Eastern Bankshares, Inc. Reports Fourth Quarter 2020 Financial Results
01/28/2021 - 11:55 PM
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 2020 fourth quarter financial results and the initiation of a quarterly cash dividend.
Concurrent with its mutual-to-stock conversion and as described in the prospectus for its initial public offering (“IPO”), the Company made a one-time donation of 7.5 million shares of common stock to the Eastern Bank Charitable Foundation (“EBCF”) at a total market value of $91.3 million . This contribution resulted in a net loss of $44.1 million for the fourth quarter of 2020, or $0.26 per share, compared to net income of $28.5 million reported for the prior quarter. Operating net income* was $31.6 million for the quarter, or $0.18 per share, for the fourth quarter of 2020, compared to $32.3 million reported for the prior quarter.
“We are very pleased with our operating results for the fourth quarter as well as our dividend initiation, and thank our colleagues for their outstanding efforts,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank. “We are thrilled to have completed our stock offering and to be trading publicly, which are major steps forward in building upon our more than 202-year history of providing competitive financial products and services and an outstanding customer experience. As I reflect on the year, I’m especially proud of the 8,800 Paycheck Protection Program (“PPP”) loans totaling $1.1 billion that we delivered to businesses in need, the third most among lenders in Massachusetts. This is all being accomplished during the COVID-19 pandemic which has had, and continues to have, an adverse effect on our customers, colleagues and the markets in which we operate. We continue to carefully monitor and adapt to it, while keeping the safety and well-being of our colleagues and customers a priority.”
“The transformative, one-time donation of $91.3 million of stock to the Eastern Bank Charitable Foundation, a condition of the stock offering, positions our Foundation to continue to support the communities we serve and address society’s most vexing challenges in a meaningful way,” added Rivers.
The Company also announced the initiation of a quarterly cash dividend of $0.06 per share as part of its capital management strategy.
Rivers continued, “Given our Company’s current strength and our history of generating strong cash flows, we believe that we can both invest in the business and return capital to shareholders. Our initiation of a quarterly dividend demonstrates our confidence in our ability to drive growth and effectively deploy capital while delivering value to our shareholders.”
SELECTED FINANCIAL HIGHLIGHTS
Net loss was $44.1 million , or $0.26 per share, for the fourth quarter due to the stock contribution to the EBCF.
Operating net income* was $31.6 million , or $0.18 per share, for the fourth quarter.
Book value and tangible book value per share* were $18.36 and $16.34 , respectively, at December 31, 2020.
At December 31, 2020, $332.7 million in loan balances remained under modified payment terms due to the COVID-19 pandemic, down from $701.2 million at September 30, 2020. Provision for credit losses was $900 thousand in the fourth quarter compared to $700 thousand in the prior quarter.
BALANCE SHEET
Total assets were $16.0 billion at December 31, 2020, representing an increase of $503.6 million or 3% from September 30, 2020.
Available-for-sale securities increased $976.2 million , or 44% on a consecutive quarter basis, to $3.2 billion , as excess liquidity was deployed into U.S. Agency securities. Cash and equivalents declined to $2.1 billion from $2.3 billion , a $274.0 million quarter over quarter decline.
Total loans were $9.7 billion , representing a decrease of $213.7 million or 2% from the prior quarter as paydowns outpaced new originations. The main contributing factor was the forgiveness or paydown of PPP loans which totaled $97.4 million for the fourth quarter, reducing total PPP loans to $1.0 billion .
Deposits totaled $12.2 billion representing a decrease of $1.2 billion , or 9% , from September 30, 2020. The decline in deposits resulted primarily from the use of funds on deposit by certain deposit holders to satisfy their stock subscription orders during the Company’s IPO in the fourth quarter.
Shareholders’ equity was $3.4 billion , representing an increase of $1.7 billion or 100% from the prior quarter. The increase was attributable to the capital raised during the Company’s mutual-to-stock conversion and IPO completed on October 14, 2020.
As previously disclosed, the Company converted its defined benefit plan to a cash balance defined benefit plan during the period which resulted in a $54.9 million after-tax increase to other comprehensive income and shareholders’ equity.
At December 31, 2020, book value per share was $18.36 and tangible book value per share* was $16.34 . Please refer to Appendix H for a quarter over quarter comparison of equity accounts.
NET INTEREST INCOME
Net interest income was $103.6 million for the fourth quarter, compared to $98.7 million in the prior quarter, representing an increase of $4.9 million . Included in net interest income in the fourth quarter was a favorable $3.8 million nonrecurring item. Also included in net interest income was $4.1 million and $6.1 million of SBA PPP fee accretion net of deferred cost amortization in the third and fourth quarters, respectively. The increase in PPP fee recognition on a consecutive quarter basis was attributable to an increase in PPP loan forgiveness rates in the fourth quarter. Between September 30 and December 31, 2020, $97.4 million in PPP loans were forgiven through the SBA or otherwise paid down.
The net interest margin on a fully tax equivalent (FTE) basis* was 2.84% for the fourth quarter, representing a 20 basis points decrease from the prior quarter primarily due to the Company’s excess liquidity.
Please refer to Appendix E for a four-quarter trend analysis of the adjusted core margin*.
NONINTEREST INCOME
Noninterest income was $49.6 million for the fourth quarter, compared to $47.7 million for the prior quarter, representing an increase of $1.9 million .
Insurance commissions increased $0.6 million to $22.4 million in the fourth quarter, compared to $21.9 million in the prior quarter and included a $1.2 million nonrecurring item.
Service charges on deposit accounts increased $1.0 million on a consecutive quarter basis to $6.0 million , primarily driven by higher account analysis service charges.
Loan-level interest rate swap revenue was $2.5 million in the fourth quarter, compared to $1.3 million in the prior quarter, representing an increase of $1.2 million primarily driven by an increase in the fair value of these interest rate swap transactions.
Income on securities held in rabbi trust accounts was $5.5 million in the fourth quarter compared to $3.8 million in the prior quarter, an increase of $1.7 million as strong equity market gains continued in the fourth quarter.
Mortgage origination activity was strong in the fourth quarter with the gain on sale of loans totaling $3.3 million , up $1.1 million from the prior quarter. This was mostly offset by a $3.1 million reduction in the gain/loss on commitments to sell mortgage loans which is recorded in other income.
Please refer to Appendix B for a reconciliation of operating revenues and expenses.
NONINTEREST EXPENSE
Noninterest expense was $199.2 million for the fourth quarter representing an increase of $89.4 million , or 81% , from the prior quarter noninterest expense of $109.8 million . Fourth quarter noninterest expense included costs associated with the Company’s mutual-to-stock conversion. Excluding expenses related to the mutual-to-stock conversion and certain other non-operating items, noninterest expense on an operating basis* for the third and fourth quarters was $100.8 million and $101.8 million , respectively.
Charitable contributions expense in the fourth quarter included $91.3 million in expense from the donation of shares of the Company to the EBCF in connection with the Company’s mutual-to-stock conversion and IPO. The Company established a $12.0 million deferred tax valuation allowance in connection with the contribution.
Salaries and benefits were $70.3 million in the fourth quarter, representing an increase of $3.7 million from the prior quarter primarily due to employee stock ownership plan (“ESOP”) contribution expense of $2.4 million and higher defined contribution supplemental employee retirement plan expense associated with the mark-to-market increase in rabbi trust accounts of $1.4 million noted above.
Other noninterest expense declined from $12.6 million in the prior quarter to $6.2 million in the fourth quarter, a decline of $6.4 million . The Company recorded impairment charges on tax credit investments of $7.6 million and $3.2 million in the third and fourth quarter, respectively. Included in other noninterest expense are components of the Company’s pension expense which were $1.3 million lower in the fourth quarter compared to the prior quarter. However, this was offset by an increase in pension service cost which is included in salary and benefit expense.
