~ Strong Margin Expansion the Result of the
Prior Quarter’s Balance Sheet Repositioning ~
~ Cash Raised in the Securities Sale Will
Continue to Enhance the Company’s Financial Position ~
Eastern Bankshares, Inc. (the “Company,” or together with its
affiliates and subsidiaries, “Eastern”) (NASDAQ Global Select
Market: EBC), the stock holding company of Eastern Bank, today
announced its 2023 second quarter financial results and the
declaration of a quarterly cash dividend.
FINANCIAL HIGHLIGHTS FOR THE SECOND QUARTER OF 2023
- Total revenue of $195.4 million. Total operating revenue* of
$196.3 million, an increase of $1.5 million from the prior
quarter.
- Net income of $48.7 million, or $0.30 per diluted share,
compared to net loss of $194.1 million, or $1.20 per diluted share,
for the prior quarter.
- Operating net income* of $45.3 million, or $0.28 per diluted
share, compared to $61.1 million, or $0.38 per diluted share, for
the prior quarter.
- The effective tax rate of 27% in the second quarter was higher
than expected due in part to impacts of the repositioning in the
prior quarter.
- Total loans increased $286.6 million, or 2.1%, to $14.0
billion, as compared to the prior quarter.
- The net interest margin on a fully tax equivalent (“FTE”)
basis* expanded 14 basis points to 2.80%.
- Continued strong asset quality, with annualized net charge-offs
("NCOs") of 0.01% of average total loans and non-performing loans
of $30.6 million, or 0.22% of total loans. Provision for allowance
for loan losses was $7.5 million, up from $25 thousand in the prior
quarter and contributing to an increase in the allowance of $7.0
million.
- Healthy balance sheet with 11.7% shareholders’ equity to
assets, 8.9% tangible shareholders’ equity to tangible assets* and
15.7% common equity tier 1 capital ratio1. Total borrowings and
brokered deposits of less than 5% of total assets.
During the first quarter, the Company completed a balance sheet
repositioning by selling $1.9 billion in lower-yielding
available-for-sale (“AFS”) investment securities creating a
non-recurring, after-tax loss of $280 million (“the
repositioning”). Proceeds from the sale were primarily used in the
second quarter to reduce Federal Home Loan Bank advances, support
customer deposit activity and fund loan growth.
“Our second quarter results show the tangible benefits of the
balance sheet repositioning completed in the first quarter,” said
Bob Rivers, Chief Executive Officer and Chair of the Board of
Eastern Bankshares, Inc. and Eastern Bank. “As anticipated, our net
interest margin expanded 14 basis points in the quarter, and the
cash raised from the sale was used to enhance our overall financial
positioning. Our wholesale funding was less than 5% of total assets
at the end of the quarter and operating revenues were up $1.5
million. Our highest priority is to be available for our customers
and meet their banking and borrowing needs. Our strong balance
sheet and core earnings position us well to do just that even in an
uncertain economic environment.”
Please refer to Appendices A-E to this press release for
reconciliations of non-GAAP financial metrics denoted by an
asterisk.
____________________ 1 Regulatory capital ratios are preliminary
estimates.
NET INTEREST INCOME
Net interest income was $141.6 million for the second quarter of
2023, compared to $138.3 million in the prior quarter, representing
an increase of $3.3 million.
- The net interest margin on a FTE basis* was 2.80% for the
second quarter, representing a 14 basis point increase from the
first quarter, as asset yields increased faster than funding
costs.
- The net interest margin for the first quarter of 2023 included
a partial quarter impact of the repositioning, which occurred in
mid-March.
- Total interest-earning asset yields increased 35 basis points
from the prior quarter to 3.95%, due to increased loan and
short-term investment yields as a result of higher short-term
interest rates during the quarter as well as the sale of lower
yielding AFS securities in the prior quarter and higher average
short-term investment balances.
- Total interest-bearing liabilities cost increased 30 basis
points from the prior quarter to 1.79%, due to core deposit pricing
increases and deposit mix shifts, partially offset by lower
borrowing costs due to the reduction in borrowings as a result of
the repositioning.
Please refer to Appendices A-E to this press release for
reconciliations of non-GAAP financial metrics denoted by an
asterisk.
NONINTEREST INCOME
Noninterest income was $53.8 million for the second quarter of
2023, compared to a loss of $278.3 million for the prior quarter,
representing an increase of $332.2 million. The loss in the prior
quarter was due to the sale of $1.9 billion in AFS investment
securities as part of the repositioning. Noninterest income on an
operating basis* was $50.8 million for the second quarter of 2023,
compared to $52.0 million for the prior quarter, a decrease of $1.2
million.
- Insurance commissions decreased $3.9 million to $27.6 million
in the second quarter, compared to $31.5 million in the prior
quarter, driven primarily by seasonality. Compared to the
comparable prior year quarter, insurance commissions increased $2.9
million, or 12%.
- Service charges on deposit accounts decreased $0.8 million on a
consecutive quarter basis to $7.2 million.
- Trust and investment advisory fees increased $0.4 million on a
consecutive quarter basis to $6.1 million.
- Debit card processing fees increased $0.3 million from the
prior quarter to $3.5 million.
- Income from investments held in rabbi trust accounts was $3.0
million in the second quarter compared to $2.9 million in the prior
quarter.
- There were no realized gains or losses on sales of AFS
securities in the second quarter compared to realized losses of
$333.2 million in the prior quarter due to the repositioning.
Please refer to Appendices A-E to this press release for
reconciliations of non-GAAP financial metrics denoted by an
asterisk.
NONINTEREST EXPENSE
Noninterest expense was $121.6 million for the second quarter of
2023, compared to $116.3 million in the prior quarter, representing
an increase of $5.4 million. Noninterest expense on an operating
basis* for the second quarter of 2023 was $120.3 million, compared
to $115.0 million in the prior quarter, an increase of $5.3
million.
- Salaries and employee benefits expense was $79.2 million in the
second quarter, representing an increase of $0.7 million from the
prior quarter.
- Office occupancy and equipment expense was $9.8 million in the
second quarter, a decrease of $0.1 million from the prior
quarter.
- Data processing expense was $13.9 million in the second
quarter, an increase of $0.4 million from the prior quarter.
- Professional services expense was $4.1 million in the second
quarter, an increase of $0.6 million from the prior quarter.
- Marketing expense was $2.1 million in the second quarter, an
increase of $1.0 million from the prior quarter.
- Loan expenses were unchanged at $1.1 million in the second
quarter.
- Federal Deposit Insurance Corporation (“FDIC”) insurance
expense was $3.0 million in the second quarter, an increase of $0.5
million from the prior quarter.
- Other noninterest expense was $7.2 million in the second
quarter, an increase of $1.9 million from the prior quarter, due
primarily to an increase of $1.5 million in provision for credit
losses on off-balance sheet credit exposure.
Please refer to Appendices A-E to this press release for
reconciliations of non-GAAP financial metrics denoted by an
asterisk.
ASSET QUALITY
The allowance for loan losses was $148.0 million at June 30,
2023, or 1.06% of total loans, compared to $140.9 million, or 1.03%
of total loans, at March 31, 2023. The Company recorded a provision
for loan losses totaling $7.5 million in the second quarter of 2023
due to a combination of loan growth and higher reserve rates.
