Eastern Bankshares, Inc. Reports Fourth Quarter 2023 Financial Results
Eastern Bankshares, Inc. announced its 2023 fourth quarter financial results, including the completion of the sale of Eastern Insurance Group, LLC to Arthur J. Gallagher & Co. for $515 million. The insurance transaction significantly improved the company's capital and funding position, allowing it to focus on its core banking business and a pending merger with Cambridge Bancorp. Financial highlights include net income of $318.5 million, an after-tax gain of $294.5 million from the insurance transaction, and increases in core deposits and total loans.
The asset sale of Eastern Insurance Group LLC to Arthur J. Gallagher & Co. for $515 million and the subsequent after-tax gain of $294.5 million is a significant transaction that has bolstered Eastern Bankshares' capital position. This strategic move has implications for liquidity management and capital adequacy, two critical aspects that financial analysts scrutinize. The capital generated from this sale enhances the company's ability to navigate interest rate changes and macroeconomic challenges, as highlighted by CEO Bob Rivers. The sale proceeds have also facilitated a reduction in wholesale funding, which is often more expensive than core deposits, thereby potentially improving the net interest margin over time.
Another key point is the impending merger with Cambridge Bancorp, indicating a strategic expansion that could lead to synergies and an expanded market presence. The growth in core deposits by 3.0% and the modest increase in total loans by 0.4% suggest a stable deposit base and lending growth, which are positive indicators for future revenue streams. The full-year net charge-offs at 0.09% and nonperforming loans at 0.38% of total loans are within acceptable risk parameters, indicating sound asset quality and credit management practices.
Eastern Bankshares' decision to sell its insurance operations and focus on its core banking business, including a merger with Cambridge Bancorp, reflects a strategic repositioning within the financial services industry. This move enables Eastern Bankshares to concentrate on its core competencies and potentially gain a competitive edge in its market. The increase in shareholder equity and the reported net income of $318.5 million for the fourth quarter, which is significantly higher than the previous quarter's $59.1 million, are poised to attract investor attention.
Furthermore, the company's ability to maintain a stable net interest margin amidst a challenging interest rate environment is noteworthy. The slight decrease in net interest income could be attributed to increased funding costs, which have been a concern for many financial institutions during periods of rising interest rates. The company's proactive management of its securities portfolio and the strategic sale of the insurance arm may mitigate some of these pressures.
Eastern Bankshares' actions are reflective of a broader trend in the banking sector where institutions are streamlining operations to adapt to an evolving economic landscape marked by higher interest rates and shifting customer deposit preferences. The reduction in wholesale funding and the increase in core deposits indicate a shift towards more stable and cost-effective funding sources. This strategy is particularly prudent in an environment where the Federal Reserve is likely to continue adjusting interest rates to manage inflation.
The increase in FDIC insurance expense by $10.7 million due to the special assessment reflects external economic pressures on the banking industry, following the closures of certain banks in 2023. This expense highlights the importance of maintaining strong deposit insurance funds to safeguard the financial system. The strategic repositioning by Eastern Bankshares may serve as a cushion against such systemic risks and contribute to the overall stability of the institution.
01/25/2024 - 04:15 PM
~ Earnings, Capital, and Liquidity Enhancements Resulting from Eastern Insurance Group LLC Asset Sale ~
~ Growth in Core Deposits and Reduction in Wholesale Funding ~
BOSTON --(BUSINESS WIRE)--
Eastern Bankshares, Inc. (the “Company,” or together with its subsidiaries, “Eastern”) (NASDAQ Global Select Market: EBC), the stock holding company of Eastern Bank, today announced its 2023 fourth quarter financial results and the declaration of a quarterly cash dividend.
On October 31, 2023, the Company completed the sale of the insurance operations of Eastern Insurance Group, LLC (“Eastern Insurance”), to Arthur J. Gallagher & Co. (“Gallagher”) for gross consideration of $515 million (“the insurance transaction”). The company recorded an after-tax gain of $294.5 million which is included in the fourth quarter results. The insurance transaction significantly improved the capital and funding position of the Company and will allow the Company to focus on the growth and strategic initiatives of its core banking business, including its pending merger with Cambridge Bancorp (“Cambridge”) (“the merger”), which was previously announced on September 19, 2023. The merger is expected to close early in the second quarter of 2024, subject to regulatory and shareholder approvals as previously disclosed.
"2023 was a year of strategic repositioning for Eastern,” said Bob Rivers, Chief Executive Officer and Chair of the Board of Eastern Bankshares, Inc. and Eastern Bank. “We realized early in 2023 that all banks were going to face significant challenges due to higher interest rates, changing customer deposit preferences and a very difficult macroeconomic environment. We responded by repositioning our securities portfolio in the first quarter, which allowed us to improve both our liquidity and earnings outlook, and followed with the sale of Eastern Insurance in the second half of the year to capitalize on the valuation premium it commanded. The insurance transaction provided us additional liquidity and capital, and positioned us to announce our merger with Cambridge Bancorp, a highly attractive in-market merger partner with a valuable wealth management business. We are very confident that these transactions provide us with a greater financial foundation, stronger earnings for our shareholders, and a leading market share in our footprint. The upcoming merger is the next step in our journey and we all look forward to welcoming the colleagues and customers of Cambridge Trust to Eastern.”
FINANCIAL HIGHLIGHTS FOR THE FOURTH QUARTER OF 2023
Completed the sale of Eastern Insurance to Gallagher for cash consideration of $515 million and for an after-tax gain of $294.5 million .
Net income of $318.5 million , or $1.95 per diluted share, compared to net income of $59.1 million , or $0.36 per diluted share, for the prior quarter.
Operating net income*, which excludes the revenues, expenses, and tax provision of discontinued operations, of $16.9 million , or $0.10 per diluted share. Operating net income* includes a $10.8 million special assessment from the Federal Deposit Insurance Corporation (“FDIC”).
Total deposits increased $172.0 million from the prior quarter, to $17.6 billion . Core deposits, which exclude brokered deposits, increased $516.2 million or 3.0% from the prior quarter.
Total loans increased $54.2 million from the prior quarter, to $14.0 billion .
The net interest margin on a fully tax equivalent (“FTE”) basis* of 2.69% was 8 basis points lower than the prior quarter but trend is stabilizing.
Borrowings and brokered deposits of less than 1% of total assets as of December 31, 2023.
Annualized net charge-offs ("NCOs") of 0.32% in the fourth quarter and 0.09% for full year 2023 and nonperforming loans ("NPLs") of $52.6 million , or 0.38% of total loans as of December 31, 2023.
BALANCE SHEET
Total assets were $21.1 billion at December 31, 2023, essentially unchanged from September 30, 2023.
Cash and equivalents increased $84.3 million from the prior quarter to $693.1 million .
Total securities increased $139.8 million , or 3% , from the prior quarter, to $4.9 billion , due to an increase in the market value of available for sale securities, partially offset by principal runoff.
Loans totaled $14.0 billion , representing an increase of $54.2 million , or 0.4% , from the prior quarter.
Deposits totaled $17.6 billion , representing an increase of $172.0 million , or 1.0% , from the prior quarter, driven primarily by an increase of $516.2 million , or 3.0% , in core deposits. This was partially offset by a decrease of $344.1 million in brokered deposits.