Please refer to Appendix B for a reconciliation of operating revenues and expenses.
ASSET QUALITY
The allowance for credit losses was $113.0 million at December 31, 2020, or 1.16% of total loans, compared to $115.4 million or 1.16% of total loans at September 30, 2020. The Company recorded a fourth quarter provision for credit losses of $0.9 million , compared to $0.7 million in the prior quarter. The Company followed the incurred loss allowance GAAP accounting model at December 31, 2020 and all preceding periods.
Non-performing loans totaled $43.3 million at December 31, 2020 compared to $44.8 million at the end of the prior quarter. The consecutive quarter decline was driven by reduction in nonperforming residential mortgage loans of $0.7 million , a reduction in nonperforming consumer loans of $0.6 million , and a reduction in nonperforming commercial loans of $0.3 million . During the fourth quarter of 2020, the Company recorded total net charge-offs of $3.3 million , or 0.13% of average total loans on an annualized basis compared to $1.9 million and 0.08% in the prior quarter, respectively.
Through June 30, 2020, approximately $946.0 million of loans had been modified due to COVID-19. Loans were modified on full or partial payment deferral pursuant to the criteria established in federal requirements for COVID-19-related loan relief. Most modifications were for a term of six months. At December 31, 2020, approximately $332.7 million in COVID-19 modified loans remained under modified payment terms, down from $701.2 million at September 30, 2020.
Please refer to Appendix F and Appendix G for detail on the Company’s lending exposure to industries which management believes are most likely to experience adverse effects of the COVID-19 pandemic, as well as a detailed breakout on COVID-19 related loan modifications.
CONFERENCE CALL INFORMATION
A conference call and webcast covering Eastern’s fourth quarter 2020 earnings will be held on Friday, January 29, 2021 at 9:00 a.m. Eastern Time. To register for the conference call, please visit the Company’s Investor Relations website at investor.easternbank.com. After registration, a confirmation will be sent through email, including dial in details and unique conference call codes to access the call. Participants are encouraged to register for the conference call at least one day in advance, although registration will be available through the conclusion of the call. The conference call will be simultaneously webcast. Participants may join the webcast on the Company’s Investor Relations website. A replay of the webcast will be made available on demand on this site.
DIVIDEND INITIATED
The Company’s Board of Directors declared a quarterly cash dividend of $0.06 per common share, payable on March 15, 2021, to shareholders of record as of the close of business on March 3, 2021. The Company expects to continue paying quarterly dividends, the declaration, timing and amounts of which remain subject to the discretion of the Company’s Board of Directors.
ANNOUNCEMENT OF THE 2021 ANNUAL MEETING OF SHAREHOLDERS
The Company’s Board of Directors has set the date and time for its 2021 annual meeting of shareholders to be 12:00 p.m. Eastern Time on Monday, May 17, 2021. The annual meeting will be held at the Company’s offices at 265 Franklin Street, Boston, Massachusetts and over the Internet in a virtual meeting format. The record date for shareholders entitled to vote at the meeting will be Monday, March 12, 2021. Shareholders of record will receive additional details and instructions for meeting participation in the proxy materials that will be made available to them in early April.
ABOUT EASTERN BANKSHARES, INC.
Eastern Bankshares, Inc. (NASDAQ Global Select Market: EBC) is the stock holding company for Eastern Bank. Founded in 1818, Boston-based Eastern Bank has more than 110 locations serving communities in eastern Massachusetts, southern and coastal New Hampshire, and Rhode Island, and as of December 31, 2020, Eastern Bank had approximately $16.0 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 subsidiary. Eastern takes pride in its outspoken advocacy and community support that has exceeded $140 million in charitable giving since 1999. An inclusive company, Eastern employs 1,800+ deeply committed professionals who value relationships with their customers, colleagues, and communities. For investor information, visit investor.easternbank.com.
NON-GAAP FINANCIAL MEASURES
*Denotes a non-GAAP financial measure used in this press release.
A non-GAAP financial measure is defined as a numerical measure of the Company’s historical or future financial performance, financial position or cash flows that excludes (or includes) amounts, or is subject to adjustments that have the effect of excluding (or including) amounts that are included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”) in the Company’s statement of income, balance sheet or statement of cash flows (or equivalent statements).
The Company presents non-GAAP financial measures, which management uses to evaluate the Company’s performance, and which exclude the effects of certain transactions that management believes are unrelated to its core business and are therefore not necessarily indicative of its current performance or financial position. Management believes excluding these items facilitates greater visibility for investors into the Company’s core businesses as well as underlying trends that may, to some extent, be obscured by inclusion of such items in the corresponding GAAP financial measures.
There are items in the Company’s financial statements that impact its financial results, but which management believes are unrelated to the Company’s core business. Accordingly, the Company presents noninterest income on an operating basis, total operating revenue, noninterest expense on an operating basis, operating net income, operating earnings per share, operating return on average assets, operating return on average shareholders’ equity, the operating efficiency ratio, and the ratio of noninterest income to total revenue on an operating basis. Each of these figures excludes the impact of such applicable items because management believes such exclusion can provide greater visibility into the Company’s core business and underlying trends. Such items that management does not consider to be core to the Company’s business include (i) income and expenses from investments held in rabbi trusts, (ii) gains and losses on sales of securities available for sale, net, (iii) gains and losses on the sale of other assets, (iv) rabbi trust employee benefits, (v) impairment charges on tax credit investments and associated tax credit benefits, (vi) expenses indirectly associated with the Company’s IPO, (vii) other real estate owned gains, (viii) merger and acquisition expenses, and (ix) the stock donation to the EBCF in connection with the Company’s mutual-to-stock conversion and IPO. The Company does not provide an outlook for its total noninterest expense because it contains expense components, such as expense associated with rabbi trust accounts, which is market-driven, over which the Company cannot exercise control. Accordingly a reconciliation of the Company’s outlook for its noninterest expense on an operating basis to an outlook for total noninterest expense cannot be made available without unreasonable effort.
Management also presents the Company’s core net interest margin which excludes the impact of items management determines as being one-time in nature or not indicative of its core operating results. Such items include the impact of excess liquidity in the form of excess cash volume, PPP loans originated in response to the COVID-19 pandemic, and material purchase accounting adjustments. Similarly, management presents certain asset quality metrics excluding PPP loans which it does not consider to be part of the Company’s core portfolios. These metrics include the ratio of total nonperforming loans to total loans excluding PPP loans, the ratio of the allowance for loan losses to total loans excluding PPP loans, and the ratio of annualized net charge-offs to average total loans excluding PPP loans. The Company anticipates that the vast majority of its PPP loans outstanding at December 31, 2020 will be forgiven during 2021, and to the extent not forgiven, a PPP loan is intended to be 100% guaranteed by the SBA.
Management also presents tangible assets, tangible shareholders’ equity, tangible book value per share, and the ratio of tangible shareholders’ equity to tangible assets, each of which excludes the impact of goodwill and other intangible assets, as management believes these financial measures provide investors with the ability to further assess the Company’s performance, identify trends in its core business and provide a comparison of its capital adequacy to other companies. The Company included the tangible ratios because management believes that investors may find it useful to have access to the same analytical tools used by management to assess performance and identify trends.
These non-GAAP financial measures presented in this press release should not be considered an alternative or substitute for financial results or measures determined in accordance with GAAP or as an indication of the Company’s cash flows from operating activities, a measure of its liquidity position or an indication of funds available for its cash needs. An item which management considers to be non-core and excludes when computing these non-GAAP measures can be of substantial importance to the Company’s results for any particular period. In addition, management’s methodology for calculating non-GAAP financial measures may differ from the methodologies employed by other banking companies to calculate the same or similar performance measures, and accordingly, the Company’s reported non-GAAP financial measures may not be comparable to the same or similar performance measures reported by other banking companies. Please refer to Appendices A-E for a 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, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiary Eastern Bank are engaged. For further discussion of such factors, please see the Company’s most recent reports on Forms S-1 and 10-Q filed with the U.S. Securities and Exchange Commission (the “SEC”) and available on the SEC’s website at www.sec.gov .
