Eastern Bankshares, Inc. Reports First Quarter 2023 Financial Results

April 27, 2023

~ Strengthens Liquidity Through Balance Sheet Repositioning – Provides 107% Coverage of All Uninsured and Uncollateralized Deposits While Maintaining Strong Capital Position ~

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 2023 first quarter financial results and the declaration of a quarterly cash dividend.

FINANCIAL HIGHLIGHTS FOR THE FIRST QUARTER OF 2023

  • Net loss of $194.1 million, or $1.20 per diluted share, compared to net income of $42.3 million, or $0.26 per diluted share for the fourth quarter of 2022.
  • Excluding the $280.0 million after-tax loss from the sale of $1.9 billion in available-for-sale (“AFS”) securities (see “Balance Sheet Repositioning, Liquidity and Capital Update” below), and certain other non-recurring items, operating net income* was a record $61.1 million, or $0.38 per diluted share, compared to $49.9 million, or $0.31 per diluted share, reported for the prior quarter.
  • Total securities decreased $2.0 billion, or 28%, from the prior quarter, to $5.2 billion, primarily due to securities sales and principal runoff, partially offset by an increase in the market value of AFS securities.
  • Deposits totaled $18.5 billion, representing a decrease of $432.8 million, or 2%, from the prior quarter. Excluding a reduction in brokered certificates of deposit of $319.0 million, total core deposits decreased $113.8 million or 0.6%.
  • Customer uninsured and uncollateralized deposits totaled $6.7 billion, representing 36% of total deposits.
  • Cash and cash equivalents were $2.1 billion and secured borrowing capacity at the Federal Reserve Bank and Federal Home Loan Bank totaled $5.0 billion, providing total liquidity sources of $7.1 billion, or 107% of customer uninsured and uncollateralized deposits.
  • Total loans were $13.7 billion, representing an increase of $99.7 million, or 1%, from the prior quarter. The increase was driven primarily by an increase in commercial loans of $73.4 million and residential loans of $36.6 million, partially offset by a decrease in consumer loans of $10.3 million.
  • Shareholders’ equity was $2.6 billion, representing an increase of $107.3 million from the prior quarter driven primarily by an increase in accumulated other comprehensive income of $313.3 million, partially offset by a decrease in retained earnings of $209.6 million both of which were primarily attributable to the sale of AFS securities.
  • Over 90% of the securities portfolio is classified as available-for-sale. Adjusted to reflect the valuation of held-to-maturity (“HTM”) securities, the tangible common equity (“TCE”) ratio* was 8.56% at quarter end, an increase from the prior quarter, with all regulatory capital ratios greatly exceeding well-capitalized minimums as shown in Appendix F.
  • At March 31, 2023, book value per share was $14.63 and tangible book value per share* was $10.88, an increase of 4% and 6% from the prior quarter, respectively.

“The first quarter marked a challenging time for our industry, and I’m grateful to our colleagues who have responded to the needs of our customers in a time of uncertainty,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank. “As a traditional, relationship-based community bank with a 200+ year history, we have worked through challenging economic environments before and know that serving our customers and earning their trust, every day, is the key to our long-term success.”

Regarding the sale of securities in the first quarter, Mr. Rivers continued, “We have taken important steps to further strengthen our already strong balance sheet to provide additional safety and security for our depositors while enhancing Eastern’s future earnings and long-term success. I encourage all of our stakeholders - our shareholders, customers, employees, and community partners - to review the earnings presentation on our investor relations website to learn more about the actions we have taken to better position Eastern for the future.”

Please refer to Appendices A-E to this press release for reconciliations of non-GAAP financial metrics denoted by an asterisk.

BALANCE SHEET REPOSITIONING, LIQUIDITY AND CAPITAL UPDATE

During the first quarter of 2023, the Company completed a balance sheet repositioning by selling $1.9 billion in lower-yielding AFS investment securities creating a non-recurring, after-tax loss of $280 million (“the repositioning”). The proceeds from the sale have been used to increase cash levels, which ended the quarter at $2.1 billion. The repositioning is expected to improve the Company’s overall financial profile by enhancing liquidity and strengthening earnings, while maintaining strong capital ratios on a GAAP and regulatory basis.

“Eastern deployed excess liquidity into the purchase of U.S. government and government agency bonds during the COVID-19 pandemic, when interest rates were historically low,” commented Mr. Rivers. “While the bonds were of the highest credit quality, they declined in value due to the recent record rise in interest rates. After careful consideration of all our options, we made the decision in early March and prior to the recent bank failures to sell a portion of our bond portfolio to improve liquidity and future earnings while maintaining robust capital levels. Eastern remains committed to serving the needs of our customers and communities and growing our market share over the long term. We believe this repositioning will allow us to better execute on those strategic objectives.”

The Company also took additional steps in the first quarter of 2023 to strengthen backup sources of liquidity including the pledging of securities to the Federal Reserve’s Bank Term Funding Program (“BTFP”) totaling $2.6 billion. At March 31, 2023, cash and cash equivalents were $2.1 billion and secured borrowing capacity at the Federal Reserve Bank and Federal Home Loan Bank totaled $5.0 billion, providing total liquidity sources of $7.1 billion. These liquidity sources provide 107% coverage of all customer uninsured and uncollateralized deposits which totaled $6.7 billion, or 36% of total deposits, on March 31, 2023.

The Company’s TCE ratio* was 8.70% at March 31, 2023, an increase from 8.24% the prior quarter, and all regulatory capital ratios greatly exceeded well capitalized minimums. The Company’s TCE ratio adjusted to reflect the valuation of HTM securities* was 8.56% at quarter end.

Please refer to Appendices A-E to this press release for reconciliations of non-GAAP financial metrics denoted by an asterisk.

NET INTEREST INCOME

Net interest income was $138.3 million for the first quarter of 2023, compared to $150.0 million in the prior quarter, representing a decrease of $11.7 million.

  • The decrease in net interest income on a consecutive quarter basis was primarily due to a decrease in the net interest margin, as increases in earning asset yields were more than offset by increased funding costs.
  • The net interest margin for the first quarter of 2023 included a partial quarter impact of the repositioning, which occurred in mid-March. As of March 31, 2023, the fully taxable-equivalent (“FTE”) spot yield on the total securities portfolio was 1.81% compared to 1.61% average FTE yield for the first quarter.
  • The net interest margin on a FTE basis* was 2.66% for the first quarter, representing a 15 basis point decrease from the prior quarter, as funding costs increased faster than asset yields.
  • Total interest-earning asset yields increased 33 basis points from the prior quarter to 3.60%, due primarily to increased loan yields as a result of higher short-term interest rates during the quarter.
  • Total interest-bearing liabilities cost increased 72 basis points from the prior quarter to 1.49%, due to core deposit pricing increases, deposit mix shifts into higher cost products, and higher non-core funding during the quarter.

Please refer to Appendices A-E to this press release for reconciliations of non-GAAP financial metrics denoted by an asterisk.