Borrowed funds decreased $667.2 million from the prior quarter to $48.2 million in the fourth quarter, as a combination of strong core deposit trends and the proceeds from the insurance transaction allowed for the paydown of Federal Home Loan Bank (“FHLB”) borrowings.
Shareholders’ equity was $3.0 billion , representing an increase of $528.3 million from the prior quarter primarily driven by increases in retained earnings and accumulated other comprehensive income. The increase in retained earnings was primarily due to the net gain on sale resulting from the insurance transaction.
At December 31, 2023, book value per share was $16.86 and tangible book value per share* was $13.65 . Please refer to Appendix D to this press release for a roll-forward of tangible shareholders’ equity*.
NET INTEREST INCOME
Net interest income was $133.3 million for the fourth quarter of 2023, compared to $137.2 million in the prior quarter, representing a decrease of $3.9 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 on a FTE basis* was 2.69% for the fourth quarter, representing an 8 basis point decrease from the prior quarter.
Total interest-earning asset yields increased 1 basis point from the prior quarter to 4.06% , due to increased residential loan, consumer loan and short-term investment yields as a result of higher interest rates throughout the quarter, partially offset by decreased commercial loan yield. The prior quarter’s commercial loan yield benefited from $2.6 million in commercial loan interest recoveries.
Total interest-bearing liabilities cost increased 20 basis points from the prior quarter to 2.19% , due primarily to higher deposit costs resulting from deposit pricing increases and deposit mix shifts.
The net interest margin for the fourth quarter included a partial quarter benefit from the proceeds of the insurance transaction, which was completed on October 31, 2023. The proceeds, in part, allowed the Company to reduce brokered deposits and borrowings to less than 1% of total assets.
NONINTEREST INCOME
Noninterest income, which excludes revenues from discontinued operations, was $26.7 million for the fourth quarter of 2023, compared to $19.2 million for the prior quarter, representing an increase of $7.6 million . Noninterest income on an operating basis* was $21.8 million for the fourth quarter of 2023, compared to $20.7 million for the prior quarter, an increase of $1.1 million .
Service charges on deposit accounts increased $0.1 million on a consecutive quarter basis to $7.5 million .
Trust and investment advisory fees decreased $0.1 million on a consecutive quarter basis to $6.1 million .
Debit card processing fees were unchanged at $3.4 million in the fourth quarter.
Loan-level interest rate swap income decreased $2.3 million from the prior quarter to a loss of $0.6 million . The decrease was driven primarily by a decrease in the fair value of such transactions.
Income from investments held in rabbi trust accounts was $5.0 million compared to losses of $1.5 million in the prior quarter due to an increase in the fair value of such investments.
In the fourth quarter, losses on the sale of commercial and industrial loans totaled $0.1 million , compared to losses of $2.7 million from the prior quarter.
Other noninterest income increased $0.8 million in the fourth quarter to $5.6 million .
NONINTEREST EXPENSE
Noninterest expense, which excludes expenses from discontinued operations, was $121.0 million for the fourth quarter of 2023, compared to $101.7 million in the prior quarter, representing an increase of $19.3 million . Noninterest expense on an operating basis* for the fourth quarter of 2023 was $117.4 million , compared to $98.7 million in the prior quarter, an increase of $18.7 million . The increase in operating noninterest expense* was driven primarily by the $10.8 million special assessment from the FDIC as well as a $4.5 million increase in the operating portion of salaries and employee benefits expense.
Salaries and employee benefits expense was $67.8 million , representing an increase of $6.9 million from the prior quarter. The increase was driven primarily by increases in incentive compensation costs and increases in supplemental executive retirement plan benefits expense.
Office occupancy and equipment expense was $9.2 million , an increase of $0.6 million from the prior quarter.
Data processing expense was $16.8 million , an increase of $3.3 million from the prior quarter, due in part to an increase in M&A related data processing costs of $1.4 million .
Professional services expense was $4.1 million in the fourth quarter, a decrease of $3.0 million from the prior quarter, primarily due to a decrease in M&A related professional services costs of $3.2 million .
Marketing expense was $2.7 million , an increase of $0.9 million from the prior quarter.
Loan expenses were $1.2 million , an increase of $0.1 million from the prior quarter.
Federal Deposit Insurance Corporation (“FDIC”) insurance expense was $13.5 million , an increase of $10.7 million from the prior quarter due to the special assessment charged by the FDIC to recover the loss to the Deposit Insurance Fund associated with protecting uninsured depositors following the closures of certain banks in 2023.
Other noninterest expense was $5.3 million , a decrease of $0.1 million from the prior quarter.
INCOME TAXES
The income tax expense for the fourth quarter was $2.3 million . The lower than expected tax expense in the fourth quarter of 2023 was primarily a result of a tax planning strategy to recognize a net state tax benefit of $9.2 million primarily due to capital losses resulting from the securities sale in the first quarter of 2023.
ASSET QUALITY
The allowance for loan losses was $149.0 million at December 31, 2023, or 1.07% of total loans, compared to $155.1 million , or 1.12% of total loans, at September 30, 2023. During the fourth quarter of 2023, the Company recorded total net charge-offs of $11.4 million , or 0.32% of average total loans on an annualized basis, compared to $0.1 million or less than 0.01% of average total loans in the prior quarter, respectively. The increase in total net charge-offs in the fourth quarter was primarily due to partial charge-offs of two credits secured by investor commercial real estate office properties, each of which had previously been placed on non-accrual and were reserved for during the third quarter. The Company recorded a provision for loan losses totaling $5.2 million in the fourth quarter of 2023 due primarily to increases in specific reserves on commercial loans.
Non-performing loans totaled $52.6 million at December 31, 2023 compared to $47.5 million at the end of the prior quarter.
Please refer to the investor presentation for a review of the Company’s office-related commercial real estate exposure.
DIVIDENDS AND SHARE REPURCHASES
The Company’s Board of Directors has declared a quarterly cash dividend of $0.11 per common share. The dividend will be payable on March 15, 2024 to shareholders of record as of the close of business on March 1, 2024.
The Company did not repurchase any shares of its common stock during the fourth quarter of 2023.
CONFERENCE CALL AND PRESENTATION INFORMATION
A conference call and webcast covering Eastern’s fourth quarter 2023 earnings will be held on Friday, January 26, 2024 at 9:00 a.m. Eastern Time. To join by telephone, participants can call the toll-free dial-in number (888) 259-6580 from within the U.S. and reference conference ID 61093108. 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 December 31, 2023, Eastern Bank had approximately $21 billion in total assets. Eastern provides a full range of banking and wealth management solutions for consumers and businesses of all sizes, and takes pride in its outspoken advocacy and community support that includes $240 million in charitable giving since 1994. An inclusive company, Eastern is comprised of 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. Except as otherwise indicated, these non-GAAP financial measures presented in this press release exclude discontinued operations.