Further, given its ongoing and dynamic nature, it is difficult to predict what continued effects the COVID-19 pandemic will have on the Company's business and results of operations. The COVID-19 pandemic and the related local and national economic disruption may result in a continued decline in demand for the Company's products and services; increased levels of loan delinquencies, problem assets and foreclosures; an increase in the Company's allowance for loan losses; a decline in the value of loan collateral, including real estate; a greater decline in the yield on the Company's interest-earning assets than the decline in the cost of the Company's interest-bearing liabilities; and increased cybersecurity risks, as employees continue to work remotely. Accordingly, you should not place undue reliance on forward-looking statements, which reflect the Company's expectations only as of the date of this document. The Company does not undertake any obligation to update forward-looking statements.
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
Certain information in this release is presented as reviewed by the Company’s management and includes information derived from the Company’s Consolidated Statements of Income, non-GAAP financial measures, and operational and performance metrics. For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures ."
As of and for the three months ended
(Unaudited, dollars in thousands, except per share amounts)
Dec 31, 2020
Sep 30, 2020
Jun 30, 2020
Mar 31, 2020
Dec 31, 2019
Earnings data
Net interest income
$
103,608
$
98,742
$
98,755
$
100,146
$
100,921
Noninterest income
49,638
47,709
47,657
33,369
47,277
Total revenue
153,246
146,451
146,412
133,515
148,198
Noninterest expense
199,169
109,817
100,765
95,172
105,619
Pre-tax, pre-provision (loss) income
(45,923
)
36,634
45,647
38,343
42,579
Provision for credit losses
900
700
8,600
28,600
1,800
Pre-tax (loss) income
(46,823
)
35,934
37,047
9,743
40,779
Net (loss) income
(44,062
)
28,505
29,850
8,445
31,238
Operating net income (non-GAAP)
31,612
32,322
27,301
10,858
29,878
Per-share data
(Loss) earnings per share
$
(0.26
)
n.a.
n.a.
n.a.
n.a.
Operating earnings per share (non-GAAP)
$
0.18
n.a.
n.a.
n.a.
n.a.
Book value per share
$
18.36
n.a.
n.a.
n.a.
n.a.
Tangible book value per share (non-GAAP)
$
16.34
n.a.
n.a.
n.a.
n.a.
Profitability
Return on average assets (1)
(1.11
)
%
0.80
%
0.88
%
0.29
%
1.08
%
Operating return on average assets (non-GAAP) (1)
0.79
%
0.90
%
0.81
%
0.38
%
1.03
%
Return on average shareholders' equity (1)
(5.61
)
%
6.65
%
7.11
%
2.08
%
7.69
%
Operating return on average shareholders' equity (non-GAAP) (1)
4.02
%
7.54
%
6.51
%
2.67
%
7.35
%
Net interest margin (FTE) (1)
2.84
%
3.04
%
3.23
%
3.80
%
3.83
%
Cost of deposits
0.03
%
0.06
%
0.11
%
0.23
%
0.26
%
Fee income ratio
32.39
%
32.58
%
32.55
%
24.99
%
31.90
%
Efficiency ratio
129.97
%
74.99
%
68.82
%
71.28
%
71.27
%
Operating efficiency ratio (non-GAAP)
68.33
%
69.95
%
68.90
%
69.54
%
71.10
%
Balance Sheet (end of period)
Total assets
$
15,964,190
$
15,460,594
$
13,996,523
$
12,343,754
$
11,628,775
Total loans (2)
9,706,989
9,911,494
9,979,616
9,080,743
8,981,481
Total deposits
12,155,784
13,332,585
11,846,765
10,309,011
9,551,392
Total loans / total deposits
79.85
%
74.34
%
84.24
%
88.09
%
94.03
%
PPP loans (2)
$
1,007,487
$
1,098,883
$
1,072,312
$
—
$
—
Asset quality
Allowance for loan losses (ALLL)
$
113,031
$
115,432
$
116,636
$
109,138
$
82,297
ALLL / total nonperforming loans (NPLs)
261.33
%
257.47
%
210.55
%
222.34
%
188.00
%
Total NPLs / total loans
0.45
%
0.45
%
0.56
%
0.54
%
0.49
%
Total NPLs / total loans (excl. PPP loans) (non-GAAP)
0.50
%
0.51
%
0.62
%
0.54
%
0.49
%
Net charge-offs (NCOs) / average total loans (1)
0.13
%
0.08
%
0.04
%
0.08
%
0.11
%
NCOs / average total loans (excl. PPP loans) (non-GAAP) (1)
0.15
%
0.09
%
0.05
%
0.08
%
0.11
%
Remaining COVID-19 loan modifications (3)
$
332,682
$
701,227
$
945,995
$
—
$
—
Capital adequacy
Shareholders' equity / assets
21.47
%
11.08
%
12.10
%
13.47
%
13.76
%
Tangible shareholders' equity / tangible assets (non-GAAP)
19.58
%
8.87
%
9.67
%
10.74
%
10.86
%
(1) Presented on an annualized basis.
(2) Includes unamortized premiums, net of unearned discounts and deferred fees.
(3) See Appendix G: COVID-19 Related Loan Modifications
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of
Dec 31, 2020 change from
(Unaudited, dollars in thousands)
Dec 31,
2020
Sep 30,
2020
Dec 31,
2019
Sep 30, 2020
Dec 31, 2019
ASSETS
△ $
△ %
△ $
△ %
Cash and due from banks
$
116,591
$
69,051
$
135,503
47,540
69
%
(18,912
)
(14
)
%
Short-term investments
1,937,479
2,259,033
227,099
(321,554
)
(14
)
%
1,710,380
753
%
Cash and cash equivalents
2,054,070
2,328,084
362,602
(274,014
)
(12
)
%
1,691,468
466
%
Securities held for trading
—
—
961
—
—
%
(961
)
(100
)
%
Available for sale securities
3,183,861
2,207,672
1,508,236
976,189
44
%
1,675,625
111
%
Total securities
3,183,861
2,207,672
1,509,197
976,189
44
%
1,674,664
111
%
Loans held for sale
1,140
4,649
26
(3,509
)
(75
)
%
1,114
4285
%
Loans:
Commercial and industrial
1,995,016
2,177,216
1,642,184
(182,200
)
(8
)
%
352,832
21
%
Commercial real estate
3,573,630
3,652,312
3,535,441
(78,682
)
(2
)
%
38,189
1
%
Commercial construction
305,708
297,508
273,774
8,200
3
%
31,934
12
%
Business banking
1,339,164
1,251,573
771,498
87,591
7
%
567,666
74
%
Total commercial loans
7,213,518
7,378,609
6,222,897
(165,091
)
(2
)
%
990,621
16
%
Residential real estate
1,370,957
1,373,237
1,428,630
(2,280
)
—
%
(57,673
)
(4
)
%
Consumer home equity
868,270
890,771
933,088
(22,501
)
(3
)
%
(64,818
)
(7
)
%
Other consumer
277,780
301,624
402,431
(23,844
)
(8
)
%
(124,651
)
(31
)
%
Total Loans