NONINTEREST INCOME

Noninterest income was $(278.3) million for the first quarter of 2023, compared to $44.5 million for the prior quarter, representing a decrease of $322.8 million primarily due to pre-tax losses on the sale of AFS securities of $333.2 million related to the repositioning. Noninterest income on an operating basis* was $52.0 million for the first quarter of 2023, compared to $42.0 million for the prior quarter, an increase of $10.0 million.

  • Insurance commissions increased $9.5 million to $31.5 million in the first quarter, compared to $22.0 million in the prior quarter, driven primarily by seasonality. Compared to the comparable prior year quarter, insurance commissions increased $2.8 million, or 10%.
  • Service charges on deposit accounts decreased $0.4 million on a consecutive quarter basis to $6.5 million.
  • Trust and investment advisory fees increased $0.1 million on a consecutive quarter basis to $5.8 million.
  • Debit card processing fees were unchanged from the prior quarter at $3.2 million.
  • Loan-level interest rate swap income decreased $0.3 million to a loss of $0.4 million in the first quarter, compared to a loss of $0.1 million in the prior quarter. The decrease was driven primarily by a decrease in the fair value of such interest rate swap transactions.
  • Gains on investments held in rabbi trust accounts were $2.9 million in the first quarter compared to $3.2 million in the prior quarter.
  • Realized losses on sales of AFS securities were $333.2 million in the first quarter compared to $0.7 million in the prior quarter due to the repositioning.
  • Other noninterest income increased $1.3 million in the first quarter to $5.6 million.

Please refer to Appendices A-E to this press release for reconciliations of non-GAAP financial metrics denoted by an asterisk.

NONINTEREST EXPENSE

Noninterest expense was $116.3 million for the first quarter of 2023, compared to $132.8 million in the prior quarter, representing a decrease of $16.5 million. Noninterest expense on an operating basis* for the first quarter of 2023 was $115.0 million, compared to $119.6 million in the prior quarter, a decrease of $4.6 million.

  • Salaries and employee benefits expense was $78.5 million in the first quarter, representing an increase of $0.9 million from the prior quarter.
  • Office occupancy and equipment expense was $9.9 million in the first quarter, an increase of $0.3 million from the prior quarter.
  • Data processing expense was $13.4 million in the first quarter, a decrease of $0.9 million from the prior quarter, due primarily to lower software service and support expense.
  • Professional services expense was $3.4 million in the first quarter, a decrease of $1.1 million from the prior quarter.
  • Marketing expense was $1.1 million in the first quarter, a decrease of $2.0 million from the prior quarter, due primarily to lower advertising expense.
  • Loan expenses were $1.1 million in the first quarter, an increase of $0.5 million from the prior quarter.
  • Federal Deposit Insurance Corporation (“FDIC”) insurance expense was $2.5 million in the first quarter, an increase of $1.0 million from the prior quarter primarily due to an increase in FDIC insurance premiums for 2023.
  • Other noninterest expense was $5.4 million in the first quarter, a decrease of $15.0 million from the prior quarter, due primarily to the Defined Benefit Plan settlement accounting charge of $12.0 million in the prior quarter, as well as higher provision for credit losses on off-balance sheet credit exposure in the prior quarter.

Please refer to Appendices A-E to this press release for reconciliations of non-GAAP financial metrics denoted by an asterisk.

ASSET QUALITY

The allowance for loan losses was $140.9 million at March 31, 2023, or 1.03% of total loans, compared to $142.2 million or 1.05% of total loans at December 31, 2022. The Company recorded a provision for loan losses totaling $25,000 in the first quarter of 2023. The remaining change in the allowance was due to the Company adopting ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02") on January 1, 2023 using a modified retrospective transition method with regard to the troubled debt restructuring ("TDR") recognition and measurement guidance. The adjustment needed to reflect the cumulative day one impact of the Company's adoption of ASU 2022-02 was a $1.1 million reduction in the allowance for loan losses and offset to retained earnings, net of taxes.

Non-performing loans totaled $34.6 million at March 31, 2023 compared to $38.6 million at the end of the prior quarter. During the first quarter of 2023, the Company recorded total net charge-offs of $0.2 million, or less than 0.01% of average total loans on an annualized basis, compared to $0.3 million or 0.01% of average total loans in the prior quarter, respectively.

Additional information regarding Eastern’s CRE portfolio is included in the first quarter earnings presentation available at investor.easternbank.com.

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, 2023 to shareholders of record as of the close of business on June 2, 2023.

The Company did not repurchase any shares of its common stock during the first quarter of 2023.

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 March 31, 2023, there were 6,989,750 shares available for repurchase and $161.8 million in total market value remaining under the repurchase authorization.

CONFERENCE CALL AND PRESENTATION INFORMATION

A conference call and webcast covering Eastern’s first quarter 2023 earnings will be held on Friday, April 28, 2023 at 9:00 a.m. Eastern Time. To join by telephone, participants can call the toll-free dial-in number (888) 886-7786 from within the U.S. and reference conference ID 83330813. The conference call will be simultaneously webcast. Participants may join the webcast on the Company’s Investor Relations website at investor.easternbank.com. A presentation providing additional information for the quarter is also available at investor.easternbank.com. A replay of the webcast will be made available on demand on this site.

ABOUT EASTERN BANKSHARES, INC.

Eastern Bankshares, Inc. is the stock holding company for Eastern Bank. Founded in 1818, Boston-based Eastern Bank has more than 120 locations serving communities in eastern Massachusetts, southern and coastal New Hampshire, and Rhode Island. As of March 31, 2023, 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 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), and the operating efficiency ratio. Each of these figures excludes the impact of such applicable items because management believes such exclusion can provide greater visibility into the Company’s core business and underlying trends. Such items that management does not consider to be core to the Company’s business include (i) income and expenses from investments held in rabbi trusts, (ii) gains and losses on sales of securities available for sale, net, (iii) gains and losses on the sale of other assets, (iv) rabbi trust employee benefits, (v) impairment charges on tax credit investments and associated tax credit benefits, (vi) other real estate owned (“OREO”) gains, (vii) merger and acquisition expenses, (viii) the non-cash pension settlement charge recognized related to the Defined Benefit Plan, and (ix) certain discrete tax items. The Company does not provide an outlook for its total noninterest income and total noninterest expense because each contains income or expense components, as applicable, such as income associated with rabbi trust accounts and rabbi trust employee benefit expense, which are market-driven, and over which the Company cannot exercise control. Accordingly, reconciliations of the Company’s outlook for its noninterest income on an operating basis and its noninterest expense on an operating basis to an outlook for total noninterest income and total noninterest expense, respectively, cannot be made available without unreasonable effort.

Management also presents tangible assets, tangible shareholders’ equity, average tangible shareholders’ equity, tangible book value per share, the ratio of tangible shareholders’ equity to tangible assets including the impact of mark-to-market adjustments on held-to-maturity securities, return on average tangible shareholders’ equity, and operating return on average shareholders’ equity (discussed further above), each of which excludes the impact of goodwill and other intangible assets, as management believes these financial measures provide investors with the ability to further assess the Company’s performance, identify trends in its core business and provide a comparison of its capital adequacy to other companies. The Company included the tangible ratios because management believes that investors may find it useful to have access to the same analytical tools used by management to assess performance and identify trends.