Non-performing loans totaled $30.6 million at June 30, 2023
compared to $34.6 million at the end of the prior quarter. During
the second quarter of 2023, the Company recorded total net
charge-offs of $0.5 million, or 0.01% of average total loans on an
annualized basis, compared to $0.2 million or less than 0.01% of
average total loans in the prior quarter, respectively.
DIVIDENDS AND SHARE REPURCHASES
The Company’s Board of Directors has declared a quarterly cash
dividend of $0.10 per common share. The dividend will be payable on
September 15, 2023 to shareholders of record as of the close of
business on September 1, 2023.
The Company did not repurchase any shares of its common stock
during the second quarter of 2023.
As announced in September of 2022, the Company received
regulatory non-objection for its second share repurchase program of
up to 8,900,000 shares, representing approximately 5% of its shares
of common stock then outstanding. The repurchase program, which is
limited to $200 million through August 31, 2023, may be modified or
terminated by the Board of Directors of the Company at any time. At
June 30, 2023, there were 6,989,750 shares available for repurchase
and $161.8 million in total market value remaining under the
repurchase authorization.
CONFERENCE CALL AND PRESENTATION INFORMATION
A conference call and webcast covering Eastern’s second quarter
2023 earnings will be held on Friday, July 28, 2023 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 19006231. 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 June
30, 2023, Eastern Bank had approximately $22 billion in total
assets. Eastern provides banking, investment and insurance products
and services for consumers and businesses of all sizes, including
through its Eastern Wealth Management division and its Eastern
Insurance Group LLC subsidiary. Eastern takes pride in its
outspoken advocacy and community support that includes $240 million
in charitable giving since 1994. An inclusive company, Eastern
employs approximately 2,100 deeply committed professionals who
value relationships with their customers, colleagues, and
communities. For investor information, visit
investor.easternbank.com.
NON-GAAP FINANCIAL MEASURES
*Denotes a non-GAAP financial measure used in this press
release.
A non-GAAP financial measure is defined as a numerical measure
of the Company’s historical or future financial performance,
financial position or cash flows that excludes (or includes)
amounts, or is subject to adjustments that have the effect of
excluding (or including) amounts that are included in the most
directly comparable measure calculated and presented in accordance
with accounting principles generally accepted in the United States
(“GAAP”) in the Company’s statement of income, balance sheet or
statement of cash flows (or equivalent statements).
The Company presents non-GAAP financial measures, which
management uses to evaluate the Company’s performance, and which
exclude the effects of certain transactions that management
believes are unrelated to its core business and are therefore not
necessarily indicative of its current performance or financial
position. Management believes excluding these items facilitates
greater visibility for investors into the Company’s core business
as well as underlying trends that may, to some extent, be obscured
by inclusion of such items in the corresponding GAAP financial
measures.
There are items in the Company’s financial statements that
impact its financial results, but which management believes are
unrelated to the Company’s core business. Accordingly, the Company
presents noninterest income on an operating basis, total operating
revenue, noninterest expense on an operating basis, operating net
income, operating earnings per share, operating return on average
assets, operating return on average shareholders’ equity, operating
return on average tangible shareholders’ equity (discussed further
below), and the operating efficiency ratio. Each of these figures
excludes the impact of such applicable items because management
believes such exclusion can provide greater visibility into the
Company’s core business and underlying trends. Such items that
management does not consider to be core to the Company’s business
include (i) income and expenses from investments held in rabbi
trusts, (ii) gains and losses on sales of securities available for
sale, net, (iii) gains and losses on the sale of other assets, (iv)
rabbi trust employee benefits, (v) impairment charges on tax credit
investments and associated tax credit benefits, (vi) other real
estate owned (“OREO”) gains, (vii) merger and acquisition expenses,
(viii) the non-cash pension settlement charge recognized related to
the Defined Benefit Plan, and (ix) certain discrete tax items. The
Company does not provide an outlook for its total noninterest
income and total noninterest expense because each contains income
or expense components, as applicable, such as income associated
with rabbi trust accounts and rabbi trust employee benefit expense,
which are market-driven, and over which the Company cannot exercise
control. Accordingly, reconciliations of the Company’s outlook for
its noninterest income on an operating basis and its noninterest
expense on an operating basis to an outlook for total noninterest
income and total noninterest expense, respectively, cannot be made
available without unreasonable effort.
Management also presents tangible assets, tangible shareholders’
equity, average tangible shareholders’ equity, tangible book value
per share, the ratio of tangible shareholders’ equity to tangible
assets including the impact of mark-to-market adjustments on
held-to-maturity securities, return on average tangible
shareholders’ equity, and operating return on average shareholders’
equity (discussed further above), each of which excludes the impact
of goodwill and other intangible assets, as management believes
these financial measures provide investors with the ability to
further assess the Company’s performance, identify trends in its
core business and provide a comparison of its capital adequacy to
other companies. The Company included the tangible ratios because
management believes that investors may find it useful to have
access to the same analytical tools used by management to assess
performance and identify trends.
These non-GAAP financial measures presented in this press
release should not be considered an alternative or substitute for
financial results or measures determined in accordance with GAAP or
as an indication of the Company’s cash flows from operating
activities, a measure of its liquidity position or an indication of
funds available for its cash needs. An item which management
considers to be non-core and excludes when computing these non-GAAP
measures can be of substantial importance to the Company’s results
for any particular period. In addition, management’s methodology
for calculating non-GAAP financial measures may differ from the
methodologies employed by other banking companies to calculate the
same or similar performance measures, and accordingly, the
Company’s reported non-GAAP financial measures may not be
comparable to the same or similar performance measures reported by
other banking companies. Please refer to Appendices A-E for
reconciliations of the Company's GAAP financial measures to the
non-GAAP financial measures in this press release.
FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” within
the meaning of section 27A of the Securities Act of 1933, as
amended, and section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements include statements regarding
anticipated future events and can be identified by the fact that
they do not relate strictly to historical or current facts. You can
identify these statements from the use of the words “may,” “will,”
“should,” “could,” “would,” “plan,” “potential,” “estimate,”
“project,” “believe,” “intend,” “anticipate,” “expect,” “target”
and similar expressions. Forward-looking statements, by their
nature, are subject to risks and uncertainties. There are many
factors that could cause actual results to differ materially from
expected results described in the forward-looking statements.
Certain factors that could cause actual results to differ
materially from expected results include; adverse developments in
the level and direction of loan delinquencies and charge-offs and
changes in estimates of the adequacy of the allowance for loan
losses; increased competitive pressures; changes in interest rates
and resulting changes in competitor or customer behavior, mix or
costs of sources of funding, and deposit amounts and composition;
risks that revenue or expense synergies or the other expected
benefits of the Company’s merger with Century Bank in November 2021
may not fully materialize for the Company in the timeframe expected
or at all, or may be more costly to achieve; adverse national or
regional economic conditions or conditions within the securities
markets or banking sector; legislative and regulatory changes and
related compliance costs that could adversely affect the business
in which the Company and its subsidiary Eastern Bank are engaged,
including the effect of, and changes in, monetary and fiscal
policies and laws, such as the interest rate policies of the Board
of Governors of the Federal Reserve System; market and monetary
fluctuations, including inflationary or recessionary pressures,
interest rate sensitivity, liquidity constraints, increased
borrowing and funding costs, and fluctuations due to actual or
anticipated changes to federal tax laws; the realizability of
deferred tax assets; the Company’s ability to successfully
implement its risk mitigation strategies; asset and credit quality
deterioration, including adverse developments in local or regional
real estate markets that decrease collateral values associated with
existing loans; operational risks such as cybersecurity incidents,
natural disasters, and pandemics, including COVID-19; and the
failure of the Company to execute all of its planned share
repurchases. For further discussion of such factors, please see the
Company’s most recent Annual Report on Form 10-K and subsequent
filings with the U.S. Securities and Exchange Commission (the
“SEC”), which are available on the SEC’s website at
www.sec.gov.