9,730,525
9,944,241
8,987,046
(213,716
)
(2
)
%
743,479
8
%
Allowance for loan losses
(113,031
)
(115,432
)
(82,297
)
2,401
(2
)
%
(30,734
)
37
%
Unamortized prem./disc. and def. fees
(23,536
)
(32,747
)
(5,565
)
9,211
(28
)
%
(17,971
)
323
%
Net Loans
9,593,958
9,796,062
8,899,184
(202,104
)
(2
)
%
694,774
8
%
Federal Home Loan Bank stock, at cost
8,805
8,805
9,027
—
—
%
(222
)
(2
)
%
Premises and equipment
49,398
50,539
57,453
(1,141
)
(2
)
%
(8,055
)
(14
)
%
Bank-owned life insurance
78,561
78,058
77,546
503
1
%
1,015
1
%
Goodwill and other intangibles, net
376,534
375,632
377,734
902
—
%
(1,200
)
—
%
Deferred income taxes, net
13,229
19,925
28,207
(6,696
)
(34
)
%
(14,978
)
(53
)
%
Prepaid expenses
148,680
92,473
61,336
56,207
61
%
87,344
142
%
Other assets
455,954
498,695
246,463
(42,741
)
(9
)
%
209,491
85
%
Total Assets
15,964,190
15,460,594
11,628,775
503,596
3
%
4,335,415
37
%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand
4,910,794
6,312,479
3,517,447
(1,401,685
)
(22
)
%
1,393,347
40
%
Interest checking accounts
2,380,497
2,207,266
1,814,327
173,231
8
%
566,170
31
%
Savings accounts
1,256,736
1,217,898
971,119
38,838
3
%
285,617
29
%
Money market investment
3,348,898
3,315,198
2,919,360
33,700
1
%
429,538
15
%
Certificate of deposits
258,859
279,744
329,139
(20,885
)
(7
)
%
(70,280
)
(21
)
%
Total deposits
12,155,784
13,332,585
9,551,392
(1,176,801
)
(9
)
%
2,604,392
27
%
Borrowed funds:
Federal funds purchased
—
—
201,082
—
—
%
(201,082
)
(100
)
%
Federal Home Loan Bank advances
14,624
14,773
18,964
(149
)
(1
)
%
(4,340
)
(23
)
%
Escrow deposits of borrowers
13,425
14,664
15,349
(1,239
)
(8
)
%
(1,924
)
(13
)
%
Total borrowed funds
28,049
29,437
235,395
(1,388
)
(5
)
%
(207,346
)
(88
)
%
Other liabilities
352,305
385,200
241,835
(32,895
)
(9
)
%
110,470
46
%
Total Liabilities
12,536,138
13,747,222
10,028,622
(1,211,084
)
(9
)
%
2,507,516
25
%
Shareholders' equity:
Common stock
1,868
—
—
1,868
—
%
1,868
—
%
Additional paid-in capital
1,854,068
—
—
1,854,068
—
%
1,854,068
—
%
Unallocated ESOP common stock
(147,725
)
—
—
(147,725
)
—
%
(147,725
)
—
%
Retained earnings
1,665,607
1,709,669
1,644,000
(44,062
)
(3
)
%
21,607
1
%
Accumulated other comprehensive income
(AOCI), net of tax
54,234
3,703
(43,847
)
50,531
1365
%
98,081
(224
)
%
Total shareholders' equity
3,428,052
1,713,372
1,600,153
1,714,680
100
%
1,827,899
114
%
Total liabilities and shareholders' equity
15,964,190
15,460,594
11,628,775
503,596
3
%
4,335,415
37
%
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three months ended
Three months ended Dec 31, 2020 change from
three months ended
(Unaudited, dollars in thousands, except share data)
Dec 31, 2020
Sep 30,
2020
Dec 31,
2019
Sep 30, 2020
Dec 31, 2019
Interest and dividend income:
△ $
△ %
△ $
△ %
Interest and fees on loans
$
93,767
$
90,704
$
97,364
3,063
3
%
(3,597
)
(4
)
%
Taxable interest and dividends on available for sale securities
8,493
7,554
7,932
939
12
%
561
7
%
Non-taxable interest and dividends on available for sale securities
1,879
1,883
1,951
(4
)
—
%
(72
)
(4
)
%
Interest on federal funds sold and other short-term investments
584
372
720
212
57
%
(136
)
(19
)
%
Interest and dividends on trading securities
—
—
6
—
—
%
(6
)
(100
)
%
Total interest and dividend income
104,723
100,513
107,973
4,210
4
%
(3,250
)
(3
)
%
Interest expense:
Interest on deposits
1,070
1,727
6,115
(657
)
(38
)
%
(5,045
)
(83
)
%
Interest on borrowings
45
44
937
1
2
%
(892
)
(95
)
%
Total interest expense
1,115
1,771
7,052
(656
)
(37
)
%
(5,937
)
(84
)
%
Net interest income
103,608
98,742
100,921
4,866
5
%
2,687
3
%
Provision for allowance for credit losses
900
700
1,800
200
29
%
(900
)
(50
)
%
Net interest income after provision for credit losses
102,708
98,042
99,121
4,666
5
%
3,587
4
%
Noninterest income:
Insurance commissions
22,437
21,884
20,168
553
3
%
2,269
11
%
Service charges on deposit accounts
6,046
5,052
6,853
994
20
%
(807
)
(12
)
%
Trust and investment advisory fees
5,502
5,311
5,058
191
4
%
444
9
%
Debit card processing fees
2,749
2,721
2,666
28
1
%
83
3
%
Interest rate swap income (losses)
2,538
1,319
4,691
1,219
92
%
(2,153
)
(46
)
%
Income (losses) from investments held in rabbi trusts
5,535
3,800
3,164
1,735
46
%
2,371
75
%
(Losses) gains on trading securities, net
(1
)
—
—
(1
)
—
%
(1
)
—
%
Gains on sales of mortgage loans held for sale, net
3,334
2,219
342
1,115
50
%
2,992
875
%
Gains on sales of securities available for sale, net
3
—
—
3
—
%
3
—
%
Other
1,495
5,403
4,335
(3,908
)
(72
)
%
(2,840
)
(66
)
%
Total noninterest income
49,638
47,709
47,277
1,929
4
%
2,361
5
%
Noninterest expense:
Salaries and employee benefits
70,310
66,593
61,317
3,717
6
%
8,993
15
%
Office occupancy and equipment
8,198
8,294
10,592
(96
)
(1
)
%
(2,394
)
(23
)
%
Data processing
11,354
11,721
12,806
(367
)
(3
)
%
(1,452
)
(11
)
%
Professional services
5,307
5,510
4,750
(203
)
(4
)
%
557
12
%
Charitable contributions
91,288
—
3,040
91,288
—
%
88,248
2903
%
Marketing
2,823
1,943
3,266
880
45
%
(443
)
(14
)
%
Loan expenses
2,025
1,554
1,436
471
30
%
589
41
%
FDIC insurance
946
938
78
8
1
%
868
1113
%
Amortization of intangible assets
755
699
885
56
8
%
(130
)
(15
)
%
Other
6,163
12,565
7,449
(6,402
)
(51
)
%
(1,286
)
(17
)
%
Total noninterest expense
199,169
109,817
105,619
89,352
81
%
93,550
89
%
(Loss) Income before income tax (benefit) expense
(46,823
)
35,934
40,779
(82,757
)
(230
)
%
(87,602
)
(215
)
%
Income tax (benefit) expense
(2,761
)
7,429
9,541
(10,190
)
(137
)
%
(12,302
)
(129
)
%
Net (loss) income
(44,062
)
28,505
31,238
(72,567
)
(255
)
%
(75,300
)
(241
)
%
Share data:
Weighted average common shares outstanding
171,812,535
n.a.
n.a.
(Loss) earnings per share
$
(0.26
)
n.a.
n.a.