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, (ix) certain discrete tax items, and (x) net income from discontinued operations. 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”, “outlook” 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; 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 associated with the Company’s completion and/or implementation of the merger with Cambridge, including risks that required regulatory, shareholder or other approvals for the merger are not obtained or other closing conditions are not satisfied in a timely manner or at all and that the merger fails to occur in the timeframe expected or at all; prior to the completion of the merger or thereafter, Cambridge or the Company may not perform as expected due to transaction-related uncertainty or other factors; and revenue or expense synergies 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 operational risks such as cybersecurity incidents, natural disasters, and pandemics, including COVID-19. 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”), including the joint proxy statement/prospectus (as defined below), 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.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger transaction, on January 16, 2024, the Company filed with the SEC a Registration Statement on Form S-4 and a Joint Proxy Statement of the Company and Cambridge and a Prospectus of the Company (the “joint proxy statement/prospectus”), as well as other relevant documents concerning the proposed transaction. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. INVESTORS AND SHAREHOLDERS OF THE COMPANY AND CAMBRIDGE ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION AND EACH OTHER RELEVANT DOCUMENT FILED WITH THE SEC, AS WELL AS ANY AMENDMENT OR SUPPLEMENT TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A copy of the definitive joint proxy statement/prospectus, as well as other filings containing information about the Company and Cambridge, can be obtained without charge, at the SEC’s website (http://www.sec.gov ). Copies of the joint proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to the Company’s Investor Relations team via email at InvestorRelations@easternbank.com or by telephone at (781) 598-7920, or to Cambridge Investor Relations via email at InvestorRelations@cambridgetrust.com or by telephone at (617) 520-5520.
PARTICIPANTS IN THE SOLICITATION
The Company, Cambridge, and their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of the Company and/or Cambridge in connection with the proposed transaction under the rules of the SEC. Information regarding the Company’s directors and executive officers is available in its definitive proxy statement relating to its 2023 Annual Meeting of Shareholders, which was filed with the SEC on April 3, 2023, and its Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Commission on February 24, 2023, and other documents filed by the Company with the SEC. Information regarding Cambridge’s directors and executive officers is available in its definitive proxy statement relating to its 2023 Annual Meeting of Shareholders, which was filed with the SEC on March 16, 2023, the joint proxy statement/prospectus and other documents filed by Cambridge with the SEC. Information regarding the participants in the proxy solicitation and a description of their interests included in the joint proxy statement/prospectus and other relevant materials filed with the SEC may be obtained free of charge as described in the preceding paragraph.
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)
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Earnings data
Net interest income
$
133,307
$
137,205
$
141,588
$
138,309
$
149,994
Noninterest income (loss)
26,739
19,157
26,204
(309,853
)
22,425
Total revenue
160,046
156,362
167,792
(171,544
)
172,419
Noninterest expense
121,029
101,748
99,934
95,891
112,583
Pre-tax, pre-provision income (loss)
39,017
54,614
67,858
(267,435
)
59,836
Provision for allowance for loan losses
5,198
7,328
7,501
25
10,880
Pre-tax income (loss)
33,819
47,286
60,357
(267,460
)
48,956
Net income (loss) from continuing operations
31,509
63,464
44,419
(202,081
)
40,918
Net income (loss) from discontinued operations
286,994
(4,351
)
4,238
7,985
1,376
Net income (loss)
318,503
59,113
48,657
(194,096
)
42,294
Operating net income (non-GAAP)
16,875
52,085
41,092
53,134
48,570
Per-share data
Earnings (losses) per share, diluted
$
1.95
$
0.36
$
0.30
$
(1.20
)
$
0.26
Continuing operations
$
0.19
$
0.39
$
0.27
$
(1.25
)
$
0.25
Discontinued operations
$
1.76
$
(0.03
)
$
0.03
$
0.05
$
0.01
Operating earnings per share, diluted (non-GAAP)
$
0.10
$
0.32
$
0.25
$
0.33
$
0.30
Book value per share
$
16.86
$
13.87
$
14.33
$
14.63
$
14.03
Tangible book value per share (non-GAAP)
$
13.65
$
10.14
$
10.59
$
10.88
$
10.28
Profitability
Return on average assets (2)
0.59
%
1.18
%
0.81
%
(3.64
)%
0.73
%
Operating return on average assets (non-GAAP) (2)
0.31
%
0.97
%
0.75
%
0.95
%
0.86
%
Return on average shareholders' equity (2)
4.66
%
9.91
%
6.85
%
(33.31
)%
6.71
%
Operating return on average shareholders' equity (2)
2.51
%
8.14
%
6.34
%
8.76
%
7.96
%
Return on average tangible shareholders' equity (non-GAAP) (2)
5.99
%
13.38
%
9.19
%
(45.55
)%
9.23
%
Operating return on average tangible shareholders' equity (non-GAAP) (2)
3.20
%
10.99
%
8.50
%
11.98
%
10.95
%
Net interest margin (FTE) (2)
2.69
%
2.77
%
2.80
%
2.66
%
2.81
%
Cost of deposits (2)
1.51
%
1.33
%
1.22
%
0.92
%
0.37
%
Efficiency ratio
75.62
%
65.07
%
59.56
%
(55.90
)%
65.30
%
Operating efficiency ratio (non-GAAP)
73.59
%
60.83
%
58.47
%
57.97
%
57.26
%
Balance Sheet (end of period)
Total assets
$
21,133,278
$
21,146,292
$
21,583,493
$
22,720,530
$
22,646,858
Total loans
13,973,428
13,919,275
13,961,878
13,675,250
13,575,531
Total deposits
17,596,217
17,424,169
18,180,972
18,541,580
18,974,359
Total loans / total deposits
79
%
80
%
77
%
74
%
72
%
Asset quality
Allowance for loan losses ("ALLL")
$
148,993
$
155,146
$
147,955
$
140,938
$
142,211
ALLL / total nonperforming loans ("NPLs")
283.49
%
326.86
%
484.18
%
407.65
%
368.38
%
Total NPLs / total loans
0.38
%
0.34
%
0.22
%
0.25
%
0.28
%
Net charge-offs ("NCOs") / average total loans (2)
0.32
%
0.00
%
0.01
%
0.00
%
0.01
%
Capital adequacy
Shareholders' equity / assets
14.08
%
11.57
%
11.71
%
11.35
%
10.91
%
Tangible shareholders' equity / tangible assets (non-GAAP)
11.71
%
8.73
%
8.93
%
8.70
%
8.24
%
(1) Average assets, average shareholders' equity and average tangible shareholders' equity components presented in this table include discontinued operations.
(2) Presented on an annualized basis.