You should not place undue reliance on forward-looking
statements, which reflect the Company's expectations only as of the
date of this press release. The Company does not undertake any
obligation to update forward-looking statements.
EASTERN BANKSHARES, INC. AND
SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS
Certain information in this press release is presented as
reviewed by the Company’s management and includes information
derived from the Company’s Consolidated Statements of Income,
non-GAAP financial measures, and operational and performance
metrics. For information on non-GAAP financial measures, please see
the section titled "Non-GAAP Financial Measures."
As of and for the three months
ended
(Unaudited, dollars in thousands, except
per-share data)
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Jun 30, 2022
Earnings data
Net interest income
$
141,588
$
138,309
$
149,994
$
152,179
$
137,757
Noninterest income
53,831
(278,330
)
44,516
43,353
41,877
Total revenue
195,419
(140,021
)
194,510
195,532
179,634
Noninterest expense
121,648
116,294
132,757
116,840
111,139
Pre-tax, pre-provision income (loss)
73,771
(256,315
)
61,753
78,692
68,495
Provision for allowance for loan
losses
7,501
25
10,880
6,480
1,050
Pre-tax income (loss)
66,270
(256,340
)
50,873
72,212
67,445
Net income (loss)
48,657
(194,096
)
42,294
54,777
51,172
Operating net income (non-GAAP)
45,323
61,113
49,912
55,742
52,518
Per-share data
Earnings (loss) per share, basic
$
0.30
$
(1.20
)
$
0.26
$
0.33
$
0.31
Earnings (loss) per share, diluted
$
0.30
$
(1.20
)
$
0.26
$
0.33
$
0.31
Operating earnings per share, basic
(non-GAAP)
$
0.28
$
0.38
$
0.31
$
0.34
$
0.32
Operating earnings per share, diluted
(non-GAAP)
$
0.28
$
0.38
$
0.31
$
0.34
$
0.32
Book value per share
$
14.33
$
14.63
$
14.03
$
13.59
$
15.17
Tangible book value per share
(non-GAAP)
$
10.59
$
10.88
$
10.28
$
9.87
$
11.52
Profitability
Return on average assets (1)
0.89
%
(3.50
)%
0.75
%
0.97
%
0.92
%
Operating return on average assets
(non-GAAP) (1)
0.83
%
1.09
%
0.88
%
0.97
%
0.94
%
Return on average shareholders' equity
(1)
7.51
%
(32.00
)%
6.93
%
7.83
%
7.16
%
Operating return on average shareholders'
equity (1)
7.00
%
10.07
%
8.17
%
7.98
%
7.34
%
Return on average tangible shareholders'
equity (non-GAAP) (1)
10.06
%
(43.75
)%
9.54
%
10.25
%
9.28
%
Operating return on average tangible
shareholders' equity (non-GAAP) (1)
9.37
%
13.78
%
11.26
%
10.44
%
9.53
%
Net interest margin (FTE) (1)
2.80
%
2.66
%
2.81
%
2.87
%
2.63
%
Cost of deposits (1)
1.22
%
0.92
%
0.37
%
0.10
%
0.06
%
Efficiency ratio
62.25
%
(83.05
)%
68.25
%
59.75
%
61.87
%
Operating efficiency ratio (non-GAAP)
61.31
%
59.06
%
61.11
%
58.38
%
60.61
%
Balance Sheet (end of period)
Total assets
$
21,583,493
$
22,720,530
$
22,646,858
$
22,042,933
$
22,350,848
Total loans
13,961,878
13,675,250
13,575,531
12,903,954
12,398,694
Total deposits
18,180,972
18,541,580
18,974,359
18,733,381
19,163,801
Total loans / total deposits
77
%
74
%
72
%
69
%
65
%
Asset quality
Allowance for loan losses ("ALLL")
$
147,955
$
140,938
$
142,211
$
131,663
$
125,531
ALLL / total nonperforming loans
("NPLs")
484.18
%
407.65
%
368.38
%
387.77
%
209.64
%
Total NPLs / total loans
0.22
%
0.25
%
0.28
%
0.26
%
0.48
%
Net charge-offs (recoveries) ("NCOs") /
average total loans (1)
0.01
%
0.00
%
0.01
%
0.01
%
(0.01
)%
Capital adequacy
Shareholders' equity / assets
11.71
%
11.35
%
10.91
%
10.96
%
12.16
%
Tangible shareholders' equity / tangible
assets (non-GAAP)
8.93
%
8.70
%
8.24
%
8.20
%
9.52
%
(1) Presented on an annualized basis.