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Twelve months ended
(Unaudited, dollars in thousands, except share data)
Dec 31, 2020
Dec 31, 2019
Change
Interest and dividend income:
△ $
△ %
Interest and fees on loans
$
372,152
$
402,092
(29,940
)
(7
)
%
Taxable interest and dividends on available for sale securities
31,825
31,400
425
1
%
Non-taxable interest and dividends on available for sale securities
7,588
8,306
(718
)
(9
)
%
Interest on federal funds sold and other short-term investments
1,757
2,977
(1,220
)
(41
)
%
Interest and dividends on trading securities
6
242
(236
)
(98
)
%
Total interest and dividend income
413,328
445,017
(31,689
)
(7
)
%
Interest expense:
Interest on deposits
11,315
27,301
(15,986
)
(59
)
%
Interest on borrowings
762
6,452
(5,690
)
(88
)
%
Total interest expense
12,077
33,753
(21,676
)
(64
)
%
Net interest income
401,251
411,264
(10,013
)
(2
)
%
Provision for allowance for credit losses
38,800
6,300
32,500
516
%
Net interest income after provision for credit losses
362,451
404,964
(42,513
)
(10
)
%
Noninterest income:
Insurance commissions
94,495
90,587
3,908
4
%
Service charges on deposit accounts
21,560
27,043
(5,483
)
(20
)
%
Trust and investment advisory fees
21,102
19,653
1,449
7
%
Debit card processing fees
10,277
10,452
(175
)
(2
)
%
Interest rate swap (losses) income
(1,381
)
4,362
(5,743
)
(132
)
%
Income from investments held in rabbi trusts
10,337
9,866
471
5
%
(Losses) gains on trading securities, net
(4
)
1,297
(1,301
)
(100
)
%
Gains on sales of mortgage loans held for sale, net
7,066
795
6,271
789
%
Gains on sales of securities available for sale, net
288
2,016
(1,728
)
(86
)
%
Other
14,633
16,228
(1,595
)
(10
)
%
Total noninterest income
178,373
182,299
(3,926
)
(2
)
%
Noninterest expense:
Salaries and employee benefits
261,827
252,238
9,589
4
%
Office occupancy and equipment
33,796
36,458
(2,662
)
(7
)
%
Data processing
45,259
45,939
(680
)
(1
)
%
Professional services
18,902
15,958
2,944
18
%
Charitable contributions
95,272
12,905
82,367
638
%
Marketing
8,879
9,619
(740
)
(8
)
%
Loan expenses
6,727
4,593
2,134
46
%
FDIC insurance
3,734
1,878
1,856
99
%
Amortization of intangible assets
2,857
3,542
(685
)
(19
)
%
Other
27,670
29,554
(1,884
)
(6
)
%
Total noninterest expense
504,923
412,684
92,239
22
%
Income before income tax expense
35,901
174,579
(138,678
)
(79
)
%
Income tax expense
13,163
39,481
(26,318
)
(67
)
%
Net income
22,738
135,098
(112,360
)
(83
)
%
Share data:
Weighted average common shares outstanding
171,812,535
n.a.
Earnings per share
$
0.13
n.a.
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
AVERAGE BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN
As of and for the three months ended
Dec 31, 2020
Sep 30, 2020
Dec 31, 2019
(Unaudited, dollars in
thousands)
Avg.
Balance
Interest
Yield /
Cost (5)
Avg.
Balance
Interest
Yield /
Cost (5)
Avg.
Balance
Interest
Yield /
Cost (5)
Interest-earning assets:
Loans (1):
Commercial
$
7,265,156
$
73,289
4.01
%
$
7,314,805
$
69,127
3.76
%
$
6,179,761
$
70,751
4.54
%
Residential
1,367,073
11,641
3.39
%
1,390,719
12,269
3.51
%
1,438,677
13,368
3.69
%
Consumer
1,164,468
9,621
3.29
%
1,209,340
10,091
3.32
%
1,360,677
14,021
4.09
%
Total loans
9,796,697
94,551
3.84
%
9,914,864
91,487
3.67
%
8,979,115
98,140
4.34
%
Investment securities
2,627,679
10,945
1.66
%
1,712,928
10,007
2.32
%
1,455,386
10,482
2.86
%
Cash and other short-term
investments
2,291,118
584
0.10
%
1,462,047
372
0.10
%
173,906
720
1.64
%
Total interest earning
assets
14,715,494
106,080
2.87
%
13,089,839
101,866
3.10
%
10,608,407
109,342
4.09
%
Non-interest-earning assets
1,123,550
1,139,440
897,539
Total assets
$
15,839,044
$
14,229,279
$
11,505,946
Interest-bearing liabilities:
Deposits:
Savings
$
1,232,669
$
62
0.02
%
$
1,187,083
$
62
0.02
%
$
970,019
$
53
0.02
%
Interest checking
2,282,786
232
0.04
%
2,307,972
334
0.06
%
1,722,176
727
0.17
%
Money market
3,362,335
609
0.07
%
3,311,847
1,051
0.13
%
2,941,944
4,655
0.63
%
Time deposits
267,378
167
0.25
%
294,025
280
0.38
%
326,741
680
0.83
%
Total interest-bearing
deposits
7,145,168
1,070
0.06
%
7,100,927
1,727
0.10
%
5,960,880
6,115
0.41
%
Borrowings
25,529
45
0.70
%
25,478
44
0.69
%
231,668
937
1.60
%
Total interest-bearing
liabilities
7,170,697
1,115
0.06
%
7,126,405
1,771
0.10
%
6,192,548
7,052
0.45
%
Demand deposit accounts
5,167,221
5,034,474
3,474,922
Other non-interest-bearing
liabilities
376,197
362,073
226,909
Total liabilities
12,714,115
12,522,952
9,894,379
Shareholders' equity
3,124,929
1,706,327
1,611,567
Total liabilities and
shareholders' equity
$
15,839,044
$
14,229,279
$
11,505,946
Net interest income - FTE
$
104,965
$
100,095
$
102,290
Net interest rate spread (2)
2.81
%
3.00
%
3.64
%
Net interest-earning assets (3)
$
7,544,797
$
5,963,434
$
4,415,859
Net interest margin - FTE (4)
2.84
%
3.04
%
3.83
%
(1) Non-accrual loans are included in Loans.
(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by average total interest-earning assets.
(5) Presented on an annualized basis.
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
AVERAGE BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN
As of and for twelve months ended
Dec 31, 2020
Dec 31, 2019
(Unaudited, dollars in
thousands)
Avg. Balance
Interest
Yield /
Cost
Avg. Balance
Interest
Yield /
Cost
Interest-earning assets:
Loans (1):
Commercial
$
7,014,044
$
281,816
4.02
%
$
6,089,410
$
291,055
4.78
%
Residential
1,400,907
49,767
3.55
%
1,439,845
53,736
3.73
%
Consumer
1,236,893
43,729
3.54
%
1,419,692
60,009
4.23
%
Total loans
9,651,844
375,312
3.89
%
8,948,947
404,800
4.52
%
Investment securities
1,826,121
41,730
2.29
%
1,435,719
42,494
2.96
%
Cash and other short-term
investments
1,288,714
1,758
0.14
%
144,856
2,977
2.06
%
Total interest earning
assets
12,766,679
418,800
3.28
%
10,529,522
450,271
4.28
%
Non-interest-earning assets
1,097,064
874,588
Total assets
$
13,863,743
$
11,404,110
Interest-bearing liabilities:
Deposits:
Savings
$
1,123,584
$
242
0.02
%
$
991,244
$
210
0.02
%
Interest checking
2,227,185
2,033
0.09
%
1,842,993
3,947
0.21
%
Money market
3,212,752
7,492
0.23
%
2,769,934
19,150
0.69
%
Time deposits
300,381
1,548
0.52
%
392,035
3,994
1.02
%
Total interest-bearing
deposits
6,863,902
11,315
0.16
%
5,996,206
27,301
0.46
%
Borrowings
72,101
762
1.06
%
291,413
6,452
2.21
%
Total interest-bearing
liabilities
6,936,003
12,077
0.17
%
6,287,619
33,753
0.54
%
Demand deposit accounts
4,535,066
3,369,375
Other non-interest-bearing
liabilities
352,518
203,925
Total liabilities
11,823,587
9,860,919
Shareholders' equity
2,040,156
1,543,191
Total liabilities and
shareholders' equity
$
13,863,743
$
11,404,110
Net interest income - FTE
$
406,723
$
416,518
Net interest rate spread (2)
3.11
%
3.74
%
Net interest-earning assets (3)
$
5,830,676
$
4,241,903
Net interest margin - FTE (4)
3.19
%
3.96
%
(1) Non-accrual loans are included in 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.