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

FORWARD-LOOKING STATEMENTS

This press release contains “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. You can identify these statements from the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions. Forward-looking statements, by their nature, are subject to risks and uncertainties. There are many factors that could cause actual results to differ materially from expected results described in the forward-looking statements.

Certain factors that could cause actual results to differ materially from expected results include 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 interest rates and resulting changes in competitor or customer behavior, mix or costs of sources of funding, and deposit amounts and composition; risks that revenue or expense synergies or the other expected benefits of the Company’s merger with Century Bank in November 2021 may not fully materialize for the Company in the timeframe expected or at all, or may be more costly to achieve; adverse national or regional economic conditions or conditions within the securities markets or banking sector; legislative and regulatory changes and related compliance costs that could adversely affect the business in which the Company and its subsidiary Eastern Bank are engaged, including the effect of, and changes in, monetary and fiscal policies and laws, such as the interest rate policies of the Board of Governors of the Federal Reserve System; market and monetary fluctuations, including inflationary or recessionary pressures, interest rate sensitivity, liquidity constraints, increased borrowing and funding costs, and fluctuations due to actual or anticipated changes to federal tax laws; the realizability of deferred tax assets; the Company’s ability to successfully implement its risk mitigation strategies; asset and credit quality deterioration, including adverse developments in local or regional real estate markets that decrease collateral values associated with existing loans; and 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.

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)

Mar 31, 2023

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

 

 

 

 

 

 

Earnings data

 

 

 

 

 

Net interest income

$

138,309

 

$

149,994

 

$

152,179

 

$

137,757

 

$

128,124

 

Noninterest income

 

(278,330

)

 

44,516

 

 

43,353

 

 

41,877

 

 

46,415

 

Total revenue

 

(140,021

)

 

194,510

 

 

195,532

 

 

179,634

 

 

174,539

 

Noninterest expense

 

116,294

 

 

132,757

 

 

116,840

 

 

111,139

 

 

108,866

 

Pre-tax, pre-provision (loss) income

 

(256,315

)

 

61,753

 

 

78,692

 

 

68,495

 

 

65,673

 

Provision for (release of) allowance for loan losses

 

25

 

 

10,880

 

 

6,480

 

 

1,050

 

 

(485

)

Pre-tax (loss) income

 

(256,340

)

 

50,873

 

 

72,212

 

 

67,445

 

 

66,158

 

Net (loss) income

 

(194,096

)

 

42,294

 

 

54,777

 

 

51,172

 

 

51,516

 

Operating net income (non-GAAP)

 

61,113

 

 

49,912

 

 

55,742

 

 

52,518

 

 

55,107

 

 

 

 

 

 

 

Per-share data

 

 

 

 

 

(Loss) earnings per share, basic

$

(1.20

)

$

0.26

 

$

0.33

 

$

0.31

 

$

0.30

 

(Loss) earnings per share, diluted

$

(1.20

)

$

0.26

 

$

0.33

 

$

0.31

 

$

0.30

 

Operating earnings per share, basic (non-GAAP)

$

0.38

 

$

0.31

 

$

0.34

 

$

0.32

 

$

0.32

 

Operating earnings per share, diluted (non-GAAP)

$

0.38

 

$

0.31

 

$

0.34

 

$

0.32

 

$

0.32

 

Book value per share

$

14.63

 

$

14.03

 

$

13.59

 

$

15.17

 

$

16.40

 

Tangible book value per share (non-GAAP)

$

10.88

 

$

10.28

 

$

9.87

 

$

11.52

 

$

12.83

 

 

 

 

 

 

 

Profitability

 

 

 

 

 

Return on average assets (1)

 

(3.50

)%

 

0.75

%

 

0.97

%

 

0.92

%

 

0.90

%

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

 

1.09

%

 

0.88

%

 

0.97

%

 

0.94

%

 

0.96

%

Return on average shareholders' equity (1)

 

(32.00

)%

 

6.93

%

 

7.83

%

 

7.16

%

 

6.38

%

Operating return on average shareholders' equity (1)

 

10.07

%

 

8.17

%

 

7.98

%

 

7.34

%

 

6.82

%

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

 

(43.75

)%

 

9.54

%

 

10.25

%

 

9.28

%

 

7.96

%

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

 

13.78

%

 

11.26

%

 

10.44

%

 

9.53

%

 

8.53

%

Net interest margin (FTE) (1)

 

2.66

%

 

2.81

%

 

2.87

%

 

2.63

%

 

2.42

%

Cost of deposits (1)

 

0.92

%

 

0.37

%

 

0.10

%

 

0.06

%

 

0.07

%

Efficiency ratio

 

(83.05

)%

 

68.25

%

 

59.75

%

 

61.87

%

 

62.37

%

Operating efficiency ratio (non-GAAP)

 

59.06

%

 

61.11

%

 

58.38

%

 

60.61

%

 

60.39

%

 

 

 

 

 

 

Balance Sheet (end of period)

 

 

 

 

 

Total assets

$

22,720,530

 

$

22,646,858

 

$

22,042,933

 

$

22,350,848

 

$

22,836,072

 

Total loans

 

13,675,250

 

 

13,575,531

 

 

12,903,954

 

 

12,398,694

 

 

12,182,203

 

Total deposits

 

18,541,580

 

 

18,974,359

 

 

18,733,381

 

 

19,163,801

 

 

19,392,816

 

Total loans / total deposits

 

74

%

 

72

%

 

69

%

 

65

%

 

63

%

 

 

 

 

 

 

Asset quality

 

 

 

 

 

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

$

140,938

 

$

142,211

 

$

131,663

 

$

125,531

 

$

124,166

 

ALLL / total nonperforming loans ("NPLs")

 

407.65

%

 

368.38

%

 

387.77

%

 

209.64

%

 

367.13

%

Total NPLs / total loans

 

0.25

%

 

0.28

%

 

0.26

%

 

0.48

%

 

0.28

%

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

 

0.00

%

 

0.01

%

 

0.01

%

 

(0.01

)%

 

0.01

%

 

 

 

 

 

 

Capital adequacy

 

 

 

 

 

Shareholders' equity / assets

 

11.35

%

 

10.91

%

 

10.96

%

 

12.16

%

 

13.17

%

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

 

8.70

%

 

8.24

%

 

8.20

%

 

9.52

%

 

10.61

%

 

 

 

 

 

 

(1) Presented on an annualized basis.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

As of

Mar 31, 2023 change from

(Unaudited, dollars in thousands)

Mar 31, 2023

Dec 31, 2022

Mar 31, 2022

Dec 31, 2022

Mar 31, 2022

ASSETS

 

 

 

△ $

△ %

△ $

△ %

Cash and due from banks

$

98,377

 

$

106,040

 

$

118,362

 

$

(7,663

)

(7

)%

$

(19,985

)

(17

)%

Short-term investments

 

2,039,439

 

 

63,465

 

 

712,132

 

 

1,975,974

 

3113

%

 

1,327,307

 

186

%

Cash and cash equivalents

 

2,137,816

 

 

169,505

 

 

830,494

 

 

1,968,311

 

