3,008,392

 

 

3,406,352

 

 

3,387,045

 

 

(397,960

)

(12

) %

 

(378,653

)

(11

) %

Total liabilities and shareholders' equity

 

22,836,072

 

 

23,512,128

 

 

16,726,795

 

 

(676,056

)

(3

) %

 

6,109,277

 

37

%

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

Certain previously reported amounts have been reclassified to conform to the current period’s presentation.

 

 

Three months ended

 

Three months ended Mar 31, 2022 change from three
months ended

(Unaudited, dollars in thousands, except share data)

Mar 31, 2022

Dec 31, 2021

Mar 31, 2021

 

Dec 31, 2021

 

Mar 31, 2021

 

 

 

 

 

 

 

 

 

 

Interest and dividend income:

 

 

 

 

△ $

△ %

 

△ $

△ %

Interest and fees on loans

$

101,367

 

$

101,275

 

$

88,639

 

 

92

 

%

 

12,728

 

14

%

Taxable interest and dividends on securities

 

27,876

 

 

21,335

 

 

10,206

 

 

6,541

 

31

%

 

17,670

 

173

%

Non-taxable interest and dividends on securities

 

1,806

 

 

1,815

 

 

1,856

 

 

(9

)

%

 

(50

)

(3

) %

Interest on federal funds sold and other short-term investments

 

436

 

 

452

 

 

432

 

 

(16

)

(4

) %

 

4

 

1

%

Total interest and dividend income

 

131,485

 

 

124,877

 

 

101,133

 

 

6,608

 

5

%

 

30,352

 

30

%

Interest expense:

 

 

 

 

 

 

 

 

 

Interest on deposits

 

3,322

 

 

2,398

 

 

1,002

 

 

924

 

39

%

 

2,320

 

232

%

Interest on borrowings

 

39

 

 

42

 

 

40

 

 

(3

)

(7

) %

 

(1

)

(3

) %

Total interest expense

 

3,361

 

 

2,440

 

 

1,042

 

 

921

 

38

%

 

2,319

 

223

%

Net interest income

 

128,124

 

 

122,437

 

 

100,091

 

 

5,687

 

5

%

 

28,033

 

28

%

Release of allowance for loan losses

 

(485

)

 

(4,318

)

 

(580

)

 

3,833

 

(89

) %

 

95

 

(16

) %

Net interest income after release of allowance for loan losses

 

128,609

 

 

126,755

 

 

100,671

 

 

1,854

 

1

%

 

27,938

 

28

%

Noninterest income:

 

 

 

 

 

 

 

 

 

Insurance commissions

 

28,713

 

 

20,937

 

 

28,147

 

 

7,776

 

37

%

 

566

 

2

%

Service charges on deposit accounts

 

8,537

 

 

7,261

 

 

5,367

 

 

1,276

 

18

%

 

3,170

 

59

%

Trust and investment advisory fees

 

6,141

 

 

6,541

 

 

5,663

 

 

(400

)

(6

) %

 

478

 

8

%

Debit card processing fees

 

2,945

 

 

3,169

 

 

2,749

 

 

(224

)

(7

) %

 

196

 

7

%

Interest rate swap income

 

2,932

 

 

512

 

 

5,405

 

 

2,420

 

473

%

 

(2,473

)

(46

) %

(Losses) income from investments held in rabbi trusts

 

(4,433

)

 

4,444

 

 

1,846

 

 

(8,877

)

(200

) %

 

(6,279

)

(340

) %

Gains on sales of mortgage loans held for sale, net

 

169

 

 

561

 

 

1,479

 

 

(392

)

(70

) %

 

(1,310

)

(89

) %

(Losses) gains on sales of securities available for sale, net

 

(2,172

)

 

 

 

1,164

 

 

(2,172

)

%

 

(3,336

)

(287

) %

Other

 

3,583

 

 

5,576

 

 

3,392

 

 

(1,993

)

(36

) %

 

191

 

6

%

Total noninterest income

 

46,415

 

 

49,001

 

 

55,212

 

 

(2,586

)

(5

) %

 

(8,797

)

(16

) %

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

69,526

 

 

96,362

 

 

64,040

 

 

(26,836

)

(28

) %

 

5,486

 

9

%

Office occupancy and equipment

 

11,614

 

 

16,194

 

 

8,217

 

 

(4,580

)

(28

) %

 

3,397

 

41

%

Data processing

 