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
ASSET QUALITY - NON-PERFORMING ASSETS (1)
As of
Dec 31, 2020
Sep 30, 2020
Jun 30, 2020
Mar 31, 2020
Dec 31, 2019
(Unaudited, dollars in thousands)
Non-accrual loans:
Commercial
$
30,059
$
28,968
$
31,273
$
38,054
$
34,093
Residential
6,815
7,419
11,693
5,594
5,598
Consumer
4,131
4,727
9,374
4,085
2,760
Total non-accrual loans
41,005
41,114
52,340
47,733
42,451
Accruing loans past due 90 days or more:
Commercial
1,959
3,384
2,802
1,345
1,315
Residential
279
326
244
—
—
Consumer
9
9
9
9
9
Total accruing loans past due 90 days or more
2,247
3,719
3,055
1,354
1,324
Total non-performing loans
43,252
44,833
55,395
49,087
43,775
Other real estate owned
—
40
40
40
—
Other non-performing assets:
—
—
—
—
—
Total non-performing assets
$
43,252
$
44,873
$
55,435
$
49,127
$
43,775
Total accruing troubled debt restructured loans
$
41,095
$
39,881
$
40,691
$
41,880
$
48,623
Total non-performing loans to total loans
0.45
%
0.45
%
0.56
%
0.54
%
0.49
%
Total non-performing assets to total assets
0.27
%
0.29
%
0.40
%
0.40
%
0.38
%
(1) Non-performing assets are comprised of nonperforming loans (“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. These properties are recorded at the lower of cost or fair value less estimated costs to sell on the date the Company obtains control.
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
ASSET QUALITY - PROVISION, ALLOWANCE, AND NET CHARGE OFFS
Three months ended
Dec 31, 2020
Sep 30, 2020
Jun 30, 2020
Mar 31, 2020
Dec 31, 2019
(Unaudited, dollars in thousands)
Average total loans
$
9,796,697
$
9,914,731
$
9,875,110
$
9,016,223
$
8,979,115
Allowance for loan losses, beginning of the period
$
115,432
$
116,636
$
109,138
$
82,297
$
83,022
Charged-off loans:
Commercial and industrial
1,603
140
27
—
851
Commercial real estate
—
—
24
—
—
Commercial construction
—
—
—
—
—
Business banking
1,433
1,179
1,198
1,337
1,534
Residential real estate
—
—
—
—
—
Consumer home equity
79
22
—
473
14
Other consumer
713
1,077
15
533
541
Total charged-off loans
3,828
2,418
1,264
2,343
2,940
Recoveries on loans previously charged-off:
Commercial and industrial
92
306
58
322
210
Commercial real estate
220
4
5
1
2
Commercial construction
—
—
—
—
—
Business banking
47
91
27
127
112
Residential real estate
9
43
13
60
17
Consumer home equity
100
31
8
14
8
Other consumer
59
39
51
60
66
Total recoveries
527
514
162
584
415
Net loans charged-off (recoveries):
Commercial and industrial
1,511
(166
)
(31
)
(322
)
641
Commercial real estate
(220
)
(4
)
19
(1
)
(2
)
Commercial construction
—
—
—
—
—
Business banking
1,386
1,088
1,171
1,210
1,422
Residential real estate
(9
)
(43
)
(13
)
(60
)
(17
)
Consumer home equity
(21
)
(9
)
(8
)
459
6
Other consumer
654
1,038
(36
)
473
475
Total net loans charged-off
3,301
1,904
1,102
1,759
2,525
Provision for loan losses
900
700
8,600
28,600
1,800
Total allowance for loan losses, end of period
$
113,031
$
115,432
$
116,636
$
109,138
$
82,297
Net charge-offs to average total loans outstanding during this
period (1)
0.13
%
0.08
%
0.04
%
0.08
%
0.11
%
Allowance for loan losses as a percent of total loans
1.16
%
1.16
%
1.17
%
1.20
%
0.92
%
Allowance for loan losses as a percent of nonperforming loans
261.33
%
257.47
%
210.55
%
222.34
%
188.00
%
(1) Presented on an annualized basis.
APPENDIX A: Reconciliation of Non-GAAP Earnings Metrics
For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures ."
Three Months Ended
(Unaudited, dollars in thousands, except share data)
Dec 31, 2020
Sep 30, 2020
Jun 30, 2020
Mar 31, 2020
Dec 31, 2019
Net income (GAAP)
$
(44,062
)
$
28,505
$
29,850
$
8,445
$
31,238
Add:
Noninterest income components:
(Income) loss from investments held in rabbi trusts
(5,535
)
(3,800
)
(7,745
)
6,743
(3,164
)
(Gain) loss on sales of securities available for sale, net
(3
)
—
(163
)
(122
)
—
(Gain) loss on sale of other assets
(49
)
71
27
(29
)
(29
)
Noninterest expense components:
Rabbi trust employee benefit expense (income)
2,838
1,445
3,985
(3,479
)
1,554
Impairment charge on tax credit investments
3,189
7,590
—
—
—
Indirect initial public offering costs (1)
—
549
380
270
—
(Gain) loss on sale of other real estate owned
(61
)
(546
)
—
—
—
Merger and acquisition expenses
90
—
—
—
—
Stock donation to the Eastern Bank Charitable Foundation
91,287
—
—
—
—
Total impact of non-GAAP
adjustments
91,756
5,309
(3,516
)
3,383
(1,639
)
Less net tax benefit (expense) associated with non-GAAP adjustment (2)
16,082
1,492
(967
)
970
(279
)
Non-GAAP adjustments, net of tax
$
75,674
$
3,817
$
(2,549
)
$
2,413
$
(1,360
)
Operating net income (non-GAAP)
$
31,612
$
32,322
$
27,301
$
10,858
$
29,878
Weighted average common shares outstanding during the period:
Basic
171,812,535
—
—
—
—
Diluted
171,812,535
—
—
—
—
(Loss) earnings per share, basic
$
(0.26
)
n.a.
n.a.
n.a.
n.a.
(Loss) earnings per share, diluted
$
(0.26
)
n.a.
n.a.
n.a.
n.a.
Operating earnings per share, basic (non-GAAP)
$
0.18
n.a.
n.a.
n.a.
n.a.
Operating earnings per share, diluted (non-GAAP)
$
0.18
n.a.
n.a.
n.a.
n.a.