1161

%

 

1,307,322

 

157

%

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

 

4,700,134

 

 

6,690,778

 

 

7,917,305

 

 

(1,990,644

)

(30

)%

 

(3,217,171

)

(41

)%

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

 

471,185

 

 

476,647

 

 

395,434

 

 

(5,462

)

(1

)%

 

75,751

 

19

%

Total securities

 

5,171,319

 

 

7,167,425

 

 

8,312,739

 

 

(1,996,106

)

(28

)%

 

(3,141,420

)

(38

)%

Loans held for sale

 

3,068

 

 

4,543

 

 

1,166

 

 

(1,475

)

(32

)%

 

1,902

 

163

%

Loans:

 

 

 

 

 

 

 

Commercial and industrial

 

3,169,438

 

 

3,150,946

 

 

2,886,560

 

 

18,492

 

1

%

 

282,878

 

10

%

Commercial real estate

 

5,201,196

 

 

5,155,323

 

 

4,609,824

 

 

45,873

 

1

%

 

591,372

 

13

%

Commercial construction

 

357,117

 

 

336,276

 

 

246,093

 

 

20,841

 

6

%

 

111,024

 

45

%

Business banking

 

1,078,678

 

 

1,090,492

 

 

1,201,007

 

 

(11,814

)

(1

)%

 

(122,329

)

(10

)%

Total commercial loans

 

9,806,429

 

 

9,733,037

 

 

8,943,484

 

 

73,392

 

1

%

 

862,945

 

10

%

Residential real estate

 

2,497,491

 

 

2,460,849

 

 

1,936,182

 

 

36,642

 

1

%

 

561,309

 

29

%

Consumer home equity

 

1,180,824

 

 

1,187,547

 

 

1,099,211

 

 

(6,723

)

(1

)%

 

81,613

 

7

%

Other consumer

 

190,506

 

 

194,098

 

 

203,326

 

 

(3,592

)

(2

)%

 

(12,820

)

(6

)%

Total loans

 

13,675,250

 

 

13,575,531

 

 

12,182,203

 

 

99,719

 

1

%

 

1,493,047

 

12

%

Allowance for loan losses

 

(140,938

)

 

(142,211

)

 

(124,166

)

 

1,273

 

(1

)%

 

(16,772

)

14

%

Unamortized prem./disc. and def. fees

 

(13,597

)

 

(13,003

)

 

(24,434

)

 

(594

)

5

%

 

10,837

 

(44

)%

Net loans

 

13,520,715

 

 

13,420,317

 

 

12,033,603

 

 

100,398

 

1

%

 

1,487,112

 

12

%

Federal Home Loan Bank stock, at cost

 

45,168

 

 

41,363

 

 

10,904

 

 

3,805

 

9

%

 

34,264

 

314

%

Premises and equipment

 

61,110

 

 

62,656

 

 

73,180

 

 

(1,546

)

(2

)%

 

(12,070

)

(16

)%

Bank-owned life insurance

 

161,755

 

 

160,790

 

 

157,954

 

 

965

 

1

%

 

3,801

 

2

%

Goodwill and other intangibles, net

 

660,165

 

 

661,126

 

 

654,759

 

 

(961

)

%

 

5,406

 

1

%

Deferred income taxes, net

 

314,139

 

 

331,648

 

 

183,137

 

 

(17,509

)

(5

)%

 

131,002

 

72

%

Prepaid expenses

 

163,018

 

 

165,900

 

 

188,704

 

 

(2,882

)

(2

)%

 

(25,686

)

(14

)%

Other assets

 

482,257

 

 

461,585

 

 

389,432

 

 

20,672

 

4

%

 

92,825

 

24

%

Total assets

$

22,720,530

 

$

22,646,858

 

$

22,836,072

 

$

73,672

 

%

$

(115,542

)

(1

)%

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

Demand

$

5,564,016

 

$

6,240,637

 

$

6,788,742

 

$

(676,621

)

(11

)%

$

(1,224,726

)

(18

)%

Interest checking accounts

 

4,240,780

 

 

4,568,122

 

 

4,662,134

 

 

(327,342

)

(7

)%

 

(421,354

)

(9

)%

Savings accounts

 

1,633,790

 

 

1,831,123

 

 

2,089,427

 

 

(197,333

)

(11

)%

 

(455,637

)

(22

)%

Money market investment

 

5,135,590

 

 

4,710,095

 

 

5,406,198

 

 

425,495

 

9

%

 

(270,608

)

(5

)%

Certificates of deposit

 

1,967,404

 

 

1,624,382

 

 

446,315

 

 

343,022

 

21

%

 

1,521,089

 

341

%

Total deposits

 

18,541,580

 

 

18,974,359

 

 

19,392,816

 

 

(432,779

)

(2

)%

 

(851,236

)

(4

)%

Borrowed funds:

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

1,100,952

 

 

704,084

 

 

13,689

 

 

396,868

 

56

%

 

1,087,263

 

7943

%

Escrow deposits of borrowers

 

25,671

 

 

22,314

 

 

21,233

 

 

3,357

 

15

%

 

4,438

 

21

%

Interest rate swap collateral funds

 

11,780

 

 

14,430

 

 

 

 

(2,650

)

(18

)%

 

11,780

 

%

Total borrowed funds

 

1,138,403

 

 

740,828

 

 

34,922

 

 

397,575

 

54

%

 

1,103,481

 

3160

%

Other liabilities

 

461,424

 

 

459,881

 

 

399,942

 

 

1,543

 

%

 

61,482

 

15

%

Total liabilities

 

20,141,407

 

 

20,175,068

 

 

19,827,680

 

 

(33,661

)

%

 

313,727

 

2

%

Shareholders' equity:

 

 

 

 

 

 

 

Common shares

 

1,764

 

 

1,762

 

 

1,834

 

 

2

 

%

 

(70

)

(4

)%

Additional paid-in capital

 

1,651,524

 

 

1,649,141

 

 

1,777,670

 

 

2,383

 

%

 

(126,146

)

(7

)%

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

 

(136,470

)

 

(137,696

)

 

(141,455

)

 

1,226

 

(1

)%

 

4,985

 

(4

)%

Retained earnings

 

1,672,169

 

 

1,881,775

 

 

1,782,997

 

 

(209,606

)

(11

)%

 

(110,828

)

(6

)%

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

 

(609,864

)

 

(923,192

)

 

(412,654

)

 

313,328

 

(34

)%

 

(197,210

)

48

%

Total shareholders' equity

 

2,579,123

 

 

2,471,790

 

 

3,008,392

 

 

107,333

 

4

%

 

(429,269

)

(14

)%

Total liabilities and shareholders' equity

$

22,720,530

 

$

22,646,858

 

$

22,836,072

 

$

73,672

 

%

$

(115,542

)

(1

)%

 

 

 

 

 

 

 

 

(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 Mar 31, 2023

change from three months ended

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

Mar 31, 2023

Dec 31, 2022

Mar 31, 2022

 

Dec 31, 2022

 

Mar 31, 2022

 

 

 

 

 

 

 

 

 

 

Interest and dividend income:

 

 

 

 