EASTERN BANKSHARES, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of
Jun 30, 2023 change
from
(Unaudited, dollars in
thousands)
Jun 30, 2023
Mar 31, 2023
Jun 30, 2022
Mar 31, 2023
Jun 30, 2022
ASSETS
△ $
△ %
△ $
△ %
Cash and due from banks
$
105,066
$
98,377
$
100,309
$
6,689
7
%
$
4,757
5
%
Short-term investments
768,436
2,039,439
268,605
(1,271,003
)
(62
)%
499,831
186
%
Cash and cash equivalents
873,502
2,137,816
368,914
(1,264,314
)
(59
)%
504,588
137
%
Available for sale ("AFS") securities
(1)
4,520,293
4,700,134
7,536,921
(179,841
)
(4
)%
(3,016,628
)
(40
)%
Held to maturity ("HTM") securities
(1)
465,061
471,185
488,581
(6,124
)
(1
)%
(23,520
)
(5
)%
Total securities
4,985,354
5,171,319
8,025,502
(185,965
)
(4
)%
(3,040,148
)
(38
)%
Loans held for sale
2,835
3,068
764
(233
)
(8
)%
2,071
271
%
Loans:
Commercial and industrial
3,341,976
3,169,438
2,840,734
172,538
5
%
501,242
18
%
Commercial real estate
5,242,290
5,201,196
4,792,345
41,094
1
%
449,945
9
%
Commercial construction
371,367
357,117
303,463
14,250
4
%
67,904
22
%
Business banking
1,089,548
1,078,678
1,126,853
10,870
1
%
(37,305
)
(3
)%
Total commercial loans
10,045,181
9,806,429
9,063,395
238,752
2
%
981,786
11
%
Residential real estate
2,510,705
2,497,491
1,989,621
13,214
1
%
521,084
26
%
Consumer home equity
1,198,290
1,180,824
1,147,425
17,466
1
%
50,865
4
%
Other consumer
207,702
190,506
198,253
17,196
9
%
9,449
5
%
Total loans
13,961,878
13,675,250
12,398,694
286,628
2
%
1,563,184
13
%
Allowance for loan losses
(147,955
)
(140,938
)
(125,531
)
(7,017
)
5
%
(22,424
)
18
%
Unamortized prem./disc. and def. fees
(15,202
)
(13,597
)
(20,988
)
(1,605
)
12
%
5,786
(28
)%
Net loans
13,798,721
13,520,715
12,252,175
278,006
2
%
1,546,546
13
%
Federal Home Loan Bank stock, at cost
26,894
45,168
5,714
(18,274
)
(40
)%
21,180
371
%
Premises and equipment
59,501
61,110
69,019
(1,609
)
(3
)%
(9,518
)
(14
)%
Bank-owned life insurance
162,718
161,755
158,890
963
1
%
3,828
2
%
Goodwill and other intangibles, net
658,993
660,165
653,853
(1,172
)
—
%
5,140
1
%
Deferred income taxes, net
351,054
314,139
244,153
36,915
12
%
106,901
44
%
Prepaid expenses
158,388
163,018
188,115
(4,630
)
(3
)%
(29,727
)
(16
)%
Other assets
505,533
482,257
383,749
23,276
5
%
121,784
32
%
Total assets
$
21,583,493
$
22,720,530
$
22,350,848
$
(1,137,037
)
(5
)%
$
(767,355
)
(3
)%
LIABILITIES AND SHAREHOLDERS'
EQUITY
Deposits:
Demand
$
5,346,693
$
5,564,016
$
6,604,154
$
(217,323
)
(4
)%
$
(1,257,461
)
(19
)%
Interest checking accounts
4,173,079
4,240,780
5,348,181
(67,701
)
(2
)%
(1,175,102
)
(22
)%
Savings accounts
1,495,540
1,633,790
2,015,865
(138,250
)
(8
)%
(520,325
)
(26
)%
Money market investment
4,814,412
5,135,590
4,787,603
(321,178
)
(6
)%
26,809
1
%
Certificates of deposit
2,351,248
1,967,404
407,998
383,844
20
%
1,943,250
476
%
Total deposits
18,180,972
18,541,580
19,163,801
(360,608
)
(2
)%
(982,829
)
(5
)%
Borrowed funds:
Federal Home Loan Bank advances
314,021
1,100,952
13,560
(786,931
)
(71
)%
300,461
2216
%
Escrow deposits of borrowers
22,980
25,671
19,456
(2,691
)
(10
)%
3,524
18
%
Interest rate swap collateral funds
14,210
11,780
10,100
2,430
21
%
4,110
41
%
Total borrowed funds
351,211
1,138,403
43,116
(787,192
)
(69
)%
308,095
715
%
Other liabilities
524,538
461,424
425,535
63,114
14
%
99,003
23
%
Total liabilities
19,056,721
20,141,407
19,632,452
(1,084,686
)
(5
)%
(575,731
)
(3
)%
Shareholders' equity:
Common shares
1,766
1,764
1,793
2
—
%
(27
)
(2
)%
Additional paid-in capital
1,656,750
1,651,524
1,700,495
5,226
—
%
(43,745
)
(3
)%
Unallocated common shares held by the
employee stock ownership plan ("ESOP")
(135,232
)
(136,470
)
(140,203
)
1,238
(1
)%
4,971
(4
)%
Retained earnings
1,704,470
1,672,169
1,817,474
32,301
2
%
(113,004
)
(6
)%
Accumulated other comprehensive income
("AOCI"), net of tax
(700,982
)
(609,864
)
(661,163
)
(91,118
)
15
%
(39,819
)
6
%
Total shareholders' equity
2,526,772
2,579,123
2,718,396
(52,351
)
(2
)%
(191,624
)
(7
)%
Total liabilities and shareholders'
equity
$
21,583,493
$
22,720,530
$
22,350,848
$
(1,137,037
)
(5
)%
$
(767,355
)
(3
)%
(1) AFS and HTM securities represented at
fair value and amortized cost, respectively.
EASTERN BANKSHARES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
Three months ended
Three months ended Jun 30,
2023 change from three months ended
(Unaudited, dollars in thousands, except
per-share data)
Jun 30, 2023
Mar 31, 2023
Jun 30, 2022
Mar 31, 2023
Jun 30, 2022
Interest and dividend income:
△ $
△ %
△ $
△ %
Interest and fees on loans
$
160,862
$
153,540
$
107,236
$
7,322
5
%
$
53,626
50
%
Taxable interest and dividends on
securities
24,618
28,642
31,121
(4,024
)
(14
)%
(6,503
)
(21
)%
Non-taxable interest and dividends on
securities
1,434
1,434
1,862
—
—
%
(428
)
(23
)%
Interest on federal funds sold and other
short-term investments
14,851
5,264
652
9,587
182
%
14,199
2178
%
Total interest and dividend income
201,765
188,880
140,871
12,885
7
%
60,894
43
%
Interest expense:
Interest on deposits
56,146
42,933
3,061
13,213
31
%
53,085
1734
%
Interest on borrowings
4,031
7,638
53
(3,607
)
(47
)%
3,978
7506
%
Total interest expense
60,177
50,571
3,114
9,606
19
%
57,063
1832
%
Net interest income
141,588
138,309
137,757
3,279
2
%
3,831
3
%
Provision for allowance for loan
losses
7,501
25
1,050
7,476
29904
%
6,451
614
%
Net interest income after provision for
allowance for loan losses
134,087
138,284
136,707
(4,197
)
(3
)%
(2,620
)
(2
)%
Noninterest income:
Insurance commissions
27,609
31,503
24,682
(3,894
)
(12
)%
2,927
12
%
Service charges on deposit accounts
7,242
6,472
8,313
770
12
%
(1,071
)
(13
)%
Trust and investment advisory fees
6,131
5,770
5,994
361
6
%
137
2
%
Debit card processing fees
3,513
3,170
3,223
343
11
%
290
9
%
Interest rate swap income (losses)
825
(408
)
1,593
1,233
(302
)%
(768
)
(48
)%
Income (losses) from investments held in
rabbi trusts
3,002
2,857
(7,316
)
145
5
%
10,318
(141
)%
(Losses) gains on sales of mortgage loans
held for sale, net
(50
)
(74
)
49
24
(32
)%
(99
)
(202
)%
Losses on sales of securities available
for sale, net
—
(333,170
)
(104
)
333,170
(100
)%
104
(100
)%
Other
5,559
5,550
5,443
9
—
%
116
2
%
Total noninterest income
53,831
(278,330
)
41,877
332,161
(119
)%
11,954
29
%
Noninterest expense:
Salaries and employee benefits
79,224
78,478
72,996
746
1
%
6,228
9
%
Office occupancy and equipment
9,802
9,878
9,888
(76
)
(1
)%
(86
)
(1
)%
Data processing
13,874
13,441
14,345
433
3
%
(471
)
(3
)%
Professional services
4,056
3,420
3,532
636
19
%
524
15
%
Marketing
2,136
1,097
2,651
1,039
95
%
(515
)
(19
)%
Loan expenses
1,115
1,095
1,626
20
2
%
(511
)
(31
)%
Federal Deposit Insurance Corporation
("FDIC") insurance
3,034
2,546
1,720
488
19
%
1,314
76
%
Amortization of intangible assets
1,172
960
907
212
22
%
265
29
%
Other
7,235
5,379
3,474
1,856
35
%
3,761
108
%
Total noninterest expense
121,648
116,294
111,139
5,354
5
%
10,509
9
%
Income (loss) before income tax (benefit)
expense
66,270
(256,340
)
67,445
322,610
(126
)%
(1,175
)
(2
)%
Income tax expense (benefit)
17,613
(62,244
)
16,273
79,857
(128
)%
1,340
8
%
Net income (loss)
$
48,657
$
(194,096
)
$
51,172
$
242,753
(125
)%
$
(2,515
)
(5
)%
Share data:
Weighted average common shares
outstanding, basic (1)
162,232,236
161,991,373
166,533,920
240,863
0
%
(4,301,684
)
(3
)%
Weighted average common shares
outstanding, diluted (1)
162,246,675
162,059,431
166,573,627
187,244
0
%
(4,326,952
)
(3
)%
Earnings (loss) per share, basic
$
0.30
$
(1.20
)
$
0.31
$
1.50
(125
)%
$
(0.01
)
(2
)%
Earnings (loss) per share, diluted
$
0.30
$
(1.20
)
$
0.31
$
1.50
(125
)%
$
(0.01
)
(2
)%
(1) Shares held by the Company’s ESOP that
have not been allocated to employees in accordance with the terms
of the ESOP are not deemed outstanding for earnings per share
calculations.