15,320

 

 

12,947

 

 

12,129

 

 

2,373

 

18

%

 

3,191

 

26

%

Professional services

 

4,701

 

 

9,866

 

 

4,148

 

 

(5,165

)

(52

) %

 

553

 

13

%

Marketing

 

1,574

 

 

1,955

 

 

1,691

 

 

(381

)

(19

) %

 

(117

)

(7

) %

Loan expenses

 

1,168

 

 

1,229

 

 

1,847

 

 

(61

)

(5

) %

 

(679

)

(37

) %

Federal Deposit Insurance Corporation ("FDIC") insurance

 

1,412

 

 

1,237

 

 

948

 

 

175

 

14

%

 

464

 

49

%

Amortization of intangible assets

 

827

 

 

726

 

 

532

 

 

101

 

14

%

 

295

 

55

%

Other

 

2,724

 

 

3,086

 

 

497

 

 

(362

)

(12

) %

 

2,227

 

448

%

Total noninterest expense

 

108,866

 

 

143,602

 

 

94,049

 

 

(34,736

)

(24

) %

 

14,817

 

16

%

Income before income tax expense (benefit)

 

66,158

 

 

32,154

 

 

61,834

 

 

34,004

 

106

%

 

4,324

 

7

%

Income tax expense (benefit) (1)

 

14,642

 

 

(2,933

)

 

14,171

 

 

17,575

 

(599

) %

 

471

 

3

%

Net income

 

51,516

 

 

35,087

 

 

47,663

 

 

16,429

 

47

%

 

3,853

 

8

%

 

 

 

 

 

 

 

 

 

 

Share data:

 

 

 

 

 

 

 

 

 

Earnings per share, basic

$

0.30

 

$

0.20

 

$

0.28

 

 

 

 

 

 

 

Earnings per share, diluted

$

0.30

 

$

0.20

 

$

0.28

 

 

 

 

 

 

 

(1) The net tax benefit amount for the quarter ended December 31, 2021 reflects the impact of the release of $11.3 million of the $12.0 million valuation allowance associated with the stock donation to the Eastern Bank Foundation made in the quarter ended December 31, 2020.

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, 2022

 

Dec 31, 2021

 

Mar 31, 2021

(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

$

8,973,094

 

$

78,226

 

3.54

%

 

$

8,021,665

 

$

80,326

 

3.97

%

 

$

7,317,951

 

$

69,210

 

3.84

%

Residential

 

1,937,494

 

 

14,471

 

3.03

%

 

 

1,735,324

 

 

12,993

 

2.97

%

 

 

1,393,139

 

 

11,274

 

3.28

%

Consumer

 

1,293,489

 

 

10,450

 

3.28

%

 

 

1,189,106

 

 

9,683

 

3.23

%

 

 

1,105,698

 

 

8,937

 

3.28

%

Total loans

 

12,204,077

 

 

103,147

 

3.43

%

 

 

10,946,095

 

 

103,002

 

3.73

%

 

 

9,816,788

 

 

89,421

 

3.69

%

Investment securities

 

8,647,200

 

 

30,163

 

1.41

%

 

 

7,336,783

 

 

23,633

 

1.28

%

 

 

3,631,530

 

 

12,577

 

1.40

%

Federal funds sold and other short-term investments

 

1,003,416

 

 

436

 

0.18

%

 

 

1,201,223

 

 

452

 

0.15

%

 

 

1,740,561

 

 

432

 

0.10

%

Total interest-earning assets

 

21,854,693

 

 

133,746

 

2.48

%

 

 

19,484,101

 

 

127,087

 

2.59

%

 

 

15,188,879

 

 

102,430

 

2.73

%

Non-interest-earning assets

 

1,436,702

 

 

 

 

 

 

1,373,219

 

 

 

 

 

 

1,120,603

 

 

 

 

Total assets

$

23,291,395

 

 

 

 

 

$

20,857,320

 

 

 

 

 

$

16,309,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings

$

2,076,754

 

$

51

 

0.01

%

 

$

1,800,862

 

$

61

 

0.01

%

 

$

1,300,057

 

$

64

 

0.02

%

Interest checking

 

4,596,026

 

 

2,032

 

0.18

%

 

 

3,830,427

 

 

1,267

 

0.13

%

 

 

2,391,025

 

 

234

 

0.04

%

Money market

 

5,568,264

 

 

920

 

0.07

%

 

 