△ $

△ %

 

△ $

△ %

Interest and fees on loans

$

153,540

 

$

142,446

 

$

101,367

 

 

$

11,094

 

8

%

 

$

52,173

 

51

%

Taxable interest and dividends on securities

 

28,642

 

 

30,413

 

 

27,876

 

 

 

(1,771

)

(6

)%

 

 

766

 

3

%

Non-taxable interest and dividends on securities

 

1,434

 

 

1,594

 

 

1,806

 

 

 

(160

)

(10

)%

 

 

(372

)

(21

)%

Interest on federal funds sold and other short-term investments

 

5,264

 

 

545

 

 

436

 

 

 

4,719

 

866

%

 

 

4,828

 

1107

%

Total interest and dividend income

 

188,880

 

 

174,998

 

 

131,485

 

 

 

13,882

 

8

%

 

 

57,395

 

44

%

Interest expense:

 

 

 

 

 

 

 

 

 

Interest on deposits

 

42,933

 

 

17,457

 

 

3,322

 

 

 

25,476

 

146

%

 

 

39,611

 

1192

%

Interest on borrowings

 

7,638

 

 

7,547

 

 

39

 

 

 

91

 

1

%

 

 

7,599

 

19485

%

Total interest expense

 

50,571

 

 

25,004

 

 

3,361

 

 

 

25,567

 

102

%

 

 

47,210

 

1405

%

Net interest income

 

138,309

 

 

149,994

 

 

128,124

 

 

 

(11,685

)

(8

)%

 

 

10,185

 

8

%

Provision for (release of) allowance for loan losses

 

25

 

 

10,880

 

 

(485

)

 

 

(10,855

)

(100

)%

 

 

510

 

(105

)%

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

 

138,284

 

 

139,114

 

 

128,609

 

 

 

(830

)

(1

)%

 

 

9,675

 

8

%

Noninterest income:

 

 

 

 

 

 

 

 

 

Insurance commissions

 

31,503

 

 

22,049

 

 

28,713

 

 

 

9,454

 

43

%

 

 

2,790

 

10

%

Service charges on deposit accounts

 

6,472

 

 

6,834

 

 

8,537

 

 

 

(362

)

(5

)%

 

 

(2,065

)

(24

)%

Trust and investment advisory fees

 

5,770

 

 

5,626

 

 

6,141

 

 

 

144

 

3

%

 

 

(371

)

(6

)%

Debit card processing fees

 

3,170

 

 

3,227

 

 

2,945

 

 

 

(57

)

(2

)%

 

 

225

 

8

%

Interest rate swap (losses) income

 

(408

)

 

(78

)

 

2,932

 

 

 

(330

)

423

%

 

 

(3,340

)

(114

)%

Gains (losses) from investments held in rabbi trusts

 

2,857

 

 

3,235

 

 

(4,433

)

 

 

(378

)

(12

)%

 

 

7,290

 

(164

)%

(Losses) gains on sales of mortgage loans held for sale, net

 

(74

)

 

8

 

 

169

 

 

 

(82

)

(1025

)%

 

 

(243

)

(144

)%

Losses on sales of securities available for sale, net

 

(333,170

)

 

(683

)

 

(2,172

)

 

 

(332,487

)

48680

%

 

 

(330,998

)

15239

%

Other

 

5,550

 

 

4,298

 

 

3,583

 

 

 

1,252

 

29

%

 

 

1,967

 

55

%

Total noninterest income

 

(278,330

)

 

44,516

 

 

46,415

 

 

 

(322,846

)

(725

)%

 

 

(324,745

)

(700

)%

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

78,478

 

 

77,604

 

 

69,526

 

 

 

874

 

1

%

 

 

8,952

 

13

%

Office occupancy and equipment

 

9,878

 

 

9,559

 

 

11,614

 

 

 

319

 

3

%

 

 

(1,736

)

(15

)%

Data processing

 

13,441

 

 

14,314

 

 

15,320

 

 

 

(873

)

(6

)%

 

 

(1,879

)

(12

)%

Professional services

 

3,420

 

 

4,566

 

 

3,950

 

 

 

(1,146

)

(25

)%

 

 

(530

)

(13

)%

Marketing

 

1,097

 

 

3,096

 

 

1,574

 

 

 

(1,999

)

(65

)%

 

 

(477

)

(30

)%

Loan expenses

 

1,095

 

 

627

 

 

1,919

 

 

 

468

 

75

%

 

 

(824

)

(43

)%

Federal Deposit Insurance Corporation ("FDIC") insurance

 

2,546

 

 

1,540

 

 

1,412

 

 

 

1,006

 

65

%

 

 

1,134

 

80

%

Amortization of intangible assets

 

960

 

 

1,097

 

 

827

 

 

 

(137

)

(12

)%

 

 

133

 

16

%

Other

 

5,379

 

 

20,354

 

 

2,724

 

 

 

(14,975

)

(74

)%

 

 

2,655

 

97

%

Total noninterest expense

 

116,294

 

 

132,757

 

 

108,866

 

 

 

(16,463

)

(12

)%

 

 

7,428

 

7

%

(Loss) income before income tax (benefit) expense

 

(256,340

)

 

50,873

 

 

66,158

 

 

 

(307,213

)

(604

)%

 

 

(322,498

)

(487

)%

Income tax (benefit) expense

 

(62,244

)

 

8,579

 

 

14,642

 

 

 

(70,823

)

(826

)%

 

 

(76,886

)

(525

)%

Net (loss) income

$

(194,096

)

$

42,294

 

$

51,516

 

 

$

(236,390

)

(559

)%

 

$

(245,612

)

(477

)%

 

 

 

 

 

 

 

 

 

 

Share data:

 

 

 

 

 

 

 

 

 

(Loss) earnings per share, basic

$

(1.20

)

$

0.26

 

$

0.30

 

 

 

 

 

 

 

(Loss) earnings per share, diluted

$

(1.20

)

$

0.26

 

$

0.30

 

 

 

 

 

 

 

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

AVERAGE BALANCES, INTEREST EARNED/PAID, & AVERAGE YIELDS

 

 

As of and for the three months ended

 

Mar 31, 2023

 

Dec 31, 2022

 

Mar 31, 2022

(Unaudited, dollars in thousands)

Avg. Balance

 

Interest

 

Yield /

Cost (5)

 

Avg. Balance

 

Interest

 

Yield /

Cost (5)

 

Avg. Balance

 

Interest

 

Yield /

Cost (5)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

$

9,765,236

 

$

115,929

 

4.81

%

 

$

9,528,386

 

$

108,015

 

4.50

%

 

$

8,973,094

 

$

78,226

 

3.54

%

Residential

 

2,513,413

 

 

21,614

 

3.49

%

 

 

2,313,810

 

 

18,837

 

3.23

%

 

 

1,937,494

 

 

14,471

 

3.03

%

Consumer

 

1,358,616

 

 

20,059

 

5.99

%

 

 

1,363,858

 

 

18,949

 

5.51

%

 

 

1,293,489

 

 

10,450

 

3.28

%

Total loans

 

13,637,265

 

 

157,602

 

4.69

%

 