Return on average assets (3)
(1.11
)
%
0.80
%
0.88
%
0.29
%
1.08
%
Add:
(Income) loss from investments held in rabbi trusts (3)
(0.14
)%
(0.11
)%
(0.23
)%
0.23
%
(0.11
)%
(Gain) loss on sales of securities available for sale, net (3)
—
%
—
%
—
%
—
%
—
%
(Gain) loss on sale of other assets (3)
—
%
—
%
—
%
—
%
—
%
Rabbi trust employee benefit expense (income) (3)
0.07
%
0.04
%
0.12
%
(0.12
)%
0.05
%
Impairment charge on tax credit investments (3)
0.08
%
0.21
%
—
%
—
%
—
%
Indirect initial public offering costs (1) (3)
—
%
0.02
%
0.01
%
0.01
%
—
%
(Gain) loss on sale of other real estate owned (3)
—
%
(0.02
)%
—
%
—
%
—
%
Merger and acquisition expenses (3)
—
%
—
%
—
%
—
%
—
%
Stock donation to the EBCF (3)
2.29
%
—
%
—
%
—
%
—
%
Less net tax benefit (expense) associated with non-GAAP
adjustment (2) (3)
0.40
%
0.04
%
(0.03
)%
0.03
%
(0.01
)%
Operating return on average assets (non-GAAP) (3)
0.79
%
0.90
%
0.81
%
0.38
%
1.03
%
Return on average shareholders' equity (3)
(5.61
)
%
6.65
%
7.11
%
2.08
%
7.69
%
Add:
(Income) loss from investments held in rabbi trusts (3)
(0.70
)%
(0.89
)%
(1.84
)%
1.66
%
(0.78
)%
(Gain) loss on sales of securities available for sale, net (3)
—
%
—
%
(0.04
)%
(0.03
)%
—
%
(Gain) loss on sale of other assets (3)
(0.01
)%
0.02
%
0.01
%
(0.01
)%
(0.01
)%
Rabbi trust employee benefit expense (income) (3)
0.36
%
0.34
%
0.95
%
(0.86
)%
0.38
%
Impairment charge on tax credit investments (3)
0.41
%
1.77
%
—
%
—
%
—
%
Indirect initial public offering costs (1) (3)
—
%
0.13
%
0.09
%
0.07
%
—
%
(Gain) loss on sale of other real estate owned (3)
(0.01
)%
(0.13
)%
—
%
—
%
—
%
Merger and acquisition expenses (3)
—
%
—
%
—
%
—
%
—
%
Stock donation to the EBCF (3)
11.62
%
—
%
—
%
—
%
—
%
Less net tax benefit (expense) associated with non-GAAP
adjustment (2) (3)
2.05
%
0.35
%
(0.23
)%
0.24
%
(0.07
)%
Operating return on average shareholders' equity (non-GAAP) (3)
4.02
%
7.54
%
6.51
%
2.67
%
7.35
%
(1) Reflects costs associated with the Company's initial public offering that are indirectly related to the offering and were not recorded as a reduction of capital.
(2) The net tax benefit (expense) associated with these items is determined by assessing whether each item is included or excluded from net taxable income and applying the Company's combined statutory tax rate only to those items included in net taxable income. Additionally, the net tax benefit (expense) for the impairment charge of tax credit investment includes associated tax credit benefits.
(3) Ratios have been annualized.
APPENDIX B: Reconciliation of Non-GAAP Operating Revenues and Expenses
For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures ."
Three Months Ended
Dec 31, 2020
Sep 30, 2020
Jun 30, 2020
Mar 31, 2020
Dec 31, 2019
(Unaudited, dollars in thousands)
Net interest income (GAAP)
$
103,608
$
98,742
$
98,755
$
100,146
$
100,921
Add:
Tax-equivalent adjustment (non-GAAP)
1,357
1,353
1,378
1,368
1,369
Fully-taxable equivalent net interest income (non-GAAP)
$
104,965
$
100,095
$
100,133
$
101,514
$
102,290
Noninterest income (GAAP)
$
49,638
$
47,709
$
47,657
$
33,369
$
47,277
Less:
Income (loss) from investments held in rabbi trusts
5,535
3,800
7,745
(6,743
)
3,164
Gain (loss) on sales of securities available for sale, net
3
—
163
122
—
Gain (loss) on sale of other assets
49
(71
)
(27
)
29
29
Noninterest income on an operating basis (non-GAAP)
$
44,051
$
43,980
$
39,776
$
39,961
$
44,084
Noninterest expense (GAAP)
$
199,169
$
109,817
$
100,765
$
95,172
$
105,619
Less:
Rabbi trust employee benefit expense (income)
2,838
1,445
3,985
(3,479
)
1,554
Impairment charge on tax credit investments
3,189
7,590
—
—
—
Indirect initial public offering costs (1)
—
549
380
270
—
(Gain) loss on sale of other real estate owned
(61
)
(546
)
—
—
—
Merger and acquisition expenses
90
—
—
—
—
Stock donation to the Eastern Bank Charitable Foundation
91,287
—
—
—
—
Noninterest expense on an operating basis (non-GAAP)
$
101,826
$
100,779
$
96,400
$
98,381
$
104,065
Total revenue (GAAP)
$
153,246
$
146,451
$
146,412
$
133,515
$
148,198
Total operating revenue (non-GAAP)
$
149,016
$
144,075
$
139,909
$
141,475
$
146,374
Efficiency ratio (GAAP)
129.97
%
74.99
%
68.82
%
71.28
%
71.27
%
Operating efficiency ratio (non-GAAP)
68.33
%
69.95
%
68.90
%
69.54
%
71.10
%
Noninterest income / total revenue (GAAP)
32.39
%
32.58
%
32.55
%
24.99
%
31.90
%
Noninterest income / total revenue on an operating basis (non-
GAAP)
29.56
%
30.53
%
28.43
%
28.25
%
30.12
%
(1) Reflects costs associated with the Company's initial public offering that are indirectly related to the offering and were not recorded as a reduction of capital.
APPENDIX C: Reconciliation of Non-GAAP Capital Metrics
For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures ."
As of
Dec 31, 2020
Sep 30, 2020
Jun 30, 2020
Mar 31, 2020
Dec 31, 2019
(Unaudited, dollars in thousands, except share
data)
Tangible shareholders' equity:
Total shareholders' equity (GAAP)
$
3,428,052
$
1,713,372
$
1,693,630
$
1,662,734
$
1,600,153
Less: Goodwill and other intangibles
376,534
375,632
376,331
377,033
377,734
Tangible shareholders' equity (non-GAAP)
3,051,518
1,337,740
1,317,299
1,285,701
1,222,419
Tangible assets:
Total assets (GAAP)
15,964,190
15,460,594
13,996,523
12,343,754
11,628,775
Less: Goodwill and other intangibles
376,534
375,632
376,331
377,033
377,734
Tangible assets (non-GAAP)
$
15,587,656
$
15,084,962
$
13,620,192
$
11,966,721
$
11,251,041
Shareholders' equity to assets ratio (GAAP)
21.5
%
11.1
%
12.1
%
13.5
%
13.8
%
Tangible shareholders' equity to tangible assets
ratio (non-GAAP)
19.6
%
8.9
%
9.7
%
10.7
%
10.9
%
Common shares outstanding
186,758,154
—
—
—
—
Book value per share (GAAP)
$
18.36
n.a.
n.a.
n.a.
n.a.
Tangible book value per share (non-GAAP)
$
16.34
n.a.
n.a.
n.a.
n.a.
APPENDIX D: Reconciliation of Non-GAAP Credit Metrics
For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures ."
As of
(Unaudited, dollars in thousands)
Dec 31, 2020
Sep 30, 2020
Jun 30, 2020
Mar 31, 2020
Dec 31, 2019
Total loans excluding PPP loans:
Total loans (GAAP)
$
9,706,989
$
9,911,494
$
9,979,616
$
9,080,743
$
8,981,481
Less: PPP loans
1,007,487
1,098,883
1,072,312
—
—
Total loans excluding PPP loans (non-
GAAP)
$
8,699,502
$
8,812,611
$
8,907,304
$
9,080,743
$
8,981,481
Total nonperforming loans (NPLs) (GAAP)
$
43,252
$
44,833
$
55,395
$
49,087
$
43,775
Total NPLs / total loans (GAAP)
0.45
%
0.45
%
0.56
%
0.54
%
0.49
%
Total NPLs / total loans (excl. PPP loans) (non-
GAAP)
0.50
%
0.51
%
0.62
%
0.54
%
0.49
%
Allowance for loan losses (ALLL) (GAAP)
$
113,031
$
115,432
$
116,636
$
109,138
$
82,297
ALLL / total loans (GAAP)
1.16
%
1.16
%
1.17
%
1.20
%
0.92
%
ALLL / total loans (excl. PPP loans) (non-
GAAP)
1.30
%
1.31
%
1.31
%
1.20
%
0.92
%
As of and for the three months ended
(Unaudited, dollars in thousands)
Dec 31, 2020
Sep 30, 2020
Jun 30, 2020
Mar 31, 2020
Dec 31, 2019
Average total loans excluding PPP Loans:
Average total loans (GAAP)
$
9,796,697
$
9,914,731
$
9,875,110
$
9,016,223
$
8,979,115
Less: Average PPP loans
1,076,155
1,091,464
818,665
—
—
Average total loans excluding PPP loans
(non-GAAP)
$
8,720,542
$
8,823,267
$
9,056,445
$
9,016,223
$
8,979,115
Total net loans charged-off (NCOs) (GAAP)
$
3,301
$
1,904
$
1,102
$
1,759
$
2,525
NCOs / Average total loans (GAAP) (1)
0.13
%
0.08
%
0.04
%
0.08
%
0.11
%
NCOs / Average total loans (excl. PPP loans)
(non-GAAP) (1)
0.15
%
0.09
%
0.05
%
0.08
%
0.11
%
(1) Presented on an annualized basis
Appendix E: Reconciliation of Non-GAAP Core Margin
For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures ."