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of
Dec 31, 2023 change from
(Unaudited, dollars in thousands)
Dec 31, 2023
Sep 30, 2023
Dec 31, 2022
Sep 30, 2023
Dec 31, 2022
ASSETS
△ $
△ %
△ $
△ %
Cash and due from banks
$
87,233
$
72,689
$
106,040
$
14,544
20
%
$
(18,807
)
(18
)%
Short-term investments
605,843
536,119
63,465
69,724
13
%
542,378
855
%
Cash and cash equivalents
693,076
608,808
169,505
84,268
14
%
523,571
309
%
Available for sale ("AFS") securities
4,407,521
4,261,518
6,690,778
146,003
3
%
(2,283,257
)
(34
)%
Held to maturity ("HTM") securities
449,721
455,900
476,647
(6,179
)
(1
)%
(26,926
)
(6
)%
Total securities
4,857,242
4,717,418
7,167,425
139,824
3
%
(2,310,183
)
(32
)%
Loans held for sale
1,124
23,892
4,543
(22,768
)
(95
)%
(3,419
)
(75
)%
Loans:
Commercial and industrial
3,034,068
3,087,509
3,150,946
(53,441
)
(2
)%
(116,878
)
(4
)%
Commercial real estate
5,457,349
5,396,912
5,155,323
60,437
1
%
302,026
6
%
Commercial construction
386,999
382,615
336,276
4,384
1
%
50,723
15
%
Business banking
1,085,763
1,087,799
1,090,492
(2,036
)
—
%
(4,729
)
—
%
Total commercial loans
9,964,179
9,954,835
9,733,037
9,344
—
%
231,142
2
%
Residential real estate
2,565,485
2,550,861
2,460,849
14,624
1
%
104,636
4
%
Consumer home equity
1,208,231
1,193,859
1,187,547
14,372
1
%
20,684
2
%
Other consumer
235,533
219,720
194,098
15,813
7
%
41,435
21
%
Total loans
13,973,428
13,919,275
13,575,531
54,153
—
%
397,897
3
%
Allowance for loan losses
(148,993
)
(155,146
)
(142,211
)
6,153
(4
)%
(6,782
)
5
%
Unamortized prem./disc. and def. fees
(25,068
)
(19,307
)
(13,003
)
(5,761
)
30
%
(12,065
)
93
%
Net loans
13,799,367
13,744,822
13,420,317
54,545
—
%
379,050
3
%
Federal Home Loan Bank stock, at cost
5,904
37,125
41,363
(31,221
)
(84
)%
(35,459
)
(86
)%
Premises and equipment
60,133
59,033
62,493
1,100
2
%
(2,360
)
(4
)%
Bank-owned life insurance
164,702
163,700
160,790
1,002
1
%
3,912
2
%
Goodwill and other intangibles, net
566,205
566,709
568,009
(504
)
—
%
(1,804
)
—
%
Deferred income taxes, net
266,185
416,081
331,963
(149,896
)
(36
)%
(65,778
)
(20
)%
Prepaid expenses
183,073
156,113
165,368
26,960
17
%
17,705
11
%
Other assets
536,267
527,873
426,863
8,394
2
%
109,404
26
%
Assets of discontinued operations
—
124,718
128,219
(124,718
)
(100
)%
(128,219
)
(100
)%
Total assets
$
21,133,278
$
21,146,292
$
22,646,858
$
(13,014
)
—
%
$
(1,513,580
)
(7
)%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand
$
5,162,218
$
5,177,015
$
6,240,637
$
(14,797
)
—
%
$
(1,078,419
)
(17
)%
Interest checking accounts
3,737,361
3,671,871
4,568,122
65,490
2
%
(830,761
)
(18
)%
Savings accounts
1,323,126
1,393,545
1,831,123
(70,419
)
(5
)%
(507,997
)
(28
)%
Money market investment
4,664,475
4,709,149
4,710,095
(44,674
)
(1
)%
(45,620
)
(1
)%
Certificates of deposit
2,709,037
2,472,589
1,624,382
236,448
10
%
1,084,655
67
%
Total deposits
17,596,217
17,424,169
18,974,359
172,048
1
%
(1,378,142
)
(7
)%
Borrowed funds:
Federal Home Loan Bank advances
17,738
673,525
704,084
(655,787
)
(97
)%
(686,346
)
(97
)%
Escrow deposits of borrowers
21,978
24,947
22,314
(2,969
)
(12
)%
(336
)
(2
)%
Interest rate swap collateral funds
8,500
16,900
14,430
(8,400
)
(50
)%
(5,930
)
(41
)%
Total borrowed funds
48,216
715,372
740,828
(667,156
)
(93
)%
(692,612
)
(93
)%
Other liabilities
513,990
525,378
424,951
(11,388
)
(2
)%
89,039
21
%
Liabilities of discontinued operations
—
34,820
34,930
(34,820
)
(100
)%
(34,930
)
(100
)%
Total liabilities
18,158,423
18,699,739
20,175,068
(541,316
)
(3
)%
(2,016,645
)
(10
)%
Shareholders' equity:
Common shares
1,767
1,766
1,762
1
—
%
5
—
%
Additional paid-in capital
1,666,441
1,661,136
1,649,141
5,305
—
%
17,300
1
%
Unallocated common shares held by the employee stock ownership plan ("ESOP")
(132,755
)
(133,992
)
(137,696
)
1,237
(1
)%
4,941
(4
)%
Retained earnings
2,047,754
1,747,225
1,881,775
300,529
17
%
165,979
9
%
Accumulated other comprehensive income ("AOCI"), net of tax
(608,352
)
(829,582
)
(923,192
)
221,230
(27
)%
314,840
(34
)%
Total shareholders' equity
2,974,855
2,446,553
2,471,790
528,302
22
%
503,065
20
%
Total liabilities and shareholders' equity
$
21,133,278
$
21,146,292
$
22,646,858
$
(13,014
)
—
%
$
(1,513,580
)
(7
)%
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three months ended
Three months ended Dec 31, 2023 change from three months ended
(Unaudited, dollars in thousands, except per-share data)
Dec 31, 2023
Sep 30, 2023
Dec 31, 2022
Sep 30, 2023
Dec 31, 2022
Interest and dividend income:
△ $
△ %
△ $
△ %
Interest and fees on loans
$
168,419
$
169,274
$
142,446
$
(855
)
(1
)%
$
25,973
18
%
Taxable interest and dividends on securities
23,782
24,191
30,413
(409
)
(2
)%
(6,631
)
(22
)%
Non-taxable interest and dividends on securities
1,434
1,434
1,594
—
—
%
(160
)
(10
)%
Interest on federal funds sold and other short-term investments
10,011
7,269
545
2,742
38
%
9,466
1737
%
Total interest and dividend income
203,646
202,168
174,998
1,478
1
%
28,648
16
%
Interest expense:
Interest on deposits
67,389
59,607
17,457
7,782
13
%
49,932
286
%
Interest on borrowings
2,950
5,356
7,547
(2,406
)
(45
)%
(4,597
)
(61
)%
Total interest expense
70,339
64,963
25,004
5,376
8
%
45,335
181
%
Net interest income
133,307
137,205
149,994
(3,898
)
(3
)%
(16,687
)
(11
)%
Provision for allowance for loan losses
5,198
7,328
10,880
(2,130
)
(29
)%
(5,682
)
(52
)%
Net interest income after provision for allowance for loan losses
128,109
129,877
139,114
(1,768
)
(1
)%
(11,005
)
(8
)%
Noninterest income:
Service charges on deposit accounts
7,514
7,403
6,834
111
1
%
680
10
%
Trust and investment advisory fees
6,128
6,235
5,626
(107
)
(2
)%
502
9
%
Debit card processing fees
3,398
3,388
3,227
10
—
%
171
5
%
Interest rate swap (losses) income
(576
)
1,695
(78
)
(2,271
)
(134
)%
(498
)
638
%
Income (losses) from investments held in rabbi trusts
4,969
(1,523
)
3,235
6,492
(426
)%
1,734
54
%
Losses on sales of commercial and industrial loans
(87
)
(2,651
)
—
2,564
(97
)%
(87
)
—
%
(Losses) gains on sales of mortgage loans held for sale, net
(219
)
(164
)
8
(55
)
34
%
(227
)
(2838
)%
Losses on sales of securities available for sale, net
—
—
(683
)
—
—
%
683
(100
)%
Other
5,612
4,774
4,256
838
18
%
1,356
32
%
Total noninterest income
26,739
19,157
22,425
7,582
40
%
4,314
19
%
Noninterest expense:
Salaries and employee benefits
67,773
60,898
61,572
6,875
11
%
6,201
10
%
Office occupancy and equipment
9,195
8,641
8,641
554
6
%
554
6
%
Data processing
16,753
13,443
13,227
3,310
25
%
3,526
27
%
Professional services
4,108
7,125
4,295
(3,017
)
(42
)%
(187
)
(4
)%
Marketing expenses
2,693
1,765
3,032
928
53
%
(339
)
(11
)%
Loan expenses
1,174
1,082
627
92
9
%
547
87
%
Federal Deposit Insurance Corporation ("FDIC") insurance
13,486
2,808
1,540
10,678
380
%
11,946
776
%
Amortization of intangible assets
505
504
299
1
—
%
206
69
%
Other
5,342
5,482
19,350
(140
)
(3
)%
(14,008
)
(72
)%
Total noninterest expense
121,029
101,748
112,583
19,281
19
%
8,446
8
%
Income before income tax expense
33,819
47,286
48,956
(13,467
)
(28
)%
(15,137
)
(31
)%
Income tax expense (benefit)
2,310
(16,178
)
8,038
18,488
(114
)%
(5,728
)
(71
)%
Net income from continuing operations
$
31,509
$
63,464
$
40,918
$
(31,955
)
(50
)%
$
(9,409
)
(23
)%
Net income (loss) from discontinued operations
$
286,994
$
(4,351
)
$
1,376
$
291,345
(6696
)%
$
285,618
20757
%
Net income
$
318,503
$
59,113
$
42,294
$
259,390
439
%
$
276,209
653
%
Share data:
Weighted average common shares outstanding, basic
162,571,066
162,370,469
162,032,522
200,597
0
%
538,544
0
%
Weighted average common shares outstanding, diluted
162,724,398
162,469,887
162,263,547
254,511
0
%
460,851
0
%
Earnings (loss) per share, basic:
Continuing operations
$
0.19
$
0.39
$
0.25
$
(0.20
)
(51
)%
$
(0.06
)
(24
)%
Discontinued operations
$
1.77
$
(0.03
)
$
0.01
$
1.80
(6000
)%
$
1.76
17600
%
Earnings per share, basic
$
1.96
$
0.36
$
0.26
$
1.60
444
%
$
1.70
654
%
Earnings (loss) per share, diluted:
Continuing operations
$
0.19
$
0.39
$
0.25
$
(0.20
)
(51
)%
$
(0.06
)
(24
)%
Discontinued operations
$
1.76
$
(0.03
)
$
0.01
$
1.79
(5967
)%
$
1.75
17500
%
Earnings per share, diluted
$
1.95
$
0.36
$
0.26
$
1.59
442
%
$
1.69
650
%
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Twelve months ended
(Unaudited, dollars in thousands, except per-share data)
Dec 31, 2023
Dec 31, 2022
Change
Interest and dividend income:
△ $
△ %
Interest and fees on loans
$
652,095
$
476,041
$
176,054
37
%
Taxable interest and dividends on securities
101,233
118,690
(17,457
)
(15
)%
Non-taxable interest and dividends on securities
5,736
7,179
(1,443
)
(20
)%
Interest on federal funds sold and other short-term investments
37,395
3,271
34,124
1043
%
Total interest and dividend income
796,459
605,181
191,278
32
%
Interest expense:
Interest on deposits
226,075
28,621
197,454
690
%
Interest on borrowings
19,975
8,506
11,469
135
%
Total interest expense
246,050
37,127
208,923
563
%
Net interest income
550,409
568,054
(17,645
)
(3
)%
Provision for allowance for loan losses
20,052
17,925
2,127
12
%
Net interest income after provision for allowance for loan losses
530,357
550,129
(19,772
)
(4
)%
Noninterest income:
Service charges on deposit accounts
28,631
30,392
(1,761
)
(6
)%
Trust and investment advisory fees
24,264
23,593
671
3
%
Debit card processing fees
13,469
12,644
825
7
%
Interest rate swap income
1,536
6,009
(4,473
)
(74
)%
Income (losses) from investments held in rabbi trusts
9,305
(10,762
)
20,067
(186
)%
Losses on sales of commercial and industrial loans
(2,738
)
—
(2,738
)
—
%
(Losses) gains on sales of mortgage loans held for sale, net
(507
)
248
(755
)
(304
)%
Losses on sales of securities available for sale, net
(333,170
)
(3,157
)
(330,013
)
10453
%
Other
21,457
17,783
3,674
21
%
Total noninterest (loss) income
(237,753
)
76,750
(314,503
)
(410
)%
Noninterest expense:
Salaries and employee benefits
253,037
233,097
19,940
9
%
Office occupancy and equipment
35,992
37,445
(1,453
)
(4
)%
Data processing
55,308
52,938
2,370
4
%
Professional services
17,385
15,805
1,580
10
%
Marketing expenses
7,592
9,294
(1,702
)
(18
)%
Loan expenses
4,466
6,384
(1,918
)
(30
)%
Federal Deposit Insurance Corporation ("FDIC") insurance
21,874
6,250
15,624
250
%
Amortization of intangible assets
1,804
1,198
606
51
%
Other
21,144
26,238
(5,094
)
(19
)%
Total noninterest expense
418,602
388,649
29,953
8
%
(Loss) income before income tax expense
(125,998
)
238,230
(364,228
)
(153
)%
Income tax (benefit) expense
(63,309
)
51,719
(115,028
)
(222
)%
Net (loss) income from continuing operations
(62,689
)
186,511
(249,200
)
(134
)%
Net income from discontinued operations
294,866
13,248
281,618
2126
%
Net income
$
232,177
$
199,759
$
32,418
16
%
Share data:
Weighted average common shares outstanding, basic
162,293,020
165,510,357
(3,217,337
)
(2
)%
Weighted average common shares outstanding, diluted
162,403,097
165,648,571
(3,245,474
)
(2
)%
Earnings (loss) per share, basic:
Continuing operations
$
(0.39
)
$
1.13
$
(1.52
)
(135
)%
Discontinued operations
$
1.82
$
0.08
$
1.74
2175