4,743,313

 

 

788

 

0.07

%

 

 

3,440,214

 

 

587

 

0.07

%

Time deposits

 

481,833

 

 

319

 

0.27

%

 

 

388,511

 

 

281

 

0.29

%

 

 

251,115

 

 

117

 

0.19

%

Total interest-bearing deposits

 

12,722,877

 

 

3,322

 

0.11

%

 

 

10,763,113

 

 

2,397

 

0.09

%

 

 

7,382,411

 

 

1,002

 

0.06

%

Borrowings

 

30,669

 

 

39

 

0.52

%

 

 

29,204

 

 

42

 

0.57

%

 

 

25,625

 

 

40

 

0.63

%

Total interest-bearing liabilities

 

12,753,546

 

 

3,361

 

0.11

%

 

 

10,792,317

 

 

2,439

 

0.09

%

 

 

7,408,036

 

 

1,042

 

0.06

%

Demand deposit accounts

 

6,821,811

 

 

 

 

 

 

6,226,291

 

 

 

 

 

 

5,125,831

 

 

 

 

Other noninterest-bearing liabilities

 

442,591

 

 

 

 

 

 

415,481

 

 

 

 

 

 

358,087

 

 

 

 

Total liabilities

 

20,017,948

 

 

 

 

 

 

17,434,089

 

 

 

 

 

 

12,891,954

 

 

 

 

Shareholders' equity

 

3,273,447

 

 

 

 

 

 

3,423,231

 

 

 

 

 

 

3,417,528

 

 

 

 

Total liabilities and shareholders' equity

$

23,291,395

 

 

 

 

 

$

20,857,320

 

 

 

 

 

$

16,309,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income - FTE

 

 

$

130,385

 

 

 

 

 

$

124,648

 

 

 

 

 

$

101,388

 

 

Net interest rate spread (2)

 

 

 

 

2.37

%

 

 

 

 

 

2.50

%

 

 

 

 

 

2.67

%

Net interest-earning assets (3)

$

9,101,147

 

 

 

 

 

$

8,691,784

 

 

 

 

 

$

7,780,843

 

 

 

 

Net interest margin - FTE (4)

 

 

 

 

2.42

%

 

 

 

 

 

2.54

%

 

 

 

 

 

2.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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, 2022

Dec 31, 2021

Sep 30, 2021

Jun 30, 2021

Mar 31, 2021

(Unaudited, dollars in thousands)

 

 

 

 

 

Non-accrual loans:

 

 

 

 

 

Commercial

$

17,919

 

$

20,630

 

$

29,166

 

$

29,356

 

$

30,275

 

Residential

 

8,256

 

 

6,681

 

 

7,185

 

 

6,445

 

 

8,127

 

Consumer

 

7,646

 

 

5,682

 

 

4,262

 

 

4,106

 

 

3,873

 

Total non-accrual loans

 

33,821

 

 

32,993

 

 

40,613

 

 

39,907

 

 

42,275

 

Total accruing loans past due 90 days or more (2):

 

 

 

1,990

 

 

1,458

 

 

1,725

 

 

1,679

 

Total non-performing loans

 

33,821

 

 

34,983

 

 

42,071

 

 

41,632

 

 

43,954

 

Other real estate owned

 

 

 

 

 

 

 

38

 

 

 

Other non-performing assets:

 

 

 

 

 

 

 

 

 

 

Total non-performing assets

$

33,821

 

$

34,983

 

$

42,071

 

$

41,670

 

$

43,954

 

Total accruing troubled debt restructured loans

$

32,016

 

$

33,336

 

$

34,723

 

$

38,316

 

$

39,367

 

Total non-performing loans to total loans

 

0.28

%

 

0.29

%

 

0.44

%

 

0.43

%

 

0.44

%

Total non-performing assets to total assets

 

0.15

%

 

0.15

%

 

0.24

%

 

0.24

%

 

0.26

%

(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 or acceptance of a deed in lieu of foreclosure.

