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Eastern Bankshares, Inc. Reports Third Quarter 2022 Financial Results

October, 27, 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 third quarter financial results and the declaration of a quarterly cash dividend. Net income for the third quarter of 2022 was $54.8 million, or $0.33 per diluted share, compared to net income of $51.2 million, or $0.31 per diluted share, reported for the second quarter of 2022. Operating net income* for the third quarter of 2022 was $55.7 million, or $0.34 per diluted share, compared to $52.5 million, or $0.32 per diluted share, reported for the prior quarter.

“Our financial results for the third quarter were strong, led by 16 percent loan growth on an annualized basis, while maintaining our high credit quality and underwriting standards,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank. “Additionally, our net interest margin expanded by twenty-four basis points from the prior quarter, driving a ten percent increase in net interest income. We remain focused on achieving our strategic priorities while continuing to deliver for our shareholders, customers, colleagues, and the communities we serve."

HIGHLIGHTS FOR THE THIRD QUARTER OF 2022

  • Operating net income* of $55.7 million, or $0.34 per diluted share, for the third quarter of 2022 was 49% higher than the comparable prior year quarter.
  • Net interest income of $152.2 million for the third quarter of 2022 was 10% higher than the prior quarter.
  • The net interest margin on a fully tax equivalent (“FTE”) basis* of 2.87% for the third quarter was 24 basis points higher than the prior quarter.
  • The cost of total deposits was 10 basis points in the third quarter, an increase of 4 basis points from the prior quarter.
  • Loan growth was 16% on an annualized basis, driven by double-digit annualized growth in commercial and residential lending.
  • The Company repurchased 1,481,248 shares of its common stock during the third quarter of 2022 at a weighted average price of $19.52 excluding commissions, for an aggregate purchase price of $28.9 million.

The results for the comparable prior year quarter do not reflect the Company’s acquisition of Century Bancorp, Inc. (“Century”), which was completed on November 12, 2021.

BALANCE SHEET

Total assets were $22.0 billion at September 30, 2022, representing a decrease of $307.9 million, or 1%, from June 30, 2022.

  • Total securities decreased $698.9 million, or 9%, from the prior quarter, to $7.3 billion, primarily due to a decline in the market value of available for sale securities driven by higher interest rates, net security sales, and principal runoff.
  • Cash and equivalents declined $210.5 million from the prior quarter to $158.4 million.
  • Total loans were $12.9 billion, representing an increase of $505.3 million, or 4%, from the prior quarter. The increase was driven by strong loan growth in all major categories. Commercial loans grew $356.6 million, residential loans grew $129.2 million and consumer loans grew $19.4 million, reflecting growth of 16%, 26%, and 6%, respectively, on an annualized basis. Residential loans at September 30, 2022 included purchased loans from Embrace Home Loans totaling $77.7 million excluding purchase premiums.
  • Deposits totaled $18.7 billion, representing a decrease of $430.4 million, or 2%, from the prior quarter. On a quarterly average basis, deposits were down $24.7 million from the prior quarter.
  • Borrowed funds increased $379.6 million from the prior quarter to provide funding for strong loan growth in the third quarter.
  • Shareholders’ equity was $2.4 billion, representing a decrease of $302.2 million from the prior quarter driven primarily by a decrease in accumulated other comprehensive income of $317.7 million. Please refer to Appendix D to this press release for a roll forward of tangible shareholders’ equity*.
  • At September 30, 2022, book value per share was $13.59 and tangible book value per share* was $9.87.

Please refer to Appendix C to this press release for a reconciliation of book value per share and tangible book value per share*.

NET INTEREST INCOME

Net interest income was $152.2 million for the third quarter of 2022, compared to $137.8 million in the prior quarter, representing an increase of $14.4 million.

  • The increase in net interest income on a consecutive quarter basis was primarily due to an increase in the net interest margin, which benefited primarily from higher short-term interest rates, as well as an increase in average interest-earning asset balances of $77.5 million from the prior quarter, attributable to loan growth.
  • The net interest margin on a FTE basis* was 2.87% for the third quarter, representing a 24 basis point increase from the prior quarter, as asset yields benefited from higher interest rates in the period, partially offset by lower net Paycheck Protection Program (“PPP”) fee accretion compared to the prior quarter. Interest-bearing funding costs increased 8 basis points from the prior quarter to 18 basis points, due to deposit pricing increases and an increase in borrowings during the quarter.
  • Included in net interest income in the third quarter and prior quarter, respectively, was $0.5 million and $2.5 million of PPP fee accretion net of deferred cost amortization. During the third quarter, $19.3 million in PPP loans were forgiven by the U.S. Small Business Administration or otherwise paid down, compared to $98.7 million in the prior quarter.

NONINTEREST INCOME

Noninterest income was $43.4 million for the third quarter of 2022, compared to $41.9 million for the prior quarter, representing an increase of $1.5 million. Noninterest income on an operating basis* was $45.3 million for the third quarter of 2022, compared to $48.0 million for the prior quarter, a decrease of $2.7 million.

  • Insurance commissions decreased $0.9 million to $23.8 million in the third quarter, compared to $24.7 million in the prior quarter. Compared to the comparable prior year quarter, insurance commissions increased $1.8 million, or 8%.
  • Service charges on deposit accounts decreased $1.6 million on a consecutive quarter basis to $6.7 million primarily due to lower overdraft fees driven by a change in overdraft charging practices as well as lower account analysis fees.
  • Trust and investment advisory fees decreased $0.2 million on a consecutive quarter basis to $5.8 million.
  • Loan-level interest rate swap income was $1.6 million in the third quarter, in line with the prior quarter.
  • Market performance drove losses on investments held in rabbi trust accounts totaling $2.2 million in the third quarter compared to losses of $7.3 million in the prior quarter.
  • Realized losses on available for sale securities were $0.2 million in the third quarter compared to $0.1 million in the prior quarter.
  • Other noninterest income decreased $0.8 million in the third quarter to $4.6 million.

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

NONINTEREST EXPENSE

Noninterest expense was $116.8 million for the third quarter of 2022, compared to $111.1 million in the prior quarter, representing an increase of $5.7 million. Noninterest expense on an operating basis* for the third quarter of 2022 was $117.4 million, compared to $114.4 million in the prior quarter, an increase of $3.0 million.

  • Salaries and employee benefits expense was $78.1 million in the third quarter, representing an increase of $5.1 million from the prior quarter, driven in part by an increase in incentive compensation expense of $3.3 million as well as an increase in benefits expense of $1.0 million primarily attributable to the lower losses on investments held in rabbi trust accounts associated with the Company’s defined contribution supplemental executive retirement plan.
  • Office occupancy and equipment expense was $9.7 million in the third quarter, a decrease of $0.2 million from the prior quarter.
  • Data processing expenses were $13.3 million in the third quarter, a decrease of $1.1 million from the prior quarter.
  • Professional services expense was $5.8 million in the third quarter, an increase of $1.8 million from the prior quarter due primarily to an increase in legal fees and an increase in other professional fees.
  • Marketing expense was $2.2 million in the third quarter, a decrease of $0.4 million from the prior quarter, primarily due to lower advertising expenses in the period.

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

ASSET QUALITY

The allowance for loan losses was $131.7 million at September 30, 2022, or 1.02% of total loans, compared to $125.5 million or 1.01% of total loans at June 30, 2022. The Company recorded a provision for the allowance for loan losses totaling $6.5 million in the third quarter of 2022 primarily due to loan growth.

Non-performing loans totaled $34.0 million at September 30, 2022 compared to $59.9 million at the end of the prior quarter. The decrease from the prior quarter was primarily attributable to the full payoff of one syndicated credit facility that migrated to nonaccrual status in the prior quarter. During the third quarter of 2022, the Company recorded total net charge-offs of $0.3 million, or 0.01% of average total loans on an annualized basis, compared to net recoveries of $0.3 million or 0.01% of average total loans in the prior quarter, respectively.

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 December 15, 2022 to shareholders of record as of the close of business on December 2, 2022.

The Company repurchased 1,481,248 shares of its common stock during the third quarter of 2022 at a weighted average price of $19.52 excluding commissions, for an aggregate purchase price of $28.9 million.

As announced in September of 2022, the Company received regulatory non-objection for its second share repurchase program of up to 8,900,000 shares, representing approximately 5% of its shares of common stock then outstanding. The repurchase program, which is limited to $200 million through August 31, 2023, may be modified or terminated by the Board of Directors of the Company at any time. At September 30, 2022, there were 8,537,684 shares available for repurchase and $192.6 million in total market value remaining under the repurchase authorization.

As announced in November of 2021, the Company received regulatory non-objection for its inaugural share repurchase program, under which it was authorized to purchase up to 9,337,900 shares for up to $225 million over a 12-month period. The Company completed the program in September of 2022, having repurchased all 9,337,900 shares for an aggregate purchase price of $186.4 million, excluding commissions.

CONFERENCE CALL INFORMATION

A conference call and webcast covering Eastern’s third quarter 2022 earnings will be held on Friday, October 28, 2022 at 9:00 a.m. Eastern Time. To join by telephone, participants can call the toll-free dial-in number (888) 396-8049 from within the U.S. and reference conference ID 09796048. 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 September 30, 2022, Eastern Bank had approximately $22 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 business 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, operating return on average tangible shareholders’ equity (discussed further below), 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) other real estate owned (“OREO”) gains, and (vii) merger and acquisition 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 tangible assets, tangible shareholders’ equity, average tangible shareholders’ equity, tangible book value per share, the ratio of tangible shareholders’ equity to tangible assets, return on average tangible shareholders’ equity, and operating return on average shareholders’ equity (discussed further above), each of which excludes the impact of goodwill and other intangible assets, as management believes these financial measures provide investors with the ability to further assess the Company’s performance, identify trends in its core business and provide a comparison of its capital adequacy to other companies. The Company included the tangible ratios because management believes that investors may find it useful to have access to the same analytical tools used by management to assess performance and identify trends.

These non-GAAP financial measures presented in this press release should not be considered an alternative or substitute for financial results or measures determined in accordance with GAAP or as an indication of the Company’s cash flows from operating activities, a measure of its liquidity position or an indication of funds available for its cash needs. An item which management considers to be non-core and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular period. In addition, management’s methodology for calculating non-GAAP financial measures may differ from the methodologies employed by other banking companies to calculate the same or similar performance measures, and accordingly, the Company’s reported non-GAAP financial measures may not be comparable to the same or similar performance measures reported by other banking companies. Please refer to Appendices A-D 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 data)

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

 

 

 

 

 

 

Earnings data

 

 

 

 

 

Net interest income

$

152,179

 

$

137,757

 

$

128,124

 

$

122,437

 

$

102,691

 

Noninterest income

 

43,353

 

 

41,877

 

 

46,415

 

 

49,001

 

 

43,209

 

Total revenue

 

195,532

 

 

179,634

 

 

174,539

 

 

171,438

 

 

145,900

 

Noninterest expense

 

116,840

 

 

111,139

 

 

108,866

 

 

143,602

 

 

98,970

 

Pre-tax, pre-provision income

 

78,692

 

 

68,495

 

 

65,673

 

 

27,836

 

 

46,930

 

Provision for (release of) allowance for loan losses

 

6,480

 

 

1,050

 

 

(485

)

 

(4,318

)

 

(1,488

)

Pre-tax income

 

72,212

 

 

67,445

 

 

66,158

 

 

32,154

 

 

48,418

 

Net income

 

54,777

 

 

51,172

 

 

51,516

 

 

35,087

 

 

37,106

 

Operating net income (non-GAAP)

 

55,742

 

 

52,518

 

 

55,107

 

 

44,860

 

 

37,391

 

 

 

 

 

 

 

Per-share data

 

 

 

 

 

Earnings per share, basic

$

0.33

 

$

0.31

 

$

0.30

 

$

0.20

 

$

0.22

 

Earnings per share, diluted

$

0.33

 

$

0.31

 

$

0.30

 

$

0.20

 

$

0.22

 

Operating earnings per share, basic (non-GAAP)

$

0.34

 

$

0.32

 

$

0.32

 

$

0.26

 

$

0.22

 

Operating earnings per share, diluted (non-GAAP)

$

0.34

 

$

0.32

 

$

0.32

 

$

0.26

 

$

0.22

 

Book value per share

$

13.59

 

$

15.17

 

$

16.40

 

$

18.28

 

$

18.36

 

Tangible book value per share (non-GAAP)

$

9.87

 

$

11.52

 

$

12.83

 

$

14.80

 

$

16.33

 

 

 

 

 

 

 

Profitability

 

 

 

 

 

Return on average assets (1)

 

0.97

%

 

0.92

%

 

0.90

%

 

0.67

%

 

0.84

%

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

 

0.97

%

 

0.94

%

 

0.96

%

 

0.86

%

 

0.86

%

Return on average shareholders' equity (1)

 

7.83

%

 

7.16

%

 

6.38

%

 

4.07

%

 

4.27

%

Operating return on average shareholders' equity (1)

 

7.98

%

 

7.34

%

 

6.82

%

 

5.19

%

 

4.30

%

Return on average tangible shareholders' equity (non-GAAP) (1)

 

10.25

%

 

9.28

%

 

7.96

%

 

4.80

%

 

4.79

%

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

 

10.44

%

 

9.53

%

 

8.53

%

 

6.14

%

 

4.84

%

Net interest margin (FTE) (1)

 

2.87

%

 

2.63

%

 

2.42

%

 

2.54

%

 

2.53

%

Cost of deposits (1)

 

0.10

%

 

0.06

%

 

0.07

%

 

0.06

%

 

0.02

%

Fee income ratio

 

22.17

%

 

23.31

%

 

26.59

%

 

28.58

%

 

29.62

%

Efficiency ratio

 

59.75

%

 

61.87

%

 

62.37

%

 

83.76

%

 

67.83

%

Operating efficiency ratio (non-GAAP)

 

58.38

%

 

60.61

%

 

60.39

%

 

65.21

%

 

66.14

%

 

 

 

 

 

 

Balance Sheet (end of period)

 

 

 

 

 

Total assets

$

22,042,933

 

$

22,350,848

 

$

22,836,072

 

$

23,512,128

 

$

17,461,223

 

Total loans

 

12,903,954

 

 

12,398,694

 

 

12,182,203

 

 

12,281,510

 

 

9,504,562

 

Total deposits

 

18,733,381

 

 

19,163,801

 

 

19,392,816

 

 

19,628,311

 

 

13,649,964

 

Total loans / total deposits

 

69

%

 

65

%

 

63

%

 

63

%

 

70

%

PPP loans

$

23,142

 

$

42,463

 

$

141,166

 

$

331,385

 

$

533,965

 

 

 

 

 

 

 

Asset quality

 

 

 

 

 

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

$

131,663

 

$

125,531

 

$

124,166

 

$

97,787

 

$

103,398

 

ALLL / total nonperforming loans ("NPLs")

 

387.77

%

 

209.64

%

 

367.13

%

 

279.53

%

 

245.77

%

Total NPLs / total loans

 

0.26

%

 

0.48

%

 

0.28

%

 

0.29

%

 

0.44

%

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

 

0.01

%

 

(0.01

)%

 

0.01

%

 

0.05

%

 

0.03

%

Remaining COVID-19 loan modifications

$

17,682

 

$

19,914

 

$

49,033

 

$

106,657

 

$

110,596

 

 

 

 

 

 

 

Capital adequacy

 

 

 

 

 

Shareholders' equity / assets

 

10.96

%

 

12.16

%

 

13.17

%

 

14.49

%

 

19.64

%

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

 

8.20

%

 

9.52

%

 

10.61

%

 

12.06

%

 

17.85

%

 

 

 

 

 

 

(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 and thereafter, 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 and prior, 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

Sep 30, 2022 change from

(Unaudited, dollars in thousands)

Sep 30,

2022

Jun 30,

2022

Sep 30,

2021

Jun 30, 2022

Sep 30, 2021

ASSETS

 

 

 

△ $

△ %

△ $

△ %

Cash and due from banks

$

102,776

 

$

100,309

 

$

78,805

 

$

2,467

 

2

%

$

23,971

 

30

%

Short-term investments

 

55,661

 

 

268,605

 

 

1,172,956

 

 

(212,944

)

(79

)%

 

(1,117,295

)

(95

)%

Cash and cash equivalents

 

158,437

 

 

368,914

 

 

1,251,761

 

 

(210,477

)

(57

)%

 

(1,093,324

)

(87

)%

Available for sale ("AFS") securities (1)

 

6,844,615

 

 

7,536,921

 

 

5,689,312

 

 

(692,306

)

(9

)%

 

1,155,303

 

20

%

Held to maturity ("HTM") securities (1)

 

481,963

 

 

488,581

 

 

 

 

(6,618

)

(1

)%

 

481,963

 

%

Total securities

 

7,326,578

 

 

8,025,502

 

 

5,689,312

 

 

(698,924

)

(9

)%

 

1,637,266

 

29

%

Loans held for sale

 

951

 

 

764

 

 

1,757

 

 

187

 

24

%

 

(806

)

(46

)%

Loans:

 

 

 

 

 

 

 

Commercial and industrial

 

3,023,729

 

 

2,840,734

 

 

1,652,447

 

 

182,995

 

6

%

 

1,371,282

 

83

%

Commercial real estate

 

4,985,654

 

 

4,792,345

 

 

3,825,186

 

 

193,309

 

4

%

 

1,160,468

 

30

%

Commercial construction

 

314,193

 

 

303,463

 

 

243,146

 

 

10,730

 

4

%

 

71,047

 

29

%

Business banking

 

1,096,436

 

 

1,126,853

 

 

1,225,538

 

 

(30,417

)

(3

)%

 

(129,102

)

(11

)%

Total commercial loans

 

9,420,012

 

 

9,063,395

 

 

6,946,317

 

 

356,617

 

4

%

 

2,473,695

 

36

%

Residential real estate

 

2,118,852

 

 

1,989,621

 

 

1,491,269

 

 

129,231

 

6

%

 

627,583

 

42

%

Consumer home equity

 

1,168,476

 

 

1,147,425

 

 

848,570

 

 

21,051

 

2

%

 

319,906

 

38

%

Other consumer

 

196,614

 

 

198,253

 

 

218,406

 

 

(1,639

)

(1

)%

 

(21,792

)

(10

)%

Total loans

 

12,903,954

 

 

12,398,694

 

 

9,504,562

 

 

505,260

 

4

%

 

3,399,392

 

36

%

Allowance for loan losses

 

(131,663

)

 

(125,531

)

 

(103,398

)

 

(6,132

)

5

%

 

(28,265

)

27

%

Unamortized prem./disc. and def. fees

 

(19,349

)

 

(20,988

)

 

(23,104

)

 

1,639

 

(8

)%

 

3,755

 

(16

)%

Net loans

 

12,752,942

 

 

12,252,175

 

 

9,378,060

 

 

500,767

 

4

%

 

3,374,882

 

36

%

Federal Home Loan Bank stock, at cost

 

18,714

 

 

5,714

 

 

10,601

 

 

13,000

 

228

%

 

8,113

 

77

%

Premises and equipment

 

63,261

 

 

69,019

 

 

44,048

 

 

(5,758

)

(8

)%

 

19,213

 

44

%

Bank-owned life insurance

 

159,838

 

 

158,890

 

 

79,259

 

 

948

 

1

%

 

80,579

 

102

%

Goodwill and other intangibles, net

 

662,222

 

 

653,853

 

 

379,772

 

 

8,369

 

1

%

 

282,450

 

74

%

Deferred income taxes, net

 

342,550

 

 

244,153

 

 

34,135

 

 

98,397

 

40

%

 

308,415

 

904

%

Prepaid expenses

 

180,742

 

 

188,115

 

 

148,180

 

 

(7,373

)

(4

)%

 

32,562

 

22

%

Other assets

 

376,698

 

 

383,749

 

 

444,338

 

 

(7,051

)

(2

)%

 

(67,640

)

(15

)%

Total assets

$

22,042,933

 

$

22,350,848

 

$

17,461,223

 

$

(307,915

)

(1

)%

$

4,581,710

 

26

%

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

Demand

$

6,582,122

 

$

6,604,154

 

$

5,484,126

 

$

(22,032

)

%

$

1,097,996

 

20

%

Interest checking accounts

 

5,047,018

 

 

5,348,181

 

 

2,693,276

 

 

(301,163

)

(6

)%

 

2,353,742

 

87

%

Savings accounts

 

1,990,188

 

 

2,015,865

 

 

1,444,928

 

 

(25,677

)

(1

)%

 

545,260

 

38

%

Money market investment

 

4,757,477

 

 

4,787,603

 

 

3,802,319

 

 

(30,126

)

(1

)%

 

955,158

 

25

%

Certificates of deposit

 

356,576

 

 

407,998

 

 

225,315

 

 

(51,422

)

(13

)%

 

131,261

 

58

%

Total deposits

 

18,733,381

 

 

19,163,801

 

 

13,649,964

 

 

(430,420

)

(2

)%

 

5,083,417

 

37

%

Borrowed funds:

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

384,215

 

 

13,560

 

 

14,172

 

 

370,655

 

2733

%

 

370,043

 

2611

%

Escrow deposits of borrowers

 

21,853

 

 

19,456

 

 

15,900

 

 

2,397

 

12

%

 

5,953

 

37

%

Interest rate swap collateral funds

 

16,650

 

 

10,100

 

 

 

 

6,550

 

65

%

 

16,650

 

%

Total borrowed funds

 

422,718

 

 

43,116

 

 

30,072

 

 

379,602

 

880

%

 

392,646

 

1306

%

Other liabilities

 

470,671

 

 

425,535

 

 

351,895

 

 

45,136

 

11

%

 

118,776

 

34

%

Total liabilities

 

19,626,770

 

 

19,632,452

 

 

14,031,931

 

 

(5,682

)

%

 

5,594,839

 

40

%

Shareholders' equity:

 

 

 

 

 

 

 

Common shares

 

1,778

 

 

1,793

 

 

1,868

 

 

(15

)

(1

)%

 

(90

)

(5

)%

Additional paid-in capital

 

1,676,396

 

 

1,700,495

 

 

1,857,165

 

 

(24,099

)

(1

)%

 

(180,769

)

(10

)%

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

 

(138,950

)

 

(140,203

)

 

(143,966

)

 

1,253

 

(1

)%

 

5,016

 

(3

)%

Retained earnings

 

1,855,757

 

 

1,817,474

 

 

1,747,300

 

 

38,283

 

2

%

 

108,457

 

6

%

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

 

(978,818

)

 

(661,163

)

 

(33,075

)

 

(317,655

)

48

%

 

(945,743

)

2859

%

Total shareholders' equity

 

2,416,163

 

 

2,718,396

 

 

3,429,292

 

 

(302,233

)

(11

)%

 

(1,013,129

)

(30

)%

Total liabilities and shareholders' equity

$

22,042,933

 

$

22,350,848

 

$

17,461,223

 

$

(307,915

)

(1

)%

$

4,581,710

 

26

%

 

 

 

 

 

 

 

 

(1) AFS and HTM securities represented at fair value and amortized cost, respectively.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

 

Three months ended

Three months ended Sep 30, 2022 change from three months ended

(Unaudited, dollars in thousands, except per-share data)

Sep 30,

2022

Jun 30,

2022

Sep 30,

2021

Jun 30, 2022

Sep 30, 2021

 

 

 

 

 

 

 

 

Interest and dividend income:

 

 

 

△ $

△ %

△ $

△ %

Interest and fees on loans

$

124,992

 

$

107,236

 

$

86,735

 

$

17,756

 

17

%

$

38,257

 

44

%

Taxable interest and dividends on securities

 

29,280

 

 

31,121

 

 

14,314

 

 

(1,841

)

(6

)%

 

14,966

 

105

%

Non-taxable interest and dividends on securities

 

1,917

 

 

1,862

 

 

1,848

 

 

55

 

3

%

 

69

 

4

%

Interest on federal funds sold and other short-term investments

 

1,638

 

 

652

 

 

571

 

 

986

 

151

%

 

1,067

 

187

%

Total interest and dividend income

 

157,827

 

 

140,871

 

 

103,468

 

 

16,956

 

12

%

 

54,359

 

53

%

Interest expense:

 

 

 

 

 

 

 

Interest on deposits

 

4,781

 

 

3,061

 

 

736

 

 

1,720

 

56

%

 

4,045

 

550

%

Interest on borrowings

 

867

 

 

53

 

 

41

 

 

814

 

1536

%

 

826

 

2015

%

Total interest expense

 

5,648

 

 

3,114

 

 

777

 

 

2,534

 

81

%

 

4,871

 

627

%

Net interest income

 

152,179

 

 

137,757

 

 

102,691

 

 

14,422

 

10

%

 

49,488

 

48

%

Provision for (release of) allowance for loan losses

 

6,480

 

 

1,050

 

 

(1,488

)

 

5,430

 

517

%

 

7,968

 

(535

)%

Net interest income after provision for (release of) allowance for loan losses

 

145,699

 

 

136,707

 

 

104,179

 

 

8,992

 

7

%

 

41,520

 

40

%

Noninterest income:

 

 

 

 

 

 

 

Insurance commissions

 

23,788

 

 

24,682

 

 

21,956

 

 

(894

)

(4

)%

 

1,832

 

8

%

Service charges on deposit accounts

 

6,708

 

 

8,313

 

 

5,935

 

 

(1,605

)

(19

)%

 

773

 

13

%

Trust and investment advisory fees

 

5,832

 

 

5,994

 

 

6,310

 

 

(162

)

(3

)%

 

(478

)

(8

)%

Debit card processing fees

 

3,249

 

 

3,223

 

 

3,030

 

 

26

 

1

%

 

219

 

7

%

Interest rate swap income

 

1,562

 

 

1,593

 

 

881

 

 

(31

)

(2

)%

 

681

 

77

%

Losses from investments held in rabbi trusts

 

(2,248

)

 

(7,316

)

 

(289

)

 

5,068

 

(69

)%

 

(1,959

)

678

%

Gains on sales of mortgage loans held for sale, net

 

22

 

 

49

 

 

717

 

 

(27

)

(55

)%

 

(695

)

(97

)%

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

 

(198

)

 

(104

)

 

1

 

 

(94

)

90

%

 

(199

)

(19900

)%

Other

 

4,638

 

 

5,443

 

 

4,668

 

 

(805

)

(15

)%

 

(30

)

(1

)%

Total noninterest income

 

43,353

 

 

41,877

 

 

43,209

 

 

1,476

 

4

%

 

144

 

%

Noninterest expense:

 

 

 

 

 

 

 

Salaries and employee benefits

 

78,060

 

 

72,996

 

 

66,238

 

 

5,064

 

7

%

 

11,822

 

18

%

Office occupancy and equipment

 

9,703

 

 

9,888

 

 

7,960

 

 

(185

)

(2

)%

 

1,743

 

22

%

Data processing

 

13,294

 

 

14,345

 

 

12,191

 

 

(1,051

)

(7

)%

 

1,103

 

9

%

Professional services

 

5,826

 

 

4,034

 

 

4,024

 

 

1,792

 

44

%

 

1,802

 

45

%

Marketing

 

2,219

 

 

2,651

 

 

1,598

 

 

(432

)

(16

)%

 

621

 

39

%

Loan expenses

 

1,152

 

 

1,124

 

 

1,586

 

 

28

 

2

%

 

(434

)

(27

)%

Federal Deposit Insurance Corporation ("FDIC") insurance

 

1,578

 

 

1,720

 

 

1,056

 

 

(142

)

(8

)%

 

522

 

49

%

Amortization of intangible assets

 

1,033

 

 

907

 

 

629

 

 

126

 

14

%

 

404

 

64

%

Other

 

3,975

 

 

3,474

 

 

3,688

 

 

501

 

14

%

 

287

 

8

%

Total noninterest expense

 

116,840

 

 

111,139

 

 

98,970

 

 

5,701

 

5

%

 

17,870

 

18

%

Income before income tax expense

 

72,212

 

 

67,445

 

 

48,418

 

 

4,767

 

7

%

 

23,794

 

49

%

Income tax expense

 

17,435

 

 

16,273

 

 

11,312

 

 

1,162

 

7

%

 

6,123

 

54

%

Net income

$

54,777

 

$

51,172

 

$

37,106

 

$

3,605

 

7

%

$

17,671

 

48

%

 

 

 

 

 

 

 

 

Share data:

 

 

 

 

 

 

 

Earnings per share, basic

$

0.33

 

$

0.31

 

$

0.22

 

 

 

 

 

Earnings per share, diluted

$

0.33

 

$

0.31

 

$

0.22

 

 

 

 

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

 

Nine months ended

 

 

(Unaudited, dollars in thousands, except per-share data)

Sep 30, 2022

Sep 30, 2021

Change

 

 

 

 

 

Interest and dividend income:

 

 

△ $

△ %

Interest and fees on loans

$

333,595

 

$

266,310

 

$

67,285

 

25

%

Taxable interest and dividends on securities

 

88,277

 

 

36,977

 

 

51,300

 

139

%

Non-taxable interest and dividends on securities

 

5,585

 

 

5,561

 

 

24

 

%

Interest on federal funds sold and other short-term investments

 

2,726

 

 

1,434

 

 

1,292

 

90

%

Total interest and dividend income

 

430,183

 

 

310,282

 

 

119,901

 

39

%

Interest expense:

 

 

 

 

Interest on deposits

 

11,164

 

 

2,769

 

 

8,395

 

303

%

Interest on borrowings

 

959

 

 

123

 

 

836

 

680

%

Total interest expense

 

12,123

 

 

2,892

 

 

9,231

 

319

%

Net interest income

 

418,060

 

 

307,390

 

 

110,670

 

36

%

Provision for (release of) allowance for loan losses

 

7,045

 

 

(5,368

)

 

12,413

 

(231

)%

Net interest income after provision for (release of) release of allowance for loan losses

 

411,015

 

 

312,758

 

 

98,257

 

31

%

Noninterest income:

 

 

 

 

Insurance commissions

 

77,183

 

 

73,767

 

 

3,416

 

5

%

Service charges on deposit accounts

 

23,558

 

 

17,010

 

 

6,548

 

38

%

Trust and investment advisory fees

 

17,967

 

 

18,047

 

 

(80

)

%

Debit card processing fees

 

9,417

 

 

8,949

 

 

468

 

5

%

Interest rate swap income

 

6,087

 

 

5,122

 

 

965

 

19

%

(Losses) income from investments held in rabbi trusts

 

(13,997

)

 

5,773

 

 

(19,770

)

(342

)%

Gains on sales of mortgage loans held for sale, net

 

240

 

 

3,044

 

 

(2,804

)

(92

)%

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

 

(2,474

)

 

1,166

 

 

(3,640

)

(312

)%

Other

 

13,664

 

 

11,276

 

 

2,388

 

21

%

Total noninterest income

 

131,645

 

 

144,154

 

 

(12,509

)

(9

)%

Noninterest expense:

 

 

 

 

Salaries and employee benefits

 

220,582

 

 

199,554

 

 

21,028

 

11

%

Office occupancy and equipment

 

31,205

 

 

24,271

 

 

6,934

 

29

%

Data processing

 

42,959

 

 

37,892

 

 

5,067

 

13

%

Professional services

 

14,561

 

 

14,611

 

 

(50

)

%

Marketing

 

6,444

 

 

6,786

 

 

(342

)

(5

)%

Loan expenses

 

3,444

 

 

5,287

 

 

(1,843

)

(35

)%

Federal Deposit Insurance Corporation ("FDIC") insurance

 

4,710

 

 

2,989

 

 

1,721

 

58

%

Amortization of intangible assets

 

2,767

 

 

1,786

 

 

981

 

55

%

Other

 

10,173

 

 

7,178

 

 

2,995

 

42

%

Total noninterest expense

 

336,845

 

 

300,354

 

 

36,491

 

12

%

Income before income tax expense

 

205,815

 

 

156,558

 

 

49,257

 

31

%

Income tax expense

 

48,350

 

 

36,980

 

 

11,370

 

31

%

Net income

$

157,465

 

$

119,578

 

$

37,887

 

32

%

 

 

 

 

 

Share data:

 

 

 

 

Weighted average common shares outstanding, basic (1)

 

166,682,222

 

 

172,174,469

 

 

(5,492,247

)

(3

)%

Weighted average common shares outstanding, diluted (1)

 

166,867,643

 

 

172,174,469

 

 

(5,306,826

)

(3

)%

Earnings per share, basic

$

0.94

 

$

0.69

 

$

0.25

 

36

%

Earnings per share, diluted

$

0.94

 

$

0.69

 

$

0.25

 

36

%

 

 

 

 

 

(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 EARNED/PAID, & AVERAGE YIELDS

 

 

As of and for the three months ended

 

Sep 30, 2022

 

Jun 30, 2022

 

Sep 30, 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

$

9,138,029

 

$

96,270

 

4.18

%

 

$

8,944,652

 

$

83,586

 

3.75

%

 

$

6,995,556

 

$

67,276

 

3.82

%

Residential

 

2,043,219

 

 

15,811

 

3.07

%

 

 

1,960,014

 

 

14,683

 

3.00

%

 

 

1,477,891

 

 

11,479

 

3.08

%

Consumer

 

1,341,528

 

 

16,072

 

4.75

%

 

 

1,309,864

 

 

11,494

 

3.52

%

 

 

1,055,075

 

 

8,803

 

3.31

%

Total loans

 

12,522,776

 

 

128,153

 

4.06

%

 

 

12,214,530

 

 

109,763

 

3.60

%

 

 

9,528,522

 

 

87,558

 

3.65

%

Investment securities

 

8,716,105

 

 

31,708

 

1.44

%

 

 

8,883,710

 

 

33,479

 

1.51

%

 

 

5,249,742

 

 

16,655

 

1.26

%

Federal funds sold and other short-term investments

 

282,629

 

 

1,638

 

2.30

%

 

 

345,731

 

 

652

 

0.76

%

 

 

1,503,919

 

 

571

 

0.15

%

Total interest-earning assets

 

21,521,510

 

 

161,499

 

2.98

%

 

 

21,443,971

 

 

143,894

 

2.69

%

 

 

16,282,183

 

 

104,784

 

2.55

%

Non-interest-earning assets

 

911,025

 

 

 

 

 

 

962,734

 

 

 

 

 

 

1,141,168

 

 

 

 

Total assets

$

22,432,535

 

 

 

 

 

$

22,406,705

 

 

 

 

 

$

17,423,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings

$

2,021,125

 

$

51

 

0.01

%

 

$

2,041,495

 

$

51

 

0.01

%

 

$

1,441,385

 

$

36

 

0.01

%

Interest checking

 

5,211,914

 

 

2,686

 

0.20

%

 

 

4,877,256

 

 

2,061

 

0.17

%

 

 

2,687,196

 

 

244

 

0.04

%

Money market

 

4,824,452

 

 

1,893

 

0.16

%

 

 

5,069,609

 

 

745

 

0.06

%

 

 

3,762,855

 

 

360

 

0.04

%

Time deposits

 

380,560

 

 

151

 

0.16

%

 

 

426,923

 

 

204

 

0.19

%

 

 

233,145

 

 

96

 

0.16

%

Total interest-bearing deposits

 

12,438,051

 

 

4,781

 

0.15

%

 

 

12,415,283

 

 

3,061

 

0.10

%

 

 

8,124,581

 

 

736

 

0.04

%

Borrowings

 

157,686

 

 

867

 

2.18

%

 

 

35,330

 

 

53

 

0.60

%

 

 

26,074

 

 

41

 

0.62

%

Total interest-bearing liabilities

 

12,595,737

 

 

5,648

 

0.18

%

 

 

12,450,613

 

 

3,114

 

0.10

%

 

 

8,150,655

 

 

777

 

0.04

%

Demand deposit accounts

 

6,614,467

 

 

 

 

 

 

6,661,920

 

 

 

 

 

 

5,471,906

 

 

 

 

Other noninterest-bearing liabilities

 

445,640

 

 

 

 

 

 

428,373

 

 

 

 

 

 

350,111

 

 

 

 

Total liabilities

 

19,655,844

 

 

 

 

 

 

19,540,906

 

 

 

 

 

 

13,972,672

 

 

 

 

Shareholders' equity

 

2,776,691

 

 

 

 

 

 

2,865,799

 

 

 

 

 

 

3,450,679

 

 

 

 

Total liabilities and shareholders' equity

$

22,432,535

 

 

 

 

 

$

22,406,705

 

 

 

 

 

$

17,423,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income - FTE

 

 

$

155,851

 

 

 

 

 

$

140,780

 

 

 

 

 

$

104,007

 

 

Net interest rate spread (2)

 

 

 

 

2.80

%

 

 

 

 

 

2.59

%

 

 

 

 

 

2.51

%

Net interest-earning assets (3)

$

8,925,773

 

 

 

 

 

$

8,993,358

 

 

 

 

 

$

8,131,528

 

 

 

 

Net interest margin - FTE (4)

 

 

 

 

2.87

%

 

 

 

 

 

2.63

%

 

 

 

 

 

2.53

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 EARNED/PAID, & AVERAGE YIELDS

 

 

As of and for the nine months ended

 

Sep 30, 2022

 

Sep 30, 2021

(Unaudited, dollars in thousands)

Avg.

Balance

 

Interest

 

Yield /

Cost (5)

 

Avg.

Balance

 

Interest

 

Yield /

Cost (5)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

Loans (1):

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

9,019,196

 

$

258,082

 

3.83

%

 

$

7,203,903

 

$

208,228

 

3.86

%

Residential

 

1,980,630

 

 

44,966

 

3.04

%

 

 

1,435,006

 

 

34,150

 

3.18

%

Consumer

 

1,315,136

 

 

38,016

 

3.86

%

 

 

1,074,039

 

 

26,337

 

3.28

%

Total loans

 

12,314,962

 

 

341,064

 

3.70

%

 

 

9,712,948

 

 

268,715

 

3.70

%

Total investment securities

 

8,749,257

 

 

95,349

 

1.46

%

 

 

4,414,582

 

 

44,015

 

1.33

%

Federal funds sold and other short-term investments

 

541,285

 

 

2,726

 

0.67

%

 

 

1,619,873

 

 

1,434

 

0.12

%

Total interest-earning assets

 

21,605,504

 

 

439,139

 

2.72

%

 

 

15,747,403

 

 

314,164

 

2.67

%

Non-interest-earning assets

 

1,099,406

 

 

 

 

 

 

1,106,967

 

 

 

 

Total assets

$

22,704,910

 

 

 

 

 

$

16,854,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

Savings

$

2,046,254

 

$

153

 

0.01

%

 

$

1,376,243

 

$

169

 

0.02

%

Interest checking

 

4,897,321

 

 

6,778

 

0.19

%

 

 

2,541,113

 

 

730

 

0.04

%

Money market

 

5,151,384

 

 

3,559

 

0.09

%

 

 

3,576,648

 

 

1,553

 

0.06

%

Time deposits

 

429,401

 

 

674

 

0.21

%

 

 

243,621

 

 

317

 

0.17

%

Total interest-bearing deposits

 

12,524,360

 

 

11,164

 

0.12

%

 

 

7,737,625

 

 

2,769

 

0.05

%

Borrowings

 

75,027

 

 

959

 

1.71

%

 

 

25,582

 

 

123

 

0.64

%

Total interest-bearing liabilities

 

12,599,387

 

 

12,123

 

0.13

%

 

 

7,763,207

 

 

2,892

 

0.05

%

Demand deposit accounts

 

6,698,640

 

 

 

 

 

 

5,318,903

 

 

 

 

Other noninterest-bearing liabilities

 

436,724

 

 

 

 

 

 

347,237

 

 

 

 

Total liabilities

 

19,734,751

 

 

 

 

 

 

13,429,347

 

 

 

 

Shareholders' equity

 

2,970,159

 

 

 

 

 

 

3,425,023

 

 

 

 

Total liabilities and shareholders' equity

$

22,704,910

 

 

 

 

 

$

16,854,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income - FTE

 

 

$

427,016

 

 

 

 

 

$

311,272

 

 

Net interest rate spread (2)

 

 

 

 

2.59

%

 

 

 

 

 

2.62

%

Net interest-earning assets (3)

$

9,006,117

 

 

 

 

 

$

7,984,196

 

 

 

 

Net interest margin - FTE (4)

 

 

 

 

2.64

%

 

 

 

 

 

2.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes non-accrual loans.

(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(4) Net interest margin 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, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

(Unaudited, dollars in thousands)

 

 

 

 

 

Non-accrual loans:

 

 

 

 

 

Commercial

$

19,886

 

$

43,628

 

$

17,919

 

$

20,630

 

$

29,166

 

Residential

 

8,513

 

 

9,486

 

 

8,256

 

 

6,681

 

 

7,185

 

Consumer

 

5,555

 

 

6,766

 

 

7,646

 

 

5,682

 

 

4,262

 

Total non-accrual loans

 

33,954

 

 

59,880

 

 

33,821

 

 

32,993

 

 

40,613

 

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

 

 

 

 

 

 

 

1,990

 

 

1,458

 

Total non-performing loans

 

33,954

 

 

59,880

 

 

33,821

 

 

34,983

 

 

42,071

 

Other real estate owned

 

 

 

 

 

 

 

 

 

 

Other non-performing assets:

 

 

 

 

 

 

 

 

 

 

Total non-performing assets

$

33,954

 

$

59,880

 

$

33,821

 

$

34,983

 

$

42,071

 

Total accruing troubled debt restructured loans

$

36,275

 

$

33,518

 

$

32,016

 

$

33,336

 

$

34,723

 

Total non-performing loans to total loans

 

0.26

%

 

0.48

%

 

0.28

%

 

0.29

%

 

0.44

%

Total non-performing assets to total assets

 

0.15

%

 

0.27

%

 

0.15

%

 

0.15

%

 

0.24

%

 

 

 

 

 

 

(1) Non-performing assets are comprised of NPLs, other real estate owned ("OREO"), and non-performing securities. NPLs consist of non-accrual loans and loans that are more than 90 days past due but still accruing interest. OREO consists of real estate properties, which primarily serve as collateral to secure the Company’s loans, that it controls due to foreclosure or acceptance of a deed in lieu of foreclosure.

(2) 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 on January 1, 2022 of the loan loss methodology commonly referred to as the "current expected credit losses methodology" ("CECL"), the Company's 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 September 30, 2022, June 30, 2022 or 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 (RECOVERIES)

 

 

Three months ended

 

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

(Unaudited, dollars in thousands)

 

 

 

 

 

Average total loans

$

12,521,426

 

$

12,213,706

 

$

12,203,212

 

$

10,944,091

 

$

9,526,766

 

Allowance for loan losses, beginning of the period

 

125,531

 

 

124,166

 

 

97,787

 

 

103,398

 

 

105,637

 

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

 

 

 

 

 

27,086

 

 

 

 

 

Charged-off loans:

 

 

 

 

 

Commercial and industrial

 

11

 

 

1

 

 

1

 

 

1,008

 

 

 

Commercial real estate

 

 

 

 

 

 

 

5

 

 

8

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

369

 

 

608

 

 

945

 

 

1,002

 

 

867

 

Residential real estate

 

 

 

 

 

 

 

35

 

 

 

Consumer home equity

 

 

 

 

 

 

 

24

 

 

 

Other consumer

 

603

 

 

490

 

 

661

 

 

666

 

 

742

 

Total charged-off loans

 

983

 

 

1,099

 

 

1,607

 

 

2,740

 

 

1,617

 

Recoveries on loans previously charged-off:

 

 

 

 

 

Commercial and industrial

 

126

 

 

698

 

 

250

 

 

873

 

 

40

 

Commercial real estate

 

3

 

 

36

 

 

14

 

 

 

 

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

286

 

 

464

 

 

928

 

 

399

 

 

469

 

Residential real estate

 

56

 

 

14

 

 

10

 

 

7

 

 

88

 

Consumer home equity

 

6

 

 

6

 

 

4

 

 

48

 

 

63

 

Other consumer

 

158

 

 

196

 

 

179

 

 

120

 

 

206

 

Total recoveries

 

635

 

 

1,414

 

 

1,385

 

 

1,447

 

 

866

 

Net loans charged-off (recoveries):

 

 

 

 

 

Commercial and industrial

 

(115

)

 

(697

)

 

(249

)

 

135

 

 

(40

)

Commercial real estate

 

(3

)

 

(36

)

 

(14

)

 

5

 

 

8

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

83

 

 

144

 

 

17

 

 

603

 

 

398

 

Residential real estate

 

(56

)

 

(14

)

 

(10

)

 

28

 

 

(88

)

Consumer home equity

 

(6

)

 

(6

)

 

(4

)

 

(24

)

 

(63

)

Other consumer

 

445

 

 

294

 

 

482

 

 

546

 

 

536

 

Total net loans charged-off (recoveries)

 

348

 

 

(315

)

 

222

 

 

1,293

 

 

751

 

Provision for (release of) allowance for loan losses

 

6,480

 

 

1,050

 

 

(485

)

 

(4,318

)

 

(1,488

)

Total allowance for loan losses, end of period

$

131,663

 

$

125,531

 

$

124,166

 

$

97,787

 

$

103,398

 

Net charge-offs (recoveries) to average total loans outstanding during this period (2)

 

0.01

%

 

(0.01

)%

 

0.01

%

 

0.05

%

 

0.03

%

Allowance for loan losses as a percent of total loans

 

1.02

%

 

1.01

%

 

1.02

%

 

0.80

%

 

1.09

%

Allowance for loan losses as a percent of nonperforming loans

 

387.77

%

 

209.64

%

 

367.13

%

 

279.53

%

 

245.77

%

 

 

 

 

 

 

 

(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 PCI financial assets as PCD financial assets and the associated gross-up of $0.1 million, pursuant to the Company’s adoption of ASU 2016-13.

(2) Presented on an annualized basis.

APPENDIX A: Reconciliation of Non-GAAP Earnings Metrics

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

 

 

As of and for the three Months Ended

(Unaudited, dollars in thousands, except per-share data)

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

 

 

 

 

 

 

Net income (GAAP)

$

54,777

 

$

51,172

 

$

51,516

 

$

35,087

 

$

37,106

 

Add:

 

 

 

 

 

Noninterest income components:

 

 

 

 

 

Losses (income) from investments held in rabbi trusts

 

2,248

 

 

7,316

 

 

4,433

 

 

(4,444

)

 

289

 

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

 

198

 

 

104

 

 

2,172

 

 

 

 

(1

)

(Gains) losses on sales of other assets

 

(501

)

 

(1,251

)

 

274

 

 

(34

)

 

(490

)

Noninterest expense components:

 

 

 

 

 

Rabbi trust employee benefit (income) expense

 

(867

)

 

(3,310

)

 

(2,087

)

 

2,519

 

 

(53

)

Impairment charge on tax credit investments

 

 

 

 

 

 

 

116

 

 

1,133

 

Gain on sale of OREO

 

 

 

 

 

 

 

 

 

(87

)

Merger and acquisition expenses

 

271

 

 

 

 

34

 

 

30,652

 

 

740

 

Total impact of non-GAAP adjustments

 

1,349

 

 

2,859

 

 

4,826

 

 

28,809

 

 

1,531

 

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

 

384

 

 

1,513

 

 

1,235

 

 

19,036

 

 

1,246

 

Non-GAAP adjustments, net of tax

$

965

 

$

1,346

 

$

3,591

 

$

9,773

 

$

285

 

Operating net income (non-GAAP)

$

55,742

 

$

52,518

 

$

55,107

 

$

44,860

 

$

37,391

 

 

 

 

 

 

 

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

 

 

 

 

 

Basic

 

163,718,962

 

 

166,533,920

 

 

169,857,950

 

 

172,246,799

 

 

172,298,615

 

Diluted

 

164,029,649

 

 

166,573,627

 

 

169,968,156

 

 

172,481,829

 

 

172,298,615

 

 

 

 

 

 

 

Earnings per share, basic

$

0.33

 

$

0.31

 

$

0.30

 

$

0.20

 

$

0.22

 

Earnings per share, diluted

$

0.33

 

$

0.31

 

$

0.30

 

$

0.20

 

$

0.22

 

 

 

 

 

 

 

Operating earnings per share, basic (non-GAAP)

$

0.34

 

$

0.32

 

$

0.32

 

$

0.26

 

$

0.22

 

Operating earnings per share, diluted (non-GAAP)

$

0.34

 

$

0.32

 

$

0.32

 

$

0.26

 

$

0.22

 

 

 

 

 

 

 

Return on average assets (3)

 

0.97

%

 

0.92

%

 

0.90

%

 

0.67

%

 

0.84

%

Add:

 

 

 

 

 

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

 

0.04

%

 

0.13

%

 

0.08

%

 

(0.08

)%

 

0.01

%

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

 

0.00

%

 

0.00

%

 

0.04

%

 

0.00

%

 

0.00

%

(Gains) losses on sales of other assets (3)

 

(0.01

)%

 

(0.02

)%

 

0.00

%

 

0.00

%

 

(0.01

)%

Rabbi trust employee benefit (income) expense (3)

 

(0.02

)%

 

(0.06

)%

 

(0.04

)%

 

0.05

%

 

0.00

%

Impairment charge on tax credit investments (3)

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.03

%

Gain on sale of OREO (3)

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Merger and acquisition expenses (3)

 

0.00

%

 

0.00

%

 

0.00

%

 

0.58

%

 

0.02

%

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

 

0.01

%

 

0.03

%

 

0.02

%

 

0.36

%

 

0.03

%

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

 

0.97

%

 

0.94

%

 

0.96

%

 

0.86

%

 

0.86

%

 

 

 

 

 

 

Return on average shareholders' equity (3)

 

7.83

%

 

7.16

%

 

6.38

%

 

4.07

%

 

4.27

%

Add:

 

 

 

 

 

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

 

0.32

%

 

1.02

%

 

0.55

%

 

(0.52

)%

 

0.03

%

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

 

0.03

%

 

0.01

%

 

0.27

%

 

0.00

%

 

0.00

%

(Gains) losses on sales of other assets (3)

 

(0.07

)%

 

(0.18

)%

 

0.03

%

 

0.00

%

 

(0.06

)%

Rabbi trust employee benefit (income) expense (3)

 

(0.12

)%

 

(0.46

)%

 

(0.26

)%

 

0.29

%

 

(0.01

)%

Impairment charge on tax credit investments (3)

 

0.00

%

 

0.00

%

 

0.00

%

 

0.01

%

 

0.13

%

Gain on sale of OREO (3)

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

(0.01

)%

Merger and acquisition expenses (3)

 

0.04

%

 

0.00

%

 

0.00

%

 

3.55

%

 

0.09

%

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

 

0.05

%

 

0.21

%

 

0.15

%

 

2.21

%

 

0.14

%

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

 

7.98

%

 

7.34

%

 

6.82

%

 

5.19

%

 

4.30

%

 

 

 

 

 

 

Average tangible shareholders' equity:

 

 

 

 

 

Average total shareholders' equity (GAAP)

$

2,776,691

 

$

2,865,799

 

$

3,273,447

 

$

3,423,231

 

$

3,450,679

 

Less: Average goodwill and other intangibles

 

656,684

 

 

654,444

 

 

649,497

 

 

520,988

 

 

380,185

 

Average tangible shareholders' equity (non-GAAP)

$

2,120,007

 

$

2,211,355

 

$

2,623,950

 

$

2,902,243

 

$

3,070,494

 

 

 

 

 

 

 

Return on average tangible shareholders' equity (non-GAAP) (3)