%
Earnings per share, basic
$
1.43
$
1.21
$
0.22
18
%
Earnings (loss) per share, diluted:
Continuing operations
$
(0.39
)
$
1.13
$
(1.52
)
(135
)%
Discontinued operations
$
1.82
$
0.08
$
1.74
2175
%
Earnings per share, diluted
$
1.43
$
1.21
$
0.22
18
%
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
AVERAGE BALANCES, INTEREST EARNED/PAID, & AVERAGE YIELDS
As of and for the three months ended
Dec 31, 2023
Sep 30, 2023
Dec 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
$
9,978,154
$
126,128
5.01
%
$
9,988,712
$
128,051
5.09
%
$
9,528,386
$
108,015
4.50
%
Residential
2,573,032
23,546
3.63
%
2,553,150
22,988
3.57
%
2,313,810
18,837
3.23
%
Consumer
1,411,374
22,835
6.42
%
1,386,350
22,227
6.36
%
1,363,858
18,949
5.51
%
Total loans
13,962,560
172,509
4.90
%
13,928,212
173,266
4.94
%
13,206,054
145,801
4.38
%
Investment securities
5,670,742
25,609
1.79
%
5,777,173
26,009
1.79
%
8,422,385
32,432
1.53
%
Federal funds sold and other short-term investments
720,384
10,011
5.51
%
537,602
7,269
5.36
%
63,408
545
3.41
%
Total interest-earning assets
20,353,686
208,129
4.06
%
20,242,987
206,544
4.05
%
21,691,847
178,778
3.27
%
Non-interest-earning assets
834,391
1,033,879
653,158
Total assets
$
21,188,077
$
21,276,866
$
22,345,005
Interest-bearing liabilities:
Deposits:
Savings
$
1,352,239
$
45
0.01
%
$
1,441,636
$
43
0.01
%
$
1,924,840
$
57
0.01
%
Interest checking
3,753,352
7,080
0.75
%
3,903,062
6,302
0.64
%
4,871,089
4,897
0.40
%
Money market
4,735,917
29,390
2.46
%
4,836,895
27,695
2.27
%
4,778,694
9,919
0.82
%
Time deposits
2,656,313
30,874
4.61
%
2,341,684
25,567
4.33
%
563,735
2,584
1.82
%
Total interest-bearing deposits
12,497,821
67,389
2.14
%
12,523,277
59,607
1.89
%
12,138,358
17,457
0.57
%
Borrowings
242,437
2,950
4.83
%
414,252
5,356
5.13
%
795,527
7,547
3.76
%
Total interest-bearing liabilities
12,740,258
70,339
2.19
%
12,937,529
64,963
1.99
%
12,933,885
25,004
0.77
%
Demand deposit accounts
5,210,185
5,257,704
6,495,817
Other noninterest-bearing liabilities
555,034
541,827
495,129
Total liabilities
18,505,477
18,737,060
19,924,831
Shareholders' equity
2,682,600
2,539,806
2,420,174
Total liabilities and shareholders' equity
$
21,188,077
$
21,276,866
$
22,345,005
Net interest income - FTE
$
137,790
$
141,581
$
153,774
Net interest rate spread (2)
1.87
%
2.06
%
2.50
%
Net interest-earning assets (3)
$
7,613,428
$
7,305,458
$
8,757,962
Net interest margin - FTE (4)
2.69
%
2.77
%
2.81
%
(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
AVERAGE BALANCES, INTEREST EARNED/PAID, & AVERAGE YIELDS
As of and for the twelve months ended
Dec 31, 2023
Dec 31, 2022
(Unaudited, dollars in thousands)
Avg. Balance
Interest
Yield / Cost
Avg. Balance
Interest
Yield / Cost
Interest-earning assets:
Loans (1):
Commercial
$
9,913,968
$
491,427
4.96
%
$
9,147,540
$
366,097
4.00
%
Residential
2,538,588
90,139
3.55
%
2,064,609
63,803
3.09
%
Consumer
1,381,745
86,167
6.24
%
1,327,417
56,965
4.29
%
Total loans
13,834,301
667,733
4.83
%
12,539,566
486,865
3.88
%
Non-taxable investment securities
197,682
7,279
3.68
%
253,651
9,091
3.58
%
Taxable investment securities
6,050,024
101,233
1.67
%
8,413,217
118,690
1.41
%
Total investment securities
6,247,706
108,512
1.74
%
8,666,868
127,781
1.47
%
Federal funds sold and other short-term investments
720,864
37,395
5.19
%
420,834
3,271
0.78
%
Total interest-earning assets
20,802,871
813,640
3.91
%
21,627,268
617,917
2.86
%
Non-interest-earning assets
921,622
986,865
Total assets
$
21,724,493
$
22,614,133
Interest-bearing liabilities:
Deposits:
Savings
$
1,515,713
$
217
0.01
%
$
2,015,651
$
209
0.01
%
Interest checking
4,070,585
24,235
0.60
%
4,890,709
11,675
0.24
%
Money market
4,918,343
104,002
2.11
%
5,057,445
13,479
0.27
%
Time deposits
2,303,520
97,621
4.24
%
463,261
3,258
0.70
%
Total interest-bearing deposits
12,808,161
226,075
1.77
%
12,427,066
28,621
0.23
%
Borrowings
418,884
19,975
4.77
%
256,632
8,506
3.31
%
Total interest-bearing liabilities
13,227,045
246,050
1.86
%
12,683,698
37,127
0.29
%
Demand deposit accounts
5,404,208
6,647,518
Other noninterest-bearing liabilities
522,239
451,384
Total liabilities
19,153,492
19,782,600
Shareholders' equity
2,571,001
2,831,533
Total liabilities and shareholders' equity
$
21,724,493
$
22,614,133
Net interest income - FTE
$
567,590
$
580,790
Net interest rate spread (2)
2.05
%
2.57
%
Net interest-earning assets (3)
$
7,575,826
$
8,943,570
Net interest margin - FTE (4)
2.73
%
2.69
%
(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.
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
ASSET QUALITY - NON-PERFORMING ASSETS (1)
As of
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
(Unaudited, dollars in thousands)
Non-accrual loans:
Commercial
$
35,107
$
31,703
$
14,178
$
17,271
$
21,474
Residential
8,725
8,075
8,796
9,603
9,750
Consumer
8,725
7,687
7,584
7,699
7,380
Total non-accrual loans
52,557
47,465
30,558
34,573
38,604
Total accruing loans past due 90 days or more:
—
—
—
—
—
Total non-performing loans
52,557
47,465
30,558
34,573
38,604
Other real estate owned
—
—
—
—
—
Other non-performing assets:
—
—
—
—
—
Total non-performing assets (1)
$
52,557
$
47,465
$
30,558
$
34,573
$
38,604
Total accruing troubled debt restructured ("TDR") (2)
$
—
$
—
$
—
$
—
$
28,834
Total non-performing loans to total loans
0.38
%
0.34
%
0.22
%
0.25
%
0.28
%
Total non-performing assets to total assets
0.25
%
0.22
%
0.14
%
0.15
%
0.17
%
(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 had no TDRs to report as of March 31, 2023 and subsequent periods.