EASTERN BANKSHARES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
Six months ended
(Unaudited, dollars in thousands, except
per-share data)
Jun 30, 2023
Jun 30, 2022
Change
Interest and dividend income:
△ $
△ %
Interest and fees on loans
$
314,402
$
208,603
$
105,799
51
%
Taxable interest and dividends on
securities
53,260
58,997
(5,737
)
(10
)%
Non-taxable interest and dividends on
securities
2,868
3,668
(800
)
(22
)%
Interest on federal funds sold and other
short-term investments
20,115
1,088
19,027
1749
%
Total interest and dividend income
390,645
272,356
118,289
43
%
Interest expense:
Interest on deposits
99,079
6,383
92,696
1452
%
Interest on borrowings
11,669
92
11,577
12584
%
Total interest expense
110,748
6,475
104,273
1610
%
Net interest income
279,897
265,881
14,016
5
%
Provision for allowance for loan
losses
7,526
565
6,961
1232
%
Net interest income after provision for
allowance for loan losses
272,371
265,316
7,055
3
%
Noninterest income:
Insurance commissions
59,112
53,395
5,717
11
%
Service charges on deposit accounts
13,714
16,850
(3,136
)
(19
)%
Trust and investment advisory fees
11,901
12,135
(234
)
(2
)%
Debit card processing fees
6,683
6,168
515
8
%
Interest rate swap income
417
4,525
(4,108
)
(91
)%
Income (losses) from investments held in
rabbi trusts
5,859
(11,749
)
17,608
(150
)%
(Losses) gains on sales of mortgage loans
held for sale, net
(124
)
218
(342
)
(157
)%
Losses on sales of securities available
for sale, net
(333,170
)
(2,276
)
(330,894
)
14538
%
Other
11,109
9,026
2,083
23
%
Total noninterest (loss) income
(224,499
)
88,292
(312,791
)
(354
)%
Noninterest expense:
Salaries and employee benefits
157,702
142,522
15,180
11
%
Office occupancy and equipment
19,680
21,502
(1,822
)
(8
)%
Data processing
27,315
29,665
(2,350
)
(8
)%
Professional services
7,476
7,482
(6
)
—
%
Marketing
3,233
4,225
(992
)
(23
)%
Loan expenses
2,210
3,545
(1,335
)
(38
)%
Federal Deposit Insurance Corporation
("FDIC") insurance
5,580
3,132
2,448
78
%
Amortization of intangible assets
2,132
1,734
398
23
%
Other
12,614
6,198
6,416
104
%
Total noninterest expense
237,942
220,005
17,937
8
%
(Loss) income before income tax (benefit)
expense
(190,070
)
133,603
(323,673
)
(242
)%
Income tax (benefit) expense
(44,631
)
30,915
(75,546
)
(244
)%
Net (loss) income
$
(145,439
)
$
102,688
$
(248,127
)
(242
)%
Share data:
Weighted average common shares
outstanding, basic (1)
162,112,223
168,184,528
(6,072,305
)
(4
)%
Weighted average common shares
outstanding, diluted (1)
162,136,984
168,248,246
(6,111,262
)
(4
)%
(Loss) earnings per share, basic
$
(0.90
)
$
0.61
$
(1.51
)
(247
)%
(Loss) earnings per share, diluted
$
(0.90
)
$
0.61
$
(1.51
)
(247
)%
(1) Shares held by the Company’s ESOP that
have not been allocated to employees in accordance with the terms
of the ESOP are not deemed outstanding for earnings per share
calculations.
EASTERN BANKSHARES, INC. AND
SUBSIDIARIES
AVERAGE BALANCES, INTEREST
EARNED/PAID, & AVERAGE YIELDS
As of and for the three months
ended
Jun 30, 2023
Mar 31, 2023
Jun 30, 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
$
9,920,608
$
121,319
4.91
%
$
9,765,236
$
115,929
4.81
%
$
8,944,652
$
83,586
3.75
%
Residential
2,513,941
21,992
3.51
%
2,513,413
21,614
3.49
%
1,960,014
14,683
3.00
%
Consumer
1,370,011
21,045
6.16
%
1,358,616
20,059
5.99
%
1,309,864
11,494
3.52
%
Total loans
13,804,560
164,356
4.78
%
13,637,265
157,602
4.69
%
12,214,530
109,763
3.60
%
Investment securities
5,885,545
26,435
1.80
%
7,684,665
30,459
1.61
%
8,883,710
33,479
1.51
%
Federal funds sold and other short-term
investments
1,174,964
14,851
5.07
%
449,543
5,264
4.75
%
345,731
652
0.76
%
Total interest-earning assets
20,865,069
205,642
3.95
%
21,771,473
193,325
3.60
%
21,443,971
143,894
2.69
%
Non-interest-earning assets
1,084,413
739,270
962,734
Total assets
$
21,949,482
$
22,510,743
$
22,406,705
Interest-bearing liabilities:
Deposits:
Savings
$
1,552,702
$
47
0.01
%
$
1,721,143
$
81
0.02
%
$
2,041,495
$
51
0.01
%
Interest checking
4,270,945
6,141
0.58
%
4,363,528
4,711
0.44
%
4,877,256
2,061
0.17
%
Money market
5,064,469
26,611
2.11
%
5,040,330
20,305
1.63
%
5,069,609
745
0.06
%
Time deposits
2,275,844
23,347
4.11
%
1,931,860
17,836
3.74
%
426,923
204
0.19
%
Total interest-bearing deposits
13,163,960
56,146
1.71
%
13,056,861
42,933
1.33
%
12,415,283
3,061
0.10
%
Borrowings
348,597
4,031
4.64
%
675,056
7,638
4.59
%
35,330
53
0.60
%
Total interest-bearing liabilities
13,512,557
60,177
1.79
%
13,731,917
50,571
1.49
%
12,450,613
3,114
0.10
%
Demand deposit accounts
5,332,045
5,825,269
6,661,920
Other noninterest-bearing liabilities
505,555
493,387
428,373
Total liabilities
19,350,157
20,050,573
19,540,906
Shareholders' equity
2,599,325
2,460,170
2,865,799
Total liabilities and shareholders'
equity
$
21,949,482
$
22,510,743
$
22,406,705
Net interest income - FTE
$
145,465
$
142,754
$
140,780
Net interest rate spread (2)
2.16
%
2.11
%
2.59
%
Net interest-earning assets (3)
$
7,352,512
$
8,039,556
$
8,993,358
Net interest margin - FTE (4)
2.80
%
2.66
%
2.63
%
(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 six months
ended
Jun 30, 2023
Jun 30, 2022
(Unaudited, dollars in thousands)
Avg.