(2) Loans that were past due 90 days or more and still accruing in prior quarters were comprised solely of purchased credit impaired (PCI) loans. PCI loans were not subject to classification as nonaccrual in the same manner as originated loans as their interest income related to the accretable yield recognized and not to contractual interest payments at the loan level. In connection with the Company’s adoption of CECL on January 1, 2022, all PCI loans are now considered purchased credit deteriorated (PCD) loans. Interest income recognition for PCD loans is consistent with originated loans and, therefore, PCD loans cease accruing interest at 90 days past due unless management believes that collateral held by the Company is clearly sufficient and in full satisfaction of both principal and interest. There were no PCD or originated loans at March 31, 2022 that were past due 90 days or more and still accruing.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

ASSET QUALITY - PROVISION, ALLOWANCE, AND NET CHARGE OFFS

 

 

Three months ended

 

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Jun 30, 2021

Mar 31, 2021

(Unaudited, dollars in thousands)

 

 

 

 

 

Average total loans

$

12,204,077

 

$

10,946,095

 

$

9,528,522

 

$

9,796,701

 

$

9,816,788

 

Allowance for loan losses, beginning of the period

 

97,787

 

 

103,398

 

 

105,637

 

 

111,080

 

 

113,031

 

Total cumulative effect of change in accounting principle (1):

 

27,086

 

 

 

 

 

 

 

 

 

Charged-off loans:

 

 

 

 

 

Commercial and industrial

 

1

 

 

1,008

 

 

 

 

550

 

 

 

Commercial real estate

 

 

 

5

 

 

8

 

 

 

 

234

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

945

 

 

1,002

 

 

867

 

 

1,838

 

 

1,384

 

Residential real estate

 

 

 

35

 

 

 

 

 

 

 

Consumer home equity

 

 

 

24

 

 

 

 

 

 

 

Other consumer

 

661

 

 

666

 

 

742

 

 

275

 

 

364

 

Total charged-off loans

 

1,607

 

 

2,740

 

 

1,617

 

 

2,663

 

 

1,982

 

Recoveries on loans previously charged-off:

 

 

 

 

 

Commercial and industrial

 

250

 

 

873

 

 

40

 

 

13

 

 

9

 

Commercial real estate

 

14

 

 

 

 

 

 

4

 

 

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

928

 

 

399

 

 

469

 

 

291

 

 

365

 

Residential real estate

 

10

 

 

7

 

 

88

 

 

17

 

 

10

 

Consumer home equity

 

4

 

 

48

 

 

63

 

 

3

 

 

71

 

Other consumer

 

179

 

 

120

 

 

206

 

 

192

 

 

156

 

Total recoveries

 

1,385

 

 

1,447

 

 

866

 

 

520

 

 

611

 

Net loans charged-off (recoveries):

 

 

 

 

 

Commercial and industrial

 

(249

)

 

135

 

 

(40

)

 

537

 

 

(9

)

Commercial real estate

 

(14

)

 

5

 

 

8

 

 

(4

)

 

234

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

17

 

 

603

 

 

398

 

 

1,547

 

 

1,019

 

Residential real estate

 

(10

)

 

28

 

 

(88

)

 

(17

)

 

(10

)

Consumer home equity

 

(4

)

 

(24

)

 

(63

)

 

(3

)

 

(71

)

Other consumer

 

482

 

 

546

 

 

536

 

 

83

 

 

208

 

Total net loans charged-off

 

222

 

 

1,293

 

 

751

 

 

2,143

 

 

1,371

 

Release of allowance for loan losses

 

(485

)

 

(4,318

)

 

(1,488

)

 

(3,300

)

 

(580

)

Total allowance for loan losses, end of period (2)

$

124,166

 

$

97,787

 

$

103,398

 

$

105,637

 

$

111,080

 

Net charge-offs to average total loans outstanding during this period (3)

 

0.01

%

 

0.05

%

 

0.03

%

 

0.09

%

 

0.06

%

Allowance for loan losses as a percent of total loans

 

1.02

%

 

0.80

%

 

1.09

%

 

1.10

%

 

1.12

%

Allowance for loan losses as a percent of nonperforming loans

 

367.13

%

 

279.53

%

 

245.77

%

 

253.74

%

 

252.72

%

(1) Represents the adjustment needed to reflect the cumulative day one impact pursuant to the Company’s adoption of ASU 2016-13 (i.e., cumulative effect adjustment related the adoption of ASU 2016-13 as of January 1, 2022). The adjustment represents a $27.1 million increase to the allowance for loan losses attributable to the change in accounting methodology which requires the estimation of the allowance for credit losses resulting from the Company’s adoption of the standard. The adjustment also includes the adjustment needed to reflect the day one reclassification of the Company’s financial assets that were previously classified as purchase credit-impaired ("PCI") financial assets as purchased credit-deteriorated ("PCD") financial assets and the associated gross-up of $0.1 million, pursuant to the Company’s adoption of ASU 2016-13.