 

13,206,054

 

 

145,801

 

4.38

%

 

 

12,204,077

 

 

103,147

 

3.43

%

Investment securities

 

7,684,665

 

 

30,459

 

1.61

%

 

 

8,422,385

 

 

32,432

 

1.53

%

 

 

8,647,200

 

 

30,163

 

1.41

%

Federal funds sold and other short-term investments

 

449,543

 

 

5,264

 

4.75

%

 

 

63,408

 

 

545

 

3.41

%

 

 

1,003,416

 

 

436

 

0.18

%

Total interest-earning assets

 

21,771,473

 

 

193,325

 

3.60

%

 

 

21,691,847

 

 

178,778

 

3.27

%

 

 

21,854,693

 

 

133,746

 

2.48

%

Non-interest-earning assets

 

739,270

 

 

 

 

 

 

653,158

 

 

 

 

 

 

1,436,702

 

 

 

 

Total assets

$

22,510,743

 

 

 

 

 

$

22,345,005

 

 

 

 

 

$

23,291,395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings

$

1,721,143

 

$

81

 

0.02

%

 

$

1,924,840

 

$

57

 

0.01

%

 

$

2,076,754

 

$

51

 

0.01

%

Interest checking

 

4,363,528

 

 

4,711

 

0.44

%

 

 

4,871,089

 

 

4,897

 

0.40

%

 

 

4,596,026

 

 

2,032

 

0.18

%

Money market

 

5,040,330

 

 

20,305

 

1.63

%

 

 

4,778,694

 

 

9,919

 

0.82

%

 

 

5,568,264

 

 

920

 

0.07

%

Time deposits

 

1,931,860

 

 

17,836

 

3.74

%

 

 

563,735

 

 

2,584

 

1.82

%

 

 

481,833

 

 

319

 

0.27

%

Total interest-bearing deposits

 

13,056,861

 

 

42,933

 

1.33

%

 

 

12,138,358

 

 

17,457

 

0.57

%

 

 

12,722,877

 

 

3,322

 

0.11

%

Borrowings

 

675,056

 

 

7,638

 

4.59

%

 

 

795,527

 

 

7,547

 

3.76

%

 

 

30,669

 

 

39

 

0.52

%

Total interest-bearing liabilities

 

13,731,917

 

 

50,571

 

1.49

%

 

 

12,933,885

 

 

25,004

 

0.77

%

 

 

12,753,546

 

 

3,361

 

0.11

%

Demand deposit accounts

 

5,825,269

 

 

 

 

 

 

6,495,817

 

 

 

 

 

 

6,821,811

 

 

 

 

Other noninterest-bearing liabilities

 

493,387

 

 

 

 

 

 

495,129

 

 

 

 

 

 

442,591

 

 

 

 

Total liabilities

 

20,050,573

 

 

 

 

 

 

19,924,831

 

 

 

 

 

 

20,017,948

 

 

 

 

Shareholders' equity

 

2,460,170

 

 

 

 

 

 

2,420,174

 

 

 

 

 

 

3,273,447

 

 

 

 

Total liabilities and shareholders' equity

$

22,510,743

 

 

 

 

 

$

22,345,005

 

 

 

 

 

$

23,291,395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income - FTE

 

 

$

142,754

 

 

 

 

 

$

153,774

 

 

 

 

 

$

130,385

 

 

Net interest rate spread (2)

 

 

 

 

2.11

%

 

 

 

 

 

2.50

%

 

 

 

 

 

2.37

%

Net interest-earning assets (3)

$

8,039,556

 

 

 

 

 

$

8,757,962

 

 

 

 

 

$

9,101,147

 

 

 

 

Net interest margin - FTE (4)

 

 

 

 

2.66

%

 

 

 

 

 

2.81

%

 

 

 

 

 

2.42

%

 
 

(1) Includes non-accrual loans.

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

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

(4) Net interest margin - FTE represents fully-taxable equivalent net interest income* divided by average total interest-earning assets. Please refer to Appendix B to this press release for a reconciliation of fully-taxable equivalent net interest income.

(5) Presented on an annualized basis.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

ASSET QUALITY - NON-PERFORMING ASSETS (1)

 

 

As of

 

Mar 31, 2023

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

(Unaudited, dollars in thousands)

 

 

 

 

 

Non-accrual loans:

 

 

 

 

 

Commercial

$

17,271

 

$

21,474

 

$

19,886

 

$

43,628

 

$

17,919

 

Residential

 

9,603

 

 

9,750

 

 

8,513

 

 

9,486

 

 

8,256

 

Consumer

 

7,699

 

 

7,380

 

 

5,555

 

 

6,766

 

 

7,646

 

Total non-accrual loans

 

34,573

 

 

38,604

 

 

33,954

 

 

59,880

 

 

33,821

 

Total accruing loans past due 90 days or more:

 

 

 

 

 

 

 

 

 

 

Total non-performing loans

 

34,573

 

 

38,604

 

 

33,954

 

 

59,880

 

 

33,821

 

Other real estate owned

 

 

 

 

 

 

 

 

 

 

Other non-performing assets:

 

 

 

 

 

 

 

 

 

 

Total non-performing assets

$

34,573

 

$

38,604

 

$

33,954

 

$

59,880

 

$

33,821

 

Total accruing troubled debt restructured (2)

$

 

$

28,834

 

$

36,275

 

$

33,518

 

$

32,016

 

Total non-performing loans to total loans

 

0.25

%

 

0.28

%

 

0.26

%

 

0.48

%

 

0.28

%

Total non-performing assets to total assets

 

0.15

%

 

0.17

%

 

0.15

%

 

0.27

%

 

0.15

%

 

 

 

 

 

 

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

(2) The Company adopted ASU 2022-02 on January 1, 2023 which eliminated the TDR recognition and measurement guidance. Accordingly, the Company has no TDRs to report as of March 31, 2023.

EASTERN BANKSHARES, INC. AND SUBSIDIARIES

ASSET QUALITY - PROVISION, ALLOWANCE, AND NET CHARGE-OFFS (RECOVERIES)

 

 

Three months ended

 

Mar 31, 2023

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

(Unaudited, dollars in thousands)

 

 

 

 

 

Average total loans

$

13,633,165

 

$

13,203,450

 

$

12,521,426

 

$

12,213,706

 

$

12,203,212

 

Allowance for loan losses, beginning of the period

 

142,211

 

 

131,663

 

 

125,531

 

 

124,166

 

 

97,787

 

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

 

(1,143

)

 

 

 

 

 

 

 

27,086

 

Charged-off loans:

 

 

 

 

 

Commercial and industrial

 

 

 

256

 

 

11

 

 

1

 

 

1

 

Commercial real estate

 

 

 

 

 

 

 

 

 

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

343

 

 

370

 

 

369

 

 

608

 

 

945

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

Consumer home equity

 

7

 

 

1

 

 

 

 

 

 

 

Other consumer

 

561

 

 

515

 

 

603

 

 

490

 

 

661

 

Total charged-off loans

 

911

 

 

1,142

 

 

983

 

 

1,099

 

 

1,607

 

Recoveries on loans previously charged-off:

 

 

 

 

 

Commercial and industrial

 

139

 

 

248

 

 

126

 

 

698

 

 

250

 

Commercial real estate

 

4

 

 

38

 

 

3

 

 

36

 

 

14

 

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

481

 

 

391

 

 

286

 

 

464

 

 

928

 

Residential real estate

 

15

 

 

14

 

 

56

 

 

14

 

 

10

 

Consumer home equity

 

1

 

 

8

 

 

6

 

 

6

 

 

4

 

Other consumer

 

116

 

 

111

 

 

158

 

 

196

 

 

179

 

Total recoveries

 

756

 

 

810

 

 

635

 

 

1,414

 

 

1,385

 

Net loans charged-off (recoveries):

 

 

 

 

 

Commercial and industrial

 

(139

)

 

8

 

 

(115

)

 

(697

)

 

(249

)

Commercial real estate

 

(4

)

 

(38

)

 

(3

)

 

(36

)

 

(14

)

Commercial construction

 

 

 

 

 

 

 

 

 

 

Business banking

 

(138

)

 

(21

)

 

83

 

 

144

 

 

17

 

Residential real estate

 

(15

)

 

(14

)

 

(56

)

 

(14

)

 

(10

)

Consumer home equity

 

6

 

 

(7

)

 

(6

)

 

(6

)

 

(4

)

Other consumer

 

445

 

 

404

 

 

445

 

 

294

 

 

482

 

Total net loans charged-off (recoveries)

 

155

 

 

332

 

 

348

 

 

(315

)

 

222

 

Provision for (release of) allowance for loan losses

 

25

 

 

10,880

 

 

6,480

 

 

1,050

 

 

(485

)

Total allowance for loan losses, end of period

$

140,938

 

$

142,211

 

$

131,663

 

$

125,531

 

$

124,166

 

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

 

0.00

%

 

0.01

%

 

0.01

%

 

(0.01

)%

 

0.01

%

Allowance for loan losses as a percent of total loans

 

1.03

%

 

1.05

%

 

1.02

%

 

1.01

%

 

1.02

%

Allowance for loan losses as a percent of nonperforming loans

 

407.65

%

 

368.38

%

 

387.77

%

 

209.64

%

 

367.13

%

 

 

 

 

 

 

 

(1) For the quarter ended March 31, 2023, represents the adjustment needed to reflect the cumulative day one impact pursuant to the Company’s adoption of ASU 2022-02 (i.e., cumulative effect adjustment related to the adoption of ASU 2022-02 as of January 1, 2023). The adjustment represents a $1.1 million decrease to the allowance attributable to the change in accounting methodology for estimating the allowance for loan losses resulting from the Company’s adoption of the standard. For the quarter ended March 31, 2022, 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)

Mar 31, 2023

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

 

 

 

 

 

 

Net (loss) income (GAAP)

$

(194,096

)

$

42,294

 

$

54,777

 

$

51,172

 

$

51,516

 

Add:

 

 

 

 

 

Noninterest income components:

 

 

 

 

 

(Income) losses from investments held in rabbi trusts

 

(2,857

)

 

(3,235

)

 

2,248

 

 

7,316

 

 

4,433

 

Losses on sales of securities available for sale, net

 

333,170

 

 

683

 

 

198

 

 

104

 

 

2,172

 

(Gains) losses on sales of other assets

 

(1

)

 

(14

)

 

(501

)

 

(1,251

)

 

274

 

Noninterest expense components:

 

 

 

 

 

Rabbi trust employee benefit expense (income)

 

1,274

 

 

1,103

 

 

(867

)

 

(3,310

)

 

(2,087

)

Merger and acquisition expenses

 

 

 

 

 

271

 

 

 

 

34

 

Defined Benefit Plan settlement loss

 

 

 

12,045

 

 

 

 

 

 

 

Total impact of non-GAAP adjustments

 

331,586

 

 

10,582

 

 

1,349

 

 

2,859

 

 

4,826

 

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

 

76,377

 

 

2,964

 

 

384

 

 

1,513

 

 

1,235

 

Non-GAAP adjustments, net of tax

$

255,209

 

$

7,618

 

$

965

 

$

1,346

 

$

3,591

 

Operating net income (non-GAAP)

$

61,113

 

$

49,912

 

$

55,742

 

$

52,518

 

$

55,107

 

 

 

 

 

 

 

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

 

 

 

 

 

Basic

 

161,991,373

 

 

162,032,522

 

 

163,718,962

 

 

166,533,920

 

 

169,857,950

 

Diluted

 

162,059,431

 

 

162,263,547

 

 

164,029,649

 

 

166,573,627

 

 

169,968,156

 

 

 

 

 

 

 

(Loss) earnings per share, basic

$

(1.20

)

$

0.26

 

$

0.33

 

$

0.31

 

$

0.30

 

(Loss) earnings per share, diluted

$

(1.20

)

$

0.26

 

$

0.33

 

$

0.31

 

$

0.30

 

 

 

 

 

 

 

Operating earnings per share, basic (non-GAAP)

$

0.38

 

$

0.31

 

$

0.34

 

$

0.32

 

$

0.32

 

Operating earnings per share, diluted (non-GAAP)

$

0.38

 

$

0.31

 

$

0.34

 

$

0.32

 

$

0.32

 

 

 

 

 

 

 

Return on average assets (3)

 

(3.50

)%

 

0.75

%

 

0.97

%

 

0.92

%

 

0.90

%

Add:

 

 

 

 

 

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

 

(0.05

)%

 

(0.06

)%

 

0.04

%

 

0.13

%

 

0.08

%

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

 

6.00

%

 

0.01

%

 

0.00

%

 

0.00

%

 

0.04

%

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

 

0.00

%

 

0.00

%

 

(0.01

)%

 

(0.02

)%

 

0.00

%

Rabbi trust employee benefit expense (income) (3)

 

0.02

%

 

0.02

%

 

(0.02

)%

 

(0.06

)%

 

(0.04

)%

Merger and acquisition expenses (3)

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Defined Benefit Plan settlement loss (3)

 

0.00

%

 

0.21

%

 

0.00

%

 

0.00

%

 

0.00

%

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

 

1.38

%

 

0.05

%

 

0.01

%

 

0.03

%

 

0.02

%

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

 

1.09

%

 

0.88

%

 

0.97

%

 

0.94

%

 

0.96

%

 

 

 

 

 

 

Return on average shareholders' equity (3)

 

(32.00

)%

 

6.93

%

 

7.83

%

 

7.16

%

 

6.38

%

Add:

 

 

 

 

 

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

 

(0.47

)%

 

(0.53

)%

 

0.32

%

 

1.02

%

 

0.55

%

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

 

54.92

%

 

0.11

%

 

0.03

%

 

0.01

%

 

0.27

%

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

 

0.00

%

 

0.00

%

 

(0.07

)%

 

(0.18

)%

 

0.03

%

Rabbi trust employee benefit expense (income) (3)

 

0.21

%

 

0.18

%

 

(0.12

)%

 

(0.46

)%

 

(0.26

)%

Merger and acquisition expenses (3)

 