Balance
Interest
Yield /
Cost (5)
Avg.
Balance
Interest
Yield /
Cost (5)
Interest-earning assets:
Loans (1):
Commercial
$
9,843,351
$
237,248
4.86
%
$
8,958,795
$
161,811
3.64
%
Residential
2,513,679
43,605
3.50
%
1,948,816
29,155
3.02
%
Consumer
1,364,345
41,105
6.08
%
1,301,721
21,944
3.40
%
Total loans
13,721,375
321,958
4.73
%
12,209,332
212,910
3.52
%
Non-taxable investment securities
197,755
3,634
3.71
%
262,082
4,645
3.57
%
Taxable investment securities
6,582,380
53,260
1.63
%
8,504,026
58,997
1.40
%
Total investment securities
6,780,135
56,894
1.69
%
8,766,108
63,642
1.46
%
Federal funds sold and other short-term
investments
814,257
20,115
4.98
%
672,757
1,088
0.33
%
Total interest-earning assets
21,315,767
398,967
3.77
%
21,648,197
277,640
2.59
%
Non-interest-earning assets
912,120
1,198,409
Total assets
$
22,227,887
$
22,846,606
Interest-bearing liabilities:
Deposits:
Savings
$
1,636,457
$
129
0.02
%
$
2,059,027
$
102
0.01
%
Interest checking
4,316,981
10,853
0.51
%
4,737,418
4,093
0.17
%
Money market
5,052,467
46,916
1.87
%
5,317,559
1,665
0.06
%
Time deposits
2,104,802
41,181
3.95
%
454,226
523
0.23
%
Total interest-bearing deposits
13,110,707
99,079
1.52
%
12,568,230
6,383
0.10
%
Borrowings
510,925
11,669
4.61
%
33,012
92
0.56
%
Total interest-bearing liabilities
13,621,632
110,748
1.64
%
12,601,242
6,475
0.10
%
Demand deposit accounts
5,577,294
6,741,424
Other noninterest-bearing liabilities
498,829
435,443
Total liabilities
19,697,755
19,778,109
Shareholders' equity
2,530,132
3,068,497
Total liabilities and shareholders'
equity
$
22,227,887
$
22,846,606
Net interest income - FTE
$
288,219
$
271,165
Net interest rate spread (2)
2.13
%
2.49
%
Net interest-earning assets (3)
$
7,694,135
$
9,046,955
Net interest margin - FTE (4)
2.73
%
2.53
%
(1) Includes non-accrual loans.
(2) Net interest rate spread represents
the difference between the weighted average yield on
interest-earning assets and the weighted average cost of
interest-bearing liabilities.
(3) Net interest-earning assets represent
total interest-earning assets less total interest-bearing
liabilities.
(4) Net interest margin - FTE represents
fully-taxable equivalent net interest income* divided by average
total interest-earning assets. Please refer to Appendix B to this
press release for a reconciliation of fully-taxable equivalent net
interest income.
(5) Presented on an annualized basis.
EASTERN BANKSHARES, INC. AND
SUBSIDIARIES
ASSET QUALITY - NON-PERFORMING
ASSETS (1)
As of
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Jun 30, 2022
(Unaudited, dollars in thousands)
Non-accrual loans:
Commercial
$
14,178
$
17,271
$
21,474
$
19,886
$
43,628
Residential
8,796
9,603
9,750
8,513
9,486
Consumer
7,584
7,699
7,380
5,555
6,766
Total non-accrual loans
30,558
34,573
38,604
33,954
59,880
Total accruing loans past due 90 days or
more:
—
—
—
—
—
Total non-performing loans
30,558
34,573
38,604
33,954
59,880
Other real estate owned
—
—
—
—
—
Other non-performing assets:
—
—
—
—
—
Total non-performing assets
$
30,558
$
34,573
$
38,604
$
33,954
$
59,880
Total accruing troubled debt restructured
("TDR") (2)
$
—
$
—
$
28,834
$
36,275
$
33,518
Total non-performing loans to total
loans
0.22
%
0.25
%
0.28
%
0.26
%
0.48
%
Total non-performing assets to total
assets
0.14
%
0.15
%
0.17
%
0.15
%
0.27
%
(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
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Jun 30, 2022
(Unaudited, dollars in thousands)
Average total loans
$
13,803,292
$
13,633,165
$
13,203,450
$
12,521,426
$
12,213,706
Allowance for loan losses, beginning of
the period
140,938
142,211
131,663
125,531
124,166
Total cumulative effect of change in
accounting principle (1):
—
(1,143
)
—
—
—
Charged-off loans:
Commercial and industrial
—
—
256
11
1
Commercial real estate
—
—
—
—
—
Commercial construction
—
—
—
—
—
Business banking
254
343
370
369
608
Residential real estate
—
—
—
—
—
Consumer home equity
—
7
1
—
—
Other consumer
591
561
515
603
490
Total charged-off loans
845
911
1,142
983
1,099
Recoveries on loans previously
charged-off:
Commercial and industrial
26
139
248
126
698
Commercial real estate
2
4
38
3
36
Commercial construction
—
—
—
—
—
Business banking
204
481
391
286
464
Residential real estate
18
15
14
56
14
Consumer home equity
—
1
8
6
6
Other consumer
111
116
111
158
196
Total recoveries
361
756
810
635
1,414
Net loans charged-off (recoveries):
Commercial and industrial
(26
)
(139
)
8
(115
)
(697
)
Commercial real estate
(2
)
(4
)
(38
)
(3
)
(36
)
Commercial construction
—
—
—
—
—
Business banking
50
(138
)
(21
)
83
144
Residential real estate
(18
)
(15
)
(14
)
(56
)
(14
)
Consumer home equity
—
6
(7
)
(6
)
(6
)
Other consumer
480
445
404
445
294
Total net loans charged-off
(recoveries)
484
155
332
348
(315
)
Provision for allowance for loan
losses
7,501
25
10,880
6,480
1,050
Total allowance for loan losses, end of
period
$
147,955
$
140,938
$
142,211
$
131,663
$
125,531
Net charge-offs (recoveries) to average
total loans outstanding during this period (2)
0.01
%
0.00
%
0.01
%
0.01
%
(0.01
)%
Allowance for loan losses as a percent of
total loans
1.06
%
1.03
%
1.05
%
1.02
%
1.01
%
Allowance for loan losses as a percent of
nonperforming loans
484.18
%
407.65
%
368.38
%
387.77
%
209.64
%
(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 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)
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Jun 30, 2022