(2) The balance of accrued interest receivable excluded from amortized cost and the calculation of the allowance for credit losses amounted to $31.1 million at March 31, 2022.

(3) 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, 2022

Dec 31, 2021

Sep 30, 2021

Jun 30, 2021

Mar 31, 2021

 

 

 

 

 

 

Net income (GAAP)

$

51,516

 

$

35,087

 

$

37,106

 

$

34,809

 

$

47,663

 

Add:

 

 

 

 

 

Noninterest income components:

 

 

 

 

 

Losses (income) from investments held in rabbi trusts

 

4,433

 

 

(4,444

)

 

289

 

 

(4,216

)

 

(1,846

)

Losses (gains) on sales of securities available for sale, net

 

2,172

 

 

 

 

(1

)

 

(1

)

 

(1,164

)

Losses (gains) on sales of other assets

 

274

 

 

(34

)

 

(490

)

 

(29

)

 

(18

)

Noninterest expense components:

 

 

 

 

 

Rabbi trust employee benefit (income) expense

 

(2,087

)

 

2,519

 

 

(53

)

 

2,063

 

 

986

 

Impairment charge (reversal) on tax credit investments

 

 

 

116

 

 

1,133

 

 

(1,419

)

 

 

Gain on sale of OREO

 

 

 

 

 

(87

)

 

 

 

 

Merger and acquisition expenses

 

34

 

 

30,652

 

 

740

 

 

3,479

 

 

589

 

Settlement and expenses for putative consumer class action matters

 

 

 

 

 

 

 

3,325

 

 

 

Total impact of non-GAAP adjustments

 

4,826

 

 

28,809

 

 

1,531

 

 

3,202

 

 

(1,453

)

Less net tax benefit (expense) associated with non-GAAP adjustments (1)

 

1,235

 

 

19,036

 

 

1,246

 

 

914

 

 

(327

)

Non-GAAP adjustments, net of tax

$

3,591

 

$

9,773

 

$

285

 

$

2,288

 

$

(1,126

)

Operating net income (non-GAAP)

$

55,107

 

$

44,860

 

$

37,391

 

$

37,097

 

$

46,537

 

 

 

 

 

 

 

Weighted average common shares outstanding during the period (2):

 

 

 

 

 

Basic

 

169,857,950

 

 

172,246,799

 

 

172,298,615

 

 

172,173,707

 

 

172,049,044

 

Diluted

 

169,968,156

 

 

172,481,829

 

 

172,298,615

 

 

172,173,707

 

 

172,049,044

 

 

 

 

 

 

 

Earnings per share, basic

$

0.30

 

$

0.20

 

$

0.22

 

$

0.20

 

$

0.28

 

Earnings per share, diluted

$

0.30

 

$

0.20

 

$

0.22

 

$

0.20

 

$

0.28

 

 

 

 

 

 

 

Operating earnings per share, basic (non-GAAP)

$

0.32

 

$

0.26

 

$

0.22

 

$

0.22

 

$

0.27

 

Operating earnings per share, diluted (non-GAAP)

$

0.32

 

$

0.26

 

$

0.22

 

$

0.22

 

$

0.27

 

 

 

 

 

 

 

Return on average assets (3)

 

0.90

%

 

0.67

%

 

0.84

%

 

0.83

%

 

1.19

%

Add:

 

 

 

 

 

Losses (income) from investments held in rabbi trusts (3)

 

0.08

%

 

(0.08

) %

 

0.01

%

 

(0.10

) %

 

(0.05

) %

Losses (gains) on sales of securities available for sale, net (3)

 

0.04

%

 

%

 

0.00

%

 

0.00

%

 

(0.03

) %

Losses (gains) on sales of other assets (3)

 

0.00

%

 

0.00

%

 

(0.01

) %

 

0.00

%

 

0.00

%

Rabbi trust employee benefit (income) expense (3)

 

(0.04

) %

 

0.05

%

 

0.00

%

 

0.05

%

 

0.02

%

Impairment charge (reversal) on tax credit investments (3)

 

%

 

0.00

%

 

0.03

%

 

(0.03

) %

 

%

Gain on sale of OREO (3)

 

%

 

%

 

0.00

%

 

%

 

%

Merger and acquisition expenses (3)

 

0.00

%

 

0.58

%

 