As of and for the three months ended
Dec 31, 2020
Sep 30, 2020
(Unaudited, dollars in
thousands)
Volume
Interest
Margin Impact
(1)
Volume
Interest
Margin Impact
(1)
Reported total average
interest earnings assets, net
interest income, and net
interest margin (2)
$
14,715,494
$
104,965
2.84
%
$
13,089,839
$
100,095
3.04
%
Non-GAAP adjustments:
PPP loan volume earning 1%
(1,076,155
)
(2,741
)
0.14
%
(1,091,464
)
(2,795
)
0.18
%
SBA PPP loan fee accretion,
net of deferred origination cost
amortization
—
(6,102
)
(0.16
)
%
—
(4,125
)
(0.13
)
%
Excess cash (3)
(1,996,808
)
(502
)
0.43
%
(1,200,250
)
(302
)
0.30
%
Deferred loan fee income
adjustment
—
(3,774
)
(0.10
)
%
—
—
—
%
Core margin (Non-GAAP) (4)
$
11,642,531
$
91,846
3.14
%
$
10,798,125
$
92,873
3.42
%
Core margin change from prior
quarter
(0.28
)
%
(0.09
)
%
Jun 30, 2020
Mar 31, 2020
Volume
Interest
Margin Impact
(1)
Volume
Interest
Margin Impact
(1)
Reported total average
interest earnings assets, net
interest income, and net
interest margin (2)
$
12,479,343
$
100,137
3.23
%
$
10,757,076
$
101,513
3.80
%
Non-GAAP adjustments:
PPP loan volume earning 1%
(818,665
)
(2,175
)
0.15
%
—
—
—
%
SBA PPP loan fee accretion,
net of deferred origination cost
amortization
—
(3,655
)
(0.12
)
%
—
—
—
%
Excess cash (3)
(898,745
)
(223
)
0.24
%
(25,298
)
(54
)
0.01
%
Deferred loan fee income
adjustment
—
—
—
%
—
—
—
%
Core margin (Non-GAAP) (4)
$
10,761,933
$
94,084
3.52
%
$
10,731,778
$
101,459
3.80
%
Core margin change from prior
quarter
(0.29
)
%
(1) Presented on an annualized basis.
(2) Presented on an fully taxable equivalent basis.
(3) Cash above 2% of average total earning assets at yield of 10, 10, 10, and 86 basis points in quarters four, three, two, and one, respectively.
(4) Core margin is the margin that results from the combined volume and interest adjustments taken together.
APPENDIX F: Commercial Loan Portfolio Exposure to High-risk Industries
High-risk industries are those industries that the Company believes will likely experience the most adverse effects of COVID-19.
As of December 31, 2020
Industry
Loan balance (Dollars
in thousands)
Balance as a percent
of total loans
COVID-19
modification as a
percent of loan type
Retail (1)
$
496,358
5.1
%
2.1
%
Restaurants
197,388
2.0
%
12.7
%
Hotels
178,696
1.8
%
51.4
%
Construction contractors financing
89,466
0.9
%
1.0
%
Auto dealerships
79,486
0.8
%
—
%
Other high risk
85,132
0.9
%
2.7
%
All impacted industries total
1,126,526
11.6
%
11.6
%
Remaining commercial and business banking
6,086,992
62.6
%
2.8
%
Total Commercial and business banking
7,213,518
74.1
%
4.2
%
All Other Loans
2,517,007
25.9
%
1.3
%
Total
$
9,730,525
100.0
%
3.4
%
(1) The retail segment contains all retail commercial real estate loans and non-essential commercial and industrial retail loans.
APPENDIX G: COVID-19 Related Loan Modifications
Total COVID-19 Modifications
as of June 30, 2020
Remaining COVID-19
Modifications as of September
30, 2020 (1)
Remaining COVID-19
Modifications as of December
31, 2020 (1)
(Dollars in thousands)
Total
Modifications
% of Total Loan
Balance
Remaining
Modifications
% of Total Loan
Balance
Remaining
Modifications
% of Total Loan
Balance
Portfolio
Commercial and
industrial
$
157,384
6.9
%
$
99,630
4.6
%
$
34,076
1.7
%
Commercial real estate
546,002
15.2
%
414,233
11.3
%
231,794
6.5
%
Commercial construction
12,890
4.6
%
13,330
4.5
%
10,987
3.6
%
Business Banking
106,886
8.7
%
64,369
5.1
%
23,434
1.8
%
Residential real estate
92,775
6.6
%
95,260
6.9
%
26,772
2.0
%
Consumer home equity
18,603
2.1
%
10,093
1.1
%
3,432
0.4
%
Other Consumer
11,455
3.4
%
4,312
1.4
%
2,187
0.8
%
Total
$
945,995
9.5
%
$
701,227
7.1
%
$
332,682
3.4
%
(1) Remaining COVID-19 modifications reflect those loans which underwent a modification and have not yet resumed payment. The Company defines a modified loan to have resumed payment if it is one month past the modification end date and not more than 30 days past due.
APPENDIX H: Shareholders’ Equity Roll-forward Analysis
As of
Dec 31, 2020 change from
Dec 31, 2020
Sep 30, 2020
Sep 30, 2020
(Unaudited, dollars in thousands, except per share amounts)
△
△ per share
Common stock
$
1,868
$
—
$
1,868
$
0.01
Additional paid in capital
1,854,068
—
1,854,068
9.93
Unallocated ESOP common stock
(147,725
)
—
(147,725
)
(0.79
)
Retained earnings
1,665,607
1,709,669
(44,062
)
(0.24
)
AOCI, net of tax - available for sale securities
45,672
43,956
1,716
0.01
AOCI, net of tax - pension
(21,253
)
(76,164
)
54,911
0.29
AOCI, net of tax - cash flow hedge
29,815
35,911
(6,096
)
(0.03
)
Total shareholders' equity:
$
3,428,052
$
1,713,372
$
1,714,680
$
9.18
Less: Goodwill and other intangibles
376,534
375,632
902
—
Tangible shareholders' equity (non-GAAP)
$
3,051,518
$
1,337,740
$
1,713,778
$
9.18
Common shares outstanding
186,758,154
—
Per share:
Common stock
$
0.01
n.a.
Additional paid in capital
9.93
n.a.
Unallocated ESOP common stock
(0.79
)
n.a.
Retained earnings
8.92
n.a.
AOCI, net of tax - available for sale securities
0.24
n.a.
AOCI, net of tax - pension
(0.11
)
n.a.
AOCI, net of tax - cash flow hedge
0.16
n.a.
Total shareholders' equity:
$
18.36
n.a.
Less: Goodwill and other intangibles
2.02
n.a.
Tangible shareholders' equity (non-GAAP)
$
16.34
n.a.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210128006223/en/