Net income (loss) (GAAP)
$
48,657
$
(194,096
)
$
42,294
$
54,777
$
51,172
Add:
Noninterest income components:
(Income) losses from investments held in
rabbi trusts
(3,002
)
(2,857
)
(3,235
)
2,248
7,316
Losses on sales of securities available
for sale, net
—
333,170
683
198
104
Gains on sales of other assets
(12
)
(1
)
(14
)
(501
)
(1,251
)
Noninterest expense components:
Rabbi trust employee benefit expense
(income)
1,314
1,274
1,103
(867
)
(3,310
)
Merger and acquisition expenses
—
—
—
271
—
Defined Benefit Plan settlement loss
—
—
12,045
—
—
Total impact of non-GAAP adjustments
(1,700
)
331,586
10,582
1,349
2,859
Less net tax benefit associated with
non-GAAP adjustments (1)
1,634
76,377
2,964
384
1,513
Non-GAAP adjustments, net of tax
$
(3,334
)
$
255,209
$
7,618
$
965
$
1,346
Operating net income (non-GAAP)
$
45,323
$
61,113
$
49,912
$
55,742
$
52,518
Weighted average common shares outstanding
during the period (2):
Basic
162,232,236
161,991,373
162,032,522
163,718,962
166,533,920
Diluted
162,246,675
162,059,431
162,263,547
164,029,649
166,573,627
Earnings (loss) per share, basic
$
0.30
$
(1.20
)
$
0.26
$
0.33
$
0.31
Earnings (loss) per share, diluted
$
0.30
$
(1.20
)
$
0.26
$
0.33
$
0.31
Operating earnings per share, basic
(non-GAAP)
$
0.28
$
0.38
$
0.31
$
0.34
$
0.32
Operating earnings per share, diluted
(non-GAAP)
$
0.28
$
0.38
$
0.31
$
0.34
$
0.32
Return on average assets (3)
0.89
%
(3.50
)%
0.75
%
0.97
%
0.92
%
Add:
(Income) losses from investments held in
rabbi trusts (3)
(0.05
)%
(0.05
)%
(0.06
)%
0.04
%
0.13
%
Losses on sales of securities available
for sale, net (3)
0.00
%
6.00
%
0.01
%
0.00
%
0.00
%
Gains on sales of other assets (3)
0.00
%
0.00
%
0.00
%
(0.01
)%
(0.02
)%
Rabbi trust employee benefit expense
(income) (3)
0.02
%
0.02
%
0.02
%
(0.02
)%
(0.06
)%
Merger and acquisition expenses (3)
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
Defined Benefit Plan settlement loss
(3)
0.00
%
0.00
%
0.21
%
0.00
%
0.00
%
Less net tax benefit associated with
non-GAAP adjustments (1) (3)
0.03
%
1.38
%
0.05
%
0.01
%
0.03
%
Operating return on average assets
(non-GAAP) (3)
0.83
%
1.09
%
0.88
%
0.97
%
0.94
%
Return on average shareholders' equity
(3)
7.51
%
(32.00
)%
6.93
%
7.83
%
7.16
%
Add:
(Income) losses from investments held in
rabbi trusts (3)
(0.46
)%
(0.47
)%
(0.53
)%
0.32
%
1.02
%
Losses on sales of securities available
for sale, net (3)
0.00
%
54.92
%
0.11
%
0.03
%
0.01
%
Gains on sales of other assets (3)
0.00
%
0.00
%
0.00
%
(0.07
)%
(0.18
)%
Rabbi trust employee benefit expense
(income) (3)
0.20
%
0.21
%
0.18
%
(0.12
)%
(0.46
)%
Merger and acquisition expenses (3)
0.00
%
0.00
%
0.00
%
0.04
%
0.00
%
Defined Benefit Plan settlement loss
(3)
0.00
%
0.00
%
1.97
%
0.00
%
0.00
%
Less net tax benefit associated with
non-GAAP adjustments (1) (3)
0.25
%
12.59
%
0.49
%
0.05
%
0.21
%
Operating return on average
shareholders' equity (non-GAAP) (3)
7.00
%
10.07
%
8.17
%
7.98
%
7.34
%
Average tangible shareholders'
equity:
Average total shareholders' equity
(GAAP)
$
2,599,325
$
2,460,170
$
2,420,174
$
2,776,691
$
2,865,799
Less: Average goodwill and other
intangibles
659,825
660,795
661,841
656,684
654,444
Average tangible shareholders' equity
(non-GAAP)
$
1,939,500
$
1,799,375
$
1,758,333
$
2,120,007
$
2,211,355
Return on average tangible
shareholders' equity (non-GAAP) (3)
10.06
%
(43.75
)%
9.54
%
10.25
%
9.28
%
Add:
(Income) losses from investments held in
rabbi trusts (3)
(0.62
)%
(0.64
)%
(0.73
)%
0.42
%
1.33
%
Losses on sales of securities available
for sale, net (3)
0.00
%
75.09
%
0.15
%
0.04
%
0.02
%
Gains on sales of other assets (3)
0.00
%
0.00
%
0.00
%
(0.09
)%
(0.23
)%
Rabbi trust employee benefit expense
(income) (3)
0.27
%
0.29
%
0.25
%
(0.16
)%
(0.60
)%
Merger and acquisition expenses (3)
0.00
%
0.00
%
0.00
%
0.05
%
0.00
%
Defined Benefit Plan settlement loss
(3)
0.00
%
0.00
%
2.72
%
0.00
%
0.00
%
Less net tax benefit associated with
non-GAAP adjustments (1) (3)
0.34
%
17.21
%
0.67
%
0.07
%
0.27
%
Operating return on average tangible
shareholders' equity (non-GAAP) (3)
9.37
%
13.78
%
11.26
%
10.44
%
9.53
%
(1) The net tax benefit 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 amount for the six months ended
June 30, 2023 resulted from the sale of securities classified as
available for sale and included a $23.7 million tax benefit
resulting from the transfer of certain securities from Market
Street Securities Corp., a wholly owned subsidiary which was
liquidated during the first quarter of 2023, to Eastern Bank. Upon
the sale of securities in the first quarter of 2023, the Company
established a valuation allowance of $17.4 million, which is
included in the net tax befit amount, as it was determined at the
time 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. The net tax benefit for the three months ended June 30,
2023 was primarily the net effect of changes in management's
estimate of the Company's annual taxable income.
(2) Shares held by the Company’s employee
stock ownership plan ("ESOP") that have not been allocated to
employees in accordance with the terms of the ESOP are not deemed
outstanding for earnings per share calculations.
(3) Presented on an annualized basis.
APPENDIX B: Reconciliation of Non-GAAP
Operating Revenues and Expenses For information on non-GAAP
financial measures, please see the section titled "Non-GAAP
Financial Measures."