0.02

%

 

0.08

%

 

0.01

%

Settlement and expenses for putative consumer class action matters (3)

 

%

 

%

 

%

 

0.08

%

 

%

Less net tax benefit (expense) associated with non-GAAP adjustments (1) (3)

 

0.02

%

 

0.36

%

 

0.03

%

 

0.02

%

 

(0.01

) %

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

 

0.96

%

 

0.86

%

 

0.86

%

 

0.89

%

 

1.15

%

 

 

 

 

 

 

Return on average shareholders' equity (3)

 

6.38

%

 

4.07

%

 

4.27

%

 

4.10

%

 

5.66

%

Add:

 

 

 

 

 

Losses (income) from investments held in rabbi trusts (3)

 

0.55

%

 

(0.52

) %

 

0.03

%

 

(0.50

) %

 

(0.22

) %

Losses (gains) on sales of securities available for sale, net (3)

 

0.27

%

 

%

 

0.00

%

 

0.00

%

 

(0.14

) %

Losses (gains) on sale of other assets (3)

 

0.03

%

 

0.00

%

 

(0.06

) %

 

0.00

%

 

0.00

%

Rabbi trust employee benefit (income) expense (3)

 

(0.26

) %

 

0.29

%

 

(0.01

) %

 

0.24

%

 

0.12

%

Impairment charge (reversal) on tax credit investments (3)

 

0.00

%

 

0.01

%

 

0.13

%

 

(0.17

) %

 

0.00

%

Gain on sale of OREO (3)

 

%

 

%

 

(0.01

) %

 

%

 

%

Merger and acquisition expenses (3)

 

0.00

%

 

3.55

%

 

0.09

%

 

0.41

%

 

0.07

%

Settlement and expenses for putative consumer class action matters (3)

 

%

 

%

 

%

 

0.39

%

 

%

Less net tax benefit (expense) associated with non-GAAP adjustments (1) (3)

 

0.15

%

 

2.21

%

 

0.14

%

 

0.11

%

 

(0.04

) %

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

 

6.82

%

 

5.19

%

 

4.30

%

 

4.36

%

 

5.53

%

(1) 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 our combined statutory tax rate only to those items included in net taxable income. The net tax benefit amount for the quarter ended December 31, 2021 reflects the impact of the release of $11.3 million of the $12.0 million valuation allowance associated with the stock donation to the Eastern Bank Foundation made in the quarter ended December 31, 2020.

(2) 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.

(3) 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

 

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Jun 30, 2021

Mar 31, 2021

(Unaudited, dollars in thousands)

 

 

 

 

 

Net interest income (GAAP)

$

128,124

 

$

122,437

 

$

102,691

 

$

104,608

 

$

100,091

 

Add:

 

 

 

 

 

Tax-equivalent adjustment (non-GAAP)

 

2,261

 

 

2,211

 

 

1,316

 

 

1,269

 

 

1,297

 

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

$

130,385

 

$

124,648

 

$

104,007

 

$

105,877

 

$

101,388

 

 

 

 

 

 

 

Noninterest income (GAAP)

$

46,415

 

$

49,001

 

$

43,209

 

$

45,733

 

$

55,212

 

Less:

 

 

 

 

 

(Losses) income from investments held in rabbi trusts

 

(4,433

)

 

4,444

 

 

(289

)

 

4,216

 

 

1,846

 

(Losses) gains on sales of securities available for sale, net

 

(2,172

)

 

 

 

1

 

 

1

 

 

1,164

 

(Losses) gains on sales of other assets

 

(274

)

 

34

 

 

490

 

 

29

 

 

18

 

Noninterest income on an operating basis (non-GAAP)

$

53,294

 

$

44,523

 

$

43,007

 

$

41,487

 

$

52,184

 

 

 

 

 

 

 

Noninterest expense (GAAP)

$

108,866

 

$

143,602

 

$

98,970

 

$

107,335

 

$

94,049

 

Less:

 

 

 

 

 

Rabbi trust employee benefit (income) expense

 

(2,087

)

 

2,519

 

 

(53

)

 

2,063

 

 

986

 

Impairment charge (reversal) on tax credit investments

 

 

 

116

 

 

1,133

 

 

(1,419

)

 

 

Gain on sale of OREO

 

 

 

 

 

(87

)

 

 

 

 

Merger and acquisition expenses

 

34

 

 

30,652

 

 

740

 

 

3,479

 