EASTERN BANKSHARES, INC. AND SUBSIDIARIES
ASSET QUALITY - PROVISION, ALLOWANCE, AND NET CHARGE-OFFS (RECOVERIES)
Three months ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
(Unaudited, dollars in thousands)
Average total loans
$
13,961,061
$
13,926,194
$
13,803,292
$
13,633,165
$
13,203,450
Allowance for loan losses, beginning of the period
155,146
147,955
140,938
142,211
131,663
Total cumulative effect of change in accounting principle (1):
—
—
—
(1,143
)
—
Charged-off loans:
Commercial and industrial
2
11
—
—
256
Commercial real estate
8,008
—
—
—
—
Commercial construction
—
—
—
—
—
Business banking
3,745
303
254
343
370
Residential real estate
—
—
—
—
—
Consumer home equity
—
—
—
7
1
Other consumer
536
731
591
561
515
Total charged-off loans
12,291
1,045
845
911
1,142
Recoveries on loans previously charged-off:
Commercial and industrial
11
120
26
139
248
Commercial real estate
190
2
2
4
38
Commercial construction
—
—
—
—
—
Business banking
573
609
204
481
391
Residential real estate
34
30
18
15
14
Consumer home equity
1
39
—
1
8
Other consumer
131
108
111
116
111
Total recoveries
940
908
361
756
810
Net loans charged-off (recoveries):
Commercial and industrial
(9
)
(109
)
(26
)
(139
)
8
Commercial real estate
7,818
(2
)
(2
)
(4
)
(38
)
Commercial construction
—
—
—
—
—
Business banking
3,172
(306
)
50
(138
)
(21
)
Residential real estate
(34
)
(30
)
(18
)
(15
)
(14
)
Consumer home equity
(1
)
(39
)
—
6
(7
)
Other consumer
405
623
480
445
404
Total net loans charged-off
11,351
137
484
155
332
Provision for allowance for loan losses
5,198
7,328
7,501
25
10,880
Total allowance for loan losses, end of period
$
148,993
$
155,146
$
147,955
$
140,938
$
142,211
Net charge-offs to average total loans outstanding during this period (2)
0.32
%
0.00
%
0.01
%
0.00
%
0.01
%
Allowance for loan losses as a percent of total loans
1.07
%
1.12
%
1.06
%
1.03
%
1.05
%
Allowance for loan losses as a percent of nonperforming loans
283.49
%
326.86
%
484.18
%
407.65
%
368.38
%
(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.
(2) Presented on an annualized basis.
APPENDIX A: Reconciliation of Non-GAAP Earnings Metrics (1)
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)
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Net income (loss) from continuing operations (GAAP)
$
31,509
$
63,464
$
44,419
$
(202,081
)
$
40,918
Add:
Noninterest income components:
(Income) losses from investments held in rabbi trusts
(4,969
)
1,523
(3,002
)
(2,857
)
(3,235
)
Losses on sales of securities available for sale, net
—
—
—
333,170
683
(Gains) losses on sales of other assets
—
(2
)
—
5
10
Noninterest expense components:
Rabbi trust employee benefit expense (income)
1,740
(586
)
1,314
1,274
1,103
Merger and acquisition expenses
1,865
3,630
—
—
—
Defined Benefit Plan settlement loss
—
—
—
—
12,045
Total impact of non-GAAP adjustments
(1,364
)
4,565
(1,688
)
331,592
10,606
Less net tax benefit associated with non-GAAP adjustments (2)
13,270
15,944
1,639
76,377
2,954
Non-GAAP adjustments, net of tax
$
(14,634
)
$
(11,379
)
$
(3,327
)
$
255,215
$
7,652
Operating net income (non-GAAP)
$
16,875
$
52,085
$
41,092
$
53,134
$
48,570
Weighted average common shares outstanding during the period:
Basic
162,571,066
162,370,469
162,232,236
161,991,373
162,032,522
Diluted
162,724,398
162,469,887
162,246,675
162,059,431
162,263,547
Earnings (losses) per share from continuing operations, basic:
$
0.19
$
0.39
$
0.27
$
(1.25
)
$
0.25
Earnings (losses) per share from continuing operations, diluted:
$
0.19
$
0.39
$
0.27
$
(1.25
)
$
0.25
Operating earnings per share, basic (non-GAAP)
$
0.10
$
0.32
$
0.25
$
0.33
$
0.30
Operating earnings per share, diluted (non-GAAP)
$
0.10
$
0.32
$
0.25
$
0.33
$
0.30
Return on average assets (3)
0.59
%
1.18
%
0.81
%
(3.64
)%
0.73
%
Add:
(Income) losses from investments held in rabbi trusts (3)
(0.09
)%
0.03
%
(0.05
)%
(0.05
)%
(0.06
)%
Losses on sales of securities available for sale, net (3)
0.00
%
0.00
%
0.00
%
6.00
%
0.01
%
(Gains) losses on sales of other assets (3)
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
Rabbi trust employee benefit expense (income) (3)
0.03
%
(0.01
)%
0.02
%
0.02
%
0.02
%
Merger and acquisition expenses (3)
0.03
%
0.07
%
0.00
%
0.00
%
0.00
%
Defined Benefit Plan settlement loss (3)
0.00
%
0.00
%
0.00
%
0.00
%
0.21
%
Less net tax benefit associated with non-GAAP adjustments (2) (3)
0.25
%
0.30
%
0.03
%
1.38
%
0.05
%
Operating return on average assets (non-GAAP) (3)
0.31
%
0.97
%
0.75
%
0.95
%
0.86
%
Return on average shareholders' equity (3)
4.66
%
9.91
%
6.85
%
(33.31
)%
6.71
%
Add:
(Income) losses from investments held in rabbi trusts (3)
(0.73
)%
0.24
%
(0.46
)%
(0.47
)%
(0.53
)%
Losses on sales of securities available for sale, net (3)
0.00
%
0.00
%
0.00
%
54.92
%
0.11
%
(Gains) losses on sales of other assets (3)
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
Rabbi trust employee benefit expense (income) (3)
0.26
%
(0.09
)%
0.20
%
0.21
%
0.18
%
Merger and acquisition expenses (3)
0.28
%
0.57
%
0.00
%
0.00
%
0.00
%
Defined Benefit Plan settlement loss (3)
0.00
%
0.00
%
0.00
%
0.00
%
1.97
%
Less net tax benefit associated with non-GAAP adjustments (2) (3)
1.96
%
2.49
%
0.25
%
12.59
%
0.48
%
Operating return on average shareholders' equity (non-GAAP) (3)
2.51
%
8.14
%
6.34
%
8.76
%
7.96
%
Average tangible shareholders' equity:
Average total shareholders' equity (GAAP)
$
2,682,600
$
2,539,806
$
2,599,325
$
2,460,170
$
2,420,174
Less: Average goodwill and other intangibles
597,234
658,591
659,825
660,795
661,841
Average tangible shareholders' equity (non-GAAP)
$
2,085,366
$
1,881,215
$
1,939,500
$
1,799,375
$
1,758,333
Return on average tangible shareholders' equity (non-GAAP) (3)
5.99
%
13.38
%
9.19
%
(45.55
)%
9.23
%
Add:
(Income) losses from investments held in rabbi trusts (3)
(0.95
)%
0.32
%
(0.62
)%
(0.64
)%
(0.73
)%
Losses on sales of securities available for sale, net (3)
0.00
%
0.00
%
0.00
%
75.09
%
0.15
%
(Gains) losses on sales of other assets (3)
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
Rabbi trust employee benefit expense (income) (3)
0.33
%
(0.12
)%
0.27
%
0.29
%
0.25
%
Merger and acquisition expenses (3)
0.35
%
0.77
%
0.00
%
0.00
%
0.00
%
Defined Benefit Plan settlement loss (3)
0.00
%
0.00
%
0.00
%
0.00
%
2.72
%
Less net tax benefit associated with non-GAAP adjustments (2) (3)
2.52
%
3.36
%
0.34
%
17.21
%
0.67
%
Operating return on average tangible shareholders' equity (non-GAAP) (3)
3.20
%
10.99
%
8.50
%
11.98
%
10.95
%
(1) Average assets, average shareholders' equity, average goodwill and other intangibles, and average tangible shareholders' equity components presented in this table include discontinued operations.
(2) The net tax benefit (expense) associated with these items is generally determined by assessing whether each item is included or excluded from net taxable income and applying our combined statutory tax rate only to those items included in net taxable income. The net tax benefit for the three months ended December 31, 2023 was primarily due to the tax benefit from state tax strategies associated with the utilization of capital losses as a result of the sale of securities in the first quarter of 2023, described further below. Upon the sale of securities in the first quarter of 2023, we established a valuation allowance of $17.4 million , as it was determined at that time that it was not more-likely-than-not that the entirety of the deferred tax asset related to the loss on such securities would be realized. Included in that $17.4 million was $2.8 million in expected lost state tax benefits. Following the execution of the sale of our insurance agency business in October 2023 and the resulting capital gain, coupled with tax planning strategies, a state tax benefit of $13.6 million was realized on the security sale losses.
(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
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
(Unaudited, dollars in thousands)
Net interest income (GAAP)
$
133,307
$
137,205
$
141,588
$
138,309
$
149,994
Add:
Tax-equivalent adjustment (non-GAAP) (1)
4,483
4,376
3,877
4,445
3,780
Fully-taxable equivalent net interest income (non-GAAP)
$
137,790
$
141,581
$
145,465
$
142,754
$
153,774
Noninterest income (loss) (GAAP)
$
26,739
$
19,157
$
26,204
$
(309,853
)
$
22,425
Less:
Income (losses) from investments held in rabbi trusts
4,969
(1,523
)
3,002
2,857
3,235
Losses on sales of securities available for sale, net
—
—
—
(333,170
)
(683
)
Gains (losses) on sales of other assets
—
2
—
(5
)
(10
)
Noninterest income on an operating basis (non-GAAP)
$
21,770
$
20,678
$
23,202
$
20,465
$
19,883
Noninterest expense (GAAP)
$
121,029
$
101,748
$
99,934
$
95,891
$
112,583
Less:
Rabbi trust employee benefit expense (income)
1,740
(586
)
1,314
1,274
1,103
Merger and acquisition expenses
1,865
3,630
—
—
—
Defined Benefit Plan settlement loss
—
—
—
—
12,045
Noninterest expense on an operating basis (non-GAAP)
$
117,424
$
98,704
$
98,620
$
94,617
$
99,435
Total revenue (loss) (GAAP)
$
160,046
$
156,362
$
167,792
$
(171,544
)
$
172,419
Total operating revenue (non-GAAP)
$
159,560
$
162,259
$
168,667
$
163,219
$
173,657
Efficiency ratio (GAAP)
75.62
%
65.07
%
59.56
%
(55.90
)%
65.30
%
Operating efficiency ratio (non-GAAP)
73.59
%
60.83
%
58.47
%
57.97
%
57.26
%
(1) Interest income on tax-exempt loans and investment securities has been adjusted to a FTE basis using a marginal tax rate of 21.9% , 21.7% , 21.8% , 21.7% , and 21.6% for the three months ended December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 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
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
(Unaudited, dollars in thousands, except per-share data)
Tangible shareholders' equity:
Total shareholders' equity (GAAP)
$
2,974,855
$
2,446,553
$
2,526,772
$
2,579,123
$
2,471,790
Less: Goodwill and other intangibles (1)
566,205
657,824
658,993
660,165
661,126
Tangible shareholders' equity (non-GAAP)
2,408,650
1,788,729
1,867,779
1,918,958
1,810,664
Tangible assets:
Total assets (GAAP)
21,133,278
21,146,292
21,583,493
22,720,530
22,646,858
Less: Goodwill and other intangibles (1)
566,205
657,824
658,993
660,165
661,126
Tangible assets (non-GAAP)
$
20,567,073
$
20,488,468
$
20,924,500
$
22,060,365
$
21,985,732
Shareholders' equity to assets ratio (GAAP)
14.08
%
11.57
%
11.71
%
11.35
%
10.91
%
Tangible shareholders' equity to tangible assets ratio (non-GAAP)
11.71
%
8.73
%
8.93
%
8.70
%
8.24
%
Common shares outstanding
176,426,993
176,376,675
176,376,675
176,328,426
176,172,073
Book value per share (GAAP)
$
16.86
$
13.87
$
14.33
$
14.63
$
14.03
Tangible book value per share (non-GAAP)
$
13.65
$
10.14
$
10.59
$
10.88
$
10.28
(1) Includes goodwill and other intangible assets of discontinued operations as of September 30, 2023 and preceding periods.
APPENDIX D: Tangible Shareholders’ Equity Roll Forward Analysis
For information on non-GAAP financial measures, please see the section titled "Non-GAAP Financial Measures."
As of
Change from
Dec 31, 2023
Sep 30, 2023
Sep 30, 2023
(Unaudited, dollars in thousands, except per-share data)
Common stock
$
1,767
$
1,766
$
1
Additional paid in capital
1,666,441
1,661,136
5,305
Unallocated ESOP common stock
(132,755
)
(133,992
)
1,237
Retained earnings
2,047,754
1,747,225
300,529
AOCI, net of tax - available for sale securities
(584,243
)
(763,871
)
179,628
AOCI, net of tax - pension
7,462
6,021
1,441
AOCI, net of tax - cash flow hedge
(31,571
)
(71,732
)
40,161
Total shareholders' equity:
$
2,974,855
$
2,446,553
$
528,302
Less: Goodwill and other intangibles (1)
566,205
657,824
(91,619
)
Tangible shareholders' equity (non-GAAP)
$
2,408,650
$
1,788,729
$
619,921
Common shares outstanding
176,426,993
176,376,675
50,318
Per share:
Common stock
$
0.01
$
0.01
$
—
Additional paid in capital
9.45
9.42
0.03
Unallocated ESOP common stock
(0.75
)
(0.76
)
0.01
Retained earnings
11.61
9.91
1.70
AOCI, net of tax - available for sale securities
(3.31
)
(4.33
)
1.02
AOCI, net of tax - pension
0.04
0.03
0.01
AOCI, net of tax - cash flow hedge
(0.18
)
(0.41
)
0.23
Total shareholders' equity:
$
16.86
$
13.87
$
2.99
Less: Goodwill and other intangibles (1)
3.21
3.73
(0.52
)
Tangible shareholders' equity (non-GAAP)
$
13.65
$
10.14
$
3.51
(1) Includes goodwill and other intangible assets of discontinued operations as of September 30, 2023.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240125436910/en/
Investor Contact
Jillian Belliveau
Eastern Bankshares, Inc.
InvestorRelations@easternbank.com
781-598-7920
Media Contact
Andrea Goodman
Eastern Bank
a.goodman@easternbank.com
781-598-7847
Source: Eastern Bank
What were the financial highlights for the fourth quarter of 2023 for Eastern Bankshares, Inc.?
The financial highlights include net income of $318.5 million, an after-tax gain of $294.5 million from the insurance transaction, and increases in core deposits and total loans.
What was the cash consideration for the sale of Eastern Insurance Group, LLC?
The sale of Eastern Insurance Group, LLC to Arthur J. Gallagher & Co. was completed for cash consideration of $515 million.
What was the after-tax gain from the insurance transaction for Eastern Bankshares, Inc.?
The company recorded an after-tax gain of $294.5 million from the insurance transaction.
What is the ticker symbol for Eastern Bankshares, Inc.?
The ticker symbol for Eastern Bankshares, Inc. is EBC.