Three Months Ended
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Jun 30, 2022
(Unaudited, dollars in thousands)
Net interest income (GAAP)
$
141,588
$
138,309
$
149,994
$
152,179
$
137,757
Add:
Tax-equivalent adjustment (non-GAAP)
(1)
3,877
4,445
3,780
3,672
3,023
Fully-taxable equivalent net interest
income (non-GAAP)
$
145,465
$
142,754
$
153,774
$
155,851
$
140,780
Noninterest income (loss)
(GAAP)
$
53,831
$
(278,330
)
$
44,516
$
43,353
$
41,877
Less:
Income (losses) from investments held in
rabbi trusts
3,002
2,857
3,235
(2,248
)
(7,316
)
Losses on sales of securities available
for sale, net
—
(333,170
)
(683
)
(198
)
(104
)
Gains on sales of other assets
12
1
14
501
1,251
Noninterest income on an operating
basis (non-GAAP)
$
50,817
$
51,982
$
41,950
$
45,298
$
48,046
Noninterest expense (GAAP)
$
121,648
$
116,294
$
132,757
$
116,840
$
111,139
Less:
Rabbi trust employee benefit expense
(income)
1,314
1,274
1,103
(867
)
(3,310
)
Merger and acquisition expenses
—
—
—
271
—
Defined Benefit Plan settlement loss
—
—
12,045
—
—
Noninterest expense on an operating
basis (non-GAAP)
$
120,334
$
115,020
$
119,609
$
117,436
$
114,449
Total revenue (loss) (GAAP)
$
195,419
$
(140,021
)
$
194,510
$
195,532
$
179,634
Total operating revenue (non-GAAP)
$
196,282
$
194,736
$
195,724
$
201,149
$
188,826
Efficiency ratio (GAAP)
62.25
%
(83.05
)%
68.25
%
59.75
%
61.87
%
Operating efficiency ratio (non-GAAP)
61.31
%
59.06
%
61.11
%
58.38
%
60.61
%
(1) Interest income on tax-exempt loans
and investment securities has been adjusted to an FTE basis using a
marginal tax rate of 21.8%, 21.7%, 21.6%, 21.5%, and 21.5% for the
three months ended June 30, 2023, March 31, 2023, December 31,
2022, September 30, 2022, and June 30, 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
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Sep 30, 2022
Jun 30, 2022
(Unaudited, dollars in thousands, except
per-share data)
Tangible shareholders' equity:
Total shareholders' equity (GAAP)
$
2,526,772
$
2,579,123
$
2,471,790
$
2,416,163
$
2,718,396
Less: Goodwill and other intangibles
658,993
660,165
661,126
662,222
653,853
Tangible shareholders' equity
(non-GAAP)
1,867,779
1,918,958
1,810,664
1,753,941
2,064,543
Tangible assets:
Total assets (GAAP)
21,583,493
22,720,530
22,646,858
22,042,933
22,350,848
Less: Goodwill and other intangibles
658,993
660,165
661,126
662,222
653,853
Tangible assets (non-GAAP)
$
20,924,500
$
22,060,365
$
21,985,732
$
21,380,711
$
21,696,995
Shareholders' equity to assets ratio
(GAAP)
11.71
%
11.35
%
10.91
%
10.96
%
12.16
%
Tangible shareholders' equity to tangible
assets ratio (non-GAAP)
8.93
%
8.70
%
8.24
%
8.20
%
9.52
%
Common shares outstanding
176,376,675
176,328,426
176,172,073
177,772,553
179,253,801
Book value per share (GAAP)
$
14.33
$
14.63
$
14.03
$
13.59
$
15.17
Tangible book value per share
(non-GAAP)
$
10.59
$
10.88
$
10.28
$
9.87
$
11.52
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
Jun 30, 2023
Mar 31, 2023
Mar 31, 2023
(Unaudited, dollars in thousands, except
per-share data)
Common stock
$ 1,766
$ 1,764
$ 2
Additional paid in capital
1,656,750
1,651,524
5,226
Unallocated ESOP common stock
(135,232)
(136,470)
1,238
Retained earnings
1,704,470
1,672,169
32,301
AOCI, net of tax - available for sale
securities
(646,611)
(588,125)
(58,486)
AOCI, net of tax - pension
6,381
6,742
(361)
AOCI, net of tax - cash flow hedge
(60,752)
(28,481)
(32,271)
Total shareholders' equity:
$ 2,526,772
$ 2,579,123
$ (52,351)
Less: Goodwill and other intangibles
658,993
660,165
(1,172)
Tangible shareholders' equity
(non-GAAP)
$ 1,867,779
$ 1,918,958
$ (51,179)
Common shares outstanding
176,376,675
176,328,426
48,249
Per share:
Common stock
$ 0.01
$ 0.01
$ —
Additional paid in capital
9.39
9.37
0.03
Unallocated ESOP common stock
(0.77)
(0.77)
0.01
Retained earnings
9.66
9.48
0.18
AOCI, net of tax - available for sale
securities
(3.67)
(3.34)
(0.33)
AOCI, net of tax - pension
0.04
0.04
—
AOCI, net of tax - cash flow hedge
(0.34)
(0.16)
(0.18)
Total shareholders' equity:
$ 14.33
$ 14.63
$ (0.30)
Less: Goodwill and other intangibles
3.74
3.74
(0.01)
Tangible shareholders' equity
(non-GAAP)
$ 10.59
$ 10.88
$ (0.29)
APPENDIX E: HTM-Marked Tangible Common
Equity Ratio For information on non-GAAP financial measures,
please see the section titled "Non-GAAP Financial Measures."
As of
Jun 30, 2023
Mar 31, 2023
(Unaudited, dollars in thousands, except
per-share data)
HTM-marked tangible shareholders'
equity:
Total shareholders' equity (GAAP)
$
2,526,772
$
2,579,123
Less: Goodwill and other intangibles
658,993
660,165
Less: After-tax fair value mark on HTM
securities (1)
37,462
32,841
HTM-marked tangible shareholders'
equity (non-GAAP)
1,830,317
1,886,117
HTM-marked tangible assets:
Total assets (GAAP)
21,583,493
22,720,530
Less: Goodwill and other intangibles
658,993
660,165
Less: After-tax fair value mark on HTM
securities (1)
37,462
32,841
HTM-marked tangible assets
(non-GAAP)
20,887,038
22,027,524
Shareholders' equity to assets ratio
(GAAP)
11.71
%
11.35
%
HTM-marked tangible shareholders' equity
to HTM-marked tangible assets ratio (non-GAAP)
8.76
%
8.56
%
(1) Assumes pre-tax mark-to-market
adjustments are tax-effected at an effective tax rate of
28.23%.
APPENDIX F: Regulatory Capital
Ratios
As of June 30, 2023
(Unaudited, dollars in thousands)
Eastern Bankshares, Inc.1
Minimum Capital Required
to be Well-Capitalized under
Prompt Corrective Action
Provisions
Capital Amount
Above Minimums1
Tier 1 capital (to average assets)
leverage
11.72
%
5.00
%
$
1,483,557
Common equity Tier 1 capital (to
risk-weighted assets)
15.69
%
6.50
%
$
1,515,326
Tier 1 capital (to risk-weighted
assets)
15.69
%
8.00
%
$
1,267,993
Total regulatory capital (to risk-weighted
assets)
16.68
%
10.00
%
$
1,101,456
1Regulatory capital figures are
preliminary estimates.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230727698621/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
Eastern Bankshares (NASDAQ:EBC)
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