 

589

 

Settlement and expenses for putative consumer class action matters

 

 

 

 

 

 

 

3,325

 

 

 

Noninterest expense on an operating basis (non-GAAP)

$

110,919

 

$

110,315

 

$

97,237

 

$

99,887

 

$

92,474

 

 

 

 

 

 

 

Total revenue (GAAP)

$

174,539

 

$

171,438

 

$

145,900

 

$

150,341

 

$

155,303

 

Total operating revenue (non-GAAP)

$

183,679

 

$

169,171

 

$

147,014

 

$

147,364

 

$

153,572

 

 

 

 

 

 

 

Efficiency ratio (GAAP)

 

62.37

%

 

83.76

%

 

67.83

%

 

71.39

%

 

60.56

%

Operating efficiency ratio (non-GAAP)

 

60.39

%

 

65.21

%

 

66.14

%

 

67.78

%

 

60.22

%

 

 

 

 

 

 

Noninterest income / total revenue (GAAP)

 

26.59

%

 

28.58

%

 

29.62

%

 

30.42

%

 

35.55

%

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

 

29.01

%

 

26.32

%

 

29.25

%

 

28.15

%

 

33.98

%

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, 2022

Dec 31, 2021

Sep 30, 2021

Jun 30, 2021

Mar 31, 2021

(Unaudited, dollars in thousands, except share data)

 

 

 

 

 

Tangible shareholders' equity:

 

 

 

 

 

Total shareholders' equity (GAAP)

$

3,008,392

 

$

3,406,352

 

$

3,429,292

 

$

3,430,622

 

$

3,387,045

 

Less: Goodwill and other intangibles

 

654,759

 

 

649,703

 

 

379,772

 

 

380,402

 

 

376,002

 

Tangible shareholders' equity (non-GAAP)

 

2,353,633

 

 

2,756,649

 

 

3,049,520

 

 

3,050,220

 

 

3,011,043

 

 

 

 

 

 

 

Tangible assets:

 

 

 

 

 

Total assets (GAAP)

 

22,836,072

 

 

23,512,128

 

 

17,461,223

 

 

17,047,453

 

 

16,726,795

 

Less: Goodwill and other intangibles

 

654,759

 

 

649,703

 

 

379,772

 

 

380,402

 

 

376,002

 

Tangible assets (non-GAAP)

$

22,181,313

 

$

22,862,425

 

$

17,081,451

 

$

16,667,051

 

$

16,350,793

 

 

 

 

 

 

 

Shareholders' equity to assets ratio (GAAP)

 

13.17

%

 

14.49

%

 

19.64

%

 

20.12

%

 

20.25

%

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

 

10.61

%

 

12.06

%

 

17.85

%

 

18.30

%

 

18.42

%

 

 

 

 

 

 

Common shares outstanding

 

183,438,711

 

 

186,305,332

 

 

186,758,154

 

 

186,758,154

 

 

186,758,154

 

 

 

 

 

 

 

Book value per share (GAAP)

$

16.40

 

$

18.28

 

$

18.36

 

$

18.37

 

$

18.14

 

Tangible book value per share (non-GAAP)

$

12.83

 

$

14.80

 

$

16.33

 

$

16.33

 

$

16.12

 

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, 2022

Dec 31, 2021

Sep 30, 2021

Jun 30, 2021

Mar 31, 2021

 

 

 

 

 

 

Total loans excluding PPP loans:

 

 

 

 

 

Total loans (GAAP) (1)

$

12,157,769

 

$

12,255,068

 

$

9,481,458

 

$

9,591,336

 

$

9,883,802

 

Less: PPP loans (1)

 

137,307

 

 

321,215

 

 

514,018

 

 

799,964

 

 

1,210,598

 

Total loans excluding PPP loans (non-GAAP)

$

12,020,462

 

$

11,933,853

 

$

8,967,440

 

$

8,791,372

 

$

8,673,204

 

 

 

 

 

 

 

Total nonperforming loans (NPLs) (GAAP)

$

33,821

 

$

34,983

 

$

42,071

 

$

41,632

 

$

43,954

 

 

 

 

 

 

 

Total NPLs / total loans (GAAP)

 

0.28

%

 

0.29

%

 

0.44

%

 

0.43

%

 

0.44

%

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

 

0.28

%

 

0.29

%

 

0.47

%

 

0.47

%

 

0.51

%

 

 

 

 

 

 

Allowance for loan losses (ALLL) (GAAP)

$

124,166

 

$

97,787

 

$

103,398

 

$

105,637

 

$

111,080

 

 

 

 

 

 

 

ALLL / total loans (GAAP)

 

1.02

%

 

0.80

%

 

1.09

%

 

1.10

%

 

1.12

%

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

 

1.03

%

 

0.82

%

 

1.15

%

 

1.20

%

 

1.28

%

 

 

 

 

 

 

 

As of and for the three months ended

(Unaudited, dollars in thousands)

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Jun 30, 2021

Mar 31, 2021

 

 

 

 

 

 

Average total loans excluding PPP Loans:

 

 

 

 

 

Average total loans (GAAP)

$

12,204,077

 

$

10,946,095

 

$

9,528,522

 

$

9,796,701

 

$

9,816,788

 

Less: Average PPP loans

 

219,198

 

 

419,894

 

 

649,443

 

 

1,073,688

 

 

1,131,516

 

Average total loans excluding PPP loans (non-GAAP)

$

11,984,879

 

$

10,526,201

 

$

8,879,079

 

$

8,723,013

 

$

8,685,272

 

 

 

 

 

 

 

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

$

222

 

$

1,293

 

$

751

 

$

2,143

 

$

1,371

 

 

 

 

 

 

 

NCOs / Average total loans (GAAP) (2)

 

0.01

%

 

0.05

%

 

0.03

%

 

0.09

%

 

0.06

%

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

 

0.01

%

 

0.05

%

 

0.03

%

 

0.10

%

 

0.06

%

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

(2) Presented on an annualized basis.

APPENDIX E: Tangible Shareholders’ Equity Roll Forward Analysis

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

 

As of

 

Mar 31, 2022 change from

 

Mar 31, 2022

Dec 31, 2021

 

Dec 31, 2021

(Unaudited, dollars in thousands, except per share amounts)

 

 

 

 

Common stock

$

1,834

 

$

1,863

 

 

$

(29

)

Additional paid in capital

 

1,777,670

 

 

1,835,241

 

 

 

(57,571

)

Unallocated ESOP common stock

 

(141,455

)

 

(142,709

)

 

 

1,254

 

Retained earnings

 

1,782,997

 

 

1,768,653

 

 

 

14,344

 

AOCI, net of tax - available for sale securities

 

(410,611

)

 

(58,586

)

 

 

(352,025

)

AOCI, net of tax - pension

 

(5,595

)

 

(5,471

)

 

 

(124

)

AOCI, net of tax - cash flow hedge

 

3,552

 

 

7,361

 

 

 

(3,809

)

Total shareholders' equity:

$

3,008,392

 

$

3,406,352

 

 

$

(397,960

)

Less: Goodwill and other intangibles

 

654,759

 

 

649,703

 

 

 

5,056

 

Tangible shareholders' equity (non-GAAP)

$

2,353,633

 

$

2,756,649

 

 

$

(403,016

)

 

 

 

 

 

Common shares outstanding

 

183,438,711

 

 

186,305,332

 

 

 

(2,866,621

)

 

 

 

 

 

Per share:

 

 

 

 

Common stock

$

0.01

 

$

0.01

 

 

$

 

Additional paid in capital

 

9.69

 

 

9.85

 

 

 

(0.16

)

Unallocated ESOP common stock

 

(0.77

)

 

(0.77

)

 

 

(0.01

)

Retained earnings

 

9.72

 

 

9.49

 

 

 

0.23

 

AOCI, net of tax - available for sale securities

 

(2.24

)

 

(0.31

)

 

 

(1.92

)

AOCI, net of tax - pension

 

(0.03

)

 

(0.03

)

 

 

 

AOCI, net of tax - cash flow hedge

 

0.02

 

 

0.04

 

 

 

(0.02

)

Total shareholders' equity:

$

16.40

 

$

18.28

 

 

$

(1.88

)

Less: Goodwill and other intangibles

 

3.57

 

 

3.49

 

 

 

0.08

 

Tangible shareholders' equity (non-GAAP)

$

12.83

 

$

14.80

 

 

$

(1.97

)

 

Investor Contact
Jillian Belliveau
Eastern Bankshares, Inc.
InvestorRelations@easternbank.com
781-598-7920

Media Contact
Andrea Goodman
Eastern Bank
a.goodman@easternbank.com
781-598-7847

Source: Eastern Bank

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