0.00

%

 

0.00

%

 

0.04

%

 

0.00

%

 

0.00

%

Defined Benefit Plan settlement loss (3)

 

0.00

%

 

1.97

%

 

0.00

%

 

0.00

%

 

0.00

%

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

 

12.59

%

 

0.49

%

 

0.05

%

 

0.21

%

 

0.15

%

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

 

10.07

%

 

8.17

%

 

7.98

%

 

7.34

%

 

6.82

%

 

 

 

 

 

 

Average tangible shareholders' equity:

 

 

 

 

 

Average total shareholders' equity (GAAP)

$

2,460,170

 

$

2,420,174

 

$

2,776,691

 

$

2,865,799

 

$

3,273,447

 

Less: Average goodwill and other intangibles

 

660,795

 

 

661,841

 

 

656,684

 

 

654,444

 

 

649,497

 

Average tangible shareholders' equity (non-GAAP)

$

1,799,375

 

$

1,758,333

 

$

2,120,007

 

$

2,211,355

 

$

2,623,950

 

 

 

 

 

 

 

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

 

(43.75

)%

 

9.54

%

 

10.25

%

 

9.28

%

 

7.96

%

Add:

 

 

 

 

 

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

 

(0.64

)%

 

(0.73

)%

 

0.42

%

 

1.33

%

 

0.69

%

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

 

75.09

%

 

0.15

%

 

0.04

%

 

0.02

%

 

0.34

%

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

 

0.00

%

 

0.00

%

 

(0.09

)%

 

(0.23

)%

 

0.04

%

Rabbi trust employee benefit expense (income) (3)

 

0.29

%

 

0.25

%

 

(0.16

)%

 

(0.60

)%

 

(0.32

)%

Merger and acquisition expenses (3)

 

0.00

%

 

0.00

%

 

0.05

%

 

0.00

%

 

0.01

%

Defined Benefit Plan settlement loss (3)

 

0.00

%

 

2.72

%

 

0.00

%

 

0.00

%

 

0.00

%

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

 

17.21

%

 

0.67

%

 

0.07

%

 

0.27

%

 

0.19

%

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

 

13.78

%

 

11.26

%

 

10.44

%

 

9.53

%

 

8.53

%

 

 

 

 

 

 

(1) The net tax benefit 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. For the quarter ended March 31, 2023, this amount is primarily comprised of a $53.2 million tax benefit, net of a valuation allowance, resulting from the sale of securities classified as available for sale and a $23.7 million tax benefit resulting from the transfer of certain securities from Market Street Securities Corp., a wholly owned subsidiary which was liquidated during the three months ended March 31, 2023, to Eastern Bank. Upon the sale of securities, the Company established a valuation allowance of $17.4 million as it was determined at that time it was not more likely than not that the entirety of the previously established deferred tax asset related to the loss on such securities would be realized.

(2) Shares held by the Company’s employee stock ownership plan ("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, 2023

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

(Unaudited, dollars in thousands)

 

 

 

 

 

Net interest income (GAAP)

$

138,309

 

$

149,994

 

$

152,179

 

$

137,757

 

$

128,124

 

Add:

 

 

 

 

 

Tax-equivalent adjustment (non-GAAP) (1)

 

4,445

 

 

3,780

 

 

3,672

 

 

3,023

 

 

2,261

 

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

$

142,754

 

$

153,774

 

$

155,851

 

$

140,780

 

$

130,385

 

 

 

 

 

 

 

Noninterest (loss) income (GAAP)

$

(278,330

)

$

44,516

 

$

43,353

 

$

41,877

 

$

46,415

 

Less:

 

 

 

 

 

Income (losses) from investments held in rabbi trusts

 

2,857

 

 

3,235

 

 

(2,248

)

 

(7,316

)

 

(4,433

)

Losses on sales of securities available for sale, net

 

(333,170

)

 

(683

)

 

(198

)

 

(104

)

 

(2,172

)

Gain (losses) on sales of other assets

 

1

 

 

14

 

 

501

 

 

1,251

 

 

(274

)

Noninterest income on an operating basis (non-GAAP)

$

51,982

 

$

41,950

 

$

45,298

 

$

48,046

 

$

53,294

 

 

 

 

 

 

 

Noninterest expense (GAAP)

$

116,294

 

$

132,757

 

$

116,840

 

$

111,139

 

$

108,866

 

Less:

 

 

 

 

 

Rabbi trust employee benefit expense (income)

 

1,274

 

 

1,103

 

 

(867

)

 

(3,310

)

 

(2,087

)

Merger and acquisition expenses

 

 

 

 

 

271

 

 

 

 

34

 

Defined Benefit Plan settlement loss

 

 

 

12,045

 

 

 

 

 

 

 

Noninterest expense on an operating basis (non-GAAP)

$

115,020

 

$

119,609

 

$

117,436

 

$

114,449

 

$

110,919

 

 

 

 

 

 

 

Total revenue (GAAP)

$

(140,021

)

$

194,510

 

$

195,532

 

$

179,634

 

$

174,539

 

Total operating revenue (non-GAAP)

$

194,736

 

$

195,724

 

$

201,149

 

$

188,826

 

$

183,679

 

 

 

 

 

 

 

Efficiency ratio (GAAP)

 

(83.05

)%

 

68.25

%

 

59.75

%

 

61.87

%

 

62.37

%

Operating efficiency ratio (non-GAAP)

 

59.06

%

 

61.11

%

 

58.38

%

 

60.61

%

 

60.39

%

 

 

 

 

 

 

(1) Interest income on tax-exempt loans and investment securities has been adjusted to an FTE basis using a marginal tax rate of 21.7%, 21.6%, 21.5%, 21.5%, and 21.0% for the three months ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022, respectively.

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, 2023

Dec 31, 2022

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

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

 

 

 

 

 

Tangible shareholders' equity:

 

 

 

 

 

Total shareholders' equity (GAAP)

$

2,579,123

 

$

2,471,790

 

$

2,416,163

 

$

2,718,396

 

$

3,008,392

 

Less: Goodwill and other intangibles

 

660,165

 

 

661,126

 

 

662,222

 

 

653,853

 

 

654,759

 

Tangible shareholders' equity (non-GAAP)

 

1,918,958

 

 

1,810,664

 

 

1,753,941

 

 

2,064,543

 

 

2,353,633

 

 

 

 

 

 

 

Tangible assets:

 

 

 

 

 

Total assets (GAAP)

 

22,720,530

 

 

22,646,858

 

 

22,042,933

 

 

22,350,848

 

 

22,836,072

 

Less: Goodwill and other intangibles

 

660,165

 

 

661,126

 

 

662,222

 

 

653,853

 

 

654,759

 

Tangible assets (non-GAAP)

$

22,060,365

 

$

21,985,732

 

$

21,380,711

 

$

21,696,995

 

$

22,181,313

 

 

 

 

 

 

 

Shareholders' equity to assets ratio (GAAP)

 

11.35

%

 

10.91

%

 

10.96

%

 

12.16

%

 

13.17

%

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

 

8.70

%

 

8.24

%

 

8.20

%

 

9.52

%

 

10.